Mixed Day on Wall Street, but Travel Data Encourages Some

Some people wear masks while using the New York City subway system during the coronavirus pandemic on April 7. (AP Photo/John Minchillo, File)

MANHATTAN (CN) — Continuing what has been an early August rally, the Dow Jones Industrial Average closed up 1.3% Monday even while talks on another coronavirus-relief package have all but collapsed and President Trump’s executive orders designed to help consumers draw pushback. 

Up about 358 points, the Dow did the best of the three indices. While the Nasdaq closed down 0.39%, the S&P was up 0.28%, about 26 points shy of its pre-pandemic high.

There was some hope of that relief talks on Capitol Hill would pick back up after Treasury Secretary Steven Mnuchin said Monday that President Donald Trump was willing to offer more money to reach a deal with Democrats. 

“The president is determined to spend what we need to spend,” Mnuchin said. “We’re prepared to put more money on the table.”  

But Mnuchin called a $2 trillion compromise — halfway between Trump’s $1 trillion proposal and Democrats’ demand for $3 trillion — “absurd.” 

“There’s a deal to do if the Democrats are reasonable and want to compromise,” he said. But he warned that the administration wouldn’t accept “really bad policy ideas. We’re not going to just split the difference.” 

A major sticking point in the negotiations has been Trump’s reluctance to provide aid to state and local governments. 

Trump tweeted today: “So now Schumer and Pelosi want to meet to make a deal … Where have they been for the last 4 weeks when they were ‘hardliners’, and only wanted BAILOUT MONEY for Democrat run states and cities that are failing badly? They know my phone number!” 

Airline shares rallied on news that air travel has picked up and on hopes for a separate $25 billion federal bailout that has been garnering bipartisan support in Congress.  

United Airlines was up 9.35% on the day, and both American and Delta were up more than 7%. 

Some 831,789 people passed through TSA checkpoints last Sunday, it was reported, the highest level since March 17, although air traffic is still down 70% from a year ago. 

Other travel-dependent companies saw their shares spike despite reporting significant losses. 

Hotel chain Marriott International reported an adjusted loss of 64 cents a share in the second quarter, much more serious than the 42 cents a share that analysts had expected. Yet its shares finished up 3.57%. 

Revenue plunged more than 72% to $1.46 billion, missing estimates of $1.68 billion. Marriott said its “revenue per available room,” a key industry metric, was down more than 84%. 

Nevertheless, “we are seeing steady signs of demand returning,” Chief Executive Officer Arne Sorenson said. The company’s most recent global occupancy rates were 34%, up from 11% in April. 

Royal Caribbean Group reported an adjusted net loss of $1.3 billion, or $6.13 a share. But CEO Richard Fain said future bookings were up to a “remarkable” extent.  

“We have been both humbled and surprised with the amount of bookings we’re seeing for 2021 with literally no marketing efforts,” he said. The company’s stock jumped 10%. 

Shares in SeaWorld Entertainment Inc. were up 5.8% after the company reported a net loss of $1.68 a share, much worse than analysts’ estimated loss of 96 cents. Revenue was down a staggering 96%. 

Of the 88% of S&P 500 companies that had reported quarterly earnings as of Friday, 58% beat expectations “by more than a standard deviation of estimates,” noted David Kostin of Goldman Sachs. 

Goldman revised its earnings-per-share estimate for the S&P 500 this year upward from $115 to $130. 

Kodak shares plummeted 28.13% after the U.S. Development Finance Corporation tweeted that it “will not proceed any further” with its plans to work with the company on funding to produce coronavirus drugs until it has addressed concerns about whether the company properly disclosed the deal to the public. 

Kodak shares rocketed from $2.62 to $33.20 over two days at the end of July as news of the deal got out. They ended today at $10.73. 

Shares of mall operator Simon Property Group jumped 5.27% after a report that the company is in talks with Amazon to turn ailing Sears and J.C. Penney outlets into fulfillment centers.  

Berkshire Hathaway announced that it had repurchased $5.1 billion of its own stock in May and June, suggesting that the company felt its shares were undervalued. Shares in the conglomerate rose 1.46%. 

Shares in Pinterest were up 2.34% to $35.86 after Morgan Stanley analyst Brian Nowak upgraded the stock and raised his price target to $44. 

Over at JPMorgan, analyst Eduardo Lecubarri said small and midcap stocks have not been fully participating in the rally and remain undervalued. It has “never been easier to make money” in them, he added.

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