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Daily Market Report | Feb. 22, 2021

U.S. Stocks Drop Amid Rising Bond Yields – Wall Street Journal, 2/22/2021

  • U.S. stocks fell on Monday as rising bond yields fueled concern that a surge higher in technology shares could slow down.
  • The tech-heavy Nasdaq Composite dropped 0.9% in morning trading.
  • Many of the tech giants that had been trading at record highs earlier this month posted declines.
  • Microsoft dropped 2.3%, while Google parent Alphabet fell 1.5%. Apple was down 1.4% at the open.
  • Investors’ bets on an economic rebound later in the year have contributed to a selloff in U.S. government bonds in recent weeks.
  • Declining bond prices result in rising yields, which make it more attractive for investors to buy assets considered to be safe havens, while reducing the allure of highflying tech stocks.
  • The yield on 10-year Treasurys ticked up to 1.345%, from 1.344% Friday, extending its gains after climbing for three consecutive weeks.
  • Money managers in general have been rotating out of the richly valued technology stocks that led markets higher last year.
  • As the outlook brightens, they are moving funds into economically sensitive sectors, leading to a rally in bank and energy stocks.
  • Eight of the S&P 500’s 11 sectors were in negative territory on Monday, with technology among the worse performers.
  • Energy and financials were among the sectors posting gains.
  • In Asia, most major stock benchmarks retreated.
  • The Shanghai Composite Index fell almost 1.5%, and Hong Kong’s Hang Seng dropped nearly 1.1%.
  • Japan’s Nikkei 225 advanced 0.5%.

Coronavirus Live Updates: New U.S. Cases Fall as Death Toll Nears Half Million – Wall Street Journal, 2/22/2021

  • The U.S. death toll from Covid-19 approached half a million, even as newly reported cases and hospitalizations due to the disease declined.
  • The country reported more than 56,000 new coronavirus cases for Sunday, down from Saturday’s total, which exceeded 71,000, according to data compiled by Johns Hopkins University that was published early Monday Eastern time.
  • The U.S. death toll approached 500,000 early Monday, with more than 1,200 fatalities reported on Sunday, according to Johns Hopkins data.
  • There were 1,821 deaths reported for Saturday.
  • Hospitalizations due to the disease fell to 56,159 as of Sunday, down more than 53% from a month earlier, according to the Covid Tracking Project.
  • The number of Covid-19 patients requiring treatment in intensive care units was less than 12,000 for the first time since Nov. 9, with 11,862 people in ICUs across the country.

Stuck in port, Royal Caribbean’s quarterly loss cruises past $1 billion – Reuters, 2/22/2021

  • Royal Caribbean lost $1 billion-plus in the fourth quarter as the coronavirus crisis kept its cruise ships ashore, but pointed to strong booking trends for 2022.
  • With its ships not sailing, Royal Caribbean’s total revenue for the quarter plunged to $34.1 million from $2.52 billion last year.
  • Analysts had expected a revenue of $35.6 million, according to Refinitiv IBES data.
  • The operator of “Oasis of the Seas” and “Symphony of the Seas” cruises posted a net attributable loss of $1.37 billion, or $6.09 per share, in the quarter ended Dec. 31, compared with a profit of $273.1 million, or $1.30 per share, a year earlier.
  • However, the company said bookings for the first half of 2022 were within historical ranges and at higher prices, underlining a strong demand for cruises.
  • As of December end, Royal Caribbean had about $4.4 billion in liquidity, up from about $3.7 billion at the end of the third quarter, after it raised $1 billion in a stock offering during the fourth quarter.

Discovery expects 12 million paid streaming subscribers by February-end – Reuters, 2/22/2021

  • Discovery said on Monday it expects to have 12 million global paid streaming subscribers by the end of this month, as coronavirus-led restrictions kept people home and fueled subscriber growth.
  • The Silver Spring, Maryland-based company posted on Monday a fourth-quarter revenue of $2.89 billion, above Wall Street’s estimates of $2.83 billion, according to Refinitiv IBES data.
  • Discovery+ has already launched in India, the UK and Ireland and will eventually be available in 25 countries.

