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Daily Market Report | Feb. 08, 2021

Stocks Rise, Putting Dow, S&P 500 on Course for Records – Wall Street Journal, 2/8/2021

  • Stocks rose toward fresh records Monday, oil prices climbed and bond yields ticked up as investors wagered that a new round of stimulus spending would bolster the economy.
  • Stocks have powered higher in recent trading sessions, putting the volatility sparked by swings in GameStop and other individual stocks in the rearview mirror. Investors are focusing on the prospect for a new batch of government spending.
  • They say that could boost growth at a time when large companies are reporting robust profits but the broader economic outlook is patchy.
  • Democrats took a series of votes last week unlocking a process called reconciliation, which will allow the party to approve President Biden’s $1.9 trillion relief plan without Republican support in the Senate.
  • House lawmakers are aiming to finalize and vote on a relief bill before the end of February.
  • Markets have also been buoyed by an upbeat set of earnings for the holiday quarter from large U.S. companies.
  • Of the 295 companies on the S&P 500 that had reported by early Monday, 81% had beaten analysts’ expectations for earnings growth, according to FactSet.
  • Bitcoin jumped 14% to about $43,583, according to CoinDesk, after Tesla said it had invested $1.5 billion in the digital currency under a new policy designed to maximize returns on cash.
  • Oil markets continued to rally, pushing Brent-crude futures above $60 a barrel for the first time since the start of the pandemic in January 2020. The international energy benchmark was up 1.4% in recent trading.
  • In another sign of growing optimism among investors, the yield on 10-year Treasury notes rose as high as 1.2% before slipping to 1.184%, up from 1.168% Friday.

Covid-19 Live Updates: New Cases in U.S. Drop Below 100,000 – Wall Street Journal, 2/8/2021

  • Newly reported coronavirus cases in the U.S. fell below 100,000 for the first time this year, and hospitalizations continued to decline, as vaccination rollouts picked up speed.
  • The U.S. reported just under 87,000 new coronavirus cases for Sunday, according to data compiled by Johns Hopkins University and published early Monday. The data may update later.
  • Hospitalizations because of Covid-19 fell to 81,439 as of Sunday, marking the 26th consecutive daily decline, according to the Covid Tracking Project. The number of Covid-19 patients requiring treatment in intensive care units also fell.
  • As of Sunday, there were 16,616 Covid-19 patients in ICUs across the country, the lowest level since Nov. 19, according to the Covid Tracking Project.
  • The U.S. also reported its lowest daily death toll from the disease since the beginning of the year. The country added more than 1,200 fatalities to the death toll, bringing the total to more than 463,000, according to Johns Hopkins.
  • Meanwhile, a highly transmissible variant of the coronavirus is spreading rapidly in the U.S., with the number of Covid-19 cases caused by it doubling every week and a half, according to a study posted online Sunday.
  • The research, conducted by a group of academic and industry scientists, was posted on a preprint server and hasn’t been peer reviewed or published in a scientific journal.
  • But it essentially confirms a forecast published last month by the CDC that found that the variant, known as B.1.1.7, would overtake other strains of the coronavirus by mid to late March unless strong public health measures are taken to slow its spread and enable a vaccination program to roll out more widely.

Rollout of AstraZeneca Covid-19 Vaccine Halted in South Africa After Study – Wall Street Journal, 2/8/2021

  • South Africa said Sunday it would temporarily halt a planned rollout of AstraZeneca’s Covid-19 vaccine after a small clinical trial found that it doesn’t appear to protect recipients against mild and moderate illness from a fast-spreading new strain of the coronavirus first detected in the country.
  • Of the 39 volunteers in the AstraZeneca trial that were found to be infected with the new South African variant, 19 had received the vaccine, while 20 had received a placebo, said Shabir Madhi, the trial’s principal investigator and dean of the medical school at the University of the Witwatersrand in Johannesburg.
  • Those numbers would imply an efficacy rate of around 10% at protecting against mild and moderate Covid-19 from the new variant, said Dr. Madhi, although he added that the data were too limited to be statistically significant.
  • After the results were announced, South Africa’s health minister, Zweli Mkhize, said the country would temporarily halt a planned rollout of the vaccine until there was more information on the vaccine’s efficacy.
  • The country had planned to administer a first shipment of one million doses of the vaccine to health-care workers later this month.

