Stocks Climb Toward Records as Tech Shares Recover – Wall Street Journal, 1/7/2021
- Political unrest in Washington didn’t dent the stock market’s ongoing rally Thursday, with U.S. stocks climbing toward fresh records.
- Financial and technology stocks led Thursday’s gains, pushing the S&P 500 up 1.5% and putting the broad index on pace to close at its first record of 2021.
- Investors largely looked past Wednesday’s violent clash between pro- Trump protesters and law enforcement in the Capitol building that left four people dead, instead focusing on what the shift of political power from Republicans to Democrats means for the market, analysts said.
- The prospect of additional fiscal stimulus has again rose to the forefront of investors’ minds after Democrats won control of the Senate by flipping two Republican seats in Georgia.
- A joint session of Congress early Thursday morning also affirmed Mr. Biden’s defeat of President Trump, who committed to an orderly transition of power.
- With the Senate, the House of Representatives and the White House in the hands of Democrats starting Jan. 20, priorities like boosting emergency relief payments to individuals to $2,000 will be easier to push through without the support of most Republicans, analysts say.
- Investors are also tracking a flurry of data releases for fresh insight into the U.S. economy’s fitful recovery. Jobless claims were nearly steady last week, slipping to 787,000 from a revised 790,000 the prior week as an extra $300 in benefits kicked in for laid-off workers.
- Meanwhile, the U.S. services sector continued to expand in December, despite the latest wave of Covid-19 cases.
- The ISM Services Report on Business PMI for December increased to 57.2 from the 55.9 in November.
Coronavirus Live Updates: Newly Reported U.S. Infections Top 250,000 – Wall Street Journal, 1/7/2021
- The number of people hospitalized in the U.S. due to Covid-19 hit a record as newly reported coronavirus cases rose to over 250,000 and deaths set a single-day record.
- The U.S. daily case total for Wednesday was higher than the nearly 230,000 new coronavirus cases reported Tuesday, according to data compiled by Johns Hopkins University.
- The nation also reported 3,865 fatalities for Wednesday, a single-day record, according to Johns Hopkins, pushing the overall death toll to more than 361,000.
- More than 132,000 people were hospitalized because of the disease as of Wednesday, according to the Covid Tracking Project. Intensive-care units were also stretched, with more than 23,700 patients in ICUs across the country.
- The U.S. has so far identified 52 cases of Covid-19 caused by a new variant first detected in the U.K., according to data released by the Centers for Disease Control and Prevention released on Wednesday.
- More countries across Europe are imposing or weighing new lockdowns to contain the spread of a more infectious variant of the virus that causes Covid-19, as the U.K, where it was first identified, recorded its highest daily tally of deaths since April.
- In Ireland, which had done better in containing the virus than many other European countries, the government ordered the closure of most schools and construction sites for three weeks, adding to measures that have already shut down hospitality and retail businesses and prohibited indoor household mixing.
- One of France’s senior government advisers, Jean-François Delfraissy, warned that it, too, might have to impose stricter lockdown measures despite seeing lower infection rates than countries such as Germany or the U.K.
- Japan’s prime minister declared a state of emergency in Tokyo and surrounding areas in an attempt to reverse an acceleration of Covid-19 infections.
- Mr. Suga said the emergency period would run until Feb. 7. However, some members of a panel of experts that advises the government on handling the pandemic say the state of emergency may need to stay in place for several months.
- Meanwhile, at least 29 people in the U.S. have developed severe allergic reactions to Covid-19 vaccines, federal health authorities said Wednesday.
- The rate is far higher than for the seasonal flu vaccine, U.S. Centers for Disease Control and Prevention officials said.
- Florida medical authorities said they are investigating the death of a 56-year-old physician two weeks after he received the first dose of Pfizer’s Covid-19 vaccine, and whether his death was caused by or related to the vaccine.
- The Miami-Dade County Medical Examiner and Florida Department of Health said they were working with the CDC.
Covid-19 Vaccines Expected to Work on South Africa Coronavirus Strain – Wall Street Journal, 1/7/2021
- A new variant of the coronavirus that is surging across South Africa may make the existing Covid-19 vaccines less effective, but is unlikely to be totally resistant to the shots, according to leading researchers who have studied the mutations and the vaccines.
- The variant, which has already shown up in patients in Europe and other African countries, has quickly become the predominant one in South Africa, exacerbating a second wave of infections that is overwhelming hospitals and has driven daily deaths to record highs.
