Dow bounces back: May 20, 2020

By CNN Business

Updated 8:53 p.m. ET, May 20, 2020
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11:04 a.m. ET, May 20, 2020

The UK just sold its first bond with a negative interest rate

From CNN Business' Anneken Tappe

Britain is now being paid to borrow money.

It's the latest country to sell government debt at a negative yield -- meaning that investors who hang onto the bonds until their maturity point will receive a little less than they paid for them.

The UK's Debt Management Office said Wednesday that it sold £3.75 billion ($4.59 billion) worth of three-year bonds, called gilts.

The gilts, which mature in July 2023, sold at an average yield of -0.003%.

With that sale the UK joins Germany and Japan, as well as some European nations, in offering government debt with negative interest rates.

Edward Moya, senior market analyst at Oanda, said in a note to clients that "expectations for the Bank of England to cut rates continue to grow." The UK's central bank slashed interest rates to 0.1% in March.

8:43 a.m. ET, May 20, 2020

Oil giant Halliburton slashes dividend by 75%

From CNN Business' Matt Egan

Halliburton, one of the world's largest oilfield service providers, cut its dividend by 75% as it grapples with a sharp decline in production.

The Houston company said Wednesday that the difficult decision "reflects the current market conditions and uncertainties regarding the depth and duration of this downturn."

Halliburton (HAL) and other providers of drilling equipment and manpower have been crushed by the oil crash, which has forced a wide range of oil companies to drastically scale back production.

CEO Jeff Miller said the move will help the company "navigate these uncertain times" and position it to "take advantage of the market's eventual recovery."

Wall Street wasn't shocked by the news: Halliburton stock rose 3% in premarket trading Wednesday morning.

In addition to the dividend cut, Halliburton announced that its board of directors is taking a voluntary 20% pay cut.

Although the largest US oil companies have insisted their dividends are safe, the leading oilfield service providers are taking a different approach. Last month, rival Schlumberger (SLB) cut its dividend by 75%.

And another oil services company, Diamond Offshore (DO), filed for bankruptcy in late April.

8:54 a.m. ET, May 20, 2020

Luckin shares resume trading and promptly plunge

From CNN Business' Paul R. La Monica

You might need to sit down with a cup of coffee for this. The Nasdaq exchange wants to delist scandal-ridden Chinese company Luckin after suspending trading in the stock on April 7. But before that can happen, Luckin shares are set to RESUME trading on Nasdaq Wednesday morning.

Shares of Luckin (LK) plunged more than 40% in premarket action to about $2.60 a share. The stock, which surged after a buzzy IPO in May 2019 on hopes that the company would steal sales from Starbucks (SBUX), plunged more than 75% in April after disclosing that its chief operating officer led a scheme to fabricate sales.

The COO -- as well as Luckin's CEO -- have since been fired. It's unclear what's next for the company. Luckin said in a regulatory filing that it was appealing the Nasdaq's delisting decision. Nasdaq did not explain in its release why it had decided to let the stock begin trading again.

But there has been speculation that Luckin will have to close stores or even file for bankruptcy. It seems the race to $0 for Luckin's stock has begun.

9:35 a.m. ET, May 20, 2020

Herbalife is selling $600 million worth of junk bonds to buy back its own shares

From CNN Business' David Goldman

Herbalife didn't get the memo about Wall Street's allergy to stock buybacks, apparently.

The company announced yesterday it was offering $600 million of "B-rated" debt to investors, and the company intends to use the proceeds to repurchase its own shares, among other "general corporate purposes" and capital investment projects.

The pandemic has led most public companies to rethink their stock repurchase plans. Instead, companies are trying to hoard cash to keep their businesses liquid during the massive economic downturn.

Herbalife did pretty well in the first quarter, considering the last month of the quarter was consumed by job losses as stay-at-home orders began to be enforced. Sales were up nearly 8% last quarter.

