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Daily Market Report | Feb. 09, 2021

Stocks Tick Lower After S&P 500’s Record Close – Wall Street Journal, 2/9/2021

  • U.S. stocks were mixed Tuesday, suggesting that the major indexes may pause after closing at record highs.
  • Investors said markets are taking a breather following a broad advance in stocks and commodities.
  • The recent rally has been fueled by expectations of a new dose of stimulus spending in the U.S., which could add impetus to the economic revival.
  • That has helped pare expectations for turbulence in U.S. stocks, sending the CBOE Volatility Index down this week to less than 22, after the gauge surged to over 37 at the end of January.
  • Expectations that the economy will revive this year have prompted money managers to bet stocks will continue to power higher, driven by sectors such as energy, banks and consumer companies that are sensitive to growth.
  • House Democrats released the biggest piece of their coronavirus relief bill late Monday, offering a measure that would extend a $400-a-week unemployment insurance payment through Aug. 29 and send $1,400 per-person payments to most households.
  • Twitter, ride-hailing firm Lyft and Cisco Systems are scheduled to publish earnings reports after markets close.
  • Of the roughly 300 companies on the S&P 500 that had reported for the holiday quarter by early Tuesday, about 81% had beaten analysts’ earnings expectations, according to FactSet.
  • Bitcoin jumped a 6.3% to $45,600, according to CoinDesk. The digital currency surged after Tesla said Monday it had bought $1.5 billion in bitcoin and planned to begin accepting it in payments, a move some analysts said could broaden acceptance of the currency.

Covid-19 Live Updates: U.S. Cases Under 100,000 for Second Straight Day – Wall Street Journal, 2/9/2021

  • The U.S. reported fewer than 100,000 new coronavirus cases for the second day in a row, as data showed that in several states, more than 10% of residents have received an initial dose of Covid-19 vaccines.
  • Newly reported coronavirus cases in the U.S. topped 86,000 for Monday, according to data compiled by Johns Hopkins University and published early Tuesday. The data may update later.
  • Hospitalizations in the U.S. due to Covid-19 continued to decline. As of Monday, there were 80,055 people hospitalized across the country due to the disease, the fifth consecutive day the total has been under 90,000, according to the Covid Tracking Project.
  • The number of Covid-19 patients requiring treatment in intensive care units also fell, with 16,174 people in ICUs, the lowest level since Nov. 20, according to the Covid Tracking Project.
  • The country reported more than 1,400 new fatalities from Covid-19, pushing the total to more than 465,000, according to Johns Hopkins data.
  • So far, 10 states have vaccinated 10% or more of their residents with at least one shot, and a further 19 states are about to hit that goal, according to a Wall Street Journal analysis.
  • In Europe, governments are mulling how far and how soon to ease their coronavirus restrictions as the number of new infections continues to fall, though many of the larger nations remain cautious.
  • German leaders are due to meet in Berlin on Wednesday to assess lockdown precautions. The number of new cases rose by just over 3,300 Tuesday, according to the Robert Koch Institute for infectious diseases, down from the day before.
  • U.K. Prime Minister Boris Johnson is under pressure from the right wing of his ruling Conservative Party to begin reopening the economy again. So far he has resisted, focusing instead on the rollout of a nationwide vaccination program.
  • Austria, meanwhile, is moving to reopen schools, stores and museums, although it, too, is tightening border restrictions. All travelers will have to present a negative coronavirus test.

Fox beats revenue expectations on record political ad spending – Reuters, 2/9/2021

  • Fox reported better-than-expected quarterly revenue on Tuesday, and announced that Fox News Chief Executive Officer Suzanne Scott has extended her term with the company.
  • Total revenue rose to $4.09 billion in the second quarter ended Dec. 31 from $3.78 billion, above Wall Street estimates of $3.99 billion, according to IBES data from Refinitiv.
  • In the fiscal second quarter, affiliate revenue grew 5.7% to $1.52 billion.
  • Fox News – the biggest driver of the company’s performance – had its highest-rated November in history, drawing 3.9 million prime-time viewers, beating all cable networks, not just cable news, according to Nielsen data.
  • Excluding items, the company earned 16 cents per share, while analysts’ expected a loss of 3 cents per share.