- South African researchers are racing to determine whether it makes patients more seriously ill than other variants of the virus.
- They are also testing how it responds to antibodies from people who have recovered from Covid-19 and those who have received coronavirus vaccines.
- Their official conclusions are eagerly awaited by researchers around the globe, since one of the variant’s mutations has in earlier laboratory experiments shown increased resistance to some of the antibodies the body uses to fight off Covid-19.
- U.K. Health Secretary Matt Hancock said earlier this week that he was “incredibly worried about the South African variant.”
Walgreens maintains full-year profit growth forecast; shares rise – Reuters, 1/7/2021
- Drugstore chain Walgreens Boots Alliance stuck to its full-year forecast for earnings growth on Thursday, despite anticipating a hit to its current-quarter earnings from the COVID-19 pandemic, sending its shares up nearly 3%.
- Revenue rose to $36.31 billion from $34.34 billion.
- Same-store sales at its U.S. pharmacies rose 3.7% in the quarter as it filled 297.3 million prescriptions.
- Boots UK pharmacies recorded a 2.5% rise in sales.
- Excluding items, the company earned $1.22 per share, while analysts were expecting a profit of $1.03 per share, according to Refinitiv IBES.
- Walgreens maintained fiscal 2021 forecast of low single-digit growth in adjusted EPS, after it beat analysts’ estimates for adjusted first-quarter profit, driven by higher sales at its retail pharmacy stores and robust prescription volumes.
- The drugstore chain expects to see some benefit from COVID-19 vaccinations in the second half of fiscal year 2021, company executives said on a conference call, although that could be offset by the hit to its retail sales from the pandemic.
Conagra’s profit forecast upbeat as pandemic continues to fuel grocery demand – Reuters, 1/7/2021
- Conagra Brands on Thursday forecast current-quarter profit above Wall Street estimates, betting on continued demand for its frozen dinners, cake mixes and snacks as the COVID-19 pandemic shows little signs of easing.
- Sales rose 6.2% to nearly $3 billion, in line with expectations.
- Overall, net profit attributable to Conagra was $378.9 million, or 77 cents per share.
- Conagra said it continued to see a “sustained increase” in demand from its retail customers so far into the third quarter. It expects adjusted earnings between 56 and 60 cents per share for the period, compared with analysts’ estimates of 57 cents per share, according to IBES data from Refinitiv.
- Organic sales are expected to rise in the 6% to 8% range, with adjusted operating margins seen between 16% and 16.5%.
GM Passes Ford in Closely Watched Truck Race – Wall Street Journal, 1/7/2021
- General Motors in 2020 dethroned rival Ford Motor in Detroit’s closely watched “truck wars,” securing the top slot in the lucrative market for large pickup trucks.
- U.S. sales of GM’s two pickup models—the Chevrolet Silverado and GMC Sierra—rose 3.9% last year, to 839,691 trucks, even as industrywide sales sank nearly 15% amid disruption from the Covid-19 pandemic.
- Ford’s F Series line, which includes its F-150 truck as well as the larger Super Duty, fell 12%, to 787,422, the company said Wednesday.
- GM said its U.S. vehicle sales fell 11.8%, while Ford’s sales declined 15.8%.
- Overall, U.S. auto industry’s sales dropped 14.6%, to 14.6 million vehicles, according to data provided Wednesday by Motor Intelligence. Large pickups accounted for 16.7% of overall sales last year, up from 12.5% in 2015.
- The average price paid for a light-duty full-size pickup truck rose 9% last year, to about $45,800, according to J.D. Power.
U.S. Weighs Adding Alibaba, Tencent to China Stock Ban – Wall Street Journal, 1/7/2021
- U.S. officials are considering prohibiting Americans from investing in Alibaba Group and Tencent Holdings, a potential escalation of the Trump administration’s efforts to unwind U.S. investors’ holdings in major Chinese companies.
- State and Defense Department officials in recent weeks have discussed expanding a blacklist of companies prohibited to U.S. investments over alleged ties to China’s military and security services, according to people familiar with the matter.
- While Alibaba and Tencent aren’t controlled by the Chinese government, the State Department and Pentagon have long voiced concerns that the companies could be coerced to share data on U.S. citizens and businesses, potentially serving as a conduit for Beijing to extend its influence.
