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Daily Market Report | Apr. 21, 2021

Stocks Turn Higher After Two Days of Declines – Wall Street Journal, 4/21/2021

  • U.S. stocks bounced higher after two consecutive days of declines.
  • The S&P 500 was recently up 0.4%. The tech-heavy Nasdaq Composite added 0.4%. The Dow Jones Industrial Average added about 175 points, or 0.5%.
  • Investors had recently put the brakes on what had been a furious rally in stocks in recent weeks, leaving the major indexes hovering near records. Some of the caution toward stocks eased on Wednesday, as major indexes edged higher and recouped some of their losses.
  • Investors are also closely monitoring earnings to see if the current valuations of expensive stocks can be justified. Chipotle Mexican Grill is among companies that will post results after the New York closing bell.
  • Netflix shares were the biggest loser in the S&P 500 on Wednesday after the company said subscriber growth for the first quarter was weaker than expected. The company’s shares fell 7.9%.
  • In bond markets, the 10-year U.S. Treasury yield edged up to 1.573%, from 1.562% on Tuesday. Yields rise as prices fall.
  • A new wave of Covid-19 infections is sweeping through a number of countries including India and Japan, raising the prospect of fresh hurdles to the anticipated global economic rebound. Health authorities are also warning that new variants may emerge that are resistant to the existing batch of coronavirus vaccines.
  • Overseas, the pan-continental Stoxx Europe 600 ticked 0.4% higher after its biggest one-day drop since late December.
  • In Asia, most major stock indexes closed lower. Japan’s Nikkei 225 fell 2%, while Hong Kong’s Hang Seng declined 1.8%. The Shanghai Composite Index ended the day relatively flat.

Covid-19 Live Updates: Newly Reported Infections Fall in the U.S. – Wall Street Journal, 4/21/2021

  • Newly reported Covid-19 cases in the U.S. were down from a day earlier, but deaths were up, as the nation’s average number of new cases a day trended downward.
  • The country reported more than 54,000 new cases for Tuesday, according to data compiled by Johns Hopkins University and published early Wednesday morning. That figure may be updated later in the morning. Tuesday’s figure was down from 67,933 a day earlier and 77,878 a week earlier.
  • There were 767 Covid-19-related deaths reported in the U.S. for Tuesday, Johns Hopkins data show, up from 477 a day earlier but down from 824 a week earlier.
  • An average of three million vaccine doses were administered each day over the past week, according to the Centers for Disease Control and Prevention. In all, 213.4 million doses have been administered, out of 272 million doses distributed. About a third of U.S. adults have been fully vaccinated, and more than half have received at least one dose, the CDC said.
  • President Emmanuel Macron of France met with top officials Wednesday to discuss options for easing France’s lockdown.
  • French officials are encouraged by a slow but steady decline in the number of Covid-19 infections and hospitalizations, indicating that the latest surge of the virus in France has peaked.
  • France’s vaccine campaign, which got off to a sluggish start, has also begun to gather pace. As of Friday, more than 19% of the population had received at least one vaccine dose.

Netflix Subscriber Growth Slows as Economies Reopen – Wall Street Journal, 4/20/2021

  • Netflix said subscriber growth for the first quarter was weaker than expected, a potential warning sign for the company as consumers in many countries start to emerge from pandemic-related lockdowns and as streaming competition increases.
  • Revenue rose to $7.16 billion from $6.64 billion.
  • The company reported a quarterly profit of $1.71 billion, or $3.75 a share, compared with $542.2 million, or $1.19 a share, for the year-earlier period. Netflix had forecast $1.36 billion in net income and $7.13 billion in revenue for the period.
  • The company on Tuesday said it added another four million subscribers on a net basis globally between January and March, fewer than its forecast of six million.
  • Netflix reported gaining 1.8 million new subscribers in the region that includes Europe and the Middle East and 1.4 million across Asia. Subscriptions in Latin America increased by 360,00 and in the U.S. and Canada by 450,000.
  • Netflix said in a letter to shareholders it believed subscriber “growth slowed due to the big Covid-19 pull forward in 2020 and a lighter content slate in the first half of this year, due to Covid-19 production delays.”
  • The company ended March with almost 208 million subscribers world-wide. It said it expected to add another one million new subscribers in the second quarter, compared with more than 10 million for the year-earlier quarter.

CSX profit slips on weather, pandemic, fuel costs – Reuters, 4/20/2021

  • U.S. railroad operator CSX on Tuesday reported lower-than-expected quarterly profit after severe “polar vortex” winter storms, COVID-19 disruptions and fuel costs weighed on results.
  • Revenue fell 1% to $2.81 billion, led by declines in automotive, metals and equipment, chemicals and coal.
  • The Jacksonville, Florida-based company, which operates in the eastern United States, had first-quarter net earnings of $706 million, or 93 cents per share, down from $770 million, or $1.00 per share, a year earlier.
  • Results from the latest quarter missed Wall Street’s average estimate by 2 cents per share, according to Refinitiv IBES data.
  • Executives said demand has been steadily building and forecast double-digit percentage revenue growth for the full year.

Verizon loses more-than-expected wireless subscribers – Reuters, 4/21/2021

  • Verizon Communications said on Wednesday it lost more wireless subscribers than expected during the first quarter as it battled intense competition from T-Mobile US and AT&T to attract customers.
  • Total operating revenue rose about 4% to $32.9 billion, compared with analysts’ estimates of $32.46 billion, according to IBES data from Refinitiv.
  • Verizon lost 178,000 wireless phone subscribers in the first quarter, more than 121,700 subscriber loss estimated by FactSet.

Health insurer Anthem raises 2021 profit target on upbeat quarter – Reuters, 4/21/2021

  • Anthem on Wednesday raised its full-year profit target, as lower demand for non-COVID-19 healthcare services helped the insurer rein in medical costs and beat quarterly profit estimates.
  • Operating revenue from Anthem’s pharmacy benefits management business, IngenioRx, jumped 12.8% to $5.86 billion in the quarter, driving the company’s operating revenue up about 9% to $32.10 billion.
  • Operating revenue from its top-earning business segment, which sells government-backed Medicare and Medicaid plans, rose 10.4% to $19.28 billion.
  • Anthem’s benefit expense ratio – the percentage of premiums paid for medical services- was 85.6% in the first quarter, well below Street estimates of 87.46%, according to Refinitiv IBES data.
  • Excluding items, Anthem earned $7.01 per share in the quarter ended March 31, compared with analysts’ average estimate of $6.51.
  • For 2021, the company expects to record adjusted net profit of more than $25.10 per share, up from its previous forecast of over $24.50 per share.

Baker Hughes profit falls 40% as winter storm freezes oilfield activity – Reuters, 4/21/2021

  • Baker Hughes reported a 40% fall in first-quarter profit, compared to the fourth, as an unusually cold winter storm in parts of the United States in February hurt drilling activity and demand for oilfield equipment and services.
  • Adjusted operating income fell to $270 million in the three months ended March 31, from $462 million in the fourth quarter.

Halliburton profit rises 6% as oilfield activity rebounds on higher prices – Reuters, 4/21/2021

  • Halliburton on Wednesday reported a 6% rise in first-quarter adjusted profit from the previous three months, as a rebound in oil prices from pandemic lows fueled drilling activity and demand for oilfield services.
  • Adjusted net income attributable to company rose to $170 million, or 19 cents per share, in the quarter ended March 31, from the $160 million, or 18 cents per share, in the fourth quarter.

Discord Ends Deal Talks With Microsoft – Wall Street Journal, 4/20/2021

  • Chat startup Discord has halted talks to sell itself to potential suitors including Microsoft, according to people familiar with the matter, as it resumes interest in a potential initial public offering down the line.
  • Microsoft had been in advanced talks to acquire Discord for at least $10 billion, The Wall Street Journal reported last month. Those talks ended without a deal, though it is possible they could be rekindled in the future, some of the people said.
  • Discord fielded interest from at least three companies about a deal, some of the people said. They said Discord is performing well and prefers to stay independent at this time.
  • Discord said it doubled its monthly user base last year to about 140 million as daily life moved online in the coronavirus pandemic. The company generated $130 million in revenue in 2020, up from nearly $45 million in 2019, though it still isn’t profitable, the Journal has reported.

Silicon Valley’s Deal Machine Is Cranking: ‘I’ve Never Seen It This Frenzied’ – Wall Street Journal, 4/21/2021

  • Years into a boom for venture capital fueled by low interest rates and the prospect of a lucrative hit in tech, deal flow and valuations are reaching new peaks.
  • In the first quarter this year, U.S. startups raised $69 billion from investors—41% more than the previous record, set in the fourth quarter of 2018, according to data firm PitchBook Data. The average valuation for startups at all stages also reached a new high, and more than tripled from last year to $1.6 billion for late-stage companies.
  • A new category of social platforms has garnered particular attention, raising more than $1.2 billion since the start of 2020, with more funding rounds in the works, according to founders and a Wall Street Journal analysis of venture-capital databases.
  • Investors are offering startups five times—or more—the amount of money they are asking, and deals that used to take months now sometimes close in days, according to venture capitalists, deal makers and founders. Startups are raising cash every few months rather than every couple of years, and valuations are soaring with each new check, these people say.

Apple Unveils Subscription Podcasts, Latest iPad Pro – Wall Street Journal, 4/21/2021

  • Apple unveiled new products Tuesday including a subscription podcast service that deepens its competition with Spotify Technology as well as upgrades to its iPad and iMac hardware lines.
  • The announcements, during Apple’s first product event of the year, also included new wireless tags that enable iPhone users to track gadgets, competing with the similar product from Tile.
  • The rollout featured a further expansion of the company’s in-house-designed processor chips to the iMac desktop computer. The chip change was part of a full iMac redesign—the first significant redesign of Apple’s popular desktop since 2012.
  • Apple also said it is bringing its new chips to the high-end iPad Pro, which comes with a brighter screen and speedy fifth-generation, or 5G, connectivity.
  • The latest iPad Pro will be available to order April 30. The device starts at $799, while the larger version with its brighter screen will begin at $1,099. The iMac, which will be offered in a variety of colors, begins at $1,299. Apple’s new M1 chip will allow the desktop to be much slimmer, according to the company.

Airlines cut global traffic forecast on recovery setbacks – Reuters, 4/21/2021

  • Air traffic will recover more slowly than previously expected from the COVID-19 pandemic, as vaccination delays and government “risk aversion” slows the reopening of routes, global airlines body IATA said on Wednesday.
  • Global traffic this year will amount to 43% of pre-crisis levels based on passenger numbers and distance flown, the International Air Transport Association said, below the 51% it had forecast late last year.
  • IATA also predicted industry losses of $47.7 billion in 2021. While that represents an improvement on last year’s $126.4 billion deficit, the organisation warned that airlines would continue to need government wage support.
  • Industry revenue is likely to grow 23% from last year’s low to $231 billion, it also forecast – still far below the $607 billion generated a year earlier.
  • Cargo demand will continue to be a bright spot outpacing passenger traffic with 13.1% growth in 2021 to exceed its 2019 level, IATA predicted. Total cargo volumes are seen at 63.1 million tonnes, close to their pre-crisis peak in 2018.

Exclusive: Fed will limit any overshoot of inflation target, Powell says – Reuters, 4/20/2021

  • The U.S. economy is going to temporarily see “a little higher” inflation this year as the recovery strengthens and supply constraints push up prices in some sectors, but the Federal Reserve is committed to limiting any overshoot, Fed Chair Jerome Powell said in an April 8 letter to Senator Rick Scott.
  • “We do not seek inflation that substantially exceeds 2 percent, nor do we seek inflation above 2 percent for a prolonged period,” Powell said in a five-page response to a March 24 letter in which the Florida Republican raised concerns about rising inflation and the U.S. central bank’s bond-buying program.
  • Those modifiers – “substantially” exceeding 2% inflation or above that level for a “prolonged” period – help to more sharply define the upper bounds of the Fed’s comfort zone as prices rise.
  • The central bank is also buying $120 billion in Treasuries and mortgage-backed securities each month to keep interest rates at a level that supports hiring and spending, and has promised to keep doing so until it sees “substantial further progress” toward full employment and the 2% flexible inflation target.

Travel on U.S. roads fell 12.1% in February over 2020 levels – Reuters, 4/21/2021

  • Travel on U.S. roads fell by 12.1%, or 28.3 billion miles, in February compared with the same month last year as millions of Americans continue to work at home and skip leisure trips amid COVID-19.
  • For the 12 months ending in February, road travel fell 15.3% to 2.77 trillion miles, the lowest total since 2000, down 497 billion miles. Travel was down 0.4% in February over January according to seasonally adjusted figures.


Artificial Intelligence, Facial Recognition Face Curbs in New EU Proposal – Wall Street Journal, 4/21/2021

  • European officials want to limit police use of facial recognition and ban the use of certain kinds of AI systems, in one of the broadest efforts yet to regulate high-stakes applications of artificial intelligence.
  • The European Union’s executive arm proposed a bill Wednesday that would also create a list of so-called high-risk uses of AI that would be subject to new supervision and standards for their development and use, such as critical infrastructure, college admissions and loan applications.
  • Regulators could fine a company up to 6% of its annual world-wide revenue for the most severe violations, though in practice EU officials rarely if ever mete out their maximum fines.
  • The bill is one of the broadest of its kind to be proposed by a Western government, and part of the EU’s expansion of its role as a global tech enforcer.

Foxconn Shrinks Plans for Wisconsin Plant – Wall Street Journal, 4/21/2021

  • Foxconn is scaling back plans for a liquid-crystal-display plant in Wisconsin, saying it expects to invest a fraction of the $10 billion promised nearly four years ago, according to a new contract with the state.
  • Foxconn, the world’s biggest electronics contract manufacturer, now plans to invest as much as $672 million and create 1,454 jobs by the year 2025 to qualify for $80 million in incentives, according to the contract.
  • The company previously agreed to invest as much as $10 billion and hire 13,000 people by the year 2032 to qualify for $2.85 billion in incentives.
  • On Tuesday, Gov. Evers said the new contract delivered on his campaign commitment to save taxpayer money and protect public investments for the existing plant site south of Milwaukee, where officials have invested hundreds of millions of dollars in roads and other infrastructure.

Factmonster – TODAY in HISTORY

  • Samuel Clemens (Mark Twain), author of the novel Huckleberry Finn, died at the age of 74. (1910)
  • Baron Manfred von Richthofen, the notorious World War I German flying ace known as the “Red Baron,” was killed in action today. (1918)
  • Timothy McVeigh was arrested in connection with the Oklahoma City bombing. (1995)

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