Re-opening names rally, Pfizer dives 7%, risks ‘lurking’?

Re-opening names rally, Pfizer dives 7%, risks 'lurking'?

A trader walks by the New York Stock Exchange (NYSE) on the first day that traders are allowed back onto the historic floor of the exchange on May 26, 2020 in New York City.

Spencer Platt | Getty Images

After falling at the open, stocks reversed course and moved higher on Monday as states reopening their economies outweighed growing U.S.-China tensions. Stocks most sensitive to the re-opening trade, including retailers, airlines and cruise line operators, led the major averages higher.

This is a live blog. Here’s the latest:

10:58 am: Cramer says Wall Street focused on reopenings

Jim Cramer said on “Squawk on the Street” that this week’s market moves would be determined primarily by how the reopening of non-essential businesses is going. But the protests against police violence could slow that process, Cramer said. “I think it’s about the reopening and to see how that goes,” Cramer said. “Whether the protests make the reopening delayed would be terrible, but I understand the protesters and I’m sympathetic with anyone who’s a peaceful, safe protester.” — Pound

10:37 am: Citi’s chief equity strategist says market looks too optimistic

Citi Chief U.S. Equity Strategist Tobias Levkovich warned that the U.S. stock market looks a bit too rosy given a host of lingering risks and the rally off the March lows. “We worry that equity markets are discounting lots of good news at this juncture, and sentiment gets more upbeat by the day when risks are lurking and valuations are becoming tenuous,” Levkovich wrote in a note published Friday.

“The upside opportunity in the S&P 500 was evident at 2,200, when fear was detectable almost everywhere. Now, not only has the economy reopened, but so have investment community animal spirits, which we think need to be tamed,” he added. — Franck

10:04 am: Reopening trade supporting the market

Shares of retailers, airlines and hotels jumped again on Monday amid optimism about a successful economic reopening, providing the broader market with some support. American Airlines and United Airlines jumped nearly 6% each, while Delta rose more than 4%. Apparel retailer Gap soared 12% in morning trading, and Marriott International climbed more than 5%. Cruise line operators were also among the biggest gainers, with Norwegian Cruise and Carnival rallying 7% and 5%, respectively. These companies, which took a huge beating from the pandemic-induced shutdowns, will benefit directly from the reopening of the economy. –Li

9:44 am: Morgan Stanley raises price target on Amazon to $2,800 from $2,600

Morgan Stanley lifted its price target on Amazon to $2,800 from $2,600, and said that 2020 will be an “inflection” point for the company as consumers continue to favor online shopping. “While the world is now re-opening, we expect these buckets of available dollars to remain e-commerce tailwinds…we expect adjusted retail and travel spend to decline an aggregate of 18% in 2H:20…and for 3,000+ retail stores to close this year,” the firm said. Shares of Amazon rose about 1% in early trading. – Bloom

9:30 am: Stocks start the month lower

Stocks opened lower on the first trading day of June, as growing U.S.-China tensions weighed on the market. The Dow shed 94 points for a loss of 0.4%, while the S&P 500 and Nasdaq Composite slid 0.36% and 0.25%, respectively. Still, the modest move lower does little to dent a period of strength for stocks, which has seen the S&P 500 rally 39% from its March 23 low. – Stevens

9:24 am: Here are Monday’s biggest analyst calls of the day: Amazon, Ulta, Hostess, Gap & more

  • Morgan Stanley raised its price target on Amazon to $2,800 from $2,600.
  • Piper Sandler upgraded Ulta to overweight from neutral.
  • Goldman Sachs downgraded Abbott Labs to sell from neutral.
  • Evercore ISI upgraded Keurig Dr Pepper to outperform from in line.
  • SunTrust upgraded Teva to buy from hold.
  • SunTrust upgraded Hostess Brands to buy from hold.
  • JPMorgan upgraded Gap to neutral from underweight.
  • Deutsche Bank downgraded Vail Resorts to hold from buy.
  • Bank of America reinstated MetLife and Travelers as buy.
  • Wedbush raised its price target on Chipotle to $1,200 from $870.

CNBC PRO subscribers can read more here. – Bloom

8:48 am: Credit Suisse: ‘Let the reopening begin,’ but market success depends on Covid-19

Credit Suisse Chief U.S. Equity Strategist Jonathan Golub wrote Monday that the market’s path forward depends on the spread of Covid-19 and the success of efforts to reopen the American economy. “COVID-19 deaths continue to increase by 1300+ daily; however, this number has been steadily declining. Market upside ultimately depends on the path of the virus and the success of reopening,” he wrote. Golub noted that retail gasoline demand is an “excellent” gauge of the reopening process and that appetite for fuel has steadily increased for six weeks. — Franck

8:46 am: Protests could cause market pullback, says strategist

Americans took to the streets over the weekend in widespread protests following the killing of George Floyd, an unarmed black man, at the hands of Minneapolis police. Art Hogan of National Securities said nothing over the weekend was “market positive.” “At the levels we’re at, I wouldn’t be surprised to see the market take a pause and pull back,” Hogan noted. “We can say we’re slowly reopening and there’s going to be economic activity but it’s hard to defend valuations with so much unrest that we’re seeing going on in this country this weekend.”