- Tencent operates the hugely popular WeChat app, which has become one of Beijing’s most powerful surveillance tools.
- Tencent also owns stakes in several U.S. videogame companies.
Thicker pickles, bigger fillet: KFC revamps fried chicken sandwich in U.S – Reuters, 1/7/2021
- Kentucky Fried Chicken will switch to a new chicken sandwich nationally by the end of February, it said on Thursday, amid a fast food frenzy to win a share of the growing chicken market.
- The company, owned by Yum Brands Inc, said its existing Crispy Colonel Sandwich was not “living up to our legacy as experts in fried chicken” so it will eventually be pulled off menus in favor of the KFC Chicken Sandwich.
- KFC’s new sandwich will contain a quarter pound of white meat fillet – 25% larger than in its existing sandwich – that is double-breaded, fried and served on a new buttered brioche bun with thicker crinkle-cut pickles. It includes mayonnaise or spicy sauce.
- KFC tested the new item in Orlando in 2020 and “nearly doubled our sales expectations,” KFC U.S.’s chief marketing officer, Andrea Zahumensky, said in a statement.
- McDonald’s Corp on Monday confirmed that it will launch three new versions of a crispy chicken sandwich late next month.
US ECONOMY & POLITICS
U.S. labor market recovery stalling; trade deficit widens sharply – Reuters, 1/7/2021
- The number of Americans filing first-time claims for jobless benefits unexpectedly dipped last week while staying extremely high, with the labor market recovery appearing to stall as a raging COVID-19 pandemic threatens to overwhelm the country.
- Initial claims for state unemployment benefits dipped 3,000 to a seasonally adjusted 787,000 for the week ended Jan. 2, compared to 790,000 in the prior week, the Labor Department said.
- Claims were likely held down by difficulties adjusting the data for seasonal fluctuations around this time of the year. Unadjusted claims jumped 77,400 to 922,072 last week.
- Including a government-funded program for the self-employed, gig workers and others who do not qualify for the regular state unemployment programs, 1.08 million people filed claims last week.
- The claims report also showed the number of people receiving benefits after an initial week of aid declined 126,000 to 5.072 million in the week ending Dec. 26. But many have exhausted their eligibility, which is limited to six months in most states. About 4.517 million workers filed for extended unemployment benefits in the week ending Dec. 19.
- Roughly 19.177 million people were receiving benefits under all programs in mid-December.
U.S. service sector regains speed in December – ISM survey – Reuters, 1/7/2021
- U.S. services industry activity accelerated in December, but sky-rocketing COVID-19 infections depressed employment, heightening the risk that the economy shed jobs for the first time since the labor market recovery from the pandemic started.
- The Institute for Supply Management (ISM) said on Thursday its non-manufacturing activity index increased to a reading of 57.2 last month from 55.9 in November.
- The ISM survey’s measure of new orders for the services industry rebounded to a reading of 58.5 in December from 57.2 in November. That came as a measure of export orders jumped to 57.3 from a reading of 50.4 in November.
- The survey’s index of services industry employment fell to a reading of 48.2 last month from 51.5 in November.
U.S. Trade Deficit Widest Since 2006 in November – Wall Street Journal, 1/7/2021
- The U.S. trade deficit hit a 14-year high in November as stores stocked up cellphones and other imported consumer and household goods ahead of the holiday season.
- The foreign-trade gap in goods and services expanded 8% from the prior month to a seasonally adjusted $68.14 billion in November, the Commerce Department said Thursday.
- Imports increased 2.9% in November to $252.3 billion. Exports rose 1.2% to $184.2 billion.
- Imports of consumer goods were the highest on record in November, the Commerce Department said. Imports of industrial supplies and capital goods also increased.
Trump Agrees to Orderly Transfer of Power to Biden After Capitol Riots – Wall Street Journal, 1/7/2021
- President Trump agreed to an orderly transition of power after Congress ratified President-elect Joe Biden’s victory early Thursday as the nation’s capital awoke after a violent day where pro-Trump rioters invaded the Capitol building and threatened lawmakers.
- Vice President Mike Pence, presiding over a joint session of Congress, confirmed Mr. Biden the winner in an overnight joint session of Congress, and Mr. Trump released a statement at 3:49 a.m. saying he “totally” disagreed with the outcome but “nevertheless there will be an orderly transition on January 20th.”
- The statement came through an aide as the president’s Twitter account remained locked due to his postings on Wednesday that the social media network said could spread violence.
