Daily Market Report | Feb. 17, 2021
U.S. Stocks Slip Ahead of Fed Minutes – Wall Street Journal, 2/17/2021
- U.S. stocks fell Wednesday as investors weighed signs of an improving economy against concerns about lofty stock valuations and rising inflation expectations.
- Stocks have been muted in recent days after a rally that saw the major indexes notch record highs.
- Fresh data on Wednesday showed that U.S. retail sales climbed more than expected in January, driven in part by the latest round of stimulus checks and declining Covid-19 infection numbers.
- That marked a turnaround from three consecutive months of declining sales during the 2020 holiday shopping season.
- Some investors say they remain optimistic.
- Money managers are focused on fresh stimulus from President Biden’s administration and measures to contain the coronavirus pandemic.
- Minutes from the Fed’s last rate-setting meeting are scheduled to be released at 2 p.m. ET.
- Investors will be scrutinizing the minutes for cues on policy makers’ view of the economy and monetary policy.
- In Asia, the major indexes ended on a mixed note. Japan’s Nikkei 225 fell 0.6%.
- Hong Kong’s Hang Seng Index rose 1.1%. Markets in mainland China remained closed for the Lunar New Year holiday.
Covid-19 Live Updates: Newly Reported Cases, Deaths Rise in U.S., but Downward Trend Continues – Wall Street Journal, 2/17/2021
- Newly reported Covid-19 infections, hospitalizations and deaths in the U.S. continued their broad decline after fall’s steep surge, though a winter storm that left millions of Americans without power likely hindered some data reporting.
- The U.S. reported more than 62,000 new cases and more than 1,700 deaths for Tuesday, both slightly higher than a day earlier, while hospitalizations fell to around 64,500, according to data from Johns Hopkins University and the Covid Tracking Project.
- Vaccinations, while also disrupted by the storm, appeared to continue to accelerate.
- About 1.5 million vaccine shots were administered on Tuesday, according to a Wall Street Journal analysis of data from the Centers for Disease Control and Prevention.
- More than 55 million shots have now been administered, which represents about 12% of the U.S. population.
- The Biden Administration said Tuesday it would increase vaccine supply to 13.5 million doses a week and double the shots sent directly to local pharmacies to two million a week.
Hilton posts surprise loss as surging COVID-19 cases hurt bookings – Reuters, 2/17/2021
- Hilton Worldwide Holdings on Wednesday posted a surprise quarterly loss as bookings took a hit from a resurgence in COVID-19 cases and renewed travel curbs, sending shares of the U.S. hotel operator down 2.3% in premarket trading.
- Revenue plunged 62% to $890 million, below Wall Street’s estimate of $1.03 billion.
- Hilton, the first major hotel chain to report earnings, said fourth-quarter revenue per available room (RevPAR) – a key measure for a hotel’s top-line performance – fell about 59% to $40.68, and was below the company’s expectation of about $45 per room.
- Net loss attributable to Hilton stockholders was $224 million, or 80 cents per share, in the quarter ended Dec. 31, compared with net income of $175 million, or 61 cents per share, a year earlier.
Shopify tempers 2021 expectations after record year for online demand – Wall Street Journal, 2/17/2021
- Shopify hinted revenue growth would slow this year, as vaccine rollouts encourage people to return to stores, after the Canadian e-commerce firm trounced profit and revenue expectations for the holiday quarter on soaring online demand.
- Revenue nearly doubled to $977.7 million, beating estimates of $910.2 million.
- Adjusted earnings of $1.58 per share also topped estimates of $1.26.
- Gross merchandise volume rose 99% to $41.1 billion during the all-important holiday shopping season, the third straight quarter of record growth, also beating analysts’ estimates of $36.67 billion, according to IBES data from Refinitiv.
- The Ottawa-based company, which generates revenue through subscriptions and merchant services, said monthly recurring revenue rose 53% to $82.6 million as more sellers on free trials converted into paying subscribers.
- The company said it does not expect the near doubling of gross merchandise volume (GMV), an industry metric to measure transaction volumes, in 2020 to repeat this year.
- The company says it has about 1.7 million total merchants now using its platform.
- Shopify noted in its fourth-quarter investor presentation that it had just a 9% share of all U.S. retail e-commerce sales last year, pegging Amazon.com’s share at nearly 39%.
