Stocks slide as Buffett dumps airlines

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Farvahar Partners CEO and founder Omeed Malik speaks about how the American economy is doing and mentions it’s amazing Boeing refused to take government assistance, which he hopes more public companies do the same.

U.S. equity markets fell Monday amid rising tensions between the U.S. and China and as Warren Buffett said Berkshire Hathaway unloaded its entire stake in airlines.

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The Dow Jones Industrial Average slid as many as 363 points, or 1.53 percent, while the S&P 500 fell 1.16 percent. The Nasdaq Composite turned higher after losing as much as 0.65 percent.

TickerSecurityLastChangeChange %
I:DJIDOW JONES AVERAGES23493.4-230.29-0.97%
SP500S&P 5002817.62-13.09-0.46%
I:COMPNASDAQ COMPOSITE INDEX8629.721654+24.77+0.29%

Secretary of State Mike Pompeo said there is “enormous evidence” that the COVID-19 outbreak began in a Wuhan, China, laboratory. Pompeo’s assertion follows hints last week from the Trump administration that the U.S. could take retaliatory action for the damage caused by the outbreak.

Meanwhile, at least 15 U.S. states are easing stay-at-home restrictions, including Florida, which will allow indoor retail establishments to open at 25 percent capacity, except in Broward, Miami-Dade and Palm Beach counties.

Looking at stocks, airlines were sharply lower after Buffett said Berkshire Hathaway has dumped all $7 billion to $8 billion of its holdings in American Airlines, Delta Air Lines, United Airlines and Southwest Airlines.

CORONAVIRUS PUSHES BERKSHIRE TO SELL ENTIRE STAKES IN US AIRLINES: BUFFETT

“The world has changed for the airlines,” Buffett said during a virtual address to shareholders at Berkshire’s annual meeting. He added that the industry will "borrow billions and have to pay that back," taking away from the upside.

Berkshire lost nearly $50 billion during the first quarter as the stock-market rout that ensued in the wake of the COVID-19 pandemic erased $54.5 billion of value from the conglomerate’s investment portfolio.

TickerSecurityLastChangeChange %
AALAMERICAN AIRLINES GROUP INC.9.91-0.73-6.86%
UALUNITED AIRLINES HLDG.24.90-1.72-6.46%
DALDELTA AIR LINES INC.22.19-1.93-8.01%
LUVSOUTHWEST AIRLINES CO.27.57-1.66-5.68%
BRK.BBERKSHIRE HATHAWAY INC.178.30-4.37-2.39%

Gilead Sciences received emergency Food and Drug Administration approval for the drug remdesivir to be used as a treatment for COVID-19.

On the earnings front, meat producer Tyson Foods missed on earnings and sales and warned lower levels of productivity and higher costs of production are likely to persist “until the effects of COVID-19 diminish.” Shake Shack, Avis Budget Group and Texas Roadhouse are among the companies reporting after the closing bell.

Elsewhere, Constellation Brands exercised warrants to raise its stake in cannabis producer Canopy Growth Corporation to 38.6 percent.

TickerSecurityLastChangeChange %
GILDGILEAD SCIENCES INC.80.53+0.58+0.73%
TSNTYSON FOODS INC.55.10-4.91-8.18%
STZCONSTELLATION BRANDS INC.161.41+0.59+0.37%

Commodities gained with West Texas Intermediate crude oil up 1.62 percent at $20.10 a barrel and gold higher by 0.80 percent at $1,715 per ounce.

U.S. Treasurys were little changed with the yield on the 10-year note near 0.64 percent.

European markets were lower across the board with Germany's DAX and France’s CAC down 3.21 percent and 3.79 percent, respectively, as traders returned to work from the May Day holiday. Britain’s FTSE, which was open on Friday, was lower by 0.19 percent.

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In Asia, Hong Kong’s Hang Seng plunged 4.18 percent after government data showed the economy shrank by 8.9 percent in the first quarter, the most on record. China’s Shanghai Composite and Japan’s Nikkei were closed for holiday.

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