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Daily Market Report | Apr. 12, 2021

S&P 500 Slips After Index Hits Record – Wall Street Journal, 4/12/2021

  • U.S. stocks inched lower Monday at the start of a busy week of corporate earnings and economic data.
  • The Dow Jones Industrial Average fell 78 points, or 0.2%, to 33723 in morning trading.
  • The S&P 500 declined 0.2%, backing away after setting its 20th all-time closing high of the year Friday, and the Nasdaq Composite lost 0.6%.
  • Investors on Monday said they were positioning for the start of earnings season, as well as data that will help to gauge whether a coming burst of inflation will prove transitory.
  • Inflation data due on Tuesday are expected to show consumer prices picked up in March.
  • In bond markets, the yield on the 10-year U.S. Treasury note ticked up to 1.681% from 1.664% Friday.
  • Yields, which move in the opposite direction to bond prices, have fallen back from their closing high of 1.749% in late March, but are still up from a low of 0.915% in early January.
  • In overseas markets, the Stoxx Europe 600 edged down 0.4%, pressured by declines in shares of travel & leisure companies.
  • Stocks pulled back in major Asian markets. China’s Shanghai Composite fell 1.1%, and Japan’s Nikkei 225 lost 0.8%.
  • American depository receipts for Alibaba Group rose 7.6% after companies founded by billionaire Jack Ma announced changes to operations and structure to placate regulators.
  • Alibaba said Monday it would invest in measures to support merchants on its platform, two days after China’s antitrust regulator imposed a record fine.

Covid-19 Live Updates: Newly Reported U.S. Cases Fall – Wall Street Journal, 4/12/2021

  • Newly reported coronavirus cases in the U.S. fell, as some states continued to struggle with elevated caseloads.
  • The U.S. reported more than 46,000 new cases for Sunday, according to data compiled by Johns Hopkins University that was published early Monday.
  • Sunday’s figure was down from Saturday’s total of 66,533, but daily cases are often lower on weekends and early in the week due to lower levels of testing. Not all states report data on new cases daily.
  • The seven-day average, which smooths out irregularities in data reporting, was 68,404 on Saturday, while the 14-day average was 66,575, according to a Wall Street Journal analysis of data compiled by Johns Hopkins University. When the seven-day average is higher than the 14-day average, it indicates cases are rising.
  • The country reported 289 fatalities for Sunday as the total death toll topped 562,000, according to Johns Hopkins data.
  • Nearly 22% of U.S. residents are now fully vaccinated and an average of 3.1 million doses were administered each day over the past week, according to a Wall Street Journal analysis of Centers for Disease Control and Prevention data.
  • Europe, with the exception of the U.K., continues to struggle to contain a new surge in Covid-19 cases amid a protracted vaccine rollout, with several countries having just adopted or now considering tighter social distancing rules.
  • In Germany, daily infections resumed their recent upward trend after a brief lull around the Easter holidays, with hospitalizations continuing their unbroken climb. The country registered 13,245 new confirmed cases on Sunday, up from 12,196 a week earlier.
  • The government is considering a nationwide lockdown that would go beyond the measures currently in place, which vary by regions. The step is controversial however, as it would override the competence of regional governments, which are legally responsible for most aspects of the pandemic response, and would require a vote from both houses of parliament.
  • The U.K., meanwhile, continued its gradual easing of its Covid-19 restrictions Monday, with pubs and restaurants able to open in England for the first time this year—though only for outdoor table service.

United Airlines sees first-quarter revenue falling 66% – Reuters, 4/12/2021

  • United Airlines said it expects first-quarter revenue to drop by 66%, which is near the lower end of its prior forecast, buoyed by improving demand for domestic travel.
  • The company said it now expects first-quarter revenue to fall 66% to $3.2 billion from the same period in 2019.
  • It had previously forecast a drop of between 65% and 70%.
  • The airline said its average daily cash burn for the quarter is expected to be about $9 million per day, an improvement of about $10 million compared to the fourth quarter of 2020.