Ford Vows to Phase Out Gas Cars in Europe by 2030 – Wall Street Journal, 2/17/2021
- Ford Motor said it would invest $1 billion in a German factory as part of a plan to phase out gas-powered cars in Europe by 2030, the latest auto maker to embrace a shift to electric vehicles.
- Ford said Wednesday that it will convert its plant in Cologne to produce electrics, including the company’s first European-built all-electric passenger car in 2023. By 2030, electric vehicles should account for all its passenger-car sales in Europe, along with two-thirds of its commercial vans and trucks, the company said.
- General Motors said last month that it would phase out production of gasoline-powered vehicles by 2035, echoing similar plans by Volkswagen, Europe’s biggest automotive producer.
iHeartMedia to Acquire Triton Digital from Scripps – Wall Street Journal, 2/17/2021
- iHeartMedia has agreed to acquire E.W. Scripps’s Triton Digital for $230 million in a deal that will give the radio giant a full slate of audio advertising technology and measurement capabilities as it builds out its podcast business.
- The biggest U.S. radio broadcaster has been working to expand its digital, streaming and on-demand business, and launched its bigger bet on podcasting in 2018 with its acquisition of Stuff Media LLC.
- Triton—founded in 2006 and purchased by Scripps in 2018 from private-equity firm Vector Capital for $150 million—provides publishers advertising infrastructure and measurement tools, including distribution for digital-audio streams and podcasts, while dynamically inserting ads based on who is listening and audience tracking.
Epic Games Files Antitrust Complaint Against Apple in Europe – Wall Street Journal, 2/17/2021
- “Fortnite” game developer Epic Games has filed an antitrust complaint against Apple in the European Union, broadening its continuing legal battle after filing similar lawsuits in the U.S., Australia and the U.K.
- At the core of the legal dispute is how much control and revenue share technology giants should have in relation to popular apps.
- The online game “Fortnite” was kicked out of both Apple’s App Store and Alphabet’s Google Play Store last year after Epic introduced a payment system that effectively cut off both companies from the 30% share of users’ spending that they had charged Epic.
- Epic has sued both Apple and Google for alleged monopolistic behavior in the U.S., and Apple countersued.
- In Europe, Epic’s legal complaint joins plaintiffs including music-streaming service Spotify Technology SA that have prompted a formal investigation into Apple’s alleged anticompetitive behavior.
Saudi Arabia Set to Raise Oil Output Amid Recovery in Prices – Wall Street Journal, 2/17/2021
- Saudi Arabia plans to increase oil output in the coming months, reversing a recent big production cut, say advisers to the kingdom, a sign of growing confidence over an oil-price recovery.
- The world’s largest oil exporter surprised oil markets last month when it said it would unilaterally slash 1 million barrels a day of crude production in February and March in an effort to raise prices.
- But the kingdom plans to announce a reversal of those cuts when a coalition of oil producers meets next month, the advisers said, in light of the recent recovery in prices.
- The output rise won’t kick in until April, given the Saudis have already committed to stick to cuts through March.
UAE regulator lifts safety ban on Boeing 737 MAX jet – Reuters, 2/17/2021
- The United Arab Emirates civil aviation authority has authorized Boeing 737 MAX planes to resume flying, state news agency WAM said on Wednesday.
- The plane was grounded globally in March 2019 after two fatal crashes in five months killed 346 people. Emirati carrier flydubai is a major buyer of the jet.
- The United States lifted its ban in November, and the European Union Aviation Safety Agency (EASA) lifted its ban last month.
NXP shuts two Austin plants as Texas reels from winter storm – Reuters, 2/17/2021
- Chipmaker NXP Semiconductors said on Wednesday it had idled two manufacturing plants in Austin, Texas as a historic winter storm gripped much of the state, forcing utility companies to curb their services.
- “Austin-area utility providers are prioritizing service to residential areas,” the company said in a statement, adding that it was notifying affected customers of potential supply disruptions.
- The winter storm in Texas has killed at least 21 people, left millions of Texans without power and spun killer tornadoes into the U.S. Southeast on Tuesday.
New York State Sues Amazon Over Worker Treatment During Covid-19 Pandemic – Wall Street Journal, 2/17/2021
- New York’s attorney general has filed a lawsuit against Amazon.com that accuses the online retailer of not doing enough to protect workers in the state from the coronavirus.
