Stocks Extend Climb Amid Big Earnings Day – Wall Street Journal, 1/20/2021

• U.S. stocks rose Wednesday, led by shares of Netflix and other communication companies.
• The S&P 500 added 1.1%, while the tech-heavy Nasdaq Composite advanced 1.7%.
• The Dow Jones Industrial Average was up 234 points to 31164.
• Netflix led Wednesday’s gains after the streaming giant reported that total subscribers topped 200 million at the end of last year, giving it enough cash to fund further growth without having to dip into more debt.
• The advance has so far solidified the stock market’s upbeat week ahead of the inauguration of Joe Biden, starting at noon Wednesday.
• Investors remain optimistic that fiscal stimulus is supporting businesses through the damage wrought by the Covid-19 pandemic, with expectations of further spending by Democrats to keep the economy on track.
• Still, investors remain willing to reward companies that top Wall Street’s forecasts.
• Besides Netflix, shares of Morgan Stanley added 1.5% after the bank reported a 51% increase in fourth-quarter profit from a year earlier,
• In Asia, stocks indexes were mixed. The Nikkei 225 ended the day down 0.4%, while the Shanghai Composite Index rose 0.5%.
• Chinese internet giant Alibaba jumped 8.5% in Hong Kong after the company’s embattled owner, Jack Ma, made his first public appearance in three months, ending concerns about his whereabouts.

Coronavirus Live Updates: Newly Reported Cases, Deaths Rise; Hospitalizations Decrease – Wall Street Journal, 1/20/2021

• Newly reported Covid-19 cases and deaths in the U.S. rose from a day earlier, while hospitalizations decreased slightly.
• The nation reported 174,589 new coronavirus cases Tuesday, according to data compiled by Johns Hopkins University, up from 141,999 cases Monday but down from 225,423 a week earlier.
• At least six states including Idaho, New Hampshire, North Carolina, Oregon, Rhode Island and Washington didn’t update their Covid-19 data dashboards for Monday, Johns Hopkins said. This could lead to a data backlog that skews numbers in the following days.
• Reported deaths were back above 2,500 Tuesday, at 2,727, according to Johns Hopkins data.
• That was up from 1,404 a day earlier, but down from a record 4,462 a week earlier.
• Tuesday’s hospitalizations were at 123,820, according to the Covid Tracking Project, down slightly from 123,848 on Monday. There were 23,029 people in intensive-care units.
• Amid a slow start to the nation’s Covid-19 vaccination drive, more than 15.7 million doses have been administered as of Tuesday morning, including more than 2 million second doses, according to the latest data from the U.S. Centers for Disease Control and Prevention.
• Countries across Europe are continuing their race to vaccinate larger numbers of people before new, more contagious strains of Covid-19 spread across the region.
• The biggest concern is a variant first detected in southeast England. It led to a sharp spike in new cases across the U.K. and Ireland shortly after Christmas and has prompted other countries to extend or impose new lockdowns to buy time for vaccinators to inoculate as many vulnerable people as possible before it takes hold.
• Hospital administrators in France warned that a strict lockdown there might be necessary to suppress the virus, instead of a 6 p.m. curfew. France could see a sharp rise in cases between mid-February and mid-March, Martin Hirsh, director of Paris’s hospital network, said Wednesday, putting the country’s medical facilities under severe pressure.
• On Tuesday, France’s seven-day moving average of new infections reached nearly 19,000, the highest since Nov. 23, while the number of Covid-19 patients in intensive care units has risen for 10 consecutive days.
• Germany might have to introduce restrictions on border crossings if its neighbors don’t do more to contain the spread of the virus, Chancellor Angela Merkel said Tuesday.
• The country extended its lockdown for a further two weeks on Tuesday, until mid-February.