Uber Posts Record Rider Demand in March – Wall Street Journal, 4/12/2021

  • Uber Technologies said it sees ride-hailing demand recovering faster than driver availability as Covid-19 vaccination rates increase in the U.S.
  • The company on Monday said gross bookings for March rose to the highest monthly level in Uber’s nearly 12-year history.
  • Uber’s mobility business, which includes ride-hailing, had its best month since March 2020, it said.
  • The company said demand also continued to exceed courier availability for its meal-delivery business.
  • The delivery business, combined with cost cuts, helped cushion the pandemic’s hit on Uber’s core ride-hailing operations during the pandemic, and the company posted a narrower full-year loss in February.
  • Uber said it is on track to reach profitability this year in quarterly adjusted earnings before interest, taxes, depreciation and amortization. The company earlier this month said it was spending $250 million in bonuses in an effort to boost driver availability in the near term.

Microsoft to Buy Nuance Communications for $19.7 Billion – Wall Street Journal, 4/12/2021

  • Microsoft has agreed to acquire speech-recognition firm Nuance Communications for $19.7 billion, adding to a series of big deals the company has struck to offer an expanded range of software tools to its customers.
  • The two companies on Monday said Microsoft agreed to pay $56 per Nuance share in the all-cash deal, a 23% premium over Friday’s closing price.
  • The deal value includes Nuance debt, the companies said.
  • Nuance, based in Burlington, Mass., was a pioneer in speech recognition and artificial intelligence technology. Its software formed the basis of Apple’s Siri voice assistant before the Cupertino, Calif-based company switched to an in-house version.
  • The acquisition is Microsoft’s second largest under Chief Executive Satya Nadella after the company spent about $26 billion for professional network LinkedIn in 2016.

White House to zero in on chip shortage in meeting with company officials – Reuters, 4/12/2021

  • Senior White House officials will meet on Monday with top executives from nearly 20 major companies to discuss a global semiconductor shortage that has roiled the automotive industry and technology firms.
  • The White House meeting is billed as the “CEO Summit on Semiconductor and Supply Chain Resilience” and will include White House national security adviser Jake Sullivan and National Economic Council Director Brian Deese.
  • As of midday Friday, 19 major companies had agreed to send executives, including General Motors Chief Executive Mary Barra, Ford Motor Chief Executive Jim Farley and Chrysler-parent Stellantis NV CEO Carlos Tavares.
  • Commerce Secretary Gina Raimondo will also take part, as well as executives from GlobalFoundries, PACCAR, NXP and Taiwan Semiconductor Manufacturing Company, AT&T, Samsung, Google-parent Alphabet, Dell Technologies, Intel, Medtronic, Northrop Grumman, HP, Cummins and Micron.

U.S. SEC review of socially responsible funds finds ‘potentially misleading’ claims – Reuters, 4/12/2021

  • The U.S. Securities and Exchange Commission on Friday said it has found “potentially misleading” claims and inadequate controls around investing environmental, social and governance (ESG) issues in a review of investment advisors and funds.
  • The regulator warned funds that its review had turned up a range of issues where stated approaches of funds or advisors did not match actions. That included examples with how firms handled proxy voting on behalf of investors, as well as “unsubstantiated and potentially misleading claims” regarding socially responsible investment strategies.
  • Socially responsible funds have grown more popular with investors in recent years.
  • A record $51 billion flooded into sustainable U.S. funds in 2020 alone, according to Morningstar.
  • But critics have said that some may overstate their credentials to attract cash.

