The Dow Jones Industrial Average (^DJI -0.20%) staged a rally on Thursday, but the gains had largely faded by early afternoon. The Dow was up just 0.4% at 1:30 p.m. EDT today.
This attempted rally comes as the number of Americans filing for unemployment benefits has exploded due to the coronavirus pandemic, with 6.65 million claims recorded last week. That brings the two-week total to 10 million. The U.S. now has over 225,000 confirmed cases of the virus, and over 5,300 deaths, according to Johns Hopkins University.
Two stocks dragging down the Dow on Thursday were Walgreens Boots Alliance (WBA 1.30%) and Boeing (BA -1.98%). Walgreens reported solid quarterly results, but the retailer pulled its guidance and warned about slumping sales in late March. Meanwhile, Boeing is reportedly offering employees buyout packages in an effort to cut costs and avoid involuntary layoffs.
Walgreens reports results, pulls guidance
Walgreens managed to beat analyst expectations for the fiscal second quarter, which ended before the coronavirus pandemic began to take a serious toll on the U.S. economy. Revenue was up 3.7% to $35.8 million, and adjusted EPS slumped 7.3% to $1.52.
But Walgreens' outlook mattered much more to investors. The company is no longer standing by its fiscal 2020 guidance, although it was on track to hit that guidance prior to the pandemic. The rapidly evolving situation has injected uncertainty, and Walgreens is unable to forecast the effects at this time.
In March, Walgreens saw strong initial U.S. retail sales, as well as increased demand for prescriptions as consumers pulled forward purchases. Over-the-counter medications, general merchandising, and grocery were strong categories, with beauty, photo, and other discretionary categories much weaker. But sales have declined since social distancing began, and the company expects foot traffic to moderate.
Walgreens is spending more on cleaning and sanitation. Supply chain costs are also up, driven in part by free shipping for online orders. The company is still on target to cut annual expenses by $1.8 billion by fiscal 2022.
Shares of Walgreens were down 6.9% by early afternoon. The stock is now down about 38% from its 52-week high.
Boeing offers buyouts to control costs
Demand for air travel has all but disappeared amid the pandemic, putting immense pressure on Boeing's airline customers. The company was already dealing with the prolonged grounding of the 737 Max, which severely reduced deliveries and led to a significant loss last year. Now, an existential crisis for the industry has forced Boeing to seek government aid, halt production at a factory in Washington state, and suspend its dividend.
Boeing took its cost containment measures a step further on Thursday by offering buyout packages to its workforce, according to The Wall Street Journal. "We will need to balance the supply and demand accordingly as the industry goes through the recovery process for years to come," CEO David Calhoun wrote in an internal email.
Boeing has yet to announce any layoffs, and the buyout packages are aimed at reducing the need for such involuntary workforce actions. Calhoun also stressed in the email that maintaining an employee base during the crisis is crucial for restarting regular operations once it has passed.
Shares of the airplane manufacturer and defense company were down 6.4% in the early afternoon. The stock is now down roughly 70% from its 52-week high.