The company's stock didn't bounce much on the news -- it's essentially flat this morning after rising a little over 3% yesterday.

7:52 a.m. ET, May 20, 2020

Lowe's surges on strong sales

From CNN Business' Paul R. La Monica

Former JCPenney (JCP) CEO Marvin Ellison must be really really happy that he's now the head of Lowe's and no longer at the helm of the bankrupt retailer. Lowe's reported earnings and revenue that topped forecasts Wednesday, thanks to a stunning 12.3% increase in same-store sales in the United States. Shares of Lowe's (LOW) rose 6% in premarket trading on the news.

Lowe's, like rival Home Depot (HD), benefited from healthy demand for home improvement products as consumers stuck in their houses during the Covid-19 pandemic have been undertaking more DIY projects.

Ellison said in the press release that the company's quick actions to enforce social distancing efforts in stores, add more hand sanitizers, increase the frequency of cleaning and adding curbside pickup options helped boost results. Lowe's also stepped up its digital efforts, resulting an 80% increase in online sales during the quarter.

Lowe's said it was investing $340 million in added benefits, wage increases and bonuses for its workers during the quarter. Home Depot took an $850 million charge in its first quarter results for similar actions.

I am tremendously proud of our associates and how they rose to meet the challenges of this global health crisis, and have continued to serve their communities, providing our customers with the essential products and services they need to keep their homes safe and functional, and their businesses running," Ellison said.
9:04 a.m. ET, May 20, 2020

US stock futures bounce back

From CNN Business' David Goldman

Stock futures are up again. That didn't work out so well yesterday, when stocks lost steam at the end of the day, giving up all their gains and ending up sharply lower. That snapped a three-day winning streak for stocks.

But today's a new day.

Here's where things stand this morning:

  • Dow futures were up nearly 300 points
  • S&P 500 futures rose 1.2%
  • Nasdaq futures were 1.1% higher.
8:52 a.m. ET, May 20, 2020

Target's digital sales climb 141%

From CNN Business' Nathaniel Meyersohn

Target's (TGT) online sales skyrocketed 141% last quarter as the big box chain took advantage of Americans shopping in bulk from their homes during the coronavirus pandemic.

Digital sales, which include home delivery and curbside pickup, accelerated as the outbreak spread. In February, Target's online sales grew 33% compared with the year prior. By April, they jumped 282%.

Target's sales at stores open for at least one year grew 10.8% during the quarter compared with the same period last year.

However, the sales growth came at a cost. Target's profit last quarter fell from a year ago because of higher supply chain and labor costs. Additionally, shoppers bought mostly groceries and daily essentials during the pandemic, instead of clothing. Groceries carry lower profit margins.

9:02 a.m. ET, May 20, 2020

Rolls-Royce is cutting at least 9,000 jobs

From CNN Business' Mark Thompson

Aircraft engine maker Rolls-Royce is cutting at least 9,000 jobs because of the collapse in demand for air travel caused by the coronavirus pandemic.

"We are proposing a major reorganization of our business to adapt to the new level of demand we are seeing from customers," the company said in a statement on Wednesday. "As a result, we expect the loss of at least 9,000 roles from our global workforce of 52,000."

Rolls-Royce (RYCEF) said its civil aerospace business, which is concentrated in the United Kingdom and makes engines for Boeing (BA) and Airbus (EADSF) planes, will bear the brunt of the restructuring.

8:54 a.m. ET, May 20, 2020

CVS Health is returning $43 million in coronavirus relief funds

From CNN Business' Rob McLean

CVS Health is returning more than $43 million it received from the federal government as part of coronavirus relief.

In a letter Tuesday to Health and Human Services Secretary Alex Azar, CVS chief executive Larry Merlo indicated his company received the funds as part of the CARES Act Provider Relief Fund. He said it was an automatic distribution from HHS and that CVS did not request the money.

The fund provides $175 billion to hospitals and healthcare providers involved in the coronavirus response, according to the HHS website.