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Daily Market Report | Feb. 25, 2021

Stocks Fall, Led Lower by Tech Shares – Wall Street Journal, 2/25/2021

  • U.S. stocks edged lower Thursday, weighed down by declines in technology shares.
  • Stocks have wobbled the past week as investors have grappled with a sharp rise in bond yields.
  • The shift, which money managers have broadly attributed to bets on inflation and growth picking up, has tempered enthusiasm for some of the pricier sectors of the stock market.
  • The S&P 500 technology sector lost 0.5% Thursday, among the worst-performing sectors in the index. Meanwhile, sectors of the market thought to benefit most from rising economic growth, like financials and energy, were higher for the day.

Coronavirus Live Updates – Wall Street Journal, 2/25/2021

  • More than 73,000 new U.S. cases were reported for Wednesday, Johns Hopkins University data showed.
  • Moderna said its new vaccine for the South Africa variant is ready for human testing.
  • The FDA said J&J’s Covid-19 vaccine is safe and effective.
  • Pfizer’s vaccine is equally effective across age groups, a new Israeli study found.
  • Hospitalizations in the U.S. have been on the decline for more than 40 consecutive days. As of Wednesday, 54,118 Covid-19 patients required hospitalization, down by more than 51% from a month earlier, according to the Covid Tracking Project.
  • The number of Covid-19 patients in intensive-care units fell to 11,026, the fourth day in a row the figure has been under 12,000.

Nvidia Lifts Revenue Amid Videogame Boom – Wall Street Journal, 2/25/2021

  • Nvidia reported fiscal fourth-quarter revenue of $5 billion, up 61% from a year earlier, generating $2.31 in earnings a share.
  • It also said it expects about $5.3 billion in revenue for the current quarter, ahead of Wall Street’s expectations.
  • Demand for some of Nvidia’s chips has been so hot that it has outpaced the company’s ability to increase production, adding to chip-supply shortages riling the semiconductor industry.
  • Nvidia’s game-chip business posted a record $2.5 billion in revenue for the December quarter, up 67% from a year earlier.
  • Nvidia’s high-performance graphics chips have also been popular with cryptocurrency miners.
  • The company estimates it had $100 million to $300 million in cryptocurrency related sales.
  • Nvidia said its automotive sales totaled $145 million, up 16% from the previous quarter and down 11% from a year earlier.

Booking Revenue Tumbles in Fourth Quarter on Pandemic Surge – Bloomberg, 2/25/2021

  • The world’s biggest online travel agency reported a 63% drop in sales in the fourth quarter reflecting a surge in Covid-19 cases and new lockdowns that weighed on the industry.
  • Sales plunged from a year earlier to $1.2 billion, in line with analysts average projection.
  • Room-night reservations dropped 60% compared with a year earlier.
  • Gross travel bookings, which reflect all travel services booked by customers, fell 65% to $7.3 billion during the period.
  • Booking, which runs major travel brands including Priceline and Kayak, has been slammed by the pandemic as global borders closed and city lockdowns shuttered tourist attractions and business conventions.

Hard Seltzers Help Bud Brewer Regain Some Sparkle – Wall Street Journal, 2/25/2021

  • Americans drinking more hard seltzer through the pandemic helped beer giant Anheuser-Busch InBev SA partly offset a continuing slump in sales of Budweiser and Bud Light.
  • Revenue on a reported basis dropped to $12.77 billion from $13.33 billion a year earlier.
  • Net profit jumped to $2.27 billion from $114 million a year earlier, when results were hit by higher finance costs.
  • Hard seltzers—essentially flavored alcoholic sparkling water—have emerged as one of the hottest parts of the booze market in recent years, tempting more health-conscious drinkers away from beer.
  • In response, AB InBev launched Bud Light Seltzer early last year, has since invested in several new flavors of the brand and recently rolled out Michelob Ultra Hard Seltzer.
  • Sales at its “beyond beer” unit, which includes hard seltzer, ready-to-drink cocktails and other products, grew double digits to top over $1 billion.
  • That helped AB InBev report overall fourth-quarter sales growth on an organic basis—which strips out currency moves and acquisitions and divestitures—of 4.5%.

ViacomCBS touts ‘Paramount+’ to investors after mixed earnings – Reuters, 2/25/2021

  • ViacomCBS said on Wednesday it expects to reach as many as 75 million global streaming subscribers by the end of 2024, with global streaming revenue to rise to more than $7 billion by that time.
  • The home to MTV, Nickelodeon and Showtime is launching the service – an expanded version of its existing CBS All Access streamer – on March 4 with a $9.99 per month ad-free version and in June with a $4.99 ad-supported version.
  • In its fourth-quarter results, ViacomCBS said it had amassed 30 million global paid subscribers to All Access and other streaming properties, including 19.2 million U.S. subscribers.
  • Paramount+ will be competing in a crowded streaming landscape dominated by Netflix, which has 200 million subscribers, and Walt Disney’s Disney+, with 94.9 million subscribers.
  • Revenue rose 3% to $6.87 billion in the fourth quarter ended Dec. 31.
  • Wall Street’s consensus was $6.89 billion, according to IBES data from Refinitiv.
  • Net earnings attributable to ViacomCBS were $783 million compared with a loss of $302 million a year earlier.
  • CBS launched All Access in 2014. The company’s 2019 merger with Viacom, a sister company also controlled by the Redstone family, allowed for more content on the service, including films from Paramount Pictures. Paramount+ will have more than 2500 movies.

Teladoc Stock Falls on Downbeat Forecast for Membership – Wall Street Journal, Barron’s 2/25/2021

  • Shares of the virtual healthcare provider Teladoc Health were down 6% on Thursday, after the company indicated it expected little membership growth next year.
  • The company achieved an extraordinary expansion in 2020, as the Covid-19 pandemic pushed medical visits online.
  • On Wednesday evening, Teladoc reported revenues of $383.2 million for the fourth quarter of 2020, up 145% year over year.
  • Revenues for 2020 were $1.1 billion, up from $553.3 million in 2019.
  • Shares of Teladoc are up 88.3% over the past 12 months, and 27.3% so far this year.
  • The earnings report also said, though, that paid membership is likely to be between 52 million and 54 million in 2021.
  • The company reported membership of 51.8 million as of the end of 2020, meaning that at the low end of that range, it would have virtually no increase this year.
  • The company’s CEO, Jason Gorevic, discussed the issue on a Wednesday conference call with investors and analysts. “We added 15 million members last year and 25 million members in the last two years,” Gorevic said. “That’s a staggering number …We’ve had to sort of refill the pipeline, if you will, after just an explosive year last year. And so we take a relatively conservative view of the membership growth given the earlier stage.”
  • Teladoc reported a net loss of $3.07 a share for the fourth quarter, due in part to the cost of the merger it completed in October with Livongo, a digital health firm.
  • In addition to its membership guidance, Teladoc said it expects revenues in 2021 of between $1.95 billion and $2 billion.
  • Analysts expect sales of $2 billion, according to FactSet.

Verizon Leads 5G Airwave Bidding with Record $45 Billion Splurge – Bloomberg, 2/25/2021

  • The budget-stretching bidding underscores how crucial these so-called midband frequencies are to companies trying to seize global leadership in emerging 5G technology. The airwaves are prized for their combined ability to travel far and carry lots of data. They are expected to drive years of growth when deployed for next-generation mobile devices, autonomous vehicles, health-care equipment and manufacturing facilities.
  • Verizon committed $45 billion for 5G wireless airwaves in a government auction that attracted record bidding as the largest U.S. mobile carriers race to build faster networks.
  • At $23 billion, AT&T was the second-highest bidder, according to the Federal Communications Commission, which ran the auction. Participants also included T-Mobile US and pay-TV providers such as Dish Network Corp., Comcast and Charter Communications.
  • Some have already tapped the debt market to help pay the tab.
  • The auction started in December, and within days the tally exceeded analysts’ estimates of $47 billion before settling at $81.2 billion.
  • In addition to the airwaves licenses, winning bidders also will pay an estimated $13 billion or more to current users of the airwaves, including satellite providers Intelsat SA and SES SA. The satellite companies will move to different frequencies to make room for the 5G providers.

Best Buy Workers Powered Through Covid-19 Pandemic. Then They Lost Their Jobs – Wall Street Journal, 2/25/2021

  • The electronics retailer has been laying off workers and cutting hours for some store workers in recent weeks.
  • Comparable sales, from stores and digital channels operating for at least 12 months, rose 12.6% in the three months ended Jan 30.
  • The company reported a 23% sales increase in the previous quarter.
  • In the most recent quarter, online sales rose almost 90% to $6.7 billion and made up 43% of total U.S. sales, nearly double compared with the same period a year earlier.

Twitter expects annual revenue to double in 2023 – Reuters, 2/25/2021

  • Twitter said on Thursday it expects to double its annual revenue to at least $7.5 billion in 2023.
  • The social media network said in a filing it has set a goal to “double the number features shipped per employee” to help grow revenue or the number of users.
  • The company expects to reach at least 315 million monetizable daily active users (mDAU) by the fourth quarter of 2023.
  • Twitter defines mDAU as the number of daily users who can view ads.

Tesla Idles Model 3 Line at California Plant for Two Weeks – Bloomberg, 2/25/2021

  • Tesla told workers it will temporarily halt some production at its car-assembly plant in California for about two weeks, according to a person familiar with the matter.
  • Staff on a Model 3 production line in Fremont were told their line would be down from Feb. 22 until March 7, said the person.
  • The workers were told they would be paid for Feb. 22 and Feb. 23 and not paid for Feb. 28, March 1, 2 and 3. They were advised to take vacation time, if they had it.
  • The California plant is still the most important part of Tesla’s vehicle-production base, with capacity to make an estimated 600,000 vehicles a year.

Moderna’s Covid Deals Top $18 Billion; Medical Chief Exits – Bloomberg, 2/25/2021

  • Moderna said it’s reached $18.4 billion worth of signed agreements for its Covid-19 vaccine in 2021 and CMO Tal Zaks will leave the company in late September.
  • The Cambridge, Massachusetts-based biotech has a pipeline of other drug and vaccine candidates in development that use the mRNA platform, now validated by the pandemic.
  • Earlier this year, Pfizer Inc., which has developed a similar mRNA-based Covid vaccine with its partner BioNTech SE, projected $15 billion in sales for 2021.
  • In the U.S., the Pfizer-BioNTech is priced at $39 for the full regimen, while Moderna’s costs $33.
  • The vaccine maker aims to deliver as many as 1 billion doses in 2021, and 1.4 billion doses in 2022. On Wednesday, the company raised the lower end of its 2021 projection from 600 million doses to 700 million doses.

SolarWinds Profit Forecast Trails Estimates After Huge Hack – Bloomberg, 2/25/2021

  • SolarWinds, a software maker at the center of a major supply-chain cyber-attack, forecast earnings that were lower than analysts’ estimates as the company grapples with the cost of cleaning up the hack and sprawling government and private-sector investigations reveal a deepening impact.
  • The Austin, Texas-based company said Thursday that adjusted earnings for the current quarter will be 19 to 20 cents per share, versus an analysts’ average estimate of 22 cents per share.
  • Adjusted revenue will be $247 million to $252 million, versus the estimate of $253.8 million.

JPMorgan Says Investors Could Make Bitcoin 1% of Portfolios – Bloomberg, 2/25/2021

  • JPMorgan is the latest Wall Street firm floating the idea of investors using Bitcoin as a way to diversify their portfolios.
  • “In a multi-asset portfolio, investors can likely add up to 1% of their allocation to cryptocurrencies in order to achieve any efficiency gain in the overall risk-adjusted returns of the portfolio,” strategists including Joyce Chang and Amy Ho wrote in a note Wednesday.
  • There were 106 million users of cryptocurrency in January, up from 92 million in the previous prior month, according to Crypto.com.
  • BNY Mellon has announced plans to hold, transfer and issue the digital currency for its clients, while assets in the Grayscale Bitcoin Trust have more than doubled to $33.5 billion since December.

U.S. Unemployment Claims Fell Sharply Last Week – Wall Street Journal, 2/25/2021

  • Initial weekly unemployment claims decreased by 111,000 to a seasonally adjusted 730,000 last week, the Labor Department said Thursday. It was the lowest weekly level of new applications to regular state programs since l
  • Claims fell significantly in Ohio last week after a large increase earlier in the month that state officials said was likely attempted fraud.
  • And storms and frigid temperatures in Texas and elsewhere caused widespread power outages and disruptions.
  • Jobless claims figures can be volatile from week to week. The four-week moving average, which helps smooth those variations, fell to 807,750 last week, the lowest reading since early December.

Gauge of U.S. Pending Home Sales Declines to a Six-Month Low – Bloomberg, 2/25/2021

  • A gauge of U.S. pending home sales fell to a six-month low in January as buyers competed for a limited number of properties.
  • The National Association of Realtors’ index of pending home sales decreased 2.8% from the prior month to 122.8, according to data released Thursday.
  • December data was revised to a 0.5% gain after a previously reported decline.
  • The median estimate in a Bloomberg survey of economists called for no change in January.
  • The decline is the latest sign that the housing boom may be starting to cool amid soaring prices, a lack of inventory and rising mortgage rates.
  • The residential real estate market has been a bright spot in the economy as it recovers from the pandemic.
  • Contract signings are still up 8.2% from a year ago on an unadjusted basis.

U.S. Mortgage Rates Surge, Hitting Highest Level Since August – Bloomberg, 2/25/2021

  • The average for a 30-year, fixed loan was 2.97%, up from 2.81% last week and the highest since August, Freddie Mac data showed Thursday. Rates have climbed from the record low of 2.65%, reached in early January.
  • The yield on 10-year Treasuries, a benchmark for mortgages, reached its highest level in about year this week.
  • Mortgage rates have below 3% since July. That, along with low inventory, has helped drive up real estate prices and pushed homeownership out of reach for many Americans.

U.S. Farmers are Planting More Row Crops Than Ever – Wall Street Journal, 2/25/2021

  • U.S. farmers are expected to plant a record amount of acres this year to take advantage of high agricultural prices after years of tough market conditions.
  • The U.S. Department of Agriculture projects that farmers will plant 182 million acres of corn and soybeans in 2021.
  • That is an all-time high and up roughly eight million acres from last year—driven by a jump in soybean acreage, which is expected to rise nearly seven million acres from last year.
  • Behind the increase lies a sharp rise in soybean prices over the past eight months—69% since June 1, with the most-active contract on the Chicago Board of Trade trading at $14.26 per bushel on Wednesday, the highest level since July 2014.
  • Prices have been lifted by surging demand for U.S. soybeans in China, where the country continues to rebuild a hog herd that was decimated by African swine fever in 2019. As of last week, Chinese buyers had purchased 35.9 million tons of U.S. soybeans since the start of September—up nearly 24 million tons from the same period a year earlier.
  • In 2020, 552 chapter 12 bankruptcy cases—a chapter of the bankruptcy code designed for farmers—were filed, down 7% from the previous year but still the third-highest total in the past decade, according to data from the American Farm Bureau Federation.

EUROPE & WORLD

Rich Countries Borrowed $18 Trillion in 2020. Few Seem Worried About Them Paying It Off – Wall Street Journal, 2/25/2021

  • Rich countries’ governments borrowed $18 trillion from bond markets in 2020—more than ever before—but their borrowing costs hit a record low, due to a big rise in bond purchases by central banks, as well as a lack of concern about public debt levels among private investors.
  • That marked a $6.8 trillion rise from 2019.
  • The massive borrowing in much of the developed world reflects the unique circumstances of the pandemic, which has required unprecedented levels of aid for workers and businesses affected by social-distancing measures.
  • But it also shows a more relaxed attitude toward government deficits among policy makers, investors and economists than a decade ago.

Global Trade Roars Back From Depths of Covid-19 Pandemic – Wall Street Journal, 2/25/2021

  • Global trade has rebounded from its collapse in the early stages of the pandemic, with China and other Asian manufacturing countries grabbing a bigger slice of exports of everything from masks to bikes—market share they are expected to keep after the public-health crisis fades.
  • According to the United Nations Conference on Trade and Development, cross-border sales of personal protection equipment, such as masks, jumped 40% in the three months through September and a further 16% in the final three months of the year.
  • Much of the exported goods came from East Asia, where factories reopened after the virus had been largely contained.

Factmonster – TODAY in HISTORY

  • Elizabeth I, queen of England, was excommunicated by Pope Pius V. (1570)
  • Samuel Colt patented the first revolving barrel multishot firearm. (1836)
  • Hiram Revels became the first black United States senator, taking over the term of Jefferson Davis. (1870)
  • P. Morgan formed U.S. Steel Corporation, the first billion-dollar corporation in the world. (1901)
  • Communists took control of the government in Czechoslovakia. (1948)

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