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Daily Market Report | Apr. 05, 2021

U.S. Stocks Climb on Signs of an Economic Rebound – Wall Street Journal, 4/5/2021

  • U.S. stocks rose Monday following a strong jobs report and as fresh data showed a recovery in the services sector.
  • The S&P 500 gained 1.2%, putting it on track for another record after the broad-based index hit an all-time high last week.
  • The Dow Jones Industrial Average climbed 1%, while the technology-heavy Nasdaq Composite added 1.2%.
  • With the U.S. stock market closed Friday, it was the market’s first reaction to the latest jobs report, which showed that U.S. hiring surged in March as the economic recovery accelerated.
  • Employers added a seasonally adjusted 916,000 jobs in March, the best gain since August.
  • Other new data released Monday showed the U.S. services sector continuing to rebound after it was bettered by shutdowns, stay-at-home orders and consumer caution related to the Covid-19 pandemic.
  • The Institute for Supply Management’s (ISM) services index rose to an all-time high of 63.7 in March from 55.3 in February, ahead of economists’ forecast of 59.2.
  • Federal Reserve officials have said they are looking for recovery in the jobs market, alongside sustained 2% inflation, before changing interest rates or altering bond purchases.
  • In recent months, a faster-than-anticipated vaccine rollout and additional stimulus spending have bolstered bets that the Fed will have to raise interest rates in the next three years.
  • On Monday, the yield on the 10-year Treasury note ticked up to 1.725% from 1.721% Friday. Yields fall when prices rise.
  • Major markets in Europe are closed for the Easter holiday. Markets in China and Hong Kong are closed for the Qingming Festival. South Korea’s Kospi rose 0.3%, and Japan’s Nikkei 225 added 0.8%.

Covid-19 Live Updates: U.S. Case Average Stays Elevated – Wall Street Journal, 4/5/2021

  • The average number of newly reported Covid-19 cases remained elevated in the U.S. over the past week, even as the Easter holiday led to a drop in daily recorded infections and deaths.
  • The U.S. reported more than 34,000 new infections on Sunday, according to the latest data compiled by Johns Hopkins University.
  • Sunday’s figure, which was likely affected by the Easter holidays, compares with more than 62,000 cases reported on Saturday and more than 43,000 a week earlier.
  • Hospitalizations have also flattened, with states over the past month reporting between 50,000 and around 40,000 Covid-19 patients in hospitals, according to the latest data posted by the Department of Health and Human Services.
  • The number of U.S. deaths from Covid-19 fell to 222 on Sunday from 676 a day earlier. The seven-day average stood at 838 on Saturday, compared with a 14-day average of 900. The U.S. has now reported more than 555,000 deaths from Covid-19 and more than 30.7 million infections.
  • More than 18% of the U.S. population is now fully vaccinated against Covid-19 and 32% have received at least one dose, CDC data shows.

Tesla Kicks Off 2021 With 184,800 Vehicles Delivered – Wall Street Journal, 4/5/2021

  • Tesla delivered a record number of vehicles in the first quarter in the face of growing electric-car competition and supply-chain challenges that have hit the global auto industry.
  • The Silicon Valley auto maker’s roughly 184,800 global deliveries in the first three months of the year eclipsed the high set in the previous quarter and more than doubled from the same period a year earlier, when Tesla idled its lone U.S. car plant in the face of the coronavirus pandemic.
  • Deliveries, which cruised past analysts’ expectations, were up about 2% from the year-end quarter.
  • Analysts surveyed by FactSet on average expected Tesla to hand over about 168,000 vehicles to customers in the first three months of the year, which typically are the company’s weakest for deliveries.
  • Deliveries of Tesla Model S and Model X vehicles in the first quarter totaled around 2,020. Tesla handed over about 182,780 Model 3 sedans and Model Y compact sport-utility vehicles combined. Tesla doesn’t disclose deliveries by region.
  • Tesla also said it produced 180,338 vehicles in the quarter, all of them Model 3s or Model Ys.

‘Godzilla vs. Kong’ Roars at Theaters, Suggests Pent-Up Demand – Wall Street Journal, 4/5/2021

  • An entertainment industry worried about getting consumers back to the theater received a burst of confidence this weekend, when the monster mashup collected a robust $48.5 million over five days despite coronavirus-driven capacity limitations in most auditoriums.
  • The film easily had the best box-office debut since the pandemic began, indicating pent-up demand exists to resume normal activity among consumers. The last “Godzilla” movie, released in 2019, made $47.8 million in its three-day opening weekend.
  • Besides “Godzilla,” the top 10 performers at the box office this weekend collectively grossed about $11.5 million.