Netflix Tops 200 Million Subscribers for the First Time – Wall Street Journal, 1/19/2021

• Netflix ended last year with more than 200 million subscribers, a milestone powered by consumers left homebound by the pandemic, eager for entertainment, and rising demand in international markets where the streaming giant has a head start over many rivals.
• The Los Gatos, Calif., company said it generated $6.64 billion in fourth-quarter revenue, up from $5.45 billion for the year earlier and thus exceeding forecasts from analysts.
• But profit decreased to $542 million, or $1.19 a share, from $587 million, or $1.30 a share, the year earlier.
• Analysts predicted $1.36 a share for the latest period, according to FactSet.
• For the quarter ended Dec. 31, Netflix added more than 8.5 million subscribers on a net basis, a gain that surpassed its forecast for the period.
• Netflix signed up what it said was a record 37 million subscribers in 2020 and had a total of 203.7 million users when the year ended—more than twice as many as it had a mere three years earlier.
• It added 860,000 subscriptions in the U.S. and Canada in the period, but gained two million subscribers in Asia, more than 1.2 million in Latin America and 4.5 million in the region covering Europe, the Middle East and Africa.
• Netflix also said Tuesday it expects to add another six million users in the current quarter, less than half of what it added for the same period a year ago, which saw a huge rise due to the pandemic lockdowns.
• The company currently anticipates 2021 cash flow at break-even, an upgrade from its earlier projection, which was minus $1 billion to break-even. Netflix said it is considering returning some cash to shareholders through stock buybacks.

Morgan Stanley profit races past estimates as trading shines – Reuters, 1/20/2021

• Morgan Stanley’s profits surged in the fourth quarter, blowing past estimates as the Wall Street bank’s trading business benefited from coronavirus-induced volatility in financial markets.
• Net revenue rose to $13.64 billion in the quarter, from $10.86 billion last year, while revenue from the company’s investment banking division rose to $2.30 billion from $1.58 billion.
• The bank’s revenue from sales and trading rose to $4.22 billion from $3.19 billion.
• Morgan Stanley’s equity underwriting revenue soared 81% from a year earlier, driven by high profile IPOs and follow-on offerings as clients continued to access capital markets.
• Morgan Stanley’s return on tangible equity, a measure of how well a bank uses shareholder money to produce profits, came in at 17.7%, compared with 13.0% last year and 15.0% in the third quarter.
• The bank reported net income applicable to common shareholders of $3.27 billion, or $1.81 per share, in the quarter ended Dec. 31, compared with $2.09 billion, or $1.30 per share, a year earlier.
• The Wall Street investment bank on Wednesday also confirmed plans to buy back $10 billion of shares this year, more than three times the figures announced by its retail banking peers, as it wrapped up results for U.S. lenders, which pointed to a modest rebound in the economy.

UnitedHealth’s Profit Slips as Health-Care Visits Return – Wall Street Journal, 1/20/2021

• UnitedHealth recorded a smaller profit for the last quarter of 2020 as the company had to pay more in medical costs to cover insured members who returned in greater numbers to doctors’ offices after putting off care earlier in the coronavirus pandemic.
• Fourth-quarter revenue for UnitedHealth climbed to $65.47 billion, up from $60.9 billion in the same quarter a year earlier.
• Analysts surveyed by FactSet had forecast revenue of $64.96 billion.
• UnitedHealth’s revenue from premiums grew to $50.58 billion, from $47.63 billion a year earlier.
• Revenue from Optum grew in the quarter as the number of customers served rose by 2.1% to 98 million and as revenue per customer jumped 29% year over year.
• Medical costs climbed to $42.08 billion, up from $39.28 billion in the year-ago period.
• Operating costs increased to $11.51 billion, from $9.3 billion in the previous year’s fourth quarter.
• UnitedHealth posted fourth-quarter net income of $2.21 billion, or $2.30 a share, compared with $3.54 billion, or $3.68 a share, in the same period a year earlier.
• UnitedHealth said it expects its full-year profit in 2021 to be between $16.90 a share and $17.40 a share, or $17.75 a share to $18.25 a share on an adjusted basis. That estimate includes a negative effect of $1.80 a share from coronavirus-related concerns, UnitedHealth said, such as testing and treatment costs, deferred care from last year and broader economic factors.

