Daily Market Report | Mar. 10, 2021
Stocks Climb as Inflation Remains Muted – Wall Street Journal, 3/10/2021
- U.S. stocks rose Wednesday after fresh inflation data showed a muted increase in consumer prices for February.
- The Dow Jones Industrial Average rose 1.1% and the S&P 500 gained 0.9%, a day after the broad market gauge gained 1.4%.
- The Nasdaq Composite jumped 1.2% at the open as technology stocks extended their advance after they surged higher on Tuesday in one of the best days for the sector in months.
- Markets have seesawed in the past few weeks, as investors have watched yields on U.S. government debt surge amid expectations of both higher inflation and an economic recovery.
- Fresh data out Wednesday showed that a key inflation gauge rose 0.4% last month, in line with expectations. That may help assuage concerns that a sharp increase in inflation would prompt the Federal Reserve to tighten monetary policy.
- Investors are awaiting the auction of $38 billion in 10-year Treasury notes on Wednesday.
- The U.S. government’s extraordinary borrowing spree is starting to test investors’ appetite for new Treasury debt, which is also contributing to pushing yields higher.
- Asian stock markets were mixed. Hong Kong’s Hang Seng rose 0.5% while Japan’s Nikkei 225 was flat.
- China’s Shanghai Composite Index edged down less than 0.1%.
Covid-19 Live Updates: Reported U.S. Cases Rise – Wall Street Journal, 3/10/2021
- Newly reported coronavirus cases in the U.S. rose, as some states widened vaccination programs to cover more people.
- The U.S. reported 57,417 new cases for Tuesday, according to the latest data compiled by Johns Hopkins University. Tuesday’s total was up from a revised daily tally of 44,758 cases for Monday.
- The country reported 1,947 fatalities from Covid-19 for Tuesday, bringing the nation’s total death toll to more than 527,700, according to Johns Hopkins data.
- Vaccination rollouts across the country are continuing to make progress.
- The seven-day average of daily doses administered has risen to 2.2 million, according to a Wall Street Journal analysis of data from the Centers for Disease Control and Prevention.
- More than 32.1 million people have been fully vaccinated against Covid-19, according to the CDC.
- Meanwhile, a laboratory analysis found that the Pfizer-BioNTech vaccine retained its ability to neutralize new, more-contagious variants of the coronavirus, including one identified in Brazil, in a sign that the shot may offer protection against new strains.
Dick’s Sees Sales Easing After Pandemic-Fueled Growth – Wall Street Journal, 3/10/2021
- Dick’s Sporting Goods reported strong demand for its latest quarter but said it expects sales to slow down this year.
- The retailer on Tuesday said sales for its fiscal fourth quarter rose 20% to $3.13 billion. Profit of almost $220 million was roughly triple that of a year earlier, and adjusted earnings were ahead of forecasts from analysts.
- Dick’s e-commerce sales during the fourth quarter rose 57%, accounting for about one-third of total sales.
- Dick’s said annual sales, which rose nearly 10% on a comparable basis last year, could fall as much as 2% or increase by that margin this year. Per-share earnings are expected to decline.
Qualtrics sees full-year sales above Wall Street estimates but fourth quarter falls short – Reuters, 3/9/2021
- Qualtrics International on Tuesday forecast revenue would beat analyst expectations in the current quarter and full year, but the business software firm reported revenue slightly below forecasts for the fourth quarter.
- For the fourth quarter ended Dec. 31, Qualtrics said sales rose 24% from a year earlier to $213.6 million.
- The fourth-quarter results were toward the high end of the $211.5 million to $214.5 million range the company told investors to expect during the run-up to its public offering in January, but below estimates of $216 million according to Refinitiv data.
- Qualtrics generated an adjusted net loss of 2 cents per share during the fourth quarter, smaller than its net loss of 5 cents per share a year earlier.
- The company forecast net losses to continue for the full year of 2021 as it works to hit its revenue growth forecast of 34%.
- Provo, Utah-based Qualtrics projected revenue midpoints of $227 million for its current first quarter and $952 million for the full year. That exceeded estimates of $223 million and $943.3 million, according to IBES data from Refinitiv.
Disney crosses streaming milestone, aims to open California parks in late April – Reuters, 3/10/2021
- Walt Disney’s Disney+ streaming service has signed up more than 100 million paying subscribers around the world in its first 16 months, Chief Executive Bob Chapek said at the company’s annual shareholder meeting on Tuesday.
- Chapek also said Disney hopes to reopen its California theme parks to limited attendance in late April.
- The parks were closed a year ago due to the COVID-19 pandemic.
- The company is hoping for a comeback at cinemas this year. It currently is holding firm to plans to release Marvel movie “Black Widow” in movie theaters on May 7, Chapek said.
Boeing delivers 22 jets in February, net order turn positive for first time in 14 months – Reuters, 3/10/2021
- Boeing said on Tuesday it delivered 22 aircraft in February, up from 17 a year earlier, and that its net orders had turned positive for the first time in 14 months as COVID-19 vaccine rollouts boosted the confidence of its airline customers.
- Boeing said it booked 82 new orders in February, taking its gross total for the year so far to 86 planes.
- Customers also converted or cancelled around 50 orders last month, but the company’s orders net of cancellations still came to 31 jets last month, back in positive territory for the first time since November 2019.
- Boeing’s order backlog stood at 4,041 aircraft as of end-February versus 4,016 jet orders as of January.
- February deliveries include 18 737 MAX jets, three wide-body planes and one P-8 military jet, but no 787 jet deliveries for the fourth straight month.
GE to Wind Down GE Capital After Shedding Jet-Leasing Unit – Wall Street Journal, 3/10/2021
- General Electric Chief Executive Larry Culp is turning off the lights at GE Capital, a once-sprawling lender, and shedding debts that have hung over the industrial giant since the 2008 financial crisis.
- On Wednesday, GE agreed to combine its jet-leasing unit, GE Capital Aviation Services, with rival AerCap Holdings in a deal worth more than $30 billion.
- It will create a leasing giant with more than 2,000 aircraft at a time when global travel has been hobbled by the Covid-19 pandemic.
- GE will get about $24 billion in cash and 46% ownership in the new merged company. It will transfer about $34 billion in net assets to AerCap along with more than 400 workers. The deal is expected to close in nine to 12 months.
Flood of New Debt Tests Bond Market – Wall Street Journal, 3/10/2021
- Some on Wall Street see signs the U.S. government’s extraordinary borrowing spree is starting to test investors’ appetite for new Treasury debt.
- Over the past few months, falling bond prices have pushed the yield on the benchmark 10-year U.S. Treasury note from about 1% to more than 1.5%, around its highest level in more than a year.
- Another factor pushing yields higher, many analysts and traders say: the sheer volume of Treasurys now flooding the market—a byproduct of the trillions of dollars the government is spending to support the economy during the coronavirus pandemic.
- Net new supply of two- to 30-year Treasurys is expected to reach $2.8 trillion this year, according to BofA Global Research, up from $1.7 trillion last year and around $990 billion in 2019.
- The Fed, meanwhile, is expected to purchase $960 billion of Treasurys, down from more than $2 trillion last year.
- The impact of supply on Treasury yields is disputed on Wall Street. Some analysts are adamant that it historically has had almost no influence on yields and that growing levels of debt could even push yields lower over the long term by dragging on economic growth.
Higher Gas, Energy Prices Boost Consumer Inflation at Start of Year – Wall Street Journal, 3/10/2021
- U.S. consumer prices picked up early this year as the pace of the economic recovery increased following a winter lull, buoyed by higher gasoline and energy costs.
- The consumer-price index—which measures what consumers pay for everyday items including food, clothing, cars and recreational activities—increased a seasonally adjusted 0.4% in February from the prior month, the Labor Department said Wednesday.
- Annual inflation also picked up, increasing by 1.7% in the year ended February, on a non-seasonally-adjusted basis.
- Gasoline prices jumped 6.4% over the previous month, driving more than half of the overall increase, while electricity and natural gas prices rose 3.9%.
- The so-called core price index, which excludes the often-volatile categories of food and energy, rose 0.1% in February versus January, and was up 1.3% from the year prior.
U.S. business formation drop in February – Reuters, 3/10/2021
- Applications to start new U.S. businesses fell in February even as economic activity picked up amid an improving public health situation, government data showed on Wednesday.
- The Commerce Department said business applications decreased 13.4% to a seasonally adjusted 423,095 last month.
- The data is derived from business applications for tax identifications.
- There were a seasonally adjusted 48,749 applications from corporations down 10.4% from January.
- Applications for businesses with planned wages totaled 51,071, a decrease of 12.9% from the prior month.
Latest Stimulus Package Could Jolt U.S. Growth, Revive Inflation in 2021 – Wall Street Journal, 3/10/2021
- The nearly $1.9 trillion relief package heading for House passage Wednesday is projected to help propel the U.S. economy to its fastest annual growth in nearly four decades, reduce poverty and revive inflation.
- The legislation—following trillions of dollars in federal aid last year and arriving amid rising Covid-19 vaccination rates—prompted economists surveyed by The Wall Street Journal in recent days to boost their average forecast for 2021 economic growth to 5.95%, measured from the fourth quarter of last year to the same period this year.
- The analysts also lifted their forecasts for inflation and job growth from last month’s survey. The new poll found that they expected consumer prices would rise 2.48% by December from a year earlier and projected that employers will add an average 514,000 jobs a month over the next four quarters.
House Set to Approve Covid-19 Relief Bill – Wall Street Journal, 3/10/2021
- The House was set to pass a $1.9 trillion coronavirus relief package Wednesday and send it to President Biden for his signature, as Democrats prepared to push through new payments to households and other aid measures without any Republican support.
- Democrats have cast the legislation, which the House is expected to pass largely along party lines, as a necessary step toward bringing the economy back to full strength after the pandemic.
- Republicans opposed the bill, pointing to signs of the economy’s recovery without it and attacking many of its measures as bloated or unnecessary and unrelated to the crisis.
- The size of the package has renewed concerns among some lawmakers and experts about the growing debt burden and the risk of inflation.
- The series of relief bills Congress has passed since the pandemic started has increased publicly held federal debt by nearly $4.5 trillion over the past year.
- At $21.9 trillion as of March 1, the debt is roughly the size of the nation’s entire economic output, the highest since the aftermath of World War II.
States Expected Covid-19 to Bring Widespread Tax Shortfalls. It Didn’t Happen. – Wall Street Journal, 3/10/2021
- Despite the pandemic’s crushing toll on the economy, total state tax revenues were roughly flat in 2020 from the year before, according to the Urban Institute, a Washington, D.C., think tank.
- Widespread federal intervention buoyed households, businesses and financial markets and helped avert analysts’ doomsday projections for state revenues. The stable employment environment for the country’s most affluent workers also brought in stronger than expected tax revenue.
- The total cash shortfall states face for budget years 2020-22 as a result of the pandemic now looks to be about $148 billion, according to forecasters at Moody’s Analytics.
- In September the group, the economic analysis arm of Moody’s, had estimated that gap could reach $434 billion, which would have amounted to the worst cash crisis since the Great Depression.
- States’ surprising resilience is a hot topic in Congress where the Senate on Saturday passed a $1.9 trillion aid package and sent it back to the House of Representatives.
- The package includes funding for vaccine distribution and a third round of stimulus checks amounting to $1,400 for many Americans.
- It would also send $350 billion more in aid to state and local governments, a move Republicans have criticized as wasteful and unnecessary.
EUROPE & WORLD
Just Eat Takeaway.com sees growth in 2021 even as pandemic eases – Reuters, 3/10/2021
- Just Eat Takeaway.com expects further growth in 2021 after a surge in business during the COVID-19 pandemic helped it meet expectations for full-year 2020 earnings, the online food-ordering and delivery company said on Wednesday.
- Takeaway’s 2020 revenues rose 54% to 2.40 billion euros ($2.85 billion) in 2020, in line with analysts’ expectations of 2.39 billion euros, according to Refinitiv data.
- Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose to 256 million euros, from 217 million euros a year earlier.
- The company reported a net loss of 151 million euros for 2020, widening from 103.1 million euros in 2019.
- It expects to win market share in Britain in 2021, and achieve revenue growth, despite plans by rival Deliveroo for a stock market listing in London, CEO Jitse Groen said.
- “We are quite a bit larger, and we’ll do our best to compete with them,” he said, citing a 88% surge in orders there in the first two months of 2021.
Adidas pushes online sales and sustainability in five-year plan – Reuters, 3/10/2021
- German sportswear company Adidas aims to double its e-commerce sales by 2025 and make its products more sustainable as part of a five-year plan to lift profitability closer to that of rival Nike.
- Adidas is targeting online sales of up to 9 billion euros ($10.7 billion) a year by 2025 with an operating profit margin of 12-14%, up from the 11.3% achieved in 2019 before the coronavirus crisis knocked sales and profitability.
- The company has reopened 95% of its stores after coronavirus lockdowns, it said on Wednesday, as it forecast a 2021 sales growth rate in the mid-to-high teens, rising to as much as 30% in greater China, the rest of Asia and Latin America.
- Net income from continuing operations is projected to rise to 1.25-1.45 billion euros in 2021, up from 429 million euros in 2020 but still below the 1.9 billion euros in 2019.
LATAM Airlines reports $963 million loss in fourth quarter – Reuters, 3/10/2021
- LATAM Airlines Group, the region’s largest airline, on Tuesday reported a loss of $962.5 million in the fourth quarter, hurt by a second wave of the pandemic which has hit Latin America particularly hard.
- LATAM filed for bankruptcy protection last May and is still going through a court-supervised reorganization in the United States.
- Overall in 2020, the airline lost $4.6 billion, compared with a pre-pandemic profit of $196 million in 2019.
Factmonster – TODAY in HISTORY
- U. S. Grant became commander of the Union armies during the Civil War. (1864)
- The first telephone call (“Mr. Watson, come here. I want you.”) was made by Alexander Graham Bell. (1876)
- James Earl Ray was sentenced in Memphis, Tennessee, to 99 years in prison for the murder of Martin Luther King, Jr., in April 1968. (1969)
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