Tesla Buys $1.5 Billion in Bitcoin – Wall Street Journal, 2/8/2021

  • Tesla on Monday said it bought $1.5 billion in bitcoin, a purchase that comes after Chief Executive Elon Musk has promoted the cryptocurrency and other digital-currency alternatives on Twitter.
  • The electric-vehicle company also said it expects to start accepting bitcoin as payment for its products soon.
  • Bitcoin prices jumped more than 10% after the announcement, according to cryptocurrency research and news site CoinDesk.
  • Tesla disclosed the bitcoin purchase in its latest annual report filed on Monday, saying the move aims to provide “flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity.”
  • The policy change also enables Tesla to invest cash in gold bullion and gold exchange-traded funds among other assets.

Tesla Summoned by Chinese Regulators on Quality Issues – Wall Street Journal, 2/8/2021

  • Tesla has been summoned by the Chinese authorities in response to consumer complaints about quality issues with its electric vehicles, a rare official rebuke for Tesla in China, where the company has expanded rapidly with the support of the authorities.
  • The State Administration for Market Regulation, China’s top market regulator, said Monday that it had instructed Tesla to abide by Chinese laws and regulations and strengthen internal management to ensure the quality and safety of its products.
  • Tesla recently recalled 36,126 Model S and Model X vehicles imported from the U.S. due to touch-screen problems.
  • The recall didn’t affect vehicles built in Shanghai.
  • That followed the recall of 48,442 imported Model S and X cars in China in October over concerns about faulty suspension systems.

Apple’s Electric-Vehicle Talks with Hyundai Break Down – Wall Street Journal, 2/8/2021

  • Apple’s talks with Hyundai Motor Group have broken down without an agreement for the South Korean auto giant to assemble vehicles for the iPhone company, Hyundai affiliates said Monday.
  • In regulatory filings, Hyundai Motor and Kia said they are “not in talks with Apple over developing an autonomous vehicle.” The two auto makers have fielded multiple requests from other firms to jointly develop autonomous electric vehicles, though no initial steps have been determined, according to the regulatory filings.
  • The companies had held talks with the Cupertino, Calif., technology giant about a deal for Hyundai subsidiary Kia to build vehicles for Apple in Georgia, The Wall Street Journal reported last week.
  • Shares sank 6% for Hyundai Motor following Monday’s regulatory-filing disclosures, while Kia plunged by more than 13%.

Rents Slide in NYC, San Francisco While Cheaper Cities Surge – Bloomberg, 2/8/2021

  • Flexible work policies have given Americans permission to move, driving up apartment rents in suburbs and lower-cost cities and pushing landlords to slash prices in New York and San Francisco.
  • With concessions factored in, rents on new U.S. apartments leases were down just 0.3% last month compared with the all-time highs a year earlier, according to RealPage. But the pandemic has opened up a geographical divide like never before.
  • Rents fell almost 22% in San Francisco, 16% in New York and 9% in Boston.
  • But of the 150 large metropolitan areas studied by RealPage, 119 showed an increase.
  • Rents jumped 8% in Riverside, a suburban area outside Los Angeles, and Sacramento, about 90 minutes east of San Francisco.
  • And they climbed 6% in Memphis, Tennessee, and about 5% in Phoenix, Detroit and Cleveland.

U.S. Treasury’s Yellen: Americans earning $60,000 should get stimulus checks – Reuters, 2/7/2021

  • U.S. Treasury Secretary Janet Yellen said on Sunday that American workers who earn $60,000 per year should receive stimulus checks as part of the White House’s proposed $1.9 trillion coronavirus relief package.
  • “The exact details of how it should be targeted are to be determined, but struggling middle class families need help,” Yellen said on CNN’s “State of the Union.”
  • The White House has said it is open to negotiation on who should be eligible to receive the proposed $1,400 checks, and has declined to specify where it thinks the income cutoff should be.
  • Speaking on the ABC News’ program “This Week,” Republican Senator Roger Wicker said he thought his party would be willing to support something in the $600 billion to $700 billion range.
  • Last week, the House and Senate approved a budget plan that would allow a coronavirus relief bill to clear the Senate with a simple majority vote of 51.
  • Under normal rules, 60 votes would be needed. The Senate is split 50-50, with Vice President Kamala Harris representing the tie-breaking vote for Democrats.