Procter & Gamble Gets Shoppers to Pay Up – Wall Street Journal, 1/20/2021

• Procter & Gamble sales surged in the most recent quarter, fueled in part by demand for high-end household products from pricey dish soap to a $300 electric toothbrush.
• The Cincinnati company’s organic sales increased 8% to $19.75 billion in the quarter ended Dec. 31.
• The strongest growth was in P&G’s fabric and home-care unit, which posted a 12% sales gain.
• Sales in P&G’s grooming unit, which includes Gillette razors, rose 5%.
• Sales in P&G’s health-care unit, which includes dental care as well as over-the-counter medications, rose 9%.
• For its fiscal second quarter, P&G generated net income of $3.9 billion, or $1.47 a share, up from $1.41 a share a year earlier.
• Analysts expected net income of $1.48 a share and sales of $19.98 billion, according to S&P Global Market Intelligence.
• P&G raised its estimates for full-year organic sales growth to between 5% and 6%, up from the previous range of 4% to 5%.

Moderna says possible allergic reactions to COVID-19 vaccine under investigation – Reuters, 1/19/2021

• Moderna said on Tuesday it had received a report from California’s health department that several people at a center in San Diego were treated for possible allergic reactions to its COVID-19 vaccine from a particular batch.
• The company’s comments come after California’s top epidemiologist on Sunday issued a statement recommending providers pause vaccination from lot no. 41L20A due to possible allergic reactions that are under investigation.
• The vaccine maker said it was unaware of comparable cases of adverse events from other vaccination centers which may have administered vaccines from the same lot or from other lots of its vaccine.

Big U.S. banks hunger for loans, capital relief as deposits pile up – Reuters, 1/20/2021

• A swell of deposits during the coronavirus pandemic has put big U.S. banks on the back foot, with executives saying they hope regulators provide relief on rules that punish bloated balance sheets until loan demand snaps back.
• JPMorgan Chase, Bank of America and Citigroup took in more than $1 trillion in deposits last year, compared with a $92 billion increase in 2019.
• But the stimulus payments and easy-money policies by the government that led to the inundation of deposits has also created a few problems for the banks: low interest rates that crimp lending profitability and stunted loan demand as customers and companies awash with cash spend less.
• Combined with rules that require more capital for bigger balance sheets, that makes deposits more expensive to hold, instead of profitable.
• Big banks will not shun deposits due to the dynamic, executives said, because doing so could hurt their franchises. However, they did push regulators to extend capital relief programs that expire March 31. Banks also want adjustments for holdings that are not high risk, like U.S. Treasury securities.

Mercedes unveils electric compact SUV in bid to outdo Tesla – Reuters, 1/20/2021

• Daimler’s Mercedes-Benz on Wednesday unveiled the EQA, a new electric compact SUV as part of plans to take on rival Tesla and offer more emission-free vehicles to consumers to meet targets in Europe and China.
• The EQA, the first of several electric models Mercedes-Benz plans to launch this year, will initially have a range of 426 kilometers (265 miles), with a 500km model coming later, the premium brand carmaker said in a video presentation.
• The SUV will go on sale in Europe on Feb 4 at what board of management Britta Seeger described as “very attractive price points”.
• Mercedes-Benz describes the EQA as an “urban entry model” and board member Seeger touted its “sustainability, versatility and fresh look”.

U.S. agency orders Ford to recall 3 million vehicles over air bags – Reuters, 1/20/2021

• Ford Motor must recall 3 million vehicles with potentially defective driver-side Takata air bags, the U.S. auto safety regulator said on Tuesday, rejecting a bid by the second-largest U.S. automaker to avoid a recall.
• The National Highway Traffic Safety Administration (NHTSA) said it was denying petitions filed by Ford and Mazda Motor in 2017 seeking to avoid recalling vehicles with potentially dangerous inflators.
• The decision also will require Mazda to recall and repair driver air bags in approximately 5,800 vehicles. The recalls will cover various vehicles from the 2006 through 2012 model years.
• The defect, which leads in rare instances to air bag inflators rupturing and sending potentially deadly metal fragments flying – especially after long-term exposure to high humidity – prompted the largest automotive recall in U.S. history of more than 67 million inflators.