Biden Tax-Increase Agenda Revived as Democrats Win Senate – Wall Street Journal, 1/7/2021
- Democratic control of the Senate gives President-elect Joe Biden a much stronger chance of raising taxes on corporations and high-income households.
- Until this week’s Georgia runoff elections, Mr. Biden’s plans for tax increases were running into solid opposition from the Republican-controlled Senate. But now, Democrats will hold the White House, Senate and House simultaneously for the first time in more than a decade, and they are poised to use that power.
- Mr. Biden has said repeatedly—and reiterated Wednesday—that he wants to work with Republicans. But unlike other policy areas, tax changes can pass with a simple majority of senators, instead of the 60-vote majority often needed for most other legislation. Democrats will face pressure from their base to deliver.
- The likely result: Up to $2 trillion worth of tax increases over the next decade, says Donald Schneider, an economist and former House Republican aide at advisory firm Cornerstone Macro.
- That is shy of what Mr. Biden proposed but still a significant bump in federal revenue to pay for new programs and targeted tax cuts and far beyond what could happen if Republicans had held the Senate.
Biden to Name Merrick Garland as Attorney General – Wall Street Journal, 1/7/2021
- President-elect Joe Biden intends to nominate Merrick Garland as attorney general, selecting a widely respected jurist and experienced prosecutor to steady a Justice Department rocked by years of political storms, people familiar with the matter said.
- Judge Garland, a 1997 appointee of President Bill Clinton to the U.S. Court of Appeals for the District of Columbia Circuit, rose to the top of the list in recent weeks.
- His selection became definite as Mr. Biden’s team grew increasingly optimistic about Democrats’ chances of taking the two Senate seats in Tuesday’s Georgia’s runoff election, giving them the ability to replace Mr. Garland’s seat on the appeals court without concerns that Republicans would block whomever Mr. Biden chooses.
- Mr. Biden also intends to nominate longtime national security official Lisa Monaco as deputy attorney general, and Vanita Gupta, who was head of the Justice Department’s civil-rights division under President Barack Obama, as the Department’s No. 3, officials on his transition team said.
- Kristen Clarke, president of the Lawyers’ Committee for Civil Rights Under Law, will be named head of the civil-rights division, the transition officials said, in a move that will likely please advocates who have urged Mr. Biden to make diversity and racial justice priorities at the Justice Department.
Biden’s Vow to Be Tough on Beijing Will Get Early Test with Hong Kong Arrests – Wall Street Journal, 1/7/2021
- The arrests of democracy advocates in Hong Kong presents the incoming Biden administration with limited options and an early test of its promised hard-nosed stance with China.
- Wednesday’s sweep of more than 50 pro-democracy figures, as well as an American human-rights lawyer, marked the broadest use of a national-security law that China imposed on Hong Kong in July.
- Since then, the Trump administration has used sanctions and other censure, though Beijing has pressed on with its crackdown on the democracy camp.
- While those tools remain available, Beijing’s decision to conduct the sweep weeks before President-elect Joe Biden takes office shows that control over Hong Kong takes priority over resetting relations with the U.S.
- A spokesman for the Biden transition had no immediate comment on what steps could be taken to support democracy advocates in the Chinese territory.
- Mr. Biden’s pick for secretary of state, Tony Blinken, said in a tweet that the Biden administration “will stand with the people of Hong Kong and against Beijing’s crackdown on democracy.”
EUROPE & WORLD
Exclusive: Baidu plans smart EV company, to make cars at Geely plant – sources – Reuters, 1/7/2021
- China’s Baidu Inc plans to form a company to make smart electric vehicles, two sources familiar with the matter said, with manufacturing to be carried out at plants owned by automaker Geely.
- Baidu, the leading search engine company in China, will take a majority stake and absolute voting power in the new company.
- The venture will revamp some of Geely’s existing car manufacturing facilities to make the vehicles, with in-car software input from Baidu and engineering know-how from Geely, sources told Reuters.
- The companies are in talks to use Geely’s EV-focused platform, Sustainable Experience Architecture (SEA), for future product development, one of the sources, who declined to be identified as the plan was private, said.
- Harry Truman announced that the U.S. had developed the hydrogen bomb. (1953)
- Japan’s Emperor Hirohito died. (1989)
- The impeachment trial of President William Clinton began in the Senate. (1999)