Pullback continues, airlines & cruise shares drop, fear gauge pops

Shares of retailers were among the biggest losers in morning trading after signs of a second wave of the coronavirus emerged. Kohl’s and Macy’s both dropped more than 5%, while Nordstrom and Gap dipped 3.6% and 4.5%, respectively. Simon Property Group, one of the largest owners of U.S. malls, fell 5.4%. These names had rebounded sharply as they started the reopening process, but worries about a virus resurgence dented the appeal of brick and mortar retailers. – Li

United Airlines announced on Monday that its using its MileagePlus program to secure a $5 billion loan to help it withstand the drop in demand due to the coronavirus pandemic. The program generated $5.3 billion in cash flow from sales in 2019, before the virus hit, according to a securities filing. The loan will give the airline roughly $17 billion in liquidity by the end of the third quarter. The stock was down 7% in early trading, similar to other airlines. — Pound

The Cboe Volatility Index, also known as the VIX or “fear gauge,” popped more than 11% to trade at 40.33 in morning trading Monday. The VIX tracks the 30-day implied volatility of the S&P 500 futures via options prices. On Thursday, the gauge crossed the 40 threshold for the first time since May 4. The VIX hit a record high of 82.69 on March 16 during the historic sell-off amid the coronavirus pandemic. –Li

Shares of United and American Airlines, down 6.5% and 5.2%, lead the airlines lower on Monday as inflamed coronavirus fears weighed on both transportation stocks and the broader U.S. equity market. The airline group outperformed the broader market during much of May as investors grew hopeful about the U.S. economy reopening, but are now lagging as Covid-19 concerns return. Alaska Air and JetBlue each dropped about 4% while Southwest Airlines lost 3%. The broader Dow Jones Transportation Average, which tracks the performance of 20 of the largest transportation-related stocks in the U.S., fell 2%. — Franck

Shares of cruise line operators dropped on Monday as investors ditched riskier stocks on concerns about a second coronavirus wave. Shares of Norwegian Cruise Line fell 6.5% and shares of Carnival Corp. dropped 5.5%. Royal Caribbean ticked 4.6% lower. All three stocks have seen a major run-up from the March low. – Fitzgerald

The S&P financials sector shed 2.65% in early trading on Monday with every component in the red, as fears over a possible second wave of coronavirus cases hammered the sector. Citigroup slid 4%, while JPMorgan, Bank of America, and Wells Fargo were each down more than 3%. The group is also taking a hit after the Federal Reserve said last week that it has no intention of raising rates any time soon. Banks typically benefit when rates are higher since it widens the spread between how much they pay to borrow compared with their profits from loans. – Stevens

Wall Street got off to a torrid start to the week as investors grow concerned over the possibility of a second coronavirus wave. Early trading action showed just nine stocks in the entire S&P 500 were positive. Electronic Arts, Twitter, Clorox and Dollar General were among the names in the green. Market breadth was also extremely downbeat at the exchange level. FactSet data showed that just one New York Stock Exchange-listed name traded higher for every 13 decliners. —Imbert

Stocks started the week sharply lower as the recent pullback continued. The Dow Jones Industrial Average fell 645 points for a loss of 2.5%. The S&P 500 was down 2%, while the Nasdaq Composite shed 1.5%. The major averages are all coming off their worst week since March 20 as fears over a second wave of coronavirus cases hit the market. Stocks most sensitive to the economy’s reopening, including airlines and cruise line operators, led the declines. – Stevens

Manufacturing in the New York area has seen a surprising rebound in June as confidence in the future hit its highest level in nearly 11 years. The New York Fed’s Empire State Manufacturing Index posted a reading of -0.2 for the month. While that represents a relatively standstill in present conditions, it was far better than the -35 that economists surveyed by Dow Jones had expected. At the same time, the index for future expectations rose to 56.5, its highest level since October 2009. Big gains also came in new orders, shipments and prices paid. – Cox

• KeyBanc upgraded Intel to overweight from sector weight.
• Atlantic Equities initiated Starbucks as overweight.
• Piper Sandler upgraded Shopify to overweight from neutral.
• B. Riley FBR upgraded Six Flags to buy from hold.
• Berenberg upgraded Mondelez to buy from hold.
• Citi opened a 30-day negative catalyst watch on American Airlines & a positive catalyst watch on United Airlines.
• Loop Capital upgraded RH to buy from hold.