GameStop to Sell Stock After Social-Media Fueled Trading Frenzy – Wall Street Journal, 4/5/2021

  • GameStop said it could raise hundreds of millions of dollars from stock sales in the coming months, as the videogame retailer turns to public markets to help support its turnaround plan.
  • The company said Monday that it would sell up to 3.5 million shares, adding that the timing and amount of any stock sale would involve various factors.
  • Though it has had the ability to sell up to $100 million in stock since December, GameStop—unlike AMC Entertainment —had resisted raising cash in that manner as retail investors helped fuel a remarkable run up in the company’s stock price.

Google Wins Oracle Copyright Fight as Top Court Overturns Ruling – Bloomberg, 4/5/2021

  • The U.S. Supreme Court ruled that Alphabet’s Google didn’t commit copyright infringement when it used Oracle’s programming code in the Android operating system, sparing Google from what could have been a multibillion-dollar award.
  • The 6-2 ruling, which overturns a victory for Oracle, marks a climax to a decade-old case that divided Silicon Valley and promised to reshape the rules for the software industry. Oracle was seeking as much as $9 billion.
  • The court said Google engaged in legitimate “fair use” when it put key aspects of Oracle’s Java programming language in the Android operating system.
  • Writing for the court, Justice Stephen Breyer said Google used “only what was needed to allow users to put their accrued talents to work in a new and transformative program.”
  • Justices Clarence Thomas and Samuel Alito dissented. Justice Amy Coney Barrett didn’t take part in the case, which was argued before she joined the court.

U.S. Added 916,000 Jobs in March as Hiring Accelerated – Wall Street Journal, 4/2/2021

  • U.S. hiring surged in March as the economic recovery accelerated, the start of what economists say could be a sustained run of job growth to industries, regions and workers hardest hit during the pandemic.
  • U.S. employers added a seasonally adjusted 916,000 jobs in March, the best gain since August, the Labor Department said Friday, and the unemployment rate, determined by a separate survey, fell to 6.0%, a pandemic low.
  • Still, as of March, there are 8.4 million fewer jobs than in February 2020 before the pandemic hit.
  • Friday’s report showed hiring rose in most industries, led by a gain of 280,000 in the category that includes restaurants and hotels.
  • Still, employment in the overall leisure and hospitality sector is down by 3.1 million, or 18.5% from February 2020.

Service Industries in U.S. Expand at Fastest Pace on Record – Bloomberg, 4/5/2021

  • U.S. service providers experienced the fastest growth on record in March as measures of business activity and orders advanced to new highs.
  • The ISM’s services index soared to 63.7 from a nine-month low of 55.3, when severe winter weather gripped much of the country and curtailed activity.
  • The group’s measure of new orders increased in March to a record 67.2 from 51.9 a month earlier. The gauge of business activity, which parallels the ISM factory production index, jumped to 69.4, also the highest in data to 1997, from a February reading of 55.5.
  • The services figures also showed prices paid for materials jumped to 74, the highest since July 2008, from 71.8 a month earlier. Delivery times also lengthened slightly.

U.S. factory orders decline in February – Reuters, 4/5/2021

  • New orders for U.S.-made goods fell in February, likely weighed down by unseasonably cold weather, though manufacturing remains strong as the economic recovery regains steam amid an improving public health situation and massive fiscal stimulus.
  • The Commerce Department said on Monday that factory orders dropped 0.8% after surging 2.7% in January. Economists polled by Reuters had forecast factory orders slipping 0.5% in February. Orders increased 1.0% on a year-on-year basis.
  • Unfilled orders at factories increased 0.8% in February after gaining 0.2% in January, suggesting a rebound in demand in the coming months.
  • The Commerce Department also reported that orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, fell 0.9% in February instead of dropping 0.8% as reported last month.
  • Shipments of core capital goods, which are used to calculate business equipment spending in the GDP report, decreased 1.1%. They were previously reported to have declined 1.0% in February.