Take-Two shares fall as sales drop, wait continues for new releases – Reuters, 2/9/2021

  • Shares of Take-Two Interactive Software fell nearly 4% after the bell on Monday after the videogame publisher posted a drop in quarterly adjusted sales and shied away from announcing any new big releases.
  • On an adjusted basis, Take-Two’s third-quarter revenue fell to $814.3 million from $888.2 million, still beating analysts’ average estimate of $747 million.
  • Take-Two on Monday raised annual adjusted sales targets on sustained demand for its top franchises, “NBA 2K” and “Grand Theft Auto”, as COVID-19 curbs continue to boost videogame sales worldwide.
  • The company lifted its full-year adjusted revenue forecast to a range of $3.37 billion to $3.42 billion, from an earlier view of $3.15 billion to $3.25 billion. Analysts had expected sales of $3.3 billion, according to Refinitiv IBES data.

DuPont signals strong 2021 on demand from smartphone makers, auto rebound – Reuters, 2/9/2021

  • Industrial materials maker DuPont on Tuesday forecast full-year profit and revenue above Wall Street expectations on the back of robust demand from smartphone makers launching 5G handsets and a recovery in global auto sales.
  • Sales in DuPont’s electronics and imaging business rose 9% to $1.02 billion in the fourth quarter from a year earlier and was also marginally higher than the third, fueled by strong uptake for advanced materials used in smartphone and chips.
  • DuPont said adjusted net income rose to $698 million, or 95 cents per share, in the fourth quarter ended Dec. 31, from $645 million, or 88 cents per share, in the third quarter, in line with preliminary results announced last month.
  • For the first quarter, the company expects net sales between $3.75 billion and $3.85 billion. It projected a profit of 75 cents to 77 cents per share. Analysts on average were expecting a profit 65 cents per share and revenue of $3.69 billion.
  • The company, once part of the erstwhile chemical giant DowDupont, forecast 2021 adjusted earnings of $3.30 to $3.45 per share, above the $3.07 analysts had estimated, according to Refinitiv IBES.
  • Net sales estimates of between $15.40 billion and $15.60 billion also came in above analysts’ expectations of $15.11 billion.

Centene misses profit estimates on higher COVID-19 costs – Reuters, 2/9/2021

  • U.S. health insurer Centene on Tuesday missed quarterly profit estimates due to higher costs related to COVID-19 treatment and testing.
  • Total revenue jumped 50% to $28.29 billion, but narrowly missed analysts’ estimates of $28.36 billion.
  • Centene’s health benefits ratio, the amount it spends on medical claims compared with its income from premiums, came in at 88.4% in the fourth quarter, in line with a year ago.
  • Analysts on average had expected a ratio of 88%, according to Refinitiv IBES data.
  • The company maintained its full-year adjusted profit of between $5.00 and $5.30 per share. Analysts on average were expecting $5.24.
  • Centene, however raised its full-year revenue forecast range to $116.1 billion to $118.1 billion, from $114.1 billion to $116.1 billion.

Simon Property forecasts higher annual profit as rent collection improves – Reuters, 2/9/2021

  • Simon Property Group forecast a rise in its 2021 profit on Monday as the U.S. mall operator benefits from improving rent collection and a recovery in the retail industry, pushing its shares up 2% in extended trading.
  • Lease income slumped nearly 24% to $1.03 billion in the fourth quarter ended Dec. 31, missing analysts’ estimates of $1.08 billion, according to Refinitiv IBES data.
  • Simon said it had collected 90% of combined the second, third and fourth-quarter net billed rents as of Feb. 5.
  • It had garnered only 85% of third-quarter net billed rents as of Nov. 6.
  • Funds from operation of $2.17 per share also missed estimates of $2.22.
  • Simon forecast 2021 earnings per share of $4.60 to $4.85, compared with $3.59 per share in 2020.