CNBC PRO subscribers can read more here. – Bloom

Stocks have been under pressure in recent days, but UBS’ Mark Haefele thinks more gains lie ahead. We are still confident that with positive medical developments and supportive stimulus measures, economies will be able to reopen sustainably without a second wave of infection overwhelming healthcare systems,” Haefele, CIO for UBS Global Wealth Management, said in a note. “We think there is still room for equities to move higher in both our central and upside scenarios.” Haefele added, however, that Thursday’s sell-off highlights “the importance of a selective approach to stocks after the recent sharp rally.” —Imbert

While coronavirus cases have moderated across the U.S. as a whole, flareups in states that relaxed restrictions early are causing concern of a second wave. Total positives rose 1% on Sunday while deaths rose 0.3% to 109,657, according to the Covid Tracking Project. While those numbers reflect a continued taming of trends from when the pandemic first hit, some states are seeing significant jumps. Alabama saw a 4.1% rise in total cases on Sunday, Arizona rose 3.6% and Tennessee rose 3%. Those gains were being largely offset by sharp declines in the pace of growth among Northeast states, but the threat of a rise in cases still spooked markets. Wall Street was headed for another rough opening Monday coming off a sharp drop last week. – Cox

Shares of brick and mortar retailers fell in premarket trading on Monday as worries about a spike in virus cases kept investors away from the reopening trade. Shares of Kohl’s ticked 6.5% lower and TJX Companies fell nearly 3%. Nordstrom lost 4.7%. Macy’s fell 5.5% and Best Buy shed more than 2% lower. Home Depot and Lowe’s fell 2.4% and 1.7%, respectively.— Fitzgerald 

Shares of e-commerce company Shopify gained 3% in premarket trading after Walmart announced a partnership between the two companies that will allow Shopify’s third-party sellers to list their products on Walmart’s website. Piper Sandler also upgraded the stock to overweight from neutral, saying in a note that Shopify’s revenues could quadruple by 2025. —Pound

A report from Israeli news outlet YNET said the country was in talks to buy Moderna’s coronavirus vaccine, which is entering the final stage of testing. The report sent Moderna shares more than 5% higher in premarket trading. —Imbert

Morgan Stanley’s U.S. equity strategist Michael Wilson raised his S&P 500 target while reiterating his belief that the recovery will be V-shaped based on positive economic data and policy action from governments and central banks. “We remain firmly in the camp that the economy is likely to experience a V-shaped recovery, which is exactly what the equity market is foreshadowing,” he wrote in a note to clients Sunday. Wilson raised his 12-month S&P 500 bull, base and bear targets to 3,700, 3,350 and 2,900, respectively. The S&P closed at 3,041 on Friday. – Stevens

Cruise line stocks took a hit on Monday as investors dumped the recently strong-performing group amid worries of a second coronavirus wave slowing down global travel. Carnival Corp. and Royal Caribbean both fell around 8% in the premarket. Norwegian Cruise Line slid 10.8%. Cruise operators have been on fire this quarter as traders be the worst of the coronavirus pandemic had passed. Quarter to date, Carnival is up 51.7% while Norwegian Cruise Line and Royal Caribbean are both up at least 87% in that time period. — Imbert

Officials in China’s capital city have reported 79 new cases of the coronavirus over the past four days after reporting no new cases for nearly two months. Parts of Beijing are now under lockdown to help control the spread of the virus, and the city has suspended sporting events and tourism. The outbreak has been linked to the Xinfadi market in the southwest part of the city. —Pound, Reuters

Shares of major U.S. airline companies fell across the board in premarket trading Monday morning as inflamed fears about a second wave of coronavirus cases continued to threaten the market’s recent optimism about economic reopening. Delta, United and Alaska Air fell 7%, 8.7% and 6.8%, respectively, underperforming S&P 500 futures that pointed to a slide of 2.1% for the broader market when regular trading resumes. JetBlue Airways and Southwest Airlines dropped 7.3% and 6.1%. — Franck

U.S. equities futures fell on Monday as investors ditched riskier assets over fears about a possible second wave of the coronavirus. Dow Jones Industrial Average futures fell about 600 points, or 2.4%. S&P 500 futures lost 2%. Nasdaq-100 futures declined 1.4%. Stocks that hinge on the economy reopening — airlines, cruise lines and retailers — were the weakest before the bell on Monday. 

Stocks are coming off of their worst week since March. Equities reversed course last week after chugging higher for three straight weeks. The Dow and S&P 500 lost 5.5% and 4.7% last week, respectively, while the Nasdaq shed 2.3%. — Fitzgerald 

— with reporting from CNBC’s Fred Imbert, Pippa Stevens, Jeff Cox, Yun Li and Michael Bloom.

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