All three major stock market indexes were relatively flat as talk of new tariffs against China over the origins of the coronavirus and Berkshire Hathaway’s dump of airline stocks dominated investor sentiment, plus more in today’s Closing Bell on Money & Markets.
The Top Story
Shares of Delta Air Lines Inc. (NYSE: DAL), American Airlines Group Inc. (Nasdaq: AAL), Southwest Airlines Co. (NYSE: LUV) and United Airlines Holdings Inc. (Nasdaq: UAL) fell between 5% and 7.7%, as Berkshire Hathaway Inc. (NYSE: BRK.B) CEO Warren Buffett said “the world has changed” for the aviation industry.
Berkshire’s move also shaved more than 1.4% off Boeing Co.’s (NYSE: BA) shares. The S&P 1500 airlines sub-index plunged 5.7%.
Analysts said Buffett’s relatively bleak reading of the market hit home with investors.
“The fact that he had sold airline stocks was perhaps a realization that he sees a slow recovery for the economy, for a while at least,” D.A. Davidson Director of Wealth Management James Ragan said.
All three major stock market indexes clawed back more than 11% in April, but the rally is likely to be tested in the coming weeks as investors try to assess the pace of an economic recovery with states starting to emerge from coronavirus lockdowns.
Minimal movements from Apple Inc. (Nasdaq: AAPL), Amazon.com Inc. (Nasdaq: AMZN) and Microsoft Corp. (Nasdaq: MSFT) kept the Nasdaq Composite safely in the green.
The Dow Jones rose 0.1%. The S&P 500 closed 0.4% higher, and the Nasdaq rose 1.2%.
Stock Market Update: Closing Bell*
S&P 500: 2,842 (+0.4%)
DOW: 23,749 (+0.1%)
NASDAQ: 8,710 (+1.2%)
GOLD: $1,711.30 (+0.6%)
BITCOIN: $8,864.54 (+0.1%)
U.S. 10-YEAR YIELD: 0.63% (-0.002)
*- as of 4:15 p.m.
A Big Win
This morning, we told you to be on the lookout for Comcast Corp. (Nasdaq: CMCSA) as the company’s NBCUniversal division planned cost-cutting measures, including layoffs, in its media and entertainment divisions. Shares of Comcast fell 2.1%.
We also told you about Berkshire Hathaway Inc. (NYSE: BRK.B). This weekend, CEO Warren Buffett mentioned unloading the company’s shares in airlines and losing $50 billion in the first quarter. Shares of Berkshire Hathaway lost 2.4%.
Finally, we mentioned that Intel Corp. (Nasdaq: INTC) is eyeing a $1 billion acquisition of Israeli startup Moovit. Moovit develops and markets a mobile navigation app that tracks public transit in 3,100 cities and 102 countries. Shares of Intel rose 0.9%.
Gold prices showed moderate gains as U.S.-China tensions helped push equities down.
Gold futures moved 0.6% higher to trade at $1,711.30 an ounce. Silver futures were down 0.6% to $14.84 an ounce.
Platinum jumped 0.8% to $779.90 an ounce, while palladium fell 3.6% to trade at $1,821.90 an ounce.
Constellation Brands Inc. (NYSE: STZ), the maker of Corona beer, has upped its stake in Canadian cannabis company Canopy Growth Corp. (NYSE: CGC).
The exercising of warrants to buy the shares pushed Constellation’s ownership to 38.6% and pushed Canopy stock up 3.1% on Monday.
Constellation CEO Bill Newlands said the company believes “the long-term opportunity in this evolving market is substantial.”
$5 Billion in Margin Calls Hammer Mortgage Market
One of the unintended consequences of the Federal Reserve’s plan to buy up mortgage securities was pushing many routine hedges into the red.
According to Bloomberg, the Fed’s buying drove up prices for those assets, turning safe havens into a massive demand for cash. Analysts estimate the move cut as much as $5 billion from lenders before the buying subsided.
While large lenders could meet their call obligations because of their huge balance sheets, smaller ones likely struggled.
“The significant price fluctuations in March meant that large margin balances flowed back and forth between lenders and broker-dealers,” Mortgage Capital Trading Chief Operating Officer Phil Rasori told Bloomberg.
Today’s Big Winners:
Phillips 66 (NYSE: PSX) +10.7%
Tesla Inc. (Nasdaq: TSLA) +8.5%
Walgreens Boots Alliance Inc. (Nasdaq: WBA) +1.9%
Today’s Big Losers:
American Airlines Group Inc. (Nasdaq: AAL) -7.7%
United Airlines Holdings Inc. (Nasdaq: UAL) -5.1%
Raytheon Technologies Corp. (NYSE: RTX) -3.6%
Check back for the most important news and numbers each day after the Closing Bell, only on Money & Markets.