Stocks Drop Despite Upbeat Economic Data

Some of Wall Street still remains positive as states ease lockdowns

by Laura McCandless

Published on May 21, 2020 at 12:23 PM

The broad market's rally appears to be breaking today, with the Dow Jones Industrial Average (DJI) down nearly 200 points midday. The S&P 500 Index (SPX) and Nasdaq Composite (IXIC) are also in the red, as weekly jobless claims, U.S.-China tensions, and a dip in FAANG stocks weigh. However, positive sentiment remains over states easing lockdowns, and data from the IHS Markit services purchasing managers index (PMI) that showed "the rate of economic collapse seems to have peaked in April."

Continue reading for more on today's market, including: 

  • Mastercard stock drops on social distancing update.
  • Call traders shrug off this medical name's dismal earnings report. 
  • Plus, Luckin Coffee stock sees a surge in options volume; the Victoria's Secret parent shooting up on the charts; and RUTH struggles after selling common stock.

mmc chart may 21

One stock seeing unusual options activity today is Luckin Coffee Inc (NASDAQ:LK), down 25% at $2.11 on the day, and down a whopping 90% in the last week. The China-based coffee name has seen an even 30,000 calls and 30,000 puts cross the tape so far -- 15 times the average daily volume. Most popular today are the May 2 and 2.5 puts, where new positions are being opened. 

Scaling the New York Stock Exchange (NYSE) today is  retail giant L Brands Inc (NYSE:LB), up 13.6% at $13.88 at last check, despite a lower-than-expected first-quarterly report. The company did reveal it's scaling down its Victoria's Secret unit, closing 250 stores in North America. Struggling to rebound from its mid-March lows, the equity has now toppled its 50-day moving average for the first time since the aforementioned selloff. And despite a surge in call volume in the options pits, the equity remains down 34% year-over-year.

LB mmc chart may 21

On the other hand, moving lower on the Nasdaq is Ruth's Hospitality Group Inc (NASDAQ:RUTH), down 11.1% at $8.11 at last check. After it's early-to-mid-March drop  pushed the stock to a 10-year bottom, it has struggled to rebound, with overhead resistance emerging at the 60-day moving average. Today's drop comes after Jefferies agreed to buy $43.5 million of the company's common stock, the proceeds of which will be used to repay borrowings under an existing credit agreement and strengthen Ruth Hospitality's balance sheet. 

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