Others, however, including Bleakly Advisory’s Peter Bookvar and Bannockburn’s Marc Chandler, believe the protests won’t materially impact markets. Chandler said that the market will only respond to the civil unrest if the protests slow economic re-opennings or trigger a bigger virus outbreak. All three strategists said U.S.-China tensions are a bigger threat to the market. – Domm, Fitzgerald

8:39 am: Axon shares surge after protests against police violence

Shares of Axon Enterprises, formerly known as Taser International, jumped more than 9% in premarket trading after protests against police violence spread across the country. The company sells electrical weapons and cameras for law enforcement officers. Oppenheimer analysts said in a note that Axon CEO Rick Smith “has a company vision and personal passion to arm police agencies with technology and disarm them of lethal weapons.” — Pound

8:34 am: Beyond Meat jumps on Yum China deal

Yum China said Monday that beginning June 3 it will offer Beyond Meat’s plant-based burgers for a limited time at some of its KFC, Pizza Hut and Taco Bell restaurants across mainland China, in a first for the company. “We see great potential for the plant-based meat market in China,” said Joey Wat, CEO of Yum China in a press release. “This latest introduction across KFC, Pizza Hut and Taco Bell brands is expected to capture valuable consumer feedback across different regions in China.” Shares of Beyond Meat rose more than 2% during premarket trading following the announcement. For the year, shares are up nearly 70%. – Stevens

8:22 am: JPMorgan upgrades Gap on ‘disproportionate growth’ in bargain retail

Shares of Gap jumped more than 3% in premarket trading after JPMorgan upgraded the stock to a neutral rating. The firm said that amid weakness at the flagship stores as well as at Banana Republic, Old Navy should benefit from the “disproportionate growth of ‘value retail.'” JPMorgan also said that there’s market share up for grabs following JCPenney’s bankruptcy filing. Growing interest in the athletic apparel sector should also boost sales at the retailer’s Athleta brand, according to JPMorgan. The firm’s $11 target represents a 23% upside to where the stock currently trades. Shares have slid nearly 50% this year as the pandemic caused widespread store closures. – Stevens

8:06 am: Wall Street begins June on a high note 

The stock market enters June on the heels of a stunning trend higher even as it faces multiple challenges ahead. Despite a global pandemic, steep economic and earnings downturn and political and civil unrest, the S&P 500 has rallied 36.1% off its March 23 low to trade at a gaudy 27.7 times expectations for 2020 earnings, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. Silverblatt figures the market is pricing in an aggressive economic recovery following a nearly three-month period where much of the U.S. remained in lockdown mode to battle the coronavirus. Should that scenario not materialize, there could be a price to pay. “If we see the upward turn in the second half, then the current levels may be justified, but if not, the Street will need to reprice, and for those of you who quickly forget, the last repricing was from the Feb. 19, 2020, high to the March 23, 2020, low, a 33.9% fall,” Silverblatt noted. Year to date, the large-cap index is down just 5.8% despite the steep fall in the early days of the coronavirus crisis. The damage was mitigated by a 12.7% surge in April that gave the market its best month since January 1987. – Cox

7:58 am: Chinese manufacturing sector grew in May, survey shows

The manufacturing purchasing manager’s index for China from Caixin and IHS Markit came in at 50.7 for May, beating economists’ expectations and showing expansion in the sector. The index is calculated such that readings above 50 represent expansion, and readings below 50 represent contraction. Economists polled by Reuters predicted the reading for May to be 49.6.The reading was an increase from 49.4 in April. The number fell as low as 40.3 in February, when China was still using widespread economic restrictions to slow the spread of the coronavirus. — Pound

7:54 am: Reopening stocks higher again after jumping last week

Stocks sensitive to economies reopening, such as cruise line operators, hotels, and airlines, moved higher during Monday’s premarket trading as business begins to get back to normal around the globe. Delta, United, Hilton, Norwegian Cruise and Royal Caribbean Cruises were among the names on the move after posting gains last week. Royal Caribbean was the relative outperformer after jumping 20% last week, although shares are still down more than 60% for the year. – Stevens

7:50 am: China pauses some U.S. farm imports, threatens trade deal, report says

The Chinese government has told state-run agricultural companies to pause purchases of some American farm commodities including soybeans, Bloomberg News reported Monday. State-owned traders Cofco and Sinograin were ordered to suspend purchases, one person told Bloomberg, while buyers have also canceled an unspecified quantity of U.S. pork orders. The directive comes as tensions between Washington and Beijing worsen, threatening the longevity of the phase-one deal the two nations inked in January. — Franck

7:43 am: Pfizer shares slip after disappointing results from breast cancer drug trial

Shares of Pfizer slipped more than 5% during premarket trading after the company reported disappointing results from its breast cancer drug trial. “The trial is unlikely to show a statistically significant improvement in the primary endpoint of invasive disease-free survival,” a release from the company said. “We are disappointed in this outcome,” said Chris Boshoff, Pfizer global product development’s chief development officer in the oncology division. Shares of the pharma giant are down roughly 2% this year. – Stevens

7:14 am: Stock futures little changed

Stocks were set to kick off the month little changed, with futures pointing to modest gains at the open for the S&P 500 and Dow Jones Industrial Average, while the Nasdaq Composite was slated to open slightly lower. All major averages are coming off a positive week — it was the Dow’s best week since early April — as well as their second straight positive month. Stocks have moved higher as states around the country have begun to reopen their economies. But widespread protests over the weekend have sparked fears that there could be a second wave of coronavirus cases. – Stevens 

– CNBC’s Jeff Cox, Patti Domm, Maggie Fitzgerald, Michael Bloom and Yun Li contributed reporting.

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