Please ensure Javascript is enabled for purposes of website accessibility

S&P 500 Falls 34 Points: Airline Stocks Fall on Federal Aid Deal; Walmart Starting Prime Competitor but Amazon Stock Stays Above $3,000

By Jason Hall - Jul 7, 2020 at 4:57PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Also, Paychex earnings disappoint, and Becton, Dickinson was granted authorization for a 15-minute COVID-19 test.

The S&P 500 (^GSPC 2.13%) closed down 34.4 points, or 1.1%, on July 7. This breaks a streak of positive days for the market index that started last month. 

The biggest news moving the market today was word that five more U.S. airlines had signed letters of intent to accept federal aid under the CARES Act, reminding investors that even with the improvements in economic activity we have seen, the travel and related industries are still in serious trouble. 

Looking beyond the airline and aerospace industries, word that Walmart (WMT 0.65%) is launching a subscription service soon gave its shares a boost. The news brought Amazon.com (AMZN 3.53%) shares down modestly, but not enough to drop them below $3,000 after closing above the mark for the first time yesterday.

We also take a look at a new COVID-19 test from healthcare giant Becton, Dickinson (BDX 1.28%), and Paychex's (PAYX 2.10%) warning that its own paycheck will shrink in 2021, after reporting a weak end to fiscal 2020. 

Airline passenger wearing facemask in empty terminal.

Image source: Getty Images.

Airlines hold out their hats a little further

Of the five airlines reported to have signed up for another helping of the federal dole, four were S&P 500 components Delta Airlines (DAL 2.17%)United Airlines Holdings (UAL 2.35%)Southwest Airlines (LUV 2.45%), and Alaska Air Group (ALK 1.92%), and non-S&P member JetBlue (JBLU 4.25%).

As a group, these airline stocks are down between 3% and 7.4% on the news, with Delta (down 5.2%) and United (down 7.5%) are the two hardest hit, as the recovery in demand for air travel has stalled. United gave a presentation to employees late Monday that demand is weakening and that it's likely to have to lay employees off later this year -- once it's able to under the terms of federal assistance it has already received. 

For context, United is adding 25,000 additional flights for August to its schedule, but even with those additions it will fly about half the volume it did one year ago. Last week Delta warned more than 2,500 pilots that they could be laid off later this year. 

It's not just airline stocks facing a shorter runway. Shares of aircraft manufacturers Boeing (BA 2.53%) and Textron (TXT 4.00%) are down 4.7% and 5.3% as the outlook for the airline business gets even more downbeat. 

Walmart aiming at Amazon Prime, but Amazon stock stays over $3,000

According to multiple reports, Walmart is planning to launch a subscription program later this month it will call Walmart+. The membership is anticipated to include discounted fuel, free same-day shipping, and other benefits, and at a lower cost than Amazon's Prime subscription. Walmart+ is expected to cost $98 per year, versus $119 for the annual Prime membership, which includes free video streaming, fast shipping on many products, and other benefits. 

Walmart stock surged on the news, closing up more than 5% and surging 7% in early after-hours trading. Amazon stock, on the other hand, fell more than 1.7% on the day. However, even news that its biggest retail competitor was planning a frontal attack on a core part of its business wasn't enough to drag the share price back below $3,000. Amazon stock closed above $3,000 for the first time on Monday, making today the first time its shares spent an entire session above that massive mark. 

FDA gives Becton, Dickinson the nod on a portable COVID test

Healthcare giant Becton, Dickinson's BD Veritor Plus handheld diagnostic machine is already portable and popular, with more than 25,000 healthcare facilities already using it in the United States. Now it's available to use to diagnose patients for the SARS-CoV-2 coronavirus that causes the COVID-19 illness. 

The U.S. Food and Drug Administration has granted an Emergency Use Authorization for an antigen test that can be delivered with the BD Veritor Plus. The antigen test, developed by a separate company, can produce a result in 15 minutes, according to Beckton, Dickinson, and the company says it can make 10 million tests by the end of September, at which point it would be able to make about 2 million per week. 

Paychex's paycheck comes up short

Payroll and business services provider Paychex reported fiscal fourth-quarter results before market open today, reporting a small 5% decline in adjusted earnings of $0.61 per share, on a 7% decline in revenue to $915 million. In addition to a decline in its results to end its fiscal year, management warned that the new fiscal year it has started won't be any better. The company expects adjusted earnings per share for fiscal 2021 -- which runs through May of 2021 -- will fall between 6% and 10% on a 2% to 5% revenue decline.

That's not just an indication of the company's outlook for its own prospects. As one of the largest payroll services providers in the U.S., it's a stark reminder that the implications for the COVID-19 pandemic on American companies could be deeper and potentially longer-lasting than expected. 

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jason Hall owns shares of Southwest Airlines. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Alaska Air Group, Delta Air Lines, JetBlue Airways, Southwest Airlines, and Textron and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,210.24 (2.13%) $87.77
The Boeing Company Stock Quote
The Boeing Company
BA
$169.02 (2.53%) $4.17
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$142.69 (3.53%) $4.86
Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
WMT
$129.14 (0.65%) $0.83
Becton, Dickinson and Company Stock Quote
Becton, Dickinson and Company
BDX
$258.56 (1.28%) $3.26
JetBlue Airways Corporation Stock Quote
JetBlue Airways Corporation
JBLU
$8.83 (4.25%) $0.36
Southwest Airlines Co. Stock Quote
Southwest Airlines Co.
LUV
$39.28 (2.45%) $0.94
United Airlines Holdings, Inc. Stock Quote
United Airlines Holdings, Inc.
UAL
$38.69 (2.35%) $0.89
Paychex, Inc. Stock Quote
Paychex, Inc.
PAYX
$132.84 (2.10%) $2.73
Delta Air Lines, Inc. Stock Quote
Delta Air Lines, Inc.
DAL
$33.93 (2.17%) $0.72
Alaska Air Group, Inc. Stock Quote
Alaska Air Group, Inc.
ALK
$46.61 (1.92%) $0.88
Textron Inc. Stock Quote
Textron Inc.
TXT
$67.01 (4.00%) $2.58

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
373%
 
S&P 500 Returns
122%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/11/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.