Hasbro hampered by near-term cost pressure after bumper holiday sales – Reuters, 2/9/2021

  • Hasbro warned on Monday that profit could come under pressure from investments in new video content and toys after a year when the toymaker’s sales rose during the coronavirus crisis.
  • Revenue jumped 21% to $1.72 billion in the three months ended Dec. 27, beating a Refinitiv IBES estimate of $1.69 billion.
  • Excluding items, Hasbro earned $1.27 per share, also topping estimates of $1.14.
  • Hasbro will invest between $675 million and $750 million on content across scripted and unscripted live action, animated TV and film in 2021, up from $439 million last year.
  • Hasbro also said it would face higher costs as it struggles to keep certain products, including “The Child” toy and “Operation Pet Scan” board game, in stock.

GM extends vehicle production cuts due to global chip shortage – Reuters, 2/9/2021

  • General Motors said on Tuesday it was extending production cuts at three North American plants until at least mid-March due to the global semiconductor chip shortage, while vehicles at two other factories would only be partially built.
  • GM, whose shares dipped almost 1% after the announcement, did not disclose the impact volumes or say which supplier and vehicle parts were affected by the chip shortage.
  • But it said it would focus on keeping production running at plants building its highest-profit vehicles: full-size pickup trucks and SUVs. GM said it intended to make up as much lost production as possible once the shortage chip eased.
  • GM vehicles affected by the idled plants include the Chevrolet Malibu sedan, Cadillac XT4 SUV, Chevy Equinox, and GMC Terrain SUVs.
  • Vehicles to be left incomplete for now included the Chevy Colorado, GMC Canyon pickups and Chevy Blazer SUV.

Apple iPhone 12 mini sales slow as smaller smartphones lose appeal – report – Reuters, 2/9/2021

  • Apple’s iPhone 12 mini U.S. sales were just 5% of overall sales of its new phones during the first half of January, industry data provider Counterpoint said on Tuesday, adding to signs of muted demand for the new smaller version of its flagship device.
  • The company launched a smaller variant of the iPhone 12 model last year, but demand for the smaller smartphones seems to be weaker, compared to the high-end iPhone 12 Pros and the older iPhone 11s.
  • J.P. Morgan analyst William Yang said in a note last week that weak demand for the smaller iPhone 12 and 12 mini might lead Apple to stop production of the mini in the second quarter.

Super Bowl Draws Lowest Audience Since 2007 – Wall Street Journal, 2/9/2021

  • About 96.4 million people watched ageless wonder Tom Brady lead the Buccaneers to a 31-9 Super Bowl victory over the defending champion Chiefs on CBS, a 5.5% decrease from the 102 million that saw last year’s much closer and coronavirus-free match between the Chiefs and San Francisco 49ers on Fox.
  • The last time the Super Bowl had such a small number of viewers was the 2007 contest between the Indianapolis Colts and Chicago Bears, which averaged 93.2 million viewers.
  • The streaming audience for the game was 5.7 million viewers a minute, a record and an increase of 65% compared with last year’s game.
  • That indicates the growing popularity of streaming as a distribution platform.
  • The regular-season average audience for NFL games was 15.6 million, a 7% decline, which the league attributed to interest in election news.
  • Postseason ratings also were down, except for the AFC and NFC championship games.

Electronic Arts Buys Glu Mobile, Maker of ‘Kim Kardashian: Hollywood’ – Wall Street Journal, 2/9/2021

  • Electronic Arts said Monday it is acquiring Glu Mobile in a $2.4 billion deal aimed at expanding an area of business in which the videogame giant has had mixed success.
  • Glu shareholders will receive $12.50 a share, representing a 36% premium to Glu’s closing price Friday, EA said.
  • Glu, founded in 2001 as Cyent Studios and renamed later that year as Sorrent, went public in 2007. Chinese internet conglomerate Tencent Holdings is Glu’s largest shareholder, with a roughly 15% stake that it purchased in 2015.

Reddit’s Valuation Doubles to $6 Billion After Funding Round – Wall Street Journal, 2/9/2021

  • Reddit doubled its valuation to $6 billion in a new round of funding that comes as the social-media company has added users through the Covid-19 pandemic and more recently has gained attention for its role in the recent Wall Street trading frenzy.
  • Reddit on Monday said it raised $250 million in a late-stage funding round led by venture-capital firm Vy Capital. Previously it was valued at $3 billion after its last funding round in February 2019, according to PitchBook, a provider of private-market data.
  • The most recent user numbers from Reddit put the daily average at 52 million as of October, which was up 44% from the same month a year earlier.