- Last week, Amazon sued New York’s attorney general to prevent the state from taking legal action against the company over its handling of worker safety during the pandemic and the firing of one of its warehouse workers last year.
- “Throughout the historic pandemic, Amazon has repeatedly and persistently failed to comply with its obligation to institute reasonable and adequate measures to protect its workers from the spread of the virus in its New York City facilities,” New York state Attorney General Letitia James wrote in a complaint filed on Tuesday in the state Supreme Court.
- Ms. James said in the complaint that Amazon failed to comply with state cleaning and disinfection requirements at its facilities. The company also didn’t adequately notify employees of infected co-workers, according to the complaint.
SEC Sues Morningstar, Alleging Undisclosed Changes to Bond Ratings – Wall Street Journal, 2/17/2021
- Morningstar allowed credit-rating analysts to adjust financial models that resulted in better terms for bond issuers and in some cases less interest income for investors, the Securities and Exchange Commission alleged in a civil lawsuit on Tuesday.
- The undisclosed adjustments were made to 30 commercial mortgage-backed securities valued at $30 billion, the SEC said in the lawsuit filed in Manhattan federal court.
- The SEC alleged the changes were material, meaning investors who relied on the ratings should have been told about them.
Additional fiscal stimulus fuels U.S. retail sales – Reuters, 2/17/2021
- U.S. retail sales rebounded sharply in January after households received additional pandemic relief money from the government, suggesting a pick-up in economic activity after being restrained by a fresh wave of COVID-19 infections late last year.
- Retail sales surged by a seasonally adjusted 5.3% last month, the Commerce Department said on Wednesday.
- Data for December was revised down to show sales decreasing 1.0% instead of 0.7% as previously reported.
- Economists polled by Reuters had forecast retail sales increasing 1.1% in January.
- Retail sales increased 7.4% from a year ago.
- Online retail sales jumped 11.0% after dropping 7.3% in December.
EUROPE & WORLD
Nestle to Sell Poland Spring, Pure Life and Other Water Brands for $4.3 Billion – Wall Street Journal, 2/17/2021
- Nestle agreed to sell most of its North American bottled-water brands, including Poland Spring, Arrowhead and Pure Life, for $4.3 billion, hoping to jump-start growth by focusing on a slimmed-down group of upscale, more on-trend brands.
- The company’s North American water business—excluding the global brands it is keeping—generated sales of around 3.4 billion Swiss francs, equivalent to $3.8 billion, in 2019, making up the biggest chunk of its global bottled-water business, which had 7.8 billion francs in sales.
- Nestle Chief Executive Mark Schneider said Wednesday the company would now focus in North America on selling its premium brands and natural mineral waters, as well as boosting efforts in so-called functional water, a common example of which is caffeinated water.
China Blocked Jack Ma’s Ant IPO After Investigation Revealed Likely Beneficiaries – Wall Street Journal, 2/17/2021
- When China’s leader Xi Jinping late last year quashed Ant Group’s initial public offering, his motives appeared clear: He was worried that Ant was adding risk to the financial system, and furious at its founder, Jack Ma, for criticizing his signature campaign to strengthen financial oversight.
- There was another key reason, according to more than a dozen Chinese officials and government advisers: growing unease in Beijing over Ant’s complex ownership structure—and the people who stood to gain most from what would have been the world’s largest IPO.
- In the weeks before the financial-technology giant was scheduled to go public, a previously unreported central-government investigation found that Ant’s IPO prospectus obscured the complexity of the firm’s ownership, according to the officials and government advisers, who had knowledge of the probe.
- Behind layers of opaque investment vehicles that own stakes in the firm are a coterie of well-connected Chinese power players, including some with links to political families that represent a potential challenge to President Xi and his inner circle.
- Those individuals, along with Mr. Ma and the company’s top managers, stood to pocket billions of dollars from a listing that would have valued the company at more than $300 billion.
Factmonster – TODAY in HISTORY
- President Richard Nixon left on his trip to China. (1972)
- Chess champion Garry Kasparov beat the IBM computer, Deep Blue, winning the six-game match. (1996)
- Kosovo declared independence from Serbia. (2008)
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