Boeing Backs Grounding Some 777 Jets After Failure During United Flight – Wall Street Journal, 2/22/2021

  • Boeing on Sunday told airlines to stop flying its wide-body 777 aircraft equipped with a type of engine that broke apart during a flight over the weekend near Denver, as the Federal Aviation Administration said it would order immediate inspections of those jets.
  • Boeing’s recommendation followed action by regulators in the U.S. and Japan aimed at the Pratt & Whitney engines found on 128 of its 777s.
  • The United Airlines Holdings flight was the third failure involving that model plane with those engines in recent years.
  • United, the only airline in the U.S. that uses that engine type, said earlier Sunday evening that it had taken two dozen planes out of service.

Goodyear to Buy Rival Cooper Tire for $2.8 Billion – Wall Street Journal, 2/22/2021

  • Goodyear Tire & Rubber agreed to buy Cooper Tire & Rubber, a combination the companies said would create a larger firm that could reduce costs and support investments tied in part to the changing landscape for cars and other vehicles.
  • Goodyear said Monday it will pay about $2.8 billion in cash and stock for its smaller rival, including $41.75 a share in cash for Cooper’s shares, which rose about 24% to $54.11 in morning trading.
  • Goodyear’s shares increased more than 7% to $14.92.
  • The combined company would generate annual revenue of roughly $17.5 billion and have some 72,000 employees globally, according to an investor presentation. Cooper’s tire brands include its namesake line and Mastercraft.
  • Within two years of the completion of the deal, cost savings are expected to total $165 million annually, the tire companies said.

Australia says no further Facebook, Google amendments as final vote nears – Reuters, 2/22/2021

  • Australia will not alter legislation that would make Facebook and Alphabet Inc’s Google pay news outlets for content, a senior lawmaker said on Monday, as Canberra neared a final vote on whether to pass the bill into law.
  • Other countries including Canada and Britain have already expressed interest in taking some sort of similar action.
  • While both Google and Facebook have campaigned against the laws, Google last week inked deals with top Australian outlets, including a global deal with Rupert Murdoch’s News Corp.

Taco Bell looks to enter crowding chicken sandwich space – Reuters, 2/22/2021

  • Taco Bell, a unit of Yum Brands, said on Monday it would launch its own version of a chicken sandwich this year, becoming the latest fast food chain to take a bite out of a category that is soaring in popularity.
  • The category was set alight in 2019 by a social media war between loyalists of chicken sandwiches from Chic-fil-A and Popeyes, another unit of Restaurant Brands.
  • Taco Bell’s Crispy Chicken Sandwich Taco, which is served in a puffy bread shaped like a taco, will be tested in Nashville and Charlotte starting March 11 for $2.49.
  • A nationwide rollout is planned for later this year.

Europe’s aviation regulator requesting information on Pratt & Whitney jet incidents – Reuters, 2/22/2021

  • Europe’s EASA aviation regulator said on Monday that it was aware of the Pratt & Whitney jet engine incidents, and was requesting information on the cause to determine what action may be needed.
  • Boeing said earlier that it recommended suspending the use of 777 jets with the same type of engine that shed debris over Denver at the weekend after U.S. regulators announced extra inspections and Japan suspended their use while considering further action.
  • The moves involving Pratt & Whitney PW4000 engines came after a United Airlines 777 landed safely in Denver on Saturday local time after its right engine failed.

Biden Prepares for Sweeping Recovery Package After Covid-19 Relief Bill – Wall Street Journal, 2/22/2021

  • As President Biden pushes for passage of his coronavirus relief plan, he has begun working on a wide-ranging economic recovery package that could face skepticism from lawmakers who are wary of another high-dollar legislative response to the pandemic.
  • The exact contours of the new round of investments in the economy remain to be determined. Mr. Biden during his presidential campaign outlined his interest in new infrastructure investments and measures to combat climate change and boost manufacturing jobs, as well as improving access to child care and seeking ways to increase racial equity.
  • The prospect of another pricey package is already raising concerns among some Republicans. Congressional aides also said that while there is bipartisan interest in funding infrastructure improvements, there will be tension between progressive lawmakers who want expansive proposals that address longstanding Democratic priorities and moderates and Republicans who support less expensive, more tailored measures.
  • Sen. Shelley Moore Capito (R., W.Va.), who was among a group of lawmakers who recently discussed infrastructure plans with Mr. Biden in the Oval Office, noted that if Congress passes Mr. Biden’s $1.9 trillion relief package, it will have approved more than $3 trillion in spending related to the pandemic since December.

Paycheck Protection Program to Offer Exclusive Covid-19 Loan-Application Window for Smallest Firms – Wall Street Journal, 2/22/2021

  • The federal government’s signature coronavirus-relief program for small businesses will accept applications exclusively from companies with fewer than 20 employees for 14 days starting Wednesday, President Biden will announce Monday, according to administration officials.
  • PPP applicants with fewer than 20 employees will be able to apply exclusively from 9 a.m. ET on Wednesday until 5 p.m. ET on March 9, an administration official said.
  • The program overall is slated to end March 31.

Republicans Romney, Collins to Oppose Biden’s Pick to Lead Budget Office – Wall Street Journal, 2/22/2021

  • Republican Sens. Susan Collins and Mitt Romney said they would oppose Neera Tanden’s nomination to lead the Office of Management and Budget, further narrowing her chances of getting confirmed by the Senate.
  • In a statement, Mr. Romney’s spokeswoman cited Ms. Tanden’s past statements on social media, which have come under criticism from lawmakers.
  • Earlier Monday, Ms. Collins, a moderate from Maine who was among a handful of Republicans who were seen as possibly supporting the nomination, cited Ms. Tanden’s past statements on social media in explaining her decision.
  • On Friday, Democratic Sen. Joe Manchin of West Virginia said he would oppose Ms. Tanden, citing her past statements and tweets criticizing Republicans.
  • Mr. Biden said on Friday that he had no plans to withdraw Ms. Tanden’s nomination, adding that he believed he could find the votes to confirm her.

Treasury Watchdog Warns of Government’s Use of Cellphone Data Without Warrants – Wall Street Journal, 2/22/2021

  • A new Treasury Department watchdog report warns that law enforcement agencies may not be on firm legal footing when they use cellphone GPS data drawn from mobile apps without obtaining a warrant first.
  • In a review of the Internal Revenue Service’s use of a commercial platform that allowed the agency to track cellphones, the Treasury Department inspector general for tax administration said that a landmark 2018 Supreme Court case might preclude the warrantless tracking of criminal suspects through location data generated by weather, game and other apps.
  • The watchdog’s report is only a recommendation, and its interpretation of the law hasn’t been blessed by any court. Yet it is the first known government analysis to raise serious doubt about the legality of law enforcement and intelligence agencies purchasing highly revealing information generated by U.S. cellphones and other digital services.
  • Cellphone location records are an “exhaustive chronicle of location information casually collected by wireless carriers,” the Supreme Court said, and therefore law enforcement must get a warrant to access the data.

EUROPE & WORLD

Europe Set to Tip Toward U.S.’s Tougher Stance on Russia, China – Wall Street Journal, 2/22/2021

  • The European Union is set to impose fresh sanctions on Russian officials over the jailing of opposition leader Alexei Navalny and plans to discuss measures to challenge Beijing over its crackdown in Hong Kong, signaling a shift in the bloc’s position on the two countries toward the U.S.’s.
  • EU foreign ministers and U.S. Secretary of State Antony Blinken were holding two hours of talks Monday, discussing the Biden administration’s goal of working closely with European allies on challenges including China’s rise and the Iran nuclear deal.
  • EU officials, while stressing their foreign-policy independence, have shown signs of aligning with the U.S. on sensitive issues since President Biden took office.
  • A confidential EU paper on Hong Kong, circulated last week and seen by The Wall Street Journal, advocates greater cooperation with the U.S. and other allies in pressuring China.
  • A handful of Russian officials are set to be hit with asset freezes and travel bans over the Navalny case, diplomats said.
  • The sanctions, expected to be finalized in March, will be the first use of the EU’s new human-rights sanctions framework, similar to the U.S. Magnitsky Act.

Beijing Plans Changes to Group Selecting Hong Kong’s Leader – Wall Street Journal, 2/22/2021

  • China’s leaders plan to curb the influence of Hong Kong opposition groups on a body that selects the city’s top official, taking seats away from pro-democracy politicians and handing them to pro-Beijing loyalists, according to people familiar with the proposal.
  • At an annual legislative session in March, Chinese lawmakers are expected to vote on the proposed changes to the composition of a 1,200-member committee that picks Hong Kong’s chief executive, the people said.
  • The revisions would drastically reduce, or potentially eliminate, the 117 seats assigned to Hong Kong’s district councilors, a bloc now dominated by opposition groups, they said.
  • These seats would be given to some of the more than 200 Hong Kong-resident members of China’s top political advisory body, the Chinese People’s Political Consultative Conference, the people said.
  • The plan is part of sweeping changes presaged by the chief of Beijing’s office on Hong Kong affairs, Xia Baolong, in a speech on Monday in which he said that Hong Kong’s executive, legislature and judiciary must comprise “true patriots.”

Myanmar Protests: Hundreds of Thousands Take to the Streets During Strike to Oppose Coup – Wall Street Journal, 2/22/2021

  • Hundreds of thousands of people took to the streets across Myanmar in response to calls by activists for a general strike, mounting what appeared to be one of the largest demonstrations against this month’s coup and signaling to the country’s military that resistance to its takeover isn’t likely to abate.
  • Protesters have rallied every day for more than two weeks. The Feb. 1 coup abruptly ended Myanmar’s decadelong democratic shift and returned the country to military rule, with the hugely popular civilian politician Aung San Suu Kyi detained in her house and the commander-in-chief of the armed forces in absolute control.
  • Monday’s massive turnout, accompanied by the closure of many shops and other places of work, comes after police fired on protesters on Saturday, killing two people. More than 30 others were injured in the incident, which took place in the city of Mandalay.
  • The demonstrations don’t have a leader, but participants have mobilized crowds using phone calls, texts, live-streaming, messaging apps like Signal and social-media websites to exchange plans and alert fellow protesters.

UK shopper numbers rise for fifth straight week despite lockdown – Reuters, 2/22/2021

  • The number of people heading out to shops across Britain increased by 6.8% last week versus the previous week, a fifth straight week of uplift despite the national lockdown, market researcher Springboard said on Monday.
  • It said shopper numbers, or footfall, in the week to Feb. 20 was up 10.5% in high streets, 4.5% in shopping centers and 1.2% in retail parks.
  • Despite the increase from last week, footfall across all retail destinations remained 62.1% lower than in the same week last year, Springboard said.

China’s Online-Lending Curbs to Hit Big Tech Firms and Regional Banks – Wall Street Journal, 2/22/2021

  • China’s banking regulator formalized rules that will force Ant Group and other online lenders to have more skin in the game when they make loans with banks, dealing a blow to a burgeoning business that helped drive Chinese consumer spending in recent years.
  • Starting in 2022, internet-lending platforms in the country will have to fund at least 30% of every loan they make jointly with commercial lenders, which include banks, trust companies, and finance companies.
  • Individual banks will also be subject to new caps on how much they can lend together with online partners, according to regulations published on Saturday by the China Banking and Insurance Regulatory Commission.
  • Several analysts on Monday said the rules are aimed at large technology companies including Ant and WeBank, a large online lender backed by Tencent Holdings.
  • Both have become big originators of unsecured loans to individuals and small businesses by working with dozens of commercial lenders that supply most of the funds. Ant and WeBank declined to comment.

Factmonster – TODAY in HISTORY

  • Spain ceded Florida to the United States. (1819)
  • Calvin Coolidge made the first presidential radio broadcast from the White House. (1924)
  • In a major upset, the U.S. Olympic hockey team defeated the Soviets 4–3 at Lake Placid, N.Y. (1980)

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