Some Democrats Cool to Biden’s Plan to Boost Corporate Tax Rate – Wall Street Journal, 4/5/2021

  • President Biden’s proposed tax increases on corporations as part of a $2.3 trillion infrastructure plan have drawn a skeptical reaction from some Democrats, who instead favor borrowing money to pay for the investments or raising other levies, like the gasoline tax, to do so.
  • Republicans have widely rejected Mr. Biden’s proposed tax increases, but some Democrats are raising their own questions about the plan. With very narrow majorities in the House and Senate, Democrats will need nearly unanimous support in their party to advance the package without Republican votes, and many lawmakers are floating potential changes to the plan.
  • The early questions from Democrats reinforce expectations that this next wave of legislation won’t move nearly as quickly as the $1.9 trillion Covid-19-aid plan, almost entirely deficit-financed, that Mr. Biden signed into law last month.

Biden will push through infrastructure plan if no Republican support – energy secretary says – Reuters, 4/5/2021

  • U.S. President Joe Biden would be willing to push through his $2 trillion infrastructure plan without the support of Republican lawmakers if he cannot reach a bipartisan deal, Energy Secretary Jennifer Granholm said on Sunday.
  • Granholm said Biden would prefer that his plan have Republican backing but, if that does not work, he would likely support using a procedural strategy called reconciliation to allow Democrats to pass it in the Senate.
  • Senate Republican leader Mitch McConnell said last week that Biden’s infrastructure plan was “bold and audacious” but would raise taxes and increase debt. He vowed to fight it “every step of the way.”
  • Republican Senator Roy Blunt on Sunday urged Biden to significantly scale back the plan if he wanted Republican lawmakers’ support.
  • “If we’d go back and look at roads and bridges and ports and airports, and maybe even underground water systems and broadband, you’d still be talking about less than 30% of this entire package,” Blunt said on “Fox News Sunday.”

Yellen to Urge Global Minimum Company Tax to Stop Venue-Hopping – Bloomberg, 4/5/2021

  • Treasury Secretary Janet Yellen will argue Monday for a global corporate minimum tax rate as she pushes President Joe Biden’s plans to raise levies on U.S. companies, a person familiar with her remarks said.
  • Yellen’s comments, reported earlier by Axios, are part of an effort to prevent companies from seeking locations with lower taxes as the administration seeks higher levies on American firms to help pay for a $2.25 trillion infrastructure program.
  • Yellen will say the U.S. is working with G-20 nations to find an appropriate minimum “that can stop the race to the bottom.”
  • The U.S. is involved in talks led by the Organization for Economic Cooperation and Development with about 140 countries to develop a global agreement on minimum levies, but participants haven’t yet reached a deal.

EUROPE & WORLD

Samsung first-quarter profit likely surged 45% on bumper smartphone, appliance sales – Reuters, 4/5/2021

  • Samsung Electronics likely saw a 45% jump in profit for January-March on robust sales of smartphones, TVs and home appliances, though chip division earnings are seen tumbling after a storm suspended production at its U.S. plant.
  • Operating profit for the South Korean tech giant in the quarter is expected to have climbed to 9.3 trillion won ($8.2 billion), according to a Refinitiv SmartEstimate drawn from 16 analysts.
  • That would mark Samsung’s highest operating income level for the first quarter since 2018. Revenue likely rose 12%.
  • Despite stratospheric demand worldwide for chips, profits for Samsung’s semiconductor division are expected to have fallen by roughly a fifth to 3.6 trillion won.
  • The division has been hampered by the cost of ramping up new production and losses at its Texas factory after a winter storm halted output in mid-February.

South Korea’s LG becomes first major smartphone brand to withdraw from market – Reuters, 4/5/2021

  • South Korea’s LG Electronics will wind down its loss-making mobile division after failing to find a buyer, a move that is set to make it the first major smartphone brand to completely withdraw from the market.
  • Its decision to pull out will leave its 10% share in North America, where it is the No. 3 brand, to be gobbled up by Samsung Electronics and Apple with its domestic rival expected to have the edge.
  • LG’s smartphone division has logged nearly six years of losses totaling some $4.5 billion.
  • Dropping out of the fiercely competitive sector would allow LG to focus on growth areas such as electric vehicle components, connected devices and smart homes, it said in a statement.

Factmonster – TODAY in HISTORY

  • George Washington cast the first presidential veto. (1792)
  • Julius and Ethel Rosenberg were sentenced to death for giving away atomic secrets to the Russians. (1951)
  • Winston Churchill resigned as prime minister of Britain. (1955)

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