Huawei Files U.S. Lawsuit Disputing It Is a Security Threat – Wall Street Journal, 2/9/2021

  • China’s Huawei Technologies filed a lawsuit in the U.S. disputing its designation as a national security threat by the Federal Communications Commission, stepping up legal challenges in the country despite a change of administration in Washington.
  • The lawsuit filed Monday in the U.S. Court of Appeals for the Fifth Circuit asked for a review of an FCC ruling last year that the company poses a national security threat, and blocking American telecommunications operators from accessing a multibillion-dollar fund to buy Huawei-made telecom gear.
  • Huawei’s lawsuit filed on Monday said the FCC’s ruling in December exceeded its authority and was “arbitrary, capricious, and an abuse of discretion, and not supported by substantial evidence.”
  • The lawsuit was filed hours before Huawei’s founder, Ren Zhengfei, told a group of journalists in China that he hoped that the Biden administration would be more open to policies “that are in the interests of U.S. companies,” and that he would welcome a phone call from the new president.

Democrats’ Plan Offers $1,400 Stimulus Checks at Same Income Levels as Previous Rounds – Wall Street Journal, 2/9/2021

  • House Democrats released the biggest piece of their coronavirus relief bill late Monday, offering a measure that would extend a $400-a-week unemployment insurance payment through Aug. 29 and send $1,400 per-person payments to most households without lowering the income thresholds from earlier rounds.
  • Democrats have been debating whether to reduce those income levels, but the version headed for a Ways and Means Committee vote this week gives the full amounts to individuals with incomes up to $75,000 and married couples with incomes up to $150,000.
  • A married couple with two children under 17 would get as much as $5,600, compared with $3,400 from the first round of payments and $2,400 in the second round.
  • A single parent with a college student would get up to $2,800, compared with $1,200 from the first round and $600 in the second round.
  • The legislation also expands the child tax credit, broadens child-care assistance and bolsters tax credits for health insurance.
  • Other sections of the relief plan will provide $130 billion in funding for K-12 schools, $40 billion for colleges and universities and $39 billion for child-care providers.
  • Sen. Joe Manchin (D., W.Va.), a centrist Democrat whose support will be key to passing the legislation, had called for the payments to begin phasing down at $50,000 for individuals and $100,000 for couples.
  • He said Monday that he would study the House bill. “I’m going to look at it, as long as we’re targeting to people that really need it,” he said.

Job Openings Pick Up in Pandemic-Resilient Industries – Wall Street Journal, 2/9/2021

  • The number of help-wanted ads returned to pre-pandemic levels in January, particularly among industries that have weathered the pandemic relatively well, a sign that hiring could pick up from its sluggish pace at the start of the year.
  • Available jobs on job-search site Indeed were up 0.7% at the end of January from Feb. 1, 2020, according to the company’s measure of job posting trends.
  • The number of postings to the site has grown since hitting a low in May, though the pace of new openings has slowed in recent months, Indeed said.
  • In the industries hit hardest by the pandemic, Indeed said job postings are lagging.
  • Openings in hospitality and tourism, for example, are down nearly 37.9% from Feb. 1, 2020, according to Indeed’s data. In arts and entertainment, the number of postings on Indeed at the end of January were 16.8% below pre-pandemic levels.

U.S. job openings edge up in December, hiring declines – Reuters, 2/9/2021

  • U.S. job openings increased marginally in December while hiring declined, pointing to a labor market that was treading water amid a raging COVID-19 pandemic.
  • Job openings, a measure of labor demand, rose to 6.65 million on the last day of December from 6.572 million in the previous month, the Labor Department said on Tuesday in its monthly Job Openings and Labor Turnover Survey, or JOLTS report.
  • The job openings rate ticked up to 4.5% from 4.4% in November.
  • Hiring dropped to 5.54 million from 5.94 million in November.
  • The hiring rate declined to 3.9% from 4.2% in November.
  • Layoffs decreased to 1.81 million in December from 2.056 million in the prior month.
  • That lowered the layoffs rate to 1.3% from 1.4% in November.

