Morning Brief

What to watch today: Dow to fall, tensions between China and Hong Kong rise

BY THE NUMBERS

Dow futures pointed to opening declines, as stocks around the world are lower following new tension between China and Hong Kong. Despite losses on Thursday, the three major U.S. stock indexes head into the week's final session having gained around 3%. The projected losses today would erase most or all of the Dow and S&P 500's gains for the month of May. (CNBC)

* Hong Kong plunges more than 5% as Beijing plans to impose new security laws (CNBC) 

There are no economic reports on today's calendar.

IN THE NEWS TODAY

China is moving to impose a new national security law on Hong Kong after months of anti-government protests in the territory. The legislation, introduced during the annual session of China's parliament, threatens to tighten Beijing's control over Hong Kong, a semi-autonomous city governed under a "one country, two systems" principle. News of the proposal led to activist calls for a protest march. (CNBC)

After New Coronavirus Outbreaks, China Imposes Wuhan-Style Lockdown (NY Times) 

President Donald Trump said Thursday "we are not closing our country" if the U.S. were to experience a second surge of coronavirus cases in the fall or winter, which health officials warn may occur. "Whether it is an ember or a flame, we are going to put it out," Trump said. "But we are not closing our country." State and local leaders, not the federal government, have imposed the lockdown orders this spring. (CNBC)

* Trump doesn't wear coronavirus mask in public at Ford plant (CNBC)

The FBI said the Thursday morning shooting at U.S. Naval Air Station in Corpus Christi, Texas, was "terrorism-related," and a second suspect could still be at large. The shooter who opened fire is dead, the FBI said. The Navy said its only sailor who was admitted to the hospital after the incident has been released and was treated for minor injuries. (CNBC)  

The University of California will no longer require students who apply to its 10 campuses to have taken the SAT and ACT, a change that could accelerate a shift from standardized testing across higher education. The tests will be optional for 2021-22 and 2022-23 applicants, then completely eliminated by 2025. (USA Today) 

Loughlin, Giannulli to serve prison time for college scam (AP) 

Facebook chief executive Mark Zuckerberg predicted Thursday that half of the social media giant's employees could be working remotely within the next five to 10 years, the latest indication of the pandemic's lasting effects on corporate America. Facebook will begin to allow some employees to work remotely full time, but depending on their new location, employees may have their compensation adjusted, Zuckerberg said. (CNBC)  

Netflix will start cancelling inactive members' subscriptions (CNBC) 

The Centers for Disease Control and Prevention's latest coronavirus dashboard combines data on two different kinds of tests, and experts caution that mixing the data could mask the reality of the outbreak. The dashboard combines both diagnostic tests, which identify current infections, and tests that identify Covid-19 antibodies, which detect past infections. The CDC acknowledged this and said it aims to separate the data soon. (CNBC)

STOCKS TO WATCH

Lululemon (LULU) said it has reopened more than 150 of its retail locations, with the athletic apparel maker planning to reopen about 200 more stores over the next two weeks. It has instituted a new set of reopening guidelines, including enhanced cleaning, modified hours, and limits to the number of customers in a store at any one time.

Palo Alto Networks (PANW) reported adjusted quarterly earnings of $1.17 per share, compared to a consensus estimate of 94 cents. The cybersecurity company's revenue also beat Wall Street forecasts, and it will benefit from a continued increase in remote working.

Nvidia (NVDA) beat estimates by 11 cents with adjusted quarterly earnings of $1.80 per share, while the graphics chipmaker's revenue also beat forecasts. Nvidia also gave an upbeat forecast, on surging demand for its chips that are used in data centers.

Hewlett Packard Enterprise (HPE) fell 7 cents short of estimates with adjusted quarterly earnings of 22 cents per share. The enterprise cloud computing company's revenue also fell short, with HPE's business impacted significantly by the coronavirus outbreak. The company also unveiled a cost-cutting plan designed to save at least $1 billion by 2022.

Proxy adviser ISS recommended that Alphabet (GOOGL) shareholders vote against executive pay proposals at the Google parent's annual meeting in June. ISS criticized the proposals as "outsized awards that are not sufficiently performance-based".

Splunk (SPLK) reported an adjusted quarterly loss of 56 cents per share, 1 cent smaller than Wall Street had expected. Revenue did fall short of forecasts, but the maker of data analytics software said it expected stronger demand for its cloud services as more people shift to working from home.

IBM (IBM) will cut an unspecified number of jobs, the first workforce reduction under new CEO Arvind Krishna, who took over from Ginni Rometty earlier this year. A person familiar with IBM's plans told the Wall Street Journal that several thousand workers are likely to be affected.

e.l.f. Beauty (ELF) doubled Wall Street expectations with adjusted quarterly earnings of 10 cents per share, with the cosmetics retailer's revenue also above estimates. The company did say the pandemic has impacted its sales, and it expects continued negative impact until consumers return to normal shopping patterns.

Ross Stores (ROST) reported a quarterly loss of 87 cents per share, surprising analysts who had expected a profit of 3 cents per share. The discount retailer also saw revenue fall short of estimates, as the coronavirus outbreak forced it to close stores, but Ross did say it began reopening stores last week.

Deckers (DECK) earned 57 cents per share for its fiscal fourth quarter, well above the 9 cent consensus estimate. The maker of UGG boots and Teva sandals also saw revenue come in above forecasts, although it said it is facing challenges due to virus-related store shutdowns. Deckers is not providing guidance for the current fiscal year due to uncertainty surrounding the pandemic's impact.

WATERCOOLER

Fresh off the success of "The Last Dance," the multi-part documentary looking at Michael Jordan's last season with the Chicago Bulls, ESPN released a trailer Thursday for a nine-part series examining the career of Tom Brady. It is set to be released next year and will be called "Man in the Arena: Tom Brady." (USA Today) 

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