Wall Street had another minor celebration on Thursday morning, responding positively even in the face of dour economic news. Another 4.4 million people filed initial claims for unemployment benefits in the past week, bringing the total to more than 25 million in recent weeks and showing the true scale of the catastrophic damage that the coronavirus pandemic has done to the U.S. economy. Yet market participants kept their eyes focused squarely forward in anticipating mass reopening of locked-down businesses in the near future. As of 11 a.m. EDT, the Dow Jones Industrial Average (^DJI -1.02%) was up 326 points to 23,801. The S&P 500 (^GSPC -0.78%) rose 38 points to 2,838, and the Nasdaq Composite (^IXIC -0.39%) picked up 123 points to 8,618.
Companies are doing whatever they can to make it through the pandemic, and they're following strategies they hope will pay off in the long run. For Las Vegas Sands (LVS 0.63%), that means hoping that casino gambling will recover more quickly in key locations in Asia like Macao. Meanwhile, Target (TGT 0.03%) has faced the same challenges that many retail businesses have dealt with, but the positive impact on its online business has helped cushion the blow to some extent.
Las Vegas Sands looks for a winner
Shares of Las Vegas Sands soared more than 10% Thursday morning. The casino giant released its first-quarter financial report, and it's looking to take steps to get ahead of the coronavirus pandemic in an area of the world that's been more successful than the U.S. in controlling its spread.
To be clear, the quarter was ugly for Sands. Revenue got cut by more than half, and operating income plunged 94% from year-ago levels. Declines were even steeper in Sands' Macao properties, with its Venetian, Parisian, and Sands Cotai Central properties there seeing sales declines of 65% to 70%. Sands suffered a minor loss for the period.
Yet Sands expects things to bounce back quickly. On the conference call, executives noted that would-be customers are itching to get back into the company's casinos, and they expect visitors to return in earnest by late summer or early fall. Experience with past outbreaks like SARS and swine flu has given Asian travelers more familiarity with how to deal with situations like these, and people in China and Singapore will be more comfortable with the idea of wearing masks or having their temperatures taken.
On a more negative note, Sands did anticipate that its U.S. properties will take longer to recover. However, the casino industry has relied on Macao for a long time now, and that might finally play to the strengths of the gambling business for Sands and its casino stock peers.
Target predicts tighter margins
Elsewhere, shares of Target didn't fare as well, falling 2%. The department store retailer gave an update on the impacts of the coronavirus on its operations, and investors weren't entirely comfortable with what they saw.
Target has tried to take care of its employees during this highly stressful time, and the company said it would continue to do so through extended $2-per-hour wage increases through the end of May. Additional benefits will include paid leave for certain workers in high-risk groups, as well as back-up care options. That will boost some costs, which could hurt profit margin levels, but Target is adamant about the role its workers are playing in this tough time.
Target said that comparable sales are up 7% for the quarter so far, but all of that growth is attributable to online sales. Revenue from digital channels has more than doubled, offsetting a slight decline in comparable-store sales during the period. High demand for food, beverage, and Target's essentials and hard-line categories has helped balance out declines of more than 20% in apparel and accessories sales, and those trends have only strengthened in intensity in March and early April.
The combination of factors hitting Target has shareholders nervous. However, the retailer's steps to build confidence during the worst of the outbreak should pay long-term dividends.