NYSE floor reopens, traders buy shares of Crocs, airlines
The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. Following are developments Tuesday related to national and global response, the work place and the spread of the virus.
Green Shoots: States are in varying degrees of reopening, and so are businesses.
– The New York Stock Exchange reopened the trading floor Tuesday, though with plexiglass shields and far fewer traders.
– U.S. restaurant traffic is starting to return as states push to get back to normal. Customer transactions at major restaurant chains fell 21% from a year ago for the week ending May 17, but it was the fifth consecutive week in which that gap narrowed, according to The NPD Group, a data and consulting firm. About 93,000 U.S. chain restaurant locations reopened between May 10 and May 17.
Transactions at full-service chains like Applebee’s and Olive Garden declined 49% from a year ago – or 33% in states where dining rooms reopened – compared with a 58% decline the prior week. Transactions at fast food chains fell 20% the week of May 17, a slight improvement from a week earlier.
– Office furniture maker Steelcase has called back most employees from furlough. All of the company’s manufacturing and distribution locations are open. Many office and showroom locations are also beginning to reopen, although some remain restricted under stay-at-home orders. Steelcase’s backlog of customer orders was about $700 million as of May 1. The company expects to manufacture and ship most of its current backlog by the end of July.
Travel & Leisure: When markets opened, some of the biggest gainers were airlines, hotels, restaurants and cruise lines. People are betting on the return to more normal rates of travel and a resumption of all things leisure.
– Plans by Delta Air Lines and United Airlines to resume flights to China next month have become entangled in a dispute between the U.S. and Chinese governments. The Transportation Department says China is in effect blocking U.S. airlines, and on Friday it ordered Chinese airlines flying to the U.S. to file certain details about those flights. The department said it will use the information to decide if the flights are counter to U.S. public interest. Delta wants to fly to Shanghai from Seattle and Detroit, and United wants to resume service to Shanghai and Beijing from San Francisco and Newark, New Jersey.
– The Czech Republic, Hungary and Slovakia are set to start reopening their borders for their citizens to travel.
The Czech Republic and Slovakia announced a deal for their citizens to travel across their common border and not to face a mandatory quarantine and tests for the coronavirus if they return in 48 hours.
Czech Prime Minister Andrej Babis said Tuesday Hungary is joining the Czechs and Slovaks to allow free travel among them for that limited period of two days. The measure will become effective on Wednesday.
– Authorities in Greece say ticket reductions for sea travel from the mainland to the Greek islands will be introduced on June 1, with a sales tax cut aimed at stimulating the domestic tourism market. Giannis Plakiotakis, the merchant marine minister, said the sales tax rate on ferry tickets would be lowered from 24% to 13%.
Greece will begin opening up to international tourism on June 15.
Earnings: Most S&P 500 companies have reported earnings for the first quarter, but others continue to trickle in. The damage from the outbreak has been extensive.
– Hibbett Sports first-quarter sales fell 21%, hurt by store closings. Comparable store sales declined 19.5%, but the retailer’s online sales more than doubled. Hibbett began reopening stores toward the end of April and now has more than 1,000 locations in operation.
– AutoZone’s third-quarter domestic same-store sales dipped 1%, with federal stimulus checks helping to boost sales that declined when the virus outbreak began. It incurred about $75 million in COVID-19-related costs. AutoZone’s stores have remained open during the pandemic.
Markets: Stocks surged on Wall Street Tuesday, driving the S&P 500 to its highest level in nearly three months, as hopes for economic recovery overshadow worries about the coronavirus pandemic.
– Among the day’s winners were airline stocks, which soared on indications that air travel is recovering from mid-April lows, although it remains down sharply from pre-pandemic levels. In afternoon trading, shares of all six leading U.S. carriers – Delta, American, United, Southwest, Alaska and JetBlue – were up between 11% and 16%. The Transportation Security Administration said about 340,000 people passed through airport checkpoints on Memorial Day. That’s 86.4% less than last year’s holiday, but it’s the smallest percentage drop in U.S. air travel since March 22. UBS upgraded Southwest Airlines to “buy” from “neutral” on better prospects for a recovery in domestic travel.
Get Your Kicks: Pandemics are not good for shoe sales, with revenue at Nike, Foot Locker and other footwear companies taking big hits this year. Not so for Crocs, the ugly, easy-to-put-on rubber shoes once exclusively in the realm of gardeners and kitchen workers. Shares are up 35% in the last month and on Tuesday analysts with BMO Research told clients to buy the stock, ticker symbol CROX, believing that Crocs have more room to run with so many people isolating.