Daily Market Report | Mar. 19, 2021
Stocks on Track for Modest Weekly Declines – Wall Street Journal, 3/19/2021
- U.S. stock market opened lower Friday as government bond yields ticked higher again, putting major indexes on course for modest weekly declines.
- The S&P 500 edged down 0.6%. The Dow Jones Industrial Average ticked down 0.9%, and the Nasdaq Composite dropped 0.5%. All three indexes were on course for weekly losses of about 1%.
- Treasury yields have risen for the past three days as investors sold down bonds in anticipation of higher inflation.
- A jump in the supply of Treasurys as the government funds trillions of dollars in Covid-19 relief spending has also muted appetite for bonds.
- The Fed said Friday that it would allow a yearlong reprieve for the way big banks account for ultrasafe assets such as Treasurys to expire at the end of the month, pressuring bank stocks.
- JPMorgan Chase dropped 3.8%, while Bank of America and Citigroup fell about 2%.
- In corporate news, FedEx rose 6.3% after the package giant said its quarterly profit nearly tripled.
- Nike fell 2.8% after the sneaker company reported revenue that fell short of analysts’ expectations due to shipping delays caused by container shortages and congestion at ports.
- The first high-level talks between the Biden administration and Chinese officials are ongoing in Alaska, with both sides trading criticism. Investors are nervous about a continuation of tensions between the two major economies.
- Overseas, the pan-continental Stoxx Europe 600 fell 1.1%. Delays to the vaccine rollout in Europe are weighing on expectations for growth in the region, investors said.
- In Asia, most major benchmarks fell. The Shanghai Composite Index declined 1.7%, and Hong Kong’s Hang Seng retreated 1.4%.
Covid-19 Live Updates: Newly Reported U.S. Deaths Rise – Wall Street Journal, 3/19/2021
- Newly reported Covid-19 deaths rose in the U.S. from the day before, while daily case numbers were steady and vaccinations picked up, with an average of 2.5 million doses administered over the past week.
- The U.S. recorded 1,611 deaths from Covid-19 on Thursday, according to the latest Johns Hopkins University data. That compares with 1,173 reported deaths a day earlier and 1,557 a week earlier.
- The U.S. recorded 59,822 new cases for Thursday, according to Johns Hopkins data, slightly above Wednesday’s 58,480 cases but down from 62,404 cases a week earlier.
- Hospitalizations continue to decline, with the number of patients in hospitals with Covid-19 at 40,568, according to the latest data posted by the Department of Health and Human Services.
- In Europe, meanwhile, Germany, France, Italy, Spain, Portugal and the Netherlands said they would start inoculating residents again with AstraZeneca’s vaccine after the European Medicines Agency said the shot was “safe and effective” and didn’t increase the risk of blood clots.
- Separately, Johnson & Johnson is working on several next-generation versions of its Covid-19 vaccine that may be needed to bolster protection against some of the coronavirus variants that have emerged.
- On Friday, however, Paris awoke to what has now become an entirely different rite of spring: a pandemic-induced lockdown.
- This lockdown is less severe than the original one that paralyzed France a year ago. It is limited to Paris and 15 other areas of France that have been hit hard by the spread of Covid-19 variants. Parisians are allowed to venture 10 kilometers from their homes with a permission slip, as opposed to last year when the limit was one kilometer.
Remote Schooling Strains Parents and Their Children, CDC Survey Suggests – Wall Street Journal, 3/19/2021
- Parents whose children received virtual instruction were more likely to report poorer well-being for themselves and their kids, a federal government survey found.
- More than 46% of the surveyed parents reported they experienced emotional distress, and more than 38% said they lost some amount of work. Over 14% of parents with children learning remotely reported issues balancing work and child care, compared with just over 8% of parents with children taking classes in person.
- Overall, parents reported that more than 12% of children had worse physical health, and 22% of children had worse mental and emotional health, regardless of the mode of learning.
- Roughly a quarter of parents with children learning remotely reported that their children’s mental and emotional health worsened, compared with about 16% of parents whose children were learning in person.
- Some 63% of parents with kids learning virtually also said the children were exercising less, while parents with children learning in person reported their kids had reduced physical activity roughly 30% of the time.
Nike Gets Tripped Up by Shipping Woes – Wall Street Journal, 3/19/2021
- Nike joined a growing list of U.S. companies getting squeezed by global supply-chain disruptions stemming from the Covid-19 pandemic.
- Nike’s revenue for the quarter ended Feb. 28 was $10.36 billion, a 2.5% increase from a year earlier.
- On a constant-currency basis, North American revenue declined 11%, while revenue in Greater China grew 42%
- Nike said its direct sales, which rose 20% to $4 billion in the quarter, somewhat offset the shipping problems. Meanwhile, digital revenue increased 59%, with the company saying digital revenue in North America hit $1 billion for the first time.
- For the fiscal third quarter, Nike had earnings of $1.45 billion, or 90 cents a share, compared with $847 million, or 53 cents a share, a year earlier.
For FedEx, Covid-19 Pandemic Keeps Delivering Profit – Wall Street Journal, 3/19/2021
- FedEx’s quarterly profit nearly tripled and revenue jumped 23%, despite winter storms in the U.S. that disrupted its delivery operations and sapped its profit by $350 million.
- Quarterly revenue in the fiscal third quarter reached $21.5 billion, up from $17.5 billion in the same period a year ago. The results were above Wall Street’s expectations, which were looking for about $20 billion in quarterly revenue, according to FactSet.
- In the quarter ended Feb. 28, FedEx’s package volumes rose 25% in its Ground unit, which handles most of its e-commerce deliveries and the bulk of its holiday shopping orders.
- The company logged a 29% surge in volumes in the Ground unit during the quarter ended Nov. 30.
- For the Express business, which handles overnight and international shipments, daily package volume rose 12.2% in the quarter.
- Overall, FedEx’s net income nearly tripled from a year ago to $892 million.
- The company expects per-share earnings of $17.60 to $18.20, excluding adjustments for its retirement plan and debt refinancing, restructuring and deal costs. Wall Street is expecting adjusted profit of around $17.56 a share.
Petco Revenue Jumps in First Earnings Report After Going Public – Wall Street Journal, 3/19/2021
- At the height of the holiday season, Petco Health and Wellness moved nearly a third of its online business out of struggling delivery networks that were buckling under overwhelming package volumes.
- The payoff was apparent Thursday when the San Diego-based pet-store operator, in its first quarter after rejoining the public markets, posted a narrow loss and said revenue grew 16% from the previous year, to $1.3 billion.
- It also said it expects 2021 revenue to rise as much as about 9% as people splurge on pets that they bought during the coronavirus pandemic.
- The company attributed its $6.2 million loss, or 3 cents a share, to settling debt related to its January’s initial public offering. The loss represented a 14% improvement year over year.
- Petco bucked the recent trend of companies opting not to issue full-year guidance, saying it expects 2021 revenue of between $5.25 billion and $5.35 billion, with earnings of between $0.63 and $0.66 per share.
Federal Reserve to End Emergency Capital Relief for Big Banks – Wall Street Journal, 3/19/2021
- The Federal Reserve said Friday it would allow a yearlong reprieve for the way big banks account for ultrasafe assets such as Treasury securities to expire as scheduled at the end of the month, a loss for Wall Street firms that had pressed for an extension to the relief.
- The decision means banks will lose the temporary ability to exclude Treasurys and deposits held at the central bank from lenders’ so-called supplementary leverage ratio.
- The ratio measures capital—funds that banks raise from investors, earn through profits and use to absorb losses—as a percentage of loans and other assets. Without the exclusion, Treasurys and deposits count as assets.
- The Fed said it would soon propose longer-term changes to the rule to address its treatment of ultrasafe assets.
- Big U.S. banks must maintain capital equal to at least 3% of all of their assets, including loans, investments and real estate. By holding banks to a minimum ratio, regulators effectively restrict them from making too many loans without increasing their capital levels.
JPMorgan to Buy $410 Million Stake in Chinese Bank’s Wealth Business – Wall Street Journal, 3/19/2021
- JPMorgan Chase & Co. agreed to pay $410 million for a stake in a leading Chinese wealth-management business, as the U.S. financial industry continues to make inroads in China.
- The deal, which is pending regulatory approval, marks the first time a Chinese bank has opened up its wealth-management subsidiary to a foreign strategic investor.
- Friday’s agreement builds on a partnership agreed in 2019, under which J.P. Morgan Asset Management and the Chinese bank said they would collaborate on product development and investor education.
- Wall Street has emerged as a big winner in the trade war between Washington and Beijing, after a pact signed in January 2020 promised greater access to China’s financial sector for American institutions.
With NFL Deal, Amazon Accelerates Its Streaming-TV Advertising Ambitions – Wall Street Journal, 3/19/2021
- A billion dollars gets you one of the most popular programs on television.
- It also signals your ambitions in the future of the medium.
- As part of the new media rights deals that the National Football League revealed Thursday, Amazon.com will make its Prime Video service the new home of “Thursday Night Football” and its coveted commercial time, taking over from Fox by 2023.
- The pact is by far Amazon’s biggest play to date in streaming TV, with the company paying an average annual fee of around $1 billion for the rights to the games.
World-Wide Streaming Subscriptions Pass One Billion During Pandemic – Wall Street Journal, 3/19/2021
- The number of subscriptions to online video streaming services around the world reached 1.1 billion in 2020, according to data released by the Motion Picture Association on Thursday—a new milestone marked amid the Covid-19 pandemic that kept people locked down, seeking their entertainment at home.
- In the U.S. alone, the number of streaming subscriptions rose by 32% last year to a total of 308.6 million, the MPA said.
- Meanwhile, global box-office revenues plunged by more than $30 billion in the year to $12 billion, as movie theaters were shut in the U.S. and in other parts of the world, according to the association.
- The drop comes after box-office revenues reached a record $42.3 billion in 2019, the MPA also said.
- And China passed the U.S. last year as the top country for box-office revenues, it said.
- Revenues from direct-to-consumer offerings, which includes streaming and online rentals, jumped to $61.8 billion last year, up from $47.2 billion in 2019, it said.
Justice Department Investigating Visa Over Debit-Card Practices – Wall Street Journal, 3/19/2021
- The Justice Department is investigating whether Visa is engaging in anticompetitive practices in the debit-card market, according to people familiar with the matter.
- The department’s antitrust division has been gathering information and asking whether Visa, the largest U.S. card network, has limited merchants’ ability to route debit-card transactions over card networks that are often less expensive, the people said.
- Many of the department’s questions have focused on online debit-card transactions, but investigators have asked about in-store issues as well, the people said.
- The probe highlights the important role of the so-called network fees that are invisible to consumers, lucrative for card companies, but a weight on merchants, who often pass on the fees in the form of higher prices to customers.
China, U.S. Trade Barbs at First High-Level Talks Under Biden – Wall Street Journal, 3/19/2021
- The U.S. and China began their first high-level meeting under the Biden administration with an acrimonious exchange of words, setting an abrasive tone as the two powers try to stabilize tense relations.
- U.S. Secretary of State Antony Blinken, in opening the talks Thursday, read a list of Washington’s problems with China, citing cyberattacks, China’s crackdown on Hong Kong and threats against Taiwan. These activities, he said, “threaten the rules-based order that maintains global stability.”
- Yang Jiechi, a member of the Communist Party’s ruling body, shot back that the U.S. should examine its problems with racism and stop promoting its version of democracy around the world. “The United States does not represent international public opinion and neither does the western world,” said Mr. Yang in a quarter-hour-long statement.
- During the talks, Mr. Yang and Foreign Minister Wang Yi plan to urge Mr. Blinken and national security adviser Jake Sullivan to roll back many of the punitive policies the Trump administration put in place on Chinese entities and individuals, according to people with knowledge of the plans.
China Buys More Iranian and Venezuelan Oil, in a Test for Biden – Wall Street Journal, 3/19/2021
- China has sharply increased its imports of oil from Iran and Venezuela in a challenge to two Biden administration foreign-policy priorities, according to U.S. officials, undermining key diplomatic leverage Washington needs to restart long-stalled negotiations.
- China is expected to import 918,000 barrels a day from Iran in March, which would be the highest volume since a full U.S. oil embargo was imposed against Tehran two years ago, according to commodities-data company Kpler.
- “If it sells 1 million barrels a day at current prices, Iran has no incentive to negotiate,” said Sara Vakhshouri, president of Washington-based SVB Energy International and an expert on Iran’s oil industry.
- China’s oil purchases from Venezuela, where the U.S. has been trying to use sanctions to pressure the Maduro regime into holding credible democratic elections, also are growing, according to London financial data provider Refinitiv.
Cuomo Administration Probed Over Nursing-Home Covid-19 Liability Immunity – Wall Street Journal, 3/19/2021
- Federal prosecutors in Brooklyn are investigating a push by Gov. Andrew Cuomo’s administration to enact broad protections for nursing homes from lawsuits and criminal prosecution early in the Covid-19 pandemic, according to people familiar with the matter.
- Nursing homes were included in a provision giving liability immunity to doctors, hospitals and their executives, as well as healthcare workers on the front lines of the coronavirus outbreak last spring, surprising some lawmakers and healthcare officials.
- In a January report, the New York state attorney general’s office said the immunity provisions may have led some facilities to make financially motivated decisions.
- Financial incentives resulted in some for-profit owners pushing staff to admit more Covid-19 patients from hospitals to meet admissions goals, the report said.
EUROPE & WORLD
Russia raises key rate to 4.5% amid inflationary and geopolitical risks – Reuters, 3/19/2021
- Russia’s central bank raised its key interest rate to 4.5% on Friday amid inflationary and geopolitical risks and signaled that more rate increases would follow.
- The decision to raise the rate from a record low of 4.25% was at odds with a Reuters poll that forecast Russia would keep the cost of lending unchanged for the last time before embarking on a rate-hiking cycle.
- The central bank’s move follows the rouble’s recent depreciation driven by sanction fears.
- It is in line with its Brazilian and Turkish peers who delivered aggressive rate hikes week.
China to Restrict Tesla Use by Military and State Personnel – Wall Street Journal, 3/19/2021
- China’s government is restricting the use of Tesla’s vehicles by military staff and employees of key state-owned companies, citing concerns that the data collected by the cars could be a source of national security leaks, according to people familiar with the effort.
- The move follows a government security review of Tesla’s vehicles, which Chinese officials said raised concerns because the cars’ cameras can constantly record images, the people said, as well as obtain various data such as when, how and where the cars are being used, and the contact list of mobile phones that are synced to the cars.
- The government is concerned that some data could be sent back to the U.S., the people said.
- The restriction applies to all individuals in military complexes, sensitive state-owned enterprises such as aerospace firms, and also government agencies, the people familiar said.
Factmonster – TODAY in HISTORY
- Napoleon Bonaparte escaped from exile on the island of Elba. (1815)
- A 312-ft long pneumatic subway was opened in New York City; funding for a larger version never materialized. (1870)
- Grand Canyon National Park was established. (1919)
- RADAR (Radio Detection and Ranging) was first demonstrated by Robert Watson-Watt. (1935)
- A bomb exploded at the World Trade Center in New York. The blast killed six people and injured more than 1,000. (1993)
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