Sen. Bernie Sanders opposes cutting the income cap for $1,400 stimulus checks – CNBC, 2/8/2021

  • Sen. Bernie Sanders said Sunday that he opposes cutting the income threshold for receiving $1,400 direct payments in the next coronavirus relief bill, underscoring a split Democrats will need to resolve before they can pass the $1.9 trillion package.
  • The Democrats’ most conservative member — Sen. Joe Manchin of West Virginia — has raised concerns that stimulus checks as currently targeted would go to too many high-income people who did not lose their jobs during the pandemic.
  • Sanders told CNN he supports a “strong cliff” for payments “so it doesn’t kind of spill over to people making $300,000 a year.” As modeled now, the plan would phase the checks out by 5% of every dollar a person makes above the cap.
  • “And that’s what I support, that’s what I think most people understand,” Sanders said of making the payments phase out more quickly. “But to say to a worker in Vermont or California or any place else, that if you’re making, you know, $52,000 a year, you are too rich to get this help, the full benefit, I think that that’s absurd.”

Covid-19’s Hit to State and Local Revenues Is Smaller Than Many Feared – Wall Street Journal, 2/7/2021

  • State and local governments in early 2020 expected the pandemic-induced downturn to decimate their budgets, as millions of business closures and layoffs wiped out tax revenue.
  • Immediately after the coronavirus outbreak last March, states slashed revenue projections by an average of about 8%, with some expecting shortfalls as high as 20%.
  • Those projections were largely based on experiences during the 2007-09 recession, when steep revenue declines lasted several years.
  • In the end, state revenues fell 1.6% in fiscal year 2020 and were 3.4% lower than projected before the pandemic, according to the National Association of State Budget Officers.
  • While states expect revenues to decline 4.4% in fiscal 2021, which ends on June 30 for most, 18 states are seeing revenues come in above forecast.
  • Policy analysts estimate state and local revenue losses due to the coronavirus pandemic will total about $300 billion through fiscal year 2022, though that doesn’t include rising expenses.

EUROPE & WORLD

China’s Car Sales Rose 25% in January – Wall Street Journal, 2/8/2021

  • China’s car sales surged in January from the low base of a year earlier, when the coronavirus began sweeping the world’s largest auto market.
  • Retail sales of passenger cars rose 25.7% to 2.16 million vehicles last month compared with the same time a year before, the China Passenger Car Association said Monday, the strongest growth since September 2016.
  • Sales slumped by 20% in January last year and closed in December with a 7% decline for the year.
  • Sales of electric cars more than tripled to 158,000 in January from a year earlier, though they dropped 23.9% month over month, the industry group said.

China’s Economy Isn’t Out of the Woods, Despite a Strong 2020 – Wall Street Journal, 2/8/2021

  • China weathered the economic fallout from Covid-19 better than any other major country, and economists are predicting a bigger snapback this year.
  • But analysts say the world’s second-largest economy also needs to address an array of challenges to get onto a more-sustainable growth trajectory and help the world fully rebound.
  • And now, a resurgence of Covid-19 infections in some parts of China, combined with a slow rollout of vaccines, is raising fresh worries about the outlook. At a minimum, Beijing’s plan to limit travel during the coming Lunar New Year, which falls on Feb. 12, will likely hit consumer spending, economists say.
  • A key factor to watch, economists say, is the job market, and its effect on spending. While China’s urban unemployment rate recovered quickly last year after hitting an all-time high last February, many economists believe the current rate of 5.2% understates the damage Covid-19 did.
  • Many urban workers are still clocking fewer hours and earning less than before, despite holding on to their jobs. Others, including college graduates and those who lost jobs due to Covid-19, are struggling to find opportunities with good pay. Income growth remains weaker than before the pandemic.

Factmonster – TODAY in HISTORY

  • Mary Queen of Scots was beheaded. (1587)
  • President Jimmy Carter revealed his plan to reinstate selective service draft registration. (1980)

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