$15 Minimum Wage Would Cut Employment, Reduce Poverty, CBO Study Finds – Wall Street Journal, 2/9/2021

  • Raising the federal minimum wage to $15 an hour by 2025 could deliver raises for 27 million workers and lift 900,000 Americans above the poverty threshold—but the policy would cost 1.4 million Americans their jobs over the next four years, according to a study released by the nonpartisan Congressional Budget Office Monday.
  • The study reaffirms a finding that a $15 minimum wage could cost the U.S. jobs, slightly increasing a job-loss estimate from a widely cited 2019 CBO study.
  • While many Americans would see raises, the analysis showed a minimum-wage increase would cause prices to rise, the federal budget deficit to widen and overall economic output to slightly decrease over the next decade.
  • While more than one million would lose jobs, the report said 17 million U.S. workers, or about 10% of the labor force, would have their pay increased. Another 10 million workers who earn slightly more than $15 an hour could also potentially see pay increases.

Biden, India’s Modi Discuss Myanmar, Security Challenges Posed by China – Wall Street Journal, 2/9/2021

  • President Biden spoke with Indian Prime Minister Narendra Modi on Monday, discussing regional security issues that revolve around China and the upheaval in Myanmar, the White House said.
  • The two leaders agreed to promote a free and open Indo-Pacific, “including support for freedom of navigation, territorial integrity, and a stronger regional architecture through the Quad,” the White House said in a statement about the call, referring to the four-nation group that also includes Japan and Australia.
  • Although China wasn’t mentioned by the White House, increased Chinese patrols around Japanese-controlled islands in the East China Sea last year steered the democracies toward heightened cooperation. The Quad reformed in 2017 in part to address a rising China.
  • Messrs. Biden and Modi also discussed the upheaval in Myanmar as well as Covid-19 and climate change, according to the White House.


Honda raises full-year profit forecast helped by car sales rebound, cost cuts – Reuters, 2/9/2021

  • Japanese automaker Honda Motor on Tuesday hiked its full-year operating profit forecast 23% to 520 billion yen as demand in China and elsewhere gained momentum and it trimmed costs.
  • Honda’s latest profit forecast is up from the 420 billion yen profit it predicted three months ago and higher than an average 463.6 billion yen forecast from 21 analysts, Refinitiv data shows.
  • The maker of the CR-V SUV crossover also posted a better-than-expected 67% jump in operating profit for the three months to Dec. 31 to 277.7 billion.
  • That result was better than an estimated average of 176.72 billion yen from eight analysts surveyed by Refinitiv SmartEstimate.
  • Honda said expects to sell 4.5 million cars globally in its business year to March 31 compared with a previous forecast of 4.6 million vehicles

Pot producer Canopy Growth sees profit in 2022 as costs drop, sales rise – Reuters, 2/9/2021

  • Canopy Growth, the world’s largest pot producer, said on Tuesday it expects to turn a profit in the second half of 2022 after aggressive cost-cutting and higher demand for cannabis products helped narrow third-quarter losses.
  • Canopy, which sells a range of products from dried flowers to chocolates and drinks mixed with weed, said its net revenue rose 23% in the quarter to C$152.5 million.
  • Expenses dropped by 15% to C$144.1 million.
  • Its adjusted loss shrank to C$68.4 million ($53.74 million) from C$97 million in the third quarter, although asset impairments and one-time restructuring costs led the company to post a net loss of more than C$900 million.
  • Canopy said it expects to start generating cash by fiscal 2024 and become operating cash flow positive a year before that, soothing market worries on profitability and sending the company’s shares up 2%.

Factmonster – TODAY in HISTORY

  • Jefferson Davis was chosen as the president of the Confederate States of America. (1861)
  • Senator Joseph McCarthy claimed he had evidence there were card-carrying members of the Communist Party in the State Department. (1950)
  • The Beatles made their first appearance on The Ed Sullivan Show. (1964)

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