Friday June 26th

26-06-2020

Stock futures fall after bank stress test results, Nike reports surprise loss

U.S. stock index futures fell before the opening bell Friday following the release of the Federal Reserve’s latest bank stress-test results and disappointing quarterly numbers out of Nike. Dow Jones Industrial Average futures implied an opening loss of about 160 points, about 0.65%, while S&P 500 and Nasdaq-100 futures pointed to declines of 0.3% and 0.1%, respectively. The moves came after the Fed’s annual stress test of the major banks showed some banks could get close to minimum capital levels in scenarios related to the coronavirus pandemic. Because of this, banks must suspend share repurchase programs and keep dividend payments at current levels for the third quarter. “While I expect banks will continue to manage their capital actions and liquidity risk prudently, and in support of the real economy, there is material uncertainty about the trajectory for the economic recovery,” Fed Vice Chair Randall Quarles said in a statement. The announcement sent some bank shares lower in after-hours trading. Bank of America and JPMorgan Chase both dipped more than 1.5%. Wells Fargo slid 2.7% and Goldman Sachs fell 3.1%. Bank stocks were coming off sharp gains, rallying more than 3% during regular trading Thursday. Meanwhile, Nike shares slid 3% after the bell on the back of a surprising quarterly loss for the apparel giant. The company reported a loss of 51 cents per share and revenue of $6.31 billion for its fiscal fourth quarter. Nike’s quarterly revenue reflected a drop of 38% on a year-over-year basis. The premarket losses Friday morning came despite a record rise in consumer spending in May. The Commerce Department reported Friday that spending increased 8.2% last month, a positive sign for the U.S. economy amid a growing number of negative coronavirus headlines. The government’s report on how much Americans spent on goods and services in May was the largest one-month gain dating back to records beginning in 1959. Consumer spending represents more than two-thirds of economic demand in the U.S. Wall Street was coming off strong gains after a late-day surge helped the major averages recover some of the steep losses from Wednesday’s session. The Dow jumped nearly 300 points Thursday while the S&P 500 and Nasdaq Composite each closed higher by 1.1%. The major averages, however, struggled for direction for most of Thursday’s session as the number of coronavirus cases keeps rising in certain states. Stocks in Asia Pacific mostly rose on Friday as the coronavirus situation stateside continued to be monitored by investors. In Japan, the Nikkei 225 rose 1.13% to close at 22,512.08 while the Topix index added 0.99% to finish its trading day at 1,577.37. South Korea’s Kospi also gained 1.05% to close at 2,134.65. Hong Kong’s Hang Seng index bucked the overall trend regionally as it slipped 0.77% as of its final hour of trading. Markets in China were closed on Friday for a holiday. Oil prices rose on Friday, extending gains from the previous day on optimism about recovering fuel demand worldwide, despite a surge in coronavirus infections in some U.S. states and indications of a revival in U.S. crude production. U.S. West Texas Intermediate crude futures gained 33 cents, or 0.85%, to $39.05, but were on track for a slight drop for the week. Brent crude futures similarly rose 1.2%, or 51 cents, to $41.57, but were also heading towards a small decline for the week. Gold prices edged up on Friday en route to a third straight weekly gain, as a spike in coronavirus cases dashed hopes of a quick economic recovery. Spot gold rose 0.1% to $1,762.41 per ounce, having soared to a peak since Oct. 2012 at $1,779.06 on Wednesday, putting it on course for a 1.1% gain for the week. U.S. gold futures rose 0.2% to $1,774.70 per ounce.