Biden faces growing Republican skepticism over infrastructure plan – Reuters, 4/12/2021

  • President Joe Biden may come under pressure on Monday to prove his much-touted interest in working with Republicans in Congress, as lawmakers return from their spring break to grapple with his $2.3 trillion proposal to improve U.S. infrastructure.
  • The Democratic president appears to be losing political capital with 10 Senate Republicans who have signaled an openness to working with Democrats, including Susan Collins and Mitt Romney, whose support could give him the votes to pass bipartisan legislation.
  • He is scheduled to host Republicans and Democrats from both chambers at the White House at 1:45 p.m. EDT on Monday to discuss a way forward on the infrastructure plan.
  • None of the 10 Senate Republicans will join Biden at the White House on Monday.
  • He will instead meet Republicans with leading roles on congressional committees: Senators Roger Wicker and Deb Fischer, and Representatives Don Young and Garret Graves.
  • A three-page memo issued by the Senate Republican Conference dismisses the Biden infrastructure proposal as “a partisan plan to kill jobs and create slush funds on the taxpayer dime” that devotes “just 5%” of spending to roads and bridges.

EUROPE & WORLD

Alibaba, Hit by Antitrust Fine, Vows to Help Vendors With Fee Cuts – Wall Street Journal, 4/11/2021

  • Alibaba said Monday that it would invest in measures to support merchants on its platform, two days after China’s antitrust regulator imposed a record fine against the company founded by Jack Ma for abusing its dominant position over vendors and rivals in the country’s e-commerce industry.
  • In a conference call, Chief Executive Daniel Zhang said the company has reduced service fees and charges for vendors, and invested in improved technology and tools for them on its platform.
  • The initiatives will cut further into profitability for the company, which said it would use existing liquidity to pay a $2.8 billion fine announced Saturday.
  • China’s State Administration for Market Regulation said an investigation into Alibaba found that it punished certain merchants who sold goods both on Alibaba and on rival platforms, a practice dubbed “er xuan yi”—literally, “choose one out of two.”

Iran Blames Israel for Attack on Nuclear Facility, Vows to Retaliate – Wall Street Journal, 4/12/2021

  • Iran on Monday accused Israel of orchestrating an attack on its main nuclear facility that destroyed a number of centrifuges and caused an electricity blackout, at a time when Washington and Tehran are seeking to resume talks over a deal that constrains the Islamic Republic’s potential to produce a nuclear weapon.
  • The attack is a potential blow to Iran’s enrichment capabilities.
  • Tehran has raised enrichment levels in recent months as part of efforts to push the U.S. to lift sanctions imposed by the Trump administration.
  • Iran accused Israel of planning the attack to scuttle talks that began last week in Vienna between Tehran and world powers to revive the 2015 nuclear deal.

Mitsubishi Motors to cut output in Japan and Thailand due to chip shortage – Reuters, 4/12/2021

  • Mitsubishi Motors will cut production by a combined 7,500 vehicles at three plants in Japan and Thailand in April, it said on Monday, citing chip shortages.
  • The company is examining whether there will be more production cuts in May, a company spokeswoman added.

Jack Ma’s Ant Group Bows to Beijing With Company Overhaul – Wall Street Journal, 4/11/2021

  • Ant Group, the financial-technology giant controlled by billionaire Jack Ma, will apply to become a financial holding company overseen by China’s central bank, overhauling its business to adapt to a new era of tighter regulation for internet companies.
  • In a statement, the People’s Bank of China said Ant representatives were summoned to a meeting Monday with four regulatory agencies that also included the country’s banking, securities and foreign-exchange overseers.
  • It said a “comprehensive, viable rectification plan” for Ant has been formulated under the regulators’ supervision over the past few months.

Factmonster – TODAY in HISTORY

  • President Franklin Roosevelt died. (1945)
  • The polio vaccine of Dr. Jonas Salk was called “safe, effective, and potent.” (1955)
  • Soviet cosmonaut Yuri A. Gagarin became the first human in space and also the first human to orbit the earth in a spacecraft. (1961)
  • The first space shuttle, Columbia, took its first test flight. (1981)
  • Arkansas federal judge Susan Webber Wright found President Clinton in contempt of court for lying about his relationship with Monica Lewinsky.

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