Daily Market Report | Apr. 27, 2021
Stocks Little Changed Ahead of Big Tech Earnings – Wall Street Journal, 4/27/2021
- U.S. stocks edged lower Tuesday as investors awaited earnings from more blue-chip companies and the start of the Federal Reserve’s two-day policy meeting.
- The broad S&P 500 slipped 0.1%, while the Dow Jones Industrial Average retreated about 50 points, or 0.1%.
- The Nasdaq Composite slid 0.1%.
- Most stocks in the S&P 500 declined a day after the benchmark hit its 24th record close of the year, with minor losses accumulating in the healthcare, material, utility, technology and communications sectors.
- Among the stocks falling were shares of Tesla. The electric car maker’s stock slid 3.6% despite posting record profit in the first quarter. Shares of Tesla have struggled this year amid a series of challenges including an investigation into a crash of a Model S sedan earlier this month in Texas, rising just 0.6% since the end of December. Shares remain up more than 300%
- General Electric slipped about 3.9% after the company’s jet-engine business and divestitures weighed on its quarterly results. And profits shrank at Eli Lilly, pushing shares down 3%.
- United Parcel Service (UPS) shares jumped 11% after the delivery company topped forecasts for profit and revenue.
- Lyft, which said Monday it was selling its self-driving division to a unit of Toyota Motor, rose 2.4%.
- The yield on 10-year Treasury notes rose to 1.583%, from 1.568% Monday.
- Yields, which move inversely to bond prices, are on course to advance for a third-consecutive session.
- In overseas markets, losses for financial-service, auto and basic-resource stocks weighed on the Stoxx Europe 600, which ticked down 0.2%.
- In Asian markets, Japan’s Nikkei 225 ended the session down 0.5% and China’s Shanghai Composite Index closed up less than 0.1%.
- Newly reported coronavirus cases in the U.S. rose, but remained under 60,000, as the White House took steps to distribute vaccines and other aid to parts of the world where infection numbers are surging.
- The U.S. reported more than 56,000 new cases for Monday, according to the latest data compiled by Johns Hopkins University.
- Hospitalizations continued to hover above the 40,000 mark, with the latest data published by the Health and Human Services Department showing 42,583 Covid-19 patients in hospitals across the U.S.
- The nation reported 474 Covid-19 fatalities for Monday, bringing the total death toll to more than 572,700, according to Johns Hopkins data.
- Some 28.9% of the U.S. population has now been fully vaccinated, and 42.5% of people have received at least one dose, according to the CDC.
- As calls mount for the U.S. to do more to assist developing countries in confronting the pandemic, the Biden administration said it plans to offer millions of doses of the AstraZeneca Covid-19 vaccine and is preparing a major effort to help India fight a resurgence of the virus.
- Electric carmaker Tesla marginally beat Wall Street expectations for first-quarter revenue on Monday boosted by a jump in environmental credit sales to other automakers and liquidating some bitcoins.
- Revenue rose to $10.39 billion from $5.99 billion a year earlier.
- Analysts had expected revenue of $10.29 billion, according to IBES data from Refinitiv.
- Its vehicle average selling price fell by 13% as production of pricier Model S and Model X vehicles ground to a halt ahead of major updates.
- Tesla, which had invested $1.5 billion in bitcoin, trimmed its position by 10% during the quarter, said Chief Financial Officer Zachary Kirkhorn.
- Tesla said proceeds from sales of digital assets amounted to $272 million with a $101 million “positive impact”.
- Tesla has posted profits for seven quarters in a row, most quarters driven by environmental credits.
- Tesla earned $518 million from sales of those credits, up 46% from a year earlier.
- It earns credits for exceeding emissions and fuel economy standards and sells them to other automakers that fall short.
- Adjusted profit of 93 cents per share topped Wall Street’s consensus of 79 cents.
GE Posts Lower Sales, Loss on Restructuring Moves – Wall Street Journal, 4/27/2021
- General Electric reported lower revenue and a loss in its first quarter as the company’s jet-engine business and divestitures weighed on its latest financial results.
- GE’s revenue fell 12% to $17.1 billion, reflecting a 28% decline in its aviation unit and a 9% drop in its healthcare unit after selling off part of the business.
- The aviation division’s revenue fell 28% to $5 billion. GE has previously said it expects the aviation market to begin recovering in the second half with 2021 revenue in the division flat or higher from 2020 levels.
- Revenue in the healthcare division, which makes CT scanners, MRI machines and other hospital equipment, fell 9% to $4.3 billion. The company said revenue rose 7% in the unit excluding the sale of its biopharma operations in early 2020.
- Revenue fell 3% in the power unit, which makes turbines for power plants, to $3.9 billion, while revenue in the renewable energy unit, which mostly makes wind turbines, rose 2% to $3.2 billion.
- The industrial company said excluding discontinued operations and other one-time charges its industrial free cash flow was negative $845 million in the first quarter, an improvement from burning $2.2 billion in the year-ago period.
- The company had a quarterly net loss of $2.8 billion, compared with a profit of $6.2 billion a year ago.
- The results include a $2.9 billion loss from the planned sale of GE Capital’s jet leasing business.
- GE backed its previous 2021 financial projections, including cash flow of $2.5 billion to $4.5 billion from the industrial operations, along with adjusted earnings of 15 cents to 25 cents a share.
UPS Posts Higher Quarterly Revenue, Boosted by Small Businesses – Wall Street Journal, 4/27/2021
- United Parcel Service said its revenue rose in the latest quarter, a period that saw mounting supply-chain woes world-wide, as small and midsize businesses drove gains in the U.S.
- The package-delivery giant on Tuesday posted revenue of $22.91 billion, up 27% from a year earlier and ahead of Wall Street expectations.
- U.S. revenue rose 22% to $14.01 billion in the quarter, while international revenue rose 36% to $4.61 billion, led by Asia and Europe.
- Average daily volume rose 14%, the company said. UPS reported $4.29 billion in revenue for its supply-chain and freight segment, up 34% from the prior year due to strong demand.
- UPS reported a profit of $4.79 billion for the quarter, compared with $965 million in the comparable period last year.
- Earnings were $5.47 a share, compared with $1.11 a share a year earlier.
- The company said it isn’t providing 2021 earnings and revenue estimates due to economic uncertainty, though it continues to expect capital expenditures of about $4 billion and for the sale of UPS Freight to close in the second quarter.
Defense and commercial travel boost Raytheon’s hopes for the year – Reuters, 4/27/2021
- U.S. aerospace manufacturer Raytheon Technologies on Tuesday lifted the lower end of its full-year sales forecast on strong performance of its defense unit and a recovery in commercial air travel.
- Revenue rose to $15.25 billion from $11.36 billion but missed Wall Street’s estimate of $15.36 billion.
- During the quarter, the company had a notable $1.4 billion in classified bookings for work at Raytheon’s Intelligence and Space unit, which Mitchill said was “clearly an indication that the operations tempo is increasing from where we saw it exiting 2020.”
- Net income attributable to common shareowners was $753 million, or 50 cents per share, in the quarter ended March 31, from a loss of $83 million, or 10 cents per share, a year earlier.
- Raytheon ended the first quarter with a backlog of $147.4 billion.
- The company now expects between $63.9 billion and $65.4 billion in full-year sales, compared with its previous forecast of $63.4 billion to $65.4 billion.
- Raytheon increased its 2021 share repurchase authorization from $1.5 billion to at least $2 billion.
3M warns of higher costs due to supply chain disruptions – Reuters, 4/27/2021
- U.S. conglomerate 3M said supply chain disruptions from the COVID-19 pandemic and the February winter storm were pushing its costs higher, after it posted a profit beat on pandemic-fueled demand for safety products.
- Net sales rose 9.6% to $8.85 billion, beating Wall Street estimates of $8.47 billion.
- Sales in the company’s safety and industrial unit jumped 13.7% to $3.3 billion in the quarter ended March 31, boosted by demand for personal safety products, roofing granules and industrial adhesives.
- Net income attributable to 3M rose 24.2% to $1.62 billion, or $2.77 per share, from a year earlier.
- Analysts on average had expected the company to earn a profit of $2.29 per share, according to Refinitiv data.
- Shares fell 1.6% to $196.40 before the bell on Tuesday as 3M reiterated its full-year forecast of earnings and total sales growth, a move analysts dubbed conservative.
- 3M said it expects a raw materials and logistics charge of between 30 cents and 50 cents per share in 2021, compared with a prior forecast of flat to a 10 cent hit.
Eli Lilly profit misses as vaccines sap U.S. demand for COVID-19 drugs – Reuters, 4/27/2021
- Eli Lilly on Tuesday missed estimates for first-quarter profit and cut the top end of its full-year forecast for adjusted earnings as demand for its COVID-19 antibody therapies took a hit due to the roll-out of vaccines in the United States.
- Lilly earned $810.1 million from its COVID-19 drugs in the quarter, below estimates of $985 million, according to Guggenheim analysts. Lilly shares fell 4% in premarket trading.
- Net earnings fell 7% to $1.36 billion, or $1.49 per share, in the quarter ended March 31.
- The company now expects adjusted full-year earnings of $7.80 to $8 per share from its prior forecast of $7.75 to $8.40 per share.
- Sales from COVID-19 drugs are expected in the range of $1 billion to $1.5 billion from $1 billion to $2 billion projected previously.
Hasbro toys to get more expensive as costs surge – Reuters, 4/27/2021
- Hasbro said on Tuesday it would raise prices of toys and games to counter higher raw material costs as the company sees surging demand for its Nerf blasters and board games from families spending more time at home.
- However, net revenue rose just 1% to $1.11 billion in the quarter, missing analysts’ estimates of $1.17 billion, as the delays and closures hurt the company’s entertainment production revenue.
- Demand for toys has remained robust more than one year into the pandemic, with the company reporting a 14% rise in first-quarter sales in its consumer products unit.
- Excluding certain items, Hasbro earned $1 per share, above analysts’ average estimate of 65 cents, according to a Refinitiv IBES estimate.
Apple’s Privacy Changes Are Poised to Boost Its Ad Products – Wall Street Journal, 4/27/2021
- Under Apple’s new privacy restrictions, advertisers targeting iPhone users will get more data about ad performance if they buy Apple’s ad space than if they buy through third parties, according to ad-industry executives.
- The difference could eventually give Apple’s small but growing ad business an edge over rivals, ad executives and app makers say.
- Apple’s latest operating system for iPhones has set off a firestorm in the ad industry and beyond by letting users decide whether to let apps track them for advertising purposes—changes that mean companies may soon have less data about who sees their ads. Apps on Apple’s iOS platform must ask users’ permission to track them for advertising purposes.
- When targeting users who have opted out of tracking, advertisers who buy ads through third-party platforms will have to wait three days for insights on their campaigns and will only receive aggregate information, such as the total number of users who took an action after an ad, people familiar with Apple’s ad products said.
Arm details new data center chips, says Oracle, Alibaba will use them – Reuters, 4/27/2021
- Arm, the British chip technology firm being acquired by Nvidia in a $40 billion deal, on Tuesday gave new details about its next generation of data center technology and said Oracle and Alibaba will use the chips.
- Arm said on Tuesday that its “N2” Neoverse computing cores are expected to be about 40% faster than the previous generation. The company also said that its “V1” cores – which are designed to handle a different type of math commonly used for artificial intelligence – are expected to be 50% