Daily Market Report | Mar. 30, 2021
S&P 500 Edges Down as Investors Sell Bonds, Tech Stocks – Wall Street Journal, 3/30/2021
- U.S. stocks dropped at the open as investors sold government bonds and many of the richly valued technology shares that had powered higher in a low-yield environment.
- The S&P 500 fell 0.5%, while the Dow Jones Industrial Average slipped 0.4%, or about 120 points.
- The Nasdaq Composite fell 0.9% as a decline in technology stocks continued.
- In bond markets, the yield on the 10-year Treasury note rose to 1.744%, from 1.721% Monday.
- Yields, which rise when prices fall, are hovering at the highest levels since January 2020.
- The sharp rise in yields, which were as low as 0.915% at the start of the year, has curbed appetite for technology shares, many of which won’t generate large profits in the immediate future.
- But that reflation trade has also floundered in recent days on rising concern that elevated Covid-19 infection levels and problems with the vaccine rollout could hamper the global economic recovery. Biden administration officials have warned that the spread of new variants, an increase in travel and loosened restrictions could lead to a surge in cases and deaths.
- Investors are also trying to gauge the impact of President Biden’s planned multitrillion-dollar economic package, as well as the ramifications of higher taxes that may accompany the additional spending.
- Overseas, the pan-continental Stoxx Europe 600 advanced 0.5%.
- In Asia, most major benchmarks closed higher. South Korea’s Kospi rallied 1.1% and Hong Kong’s Hang Seng added 0.8%.
- China’s benchmark Shanghai Composite Index rose 0.6%.
Covid-19 Live Updates: Newly Reported Cases Rise in U.S. – Wall Street Journal, 3/30/2021
- Newly reported U.S. Covid-19 cases rose from a day earlier, as did deaths, while the nation grapples with a fresh surge in infections even as its vaccine drive gains steam.
- The country reported more than 68,000 new infections for Monday, according to data compiled by Johns Hopkins University and published early Tuesday morning Eastern Time.
- Monday’s figure was up from the 43,694 reported a day earlier and 51,567 a week earlier.
- The seven-day moving average, which smooths out irregularities in the data, was 63,239 as of Sunday, according to a Wall Street Journal analysis of Johns Hopkins data. The 14-day average was 58,829.
- There were 668 deaths reported for Monday, according to Johns Hopkins data, up from 507 a day earlier and from 586 a week earlier.
- Meanwhile, the U.S. vaccine drive is expanding. President Biden said Monday that the administration is more than doubling the number of pharmacies in the federal program and opening additional mass-vaccination sites.
- He said 90% of adults would be eligible for vaccination by April 19 and that 90% would have a vaccination site within 5 miles of their residence.
- Europe continues to face a rebound in Covid-19 infections just as it struggles to deploy vaccines due to manufacturing hiccups, administrative and logistical bottlenecks, and a protracted approval process for shots.
- By Sunday, European Union member states had injected 15.4 vaccine doses per 100 inhabitants according to data collated by Oxford University, compared with 50.4 in the U.K. and 43.3 in the U.S., where the pace of vaccinations has picked up dramatically in recent weeks.
- In Germany, which has seen a roughly 30% weekly rise in new cases this month despite a relatively tight lockdown, calls were mounting for even tougher measures ahead of the Easter holiday.
- In France, President Emmanuel Macron is expected to meet with top advisors Wednesday to discuss whether the country should tighten lockdown restrictions.
- Earlier this month, Mr. Macron placed Paris and other hard-hit areas across France under a limited lockdown, allowing people to venture 10 kilometers from their homes.
Traffic in Suez Canal resumes after stranded ship refloated – Reuters, 3/30/2021
- Shipping was on the move again late on Monday in Egypt’s Suez Canal after tugs refloated a giant container ship which had been blocking the channel for almost a week, causing a huge build-up of vessels around the waterway.
- With the 400-metre-long (430-yard) Ever Given dislodged, 113 ships were expected to transit the canal in both directions by early Tuesday morning, Suez Canal Authority (SCA) chairman Osama Rabie told reporters.
- He said a backlog of 422 ships could be cleared in 3 -1/2 days.
- Shipping group Maersk said the knock-on disruptions to global shipping could take weeks or months to unravel.
Global reinsurers stare at massive losses from Suez Canal blockage, Fitch says – Reuters, 3/30/2021
- The blocking of the Suez Canal by one of the world’s largest container ships is likely to result in losses worth hundreds of millions of euros for the reinsurance industry, Fitch Ratings said, even as rescue teams were successful in partially refloating the vessel on Monday.
- This event will reduce global reinsurers’ earnings but should not materially affect their credit profiles, while prices for marine reinsurance will rise further, the credit rating agency said.
- Shipping rates for oil product tankers nearly doubled after the ship got jammed, and the blockage has disrupted global supply chains, threatening costly delays for companies already dealing with COVID-19 restrictions.
Exclusive: PayPal launches crypto checkout service – Reuters, 3/30/2021
- PayPal will announce later on Tuesday that it has started allowing U.S. consumers to use their cryptocurrency holdings to pay at millions of its online merchants globally, a move that could significantly boost use of digital assets in everyday commerce.
- The service, which PayPal revealed it was working on late last year, will be available at all of its 29 million merchants in the coming months, the company said.
- Checkout with Crypto builds on the ability for PayPal users to buy, sell and hold cryptocurrencies, which the San Jose, California-based payments company launched in October.
- The company will charge no transaction fee to checkout with crypto and only one type of coin can be used for each purchase, it said.
T-Mobile to Scale Back TV-Service Plans – Wall Street Journal, 3/30/2021
- T-Mobile US is scrapping its efforts to crack into the home television market on its own after the wireless company failed to build its skinny bundle of channels into a profitable service.
- The cellphone carrier said Monday it will wind down the service, called TVision, on April 29 and steer its wireless customers toward Google’s YouTube TV instead.
- The new product was designed to supplement T-Mobile’s home broadband-internet service, which is scheduled to open up to the general public later this year.
- Rival online video packages from Sony and others have shut operations or raised prices on live-TV service to keep up with programmers that continue to raise their fees.
Apple to host developers event online again as COVID-19 cases surge – Reuters, 3/30/2021
- Apple said on Tuesday it would host its annual developers’ conference in an online-only format for the second year in a row, from June 7 to June 11, as COVID-19 cases rise in the United States.
- The iPhone maker’s Worldwide Developers Conference, usually held in San Jose, California with more than 5,000 people attending, was moved completely online for the first time in June last year due to the coronavirus outbreak.
- The United States surpassed 30 million total cases of COVID-19 on Sunday, and the seven-day average of new cases was slightly less than 60,000 per day, according to officials of the U.S. Centers for Disease Control and Prevention.
Musk says battery cell constraints impact production of Tesla Semi – Reuters, 3/30/2021
- Tesla chief Elon Musk tweeted on Tuesday that supply constraints related to battery cells are making it difficult to scale up production of its long-delayed Tesla Semi electric commercial truck, sending the company’s shares down nearly 2%.
- “Demand is no problem, but near-term cell supply makes it hard to scale Semi. This limitation will be less onerous next year,” the billionaire entrepreneur said here.
- Musk’s statement was in response to a tweet which referred to a news report about the electric carmaker receiving an order for ten Semi trucks from MHX Leasing LLC.
- Last week, Musk had suggested the bottlenecks would cause the mass production to be delayed until 2022.
Amazon union vote enters final stretch in watershed moment for U.S. labor – Reuters, 3/30/2021
- The votes on whether to form a union at Amazon.com’s sprawling Alabama fulfillment center are set to be reviewed starting on Tuesday, with momentum for future labor organizing at America’s second-largest private employer hanging in the balance.
- An agent from the U.S. National Labor Relations Board will sift through ballots sent to more than 5,800 workers at Amazon’s Bessemer, Alabama-based warehouse as part of a prolonged process expected to last days and spark legal challenges.
- Amazon has aggressively discouraged attempts by the Retail, Wholesale and Department Store Union (RWDSU) to become the first ever to organize one of the online retail giant’s facilities in the United States.
- A union victory would leave Amazon, second only to Walmart with more than 800,000 employees nationwide, vulnerable to additional organizing efforts and represent a watershed moment for the U.S. labor movement, said Wilma Liebman, a former NLRB chair during the Obama administration.
Spotify Acquires Sports-Talk App Locker Room – Wall Street Journal, 3/30/2021
- Spotify Technology is making its move into live audio by acquiring the sports-talk app Locker Room and its maker Betty Labs.
- The deal values the company, initially backed by Lightspeed Venture Partners, and more recently by Google Ventures and Precursor Ventures, around $50 million, according to a person familiar with the transaction.
- For Spotify, which has expanded into podcasting to position itself as the world’s largest audio company—not just a music-streaming giant—the deal is a bet that live audio will last well beyond the pandemic.
- The Locker Room app is less than a year old. It launched in October of last year and has seen about 19,000 installs since then, according to app research firm Sensor Tower.
- So far in March, it has seen about 8,000 installs, already representing 60% month-over-month growth from all of February.
JPMorgan, Salesforce Join Growing List of Firms Dumping Office Space – Wall Street Journal, 3/30/2021
- JPMorgan Chase, Salesforce.com and PricewaterhouseCoopers are among the major firms looking to unload big blocks of office space, the latest sign that remote work is hurting demand for this pillar of commercial real estate.
- At the end of 2020, 137 million square feet of office space was available for sublease across the U.S., according to CBRE Group.
- That is up 40% from a year earlier and the highest figure since 2003.
- That raises the prospect that demand for office space could be permanently lower at some companies, much like the rise of e-commerce has been driving down demand and rents for street-level retail.
- This flurry of subleasing activity is already causing fresh headaches for landlords. Office rents for more expensive space, including concessions, fell around 17% over the past year in New York and San Francisco and 13% nationwide, according to real-estate firm JLL.
U.S. Consumer Confidence Surges to One-Year High on Job Optimism – Bloomberg, 3/30/2021
- U.S. consumer confidence rose in March to a one-year high as Americans grew more upbeat about the economy and labor market, a sign that household spending may pick up more broadly in the coming months.
- The Conference Board’s index increased to 109.7 from a revised 90.4 reading in February, according to a report Tuesday.
- That was the sharpest one-month gain in nearly 18 years and exceeded the most optimistic forecast in a Bloomberg survey of economists.
- The group’s gauge of expectations rose to 109.6, the highest since July 2019, while a measure of sentiment about current conditions rose to a one-year high of 110.
- The 18.7-point gain from February in the measure of outlook was the largest since May 2009.
U.S. Home-Price Growth Accelerated in January – Wall Street Journal, 3/30/2021
- Home-price growth accelerated to a 15-year high in January, as the supply of homes for sale dropped to a new low.
- The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 11.2% in the year that ended in January, up from a 10.4% annual rate the prior month.
- The supply of homes for sale has dropped, prompting buyers to compete for houses and buoying prices. There were 1.03 million homes for sale at the end of January, the lowest level in data going back to 1982, according to NAR.
- The Case-Shiller 10-city index gained 10.9% over the year ended in January, compared with a 9.9% increase in December. The 20-city index rose 11.1%, after an annual gain of 10.2% in December. Price growth accelerated in all of the 20 cities.
Senate Democrats Push for Capital-Gains Tax at Death With $1 Million Exemption – Wall Street Journal, 3/30/2021
- Progressive Senate Democrats suggested that their new plan to tax unrealized capital gains at death should come with a $1 million per-person exemption, setting that line 10 times higher than an earlier Obama administration proposal and shielding a larger swath of upper income households.
- Under current law, someone who dies with appreciated assets—including homes, businesses and stocks in taxable accounts—doesn’t have to pay capital-gains taxes on that increase.
- Instead, the heirs have to pay capital-gains taxes only after they sell and only on gains after the original owner’s death.
- The Biden administration is weighing eliminating the current rules for stepped-up basis in the coming legislative push on infrastructure, education, and child care.
- Democrats have also considered raising the capital-gains tax rate for the highest earners to more closely reflect the top marginal income-tax rate. Currently, the top capital-gains tax rate is 23.8%.
- Raising the corporate tax rate to 28% from 21%, collecting more taxes on multinational companies’ foreign earnings and raising the top income-tax rate are all also options Democrats are considering in the coming push.
- Mr. Biden is expected to unveil his proposal for infrastructure spending in Pittsburgh on Wednesday, and White House press secretary Jen Psaki said Monday that Mr. Biden would propose ways to pay for the entirety of the infrastructure plan.
Democrats Look at Lowering Medicare Eligibility Age in Healthcare Package – Wall Street Journal, 3/30/2021
- Congressional Democrats and the Biden administration are planning another round of healthcare initiatives that could include lowering the Medicare eligibility age, following their major expansion of the Affordable Care Act this year.
- Democrats are still negotiating over which healthcare policy elements could be in the second of two spending programs the administration plans to unveil soon, according to congressional aides and industry groups.
- The package is likely to contain measures to reduce drug prices and expand health coverage, lawmakers said.
- Proposals to expand Medicare eligibility from age 65 to 60 and to enable the federal government to negotiate drug prices in the health program for seniors—both of which President Biden supported on the campaign trail—are also likely to be included.
- The healthcare proposals would face opposition from many Republicans and hospital groups, who say they could reduce the labor force because more people may retire early.
EUROPE & WORLD
U.S. Suspends Trade Pact With Myanmar After Deadly Weekend Violence – Wall Street Journal, 3/30/2021
- The Biden administration condemned the Myanmar government’s latest crackdown on protesters and said the U.S. was suspending relations established with the country under a 2013 trade pact after security forces there unleashed deadly violence on anticoup demonstrators over the weekend.
- Soldiers and police gunned down at least 90 protesters over the weekend, including six children between the ages of 10 and 16, in some cases firing weapons into residential areas and homes, according to the Assistance Association for Political Prisoners, a nonprofit that is monitoring the junta’s attempt to crush political opposition.
- The Biden administration, after expressing increasing concern about the crackdown on political opposition and human rights abuses, directed U.S. Trade Representative Katherine Tai on Monday to suspend trade ties with Myanmar that the U.S. established in 2013.
- With the 2013 agreement, the Obama administration established a platform for trade and investment talks with Myanmar in recognition of the country’s movement toward democracy.
- Myanmar agreed to cooperate with the U.S. on economic reforms, inclusive development and integration of global trade, and it took steps to improve labor rights.
China Rewrites Hong Kong Election Rules to Keep Opponents Out – Wall Street Journal, 3/30/2021
- China’s top lawmaking body rewrote electoral rules for Hong Kong to give Beijing decisive control over how the city chooses its leader and legislators, putting pro-establishment politicians firmly in charge of the former British colony.
- The changes, approved Tuesday, will curtail democratic representation in Hong Kong by slashing the share of directly elected seats in the local legislature, while giving unelected political bodies more influence over the city’s governance.
- Local national-security officials will also get effective veto power over election candidates, allowing authorities to bar opposition figures from elected office.
- Chinese officials say the electoral overhauls reinforce efforts to stamp out what they deem anti-China forces in Hong Kong that impede governance and incite unrest.
Apple supplier Foxconn’s profit slips, warns on ‘materials shortages’ – Reuters, 3/30/2021
- Major Apple supplier Foxconn on Tuesday posted a lower fourth-quarter profit that lagged expectations as the pandemic hit margins, and warned of the impact of “materials shortages” amid tight global chip supplies.
- Formally called Hon Hai Precision Industry, Foxconn’s fourth-quarter revenue rose 15% on the year.
- That was mainly driven by a more than 15% revenue increase on the year from consumer electronics including smartphones, which accounted for 63% of its business in the quarter, Foxconn said.
- The Taiwanese firm, the world’s largest contract electronics maker booked an October-December net profit of T$45.97 billion ($1.61 billion), a 4% decline from a year earlier, and compared with the T$50.89 billion average of 11 analyst estimates compiled by Refinitiv.
- Chairman Liu Young-way, however, said the company is closely monitoring “materials shortages” in the consumer electronics supply chain and that could hit less than 10% of client orders, though described the impact as limited.
Samsung Electronics’ Texas chip production returns to near-normal levels – Reuters, 3/30/2021
- Samsung Electronics said on Tuesday that production at its U.S. chip plant at Austin, Texas had returned to near-normal levels as of last week after more than a month of disruption that exacerbated a global chip capacity crunch.
- Qualcomm 5G radio frequency chips and Samsung display and image sensor chips account for about 65% of the monthly production at the Samsung plant, TrendForce added.
- Samsung and other chipmakers with production facilities in the area had seen shutdowns due to severe weather on Feb. 16.
- Samsung declined to comment on when production would be fully back to normal.
Auto-Chip Maker Needs Up to Four Months to Recover From Fire – Wall Street Journal, 3/30/2021
- Japanese auto-chip maker Renesas Electronics said Tuesday it has found more damage from a recent factory fire and predicted it would take three to four months to recover full production.
- The latest forecast is more bad news for the auto industry, which was already struggling with a semiconductor shortage for months before the March 19 blaze at Renesas’ factory in Hitachinaka, Japan.
- Renesas Chief Executive Hidetoshi Shibata said at a briefing that 23 pieces of equipment were affected by the fire, about double the company’s initial estimate.
- He repeated an earlier comment that the company aimed to restart production at the factory in about a month, but, in a new forecast, said that a full recovery would take at least three to four months.
Factmonster – TODAY in HISTORY
- The 15th Amendment to the U.S. Constitution went into effect, guaranteeing the right to vote regardless of race. (1870)
- President Ronald Reagan was shot in the chest by John Hinckley as he left a Washington hotel. (1981)
- The Queen Mother Elizabeth of England died at the age of 101. (2002)
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