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Daily Market Report | Feb. 02, 2021

Stocks Rise Ahead of Amazon, Alphabet Earnings – Wall Street Journal, 2/2/2021

  • U.S. stocks rose Tuesday, signaling that major indexes may extend this week’s gains ahead of earnings from technology giants Amazon.com and Google parent Alphabet.
  • Investors will parse quarterly earnings from Amazon.com and Alphabet after markets close. Shares of giant tech companies have continued to power the broader market in 2021, pushing the Nasdaq Composite up 5% so far this year.
  • Earnings for the last quarter of 2020 have been better than analysts had anticipated.
  • Of the 189 companies on the S&P 500 index that had reported results by late Monday, 81% have beaten expectations, according to FactSet.
  • Silver prices slid after Monday’s steep ascent, when they posted their biggest one-day advance in over a decade in the latest example of wild market moves spurred by online traders.
  • Futures for the metal fell over 6% on Tuesday after CME Group’s Comex exchange responded to the volatility by raising margin requirements.
  • Shares of GameStop continued to slump, dropping about 48%.
  • Headphones-maker Koss and AMC Entertainment Holdings declined 42% and 39% respectively.
  • Express, Naked Brand and BlackBerry also retreated.

Covid-19 Live Updates: U.S. Reports Uptick in New Cases, Decrease in Hospitalizations – Wall Street Journal, 2/2/2021

  • Newly reported Covid-19 cases in the U.S. were up from a day earlier, as were deaths, but hospitalizations declined again.
  • More than 130,000 new cases were reported for Monday, according to data compiled by Johns Hopkins University and made public early Tuesday morning on the East Coast. The number may update.
  • That was up from 111,896 a day earlier but down from 151,095 a week earlier.
  • There were more than 1,800 Covid-19-related deaths reported for Monday, according to Johns Hopkins, up from 1,794 a day earlier but down from 1,917 a week earlier.
  • The nation’s seven-day moving average of new cases, which smooths out irregularities in the data, was 148,413 as of Sunday, according to a Wall Street Journal analysis of Johns Hopkins data.
  • The 14-day average was 158,954. When the seven-day average is lower than the 14-day average, which it has been since Jan. 15, it indicates cases are decreasing.
  • There were 93,536 people hospitalized in the U.S. on Monday, according to the Covid Tracking Project, the 20th consecutive day of declines.
  • The CDC also reported that about 78% of nursing-home residents and 38% of staffers received at least one shot at 11,460 nursing homes that had vaccination clinics, a ratio likely to underscore concerns about the level of participation by nursing-home workers.

UPS’s Revenue Jumps 21% on Online Shopping Surge – Wall Street Journal, 2/2/2021

  • United Parcel Service notched a 21% jump in fourth-quarter sales to $24.9 billion, a record for the company, boosted by pandemic-fueled online shopping during the holidays.
  • Package volume rose more than 28% for smaller customers, compared with 4% for the biggest shippers, in the fourth quarter.
  • Combined with additional surcharges applied more broadly, UPS’s revenue per item shipped rose 7.8% in the fourth quarter, the highest increase in more than a decade.
  • UPS booked a $545 million after-tax charge on the Freight sale and a $4.9 billion noncash charge on its pension plan to reflect low interest rates.
  • Those moves resulted in a net loss for the quarter of $3.26 billion, compared with a profit of $659 million a year ago.
  • Excluding those items, UPS said it had adjusted profit of $2.66 a share.
  • Analysts were looking for UPS to post per-share earnings of $2.14 on $22.87 billion in revenue, according to FactSet.
  • UPS declined to provide earnings guidance for the coming year due to uncertainty from the global pandemic.
  • It did say it plans to spend about $4 billion on capital expenditures and grow its dividend, and it had no plans for share buybacks.

Pfizer Lifts Outlook on Covid-19 Vaccine, Posts Weaker-Than-Expected Profit – Wall Street Journal, 2/2/2021

  • Pfizer said it expects to generate about $15 billion in sales for its Covid-19 vaccine this year as it posted higher quarterly revenue, but missed on profit expectations to finish 2020.
  • Revenue was $11.68 billion, compared with $10.45 billion in the same quarter a year earlier.
  • Analysts surveyed by FactSet were expecting revenue of $11.48 billion.
  • Oncology revenue grew 23% year over year to $3.02 billion. Sales growth for drugs such as Vyndaqel, a heart medication, Ibrance, for breast cancer, and other oncology drugs helped drive growth in Pfizer’s revenue from therapeutics.
  • Pfizer said Tuesday the Covid-19 vaccine it developed with BioNTech SE contributed $154 million in revenue in the fourth quarter, helping lift the company’s overall revenue from all vaccines to $2 billion, a 17% year-over-year increase.
  • The company’s fourth-quarter net income was $594 million, or 10 cents a share, compared with a year-earlier loss of $337 million, or 6 cents a share.
  • Pfizer said it expects full-year revenue of $59.4 billion to $61.4 billion, and an adjusted profit of $3.10 to $3.20 a share.

Exxon Logs Fourth Quarterly Loss in a Row – Wall Street Journal, 2/2/2021

  • Exxon Mobil posted its fourth consecutive quarterly loss, bringing its total loss for its fiscal year to more than $22 billion.
  • Revenue and other income fell 31% to $46.54 billion, nearly in line with Wall Street’s consensus estimate of $46.55 billion.
  • Exxon said Tuesday that fourth-quarter oil-equivalent production was 3.7 million barrels a day.
  • The company reported a fourth-quarter loss of $20.07 billion, or $4.70 a share, compared with a profit of $5.69 billion, or $1.33 a share, in the same period a year earlier.
  • The company’s fourth-quarter results included more than $19 billion in impairments.
  • Exxon, under pressure from activist investors, on Tuesday said it added Tan Sri Wan Zulkiflee Wan Ariffin, former president and group CEO of Malaysia’s state oil firm Petronas, to the board.
  • Exxon said that it is talking to other board candidates and that it expects to take further action in the near term.

ConocoPhillips posts smaller fourth-quarter loss, boosts 2021 spending as oil steadies – Reuters, 2/2/2021

  • ConocoPhillips reported a smaller-than-expected quarterly loss on Tuesday, thanks to steadying crude prices that also saw the top U.S. independent oil producer raise its capital budget for 2021.
  • On a sequential basis, fourth-quarter production excluding Libya climbed 7.3% to 1.1 million barrels of oil equivalent per day. Average realized price was $33.21 per barrel of oil equivalent, 7% higher than the third quarter.
  • The company’s net loss widened to $772 million from $450 million.
  • ConocoPhillips earned a profit of $720 million in the year-ago quarter.
  • ConocoPhillips, which completed its $13.3 billion takeover of rival Concho Resources in January, the biggest pure shale acquisition since 2011, set a $5.5 billion spending budget for 2021, much of which will be used to sustain current production.

U.S. refiner Marathon Petroleum’s fourth-quarter loss narrows – Reuters, 2/2/2021

  • U.S. refiner Marathon Petroleum’s losses narrowed in the fourth quarter from the third, helped by a slight recovery in fuel demand on the back of easing COVID-19 restrictions and lower costs.
  • The company’s total throughput or the amount of crude it processed in the fourth quarter was 2.5 million barrels per day (bpd), flat from the third quarter but still below last year’s 3.1 million bpd.
  • Findlay, Ohio-based Marathon said on Tuesday adjusted net loss narrowed to $608 million, or 94 cents per share, in the quarter ended December, from $649 million, or $1 per share, in the third quarter.
  • Marathon Petroleum forecast 2021 standalone capital spending of $1.4 billion, a reduction of $350 million from 2020.

HCA Healthcare fourth-quarter profit jumps 33% on inpatient admissions – Reuters, 2/2/2021

  • Hospital operator HCA Healthcare reported a 33% rise in fourth-quarter profit on Tuesday, helped by higher revenue from hospital admissions.
  • Same-facility equivalent admissions, which include patients who stay in the hospital overnight and those who are treated on an outpatient basis, declined 7.5% in the fourth quarter compared with the year-ago period, HCA said.
  • Revenue per same-facility equivalent admission, a measure of sales per patient staying overnight at a hospital and those treated on an outpatient basis, rose 14.1% from a year earlier due to increases in acuity of patients treated.
  • Net income attributable to HCA rose to $1.43 billion, or $4.13 per share, in the quarter ended Dec. 31, from $1.07 billion, or $3.09 per share, a year earlier.
  • The company forecast 2021 revenues to be between $53.5 billion and $55.5 billion, while analysts on an average estimate $54.33 billion.

Robinhood Raises Another $2.4 Billion From Shareholders – Wall Street Journal, 2/2/2021

  • Robinhood Markets raised another $2.4 billion from shareholders, days after investors agreed to pump $1 billion into the online brokerage to help it ride out a trading frenzy in talked-up stocks like GameStop.
  • The big infusion—the $3.4 billion brought in since last Thursday is more than the company had previously raised in the eight years since its launch—gives Robinhood a cushion to cover a surge in collateral requirements stemming from the trading boom.
  • New and existing Robinhood shareholders participated in the deal, which is structured as a note that conveys the option to buy additional shares at a discount later, a person familiar with the matter said.
  • Robinhood’s collateral requirements have fallen since Thursday, the person said, indicating that the company’s restrictions on buying some stocks dampened the overall riskiness of its customers’ trading activity.

GameStop short interest falls to $5.8 billion: S3 Partners – Reuters, 2/2/2021

  • Short interest in GameStop declined as the video game retailer’s stock price dropped and the number of shares shorted fell modestly, according to the latest data from analytics firm S3 Partners.
  • The value of GameStop short interest stood at $5.81 billion, down from $8.8 billion a day earlier, according to Ihor Dusaniwsky, managing director of predictive analytics at S3.
  • The number of shares shorted fell by about 1 million to 26.09 million, according to S3.
  • With GameStop shares falling to $130.25 early on Tuesday, GameStop shorts were up $2.5 billion on a mark-to-market basis, cutting their year-to-date loss to $10.1 billion, according to S3.

Tesla Recalls Roughly 135,000 Vehicles Over Touch-Screen Failures – Wall Street Journal, 2/2/2021

  • Tesla is recalling roughly 135,000 Model S luxury sedans and Model X sport-utility vehicles over touch-screen failures, one of the electric-car maker’s largest-ever safety actions.
  • The move comes after the National Highway Traffic Safety Administration requested a recall last month, saying the touch screen in some models can fail when a memory chip runs out of storage capacity, affecting functions such as defrosting, turn-signal functionality and driver assistance.
  • The agency said the problem affected roughly 158,000 vehicles, including Model S sedans built between 2012 and early 2018 and Model X vehicles made from 2016 through early 2018.
  • The recall doesn’t cover vehicles in that group that have already been repaired with a larger memory chip or an upgraded touch screen, according to NHTSA.

Uber to Buy Drizly for $1.1 Billion in Stock and Cash – Wall Street Journal, 2/2/2021

  • Uber Technologies said it reached a deal to buy alcohol-delivery service Drizly for $1.1 billion in stock and cash, signaling the company’s ambitions to provide a wider range of items to consumers’ doorsteps.
  • E-commerce made up just 1% of U.S. alcohol sales by retailers in 2019 by volume but is expected to grow to 7% by 2024, says industry tracker IWSR.
  • It estimates online alcohol sales in the U.S. grew 80% by value last year from the year earlier and that the country is now poised to overtake China this year as the world’s largest online alcohol market.
  • IWSR says the pandemic has created enormous awareness among Americans that they can buy booze online and that 44% who buy alcohol via e-commerce only began doing so starting last year.

Boeing says 118 orders for 777X no longer firm under accounting rules – Reuters, 2/2/2021

  • Boeing said on Monday that 118 orders for its 777X widebody plane under development are no longer seen as firm under accounting rules that require it to regularly assess their viability, leaving it with 191 solid orders for the model.
  • Boeing last week announced a $6.5 billion charge on the 777X in part due to weaker-than-expected demand for the model.
  • It also pushed back its entry into service by a year to late 2023 in anticipation of a longer, costlier certification process.

U.S. Economy Is Expected to Reach Pre-Pandemic Peak by Mid-2021 – Wall Street Journal, 2/1/2021

  • The U.S. economy is expected to expand more rapidly in 2021 than officials projected in July, but it will take several years for output to reach its full potential and for the number of employed workers to return to its pre-pandemic peak, according to new economic projections released Monday.
  • The Congressional Budget Office said it expects gross domestic product, the broadest measure of economic output, to return to its pre-pandemic level by the middle of this year, thanks in part to a surge of relief spending Congress authorized in 2020, including aid for households and businesses.
  • Gross domestic product is expected to grow 3.7% in the fourth quarter of 2021, compared with a year earlier, and to expand 2.4% in 2022. Growth is likely to average 2.6% a year through 2025, the CBO said.
  • The agency said a roughly $900 billion relief bill enacted in December would add about 1.5% to the level of GDP this year and next.
  • The CBO also estimated the jobless rate will fall to 5.3% by the end of this year from 6.8% at the end of 2020. The number of people who are employed, however, won’t return to the level seen before the pandemic until 2024, the agency said.
  • But the CBO projects economic activity will remain below its potential—or maximum sustainable output—until 2025, suggesting the burst of activity expected this year could be followed by a long, slow recovery.

Google to shut down internal Stadia game development studios – Reuters, 2/2/2021

  • Alphabet’s Google said on Monday it would stop internal development of games for Stadia, making the cloud-based game-streaming service entirely dependent on titles from other game developers and publishers.
  • Stadia was launched in 2019 along with an internal game development unit that was expected to make titles for the platform.
  • The company said on Monday it was shutting down the unit due to the high costs involved in developing games that attract users.

EUROPE & WORLD

Alibaba’s Quarterly Sales Lifted by Extended Shopping Event – Wall Street Journal, 2/2/2021

  • Alibaba Group said an extended shopping event in November helped boost its profit and sales for the last three months of 2020, a period that also saw the technology giant and its founder attracting scrutiny from Chinese regulators.
  • Sales for the fiscal third quarter rose about 37% to 221.08 billion yuan, ahead of the 214.29 billion yuan analysts polled by FactSet had expected.
  • Core commerce sales at the company, which runs China’s two most popular e-commerce platforms, rose 38% to 195.54 billion yuan.
  • The company’s cloud-computing revenue grew 50% to 16.12 billion yuan, a gain the company attributed to customers in the internet, retail and public sectors. Alibaba said it processed 583,000 orders per second during the 11.11 event.
  • The Chinese e-commerce giant’s annual 11.11 Global Shopping Festival, normally a one-day affair, ran from Nov. 1 to Nov. 11.
  • That generated 498.2 billion yuan, equivalent to $74.1 billion, in gross merchandise value during those 11 days, excluding unpaid orders, up 26% from the same time frame in 2019, the company said Tuesday.
  • Alibaba posted net income attributable to ordinary shareholders of 79.43 billion yuan, compared with 52.31 billion yuan in the comparable quarter last year.

Pandemic drives oil major BP to first loss in a decade – Reuters, 2/2/2021

  • BP plunged to a $5.7 billion loss last year, its first in a decade, as the pandemic took a heavy toll on oil demand, and the energy company warned of a tough start to 2021 amid widespread travel restrictions.
  • BP’s overall fourth-quarter underlying replacement cost profit, its definition of net income, of $115 million fell short of the $360 million seen in a company-provided poll of analysts.
  • For the year, BP reported an underlying loss of $5.69 billion, compared with a profit of $10 billion in 2019.
  • Capital expenditure is set to rise to $13 billion this year, of which $9 billion will still go to oil and gas, Chief Financial Officer Murray Auchincloss said. That compared with a budget of $12 billion in 2020.

Panasonic says Tesla business to be profitable, boosts profit outlook – Reuters, 2/2/2021

  • Panasonic said on Tuesday it expects its battery business supplying Tesla to be profitable this fiscal year, and raised its full-year operating profit forecast by more than half.
  • For the three months ending Dec. 31 the company posted a 30% rise in operating profit to 130.2 billion yen, above a Refinitiv estimate of 74.6 billion yen from four analysts.
  • Its new forecast of 230 billion yen ($2.2 billion) for the year to end-March – up from 150 billion yen – is still 22% below the previous year.
  • Panasonic plans to start test production for the new line – for Tesla’s 4680 battery – in the financial year beginning April 1, Umeda said.

Ryanair predicts strong recovery after record annual loss – Reuters, 2/2/2021

  • Ryanair expects a record loss of close to 1 billion euros ($1.2 billion) in the year to March 31 before what Chief Executive Michael O’Leary says will be a “dramatic recovery” later in the year thanks to COVID-19 vaccination programmes.
  • COVID-19 restrictions slashed Ryanair passenger numbers by 78% in the last three months of 2020, pushing it to a third-quarter loss of 306 million euros, slightly better than the 300 million euro loss forecast in a company poll of analysts.
  • The Irish low-cost airline, Europe’s largest, forecast a loss between 850 million and 950 million euros in its current financial year – about five times larger than its previous record loss in 2009.
  • Traffic is likely to be 20-25% of pre-pandemic levels between April and June, rising to 50-70% between July and September, depending on the success of the European Union’s vaccine program, O’Leary said, with winter traffic potentially at 75-100%.
  • Ryanair said it expects its first delivery of Boeing’s 737 MAX in March, with at least 24 of the 210 it has on order arriving in time for its peak summer season.

Volkswagen looks at direct buying to secure scarce chips – Reuters, 2/2/2021

  • Volkswagen is looking into buying chip supplies directly from manufacturers, according to a company executive, as automakers battle a global semiconductor shortage.
  • Automakers around the world are adjusting assembly lines due to the shortages, caused by manufacturing delays that some semiconductor makers blame on a faster-than expected recovery from the coronavirus pandemic.
  • Volkswagen, which warned as early as Dec. 4 about the problem, currently sources chips via major suppliers such as Bosch and Continental and has no direct contractual or supply agreements with semiconductor makers.
  • Carmakers also affected by the shortage include Ford, Toyota, Nissan and Daimler, with the companies having to cut production or planning to reduce working hours due to the disruption.

Factmonster – TODAY in HISTORY

  • Nazi troops surrendered in the World War II Battle of Stalingrad. (1943)
  • South African President F. W. de Klerk lifted a ban on the African National Congress and promised to free Nelson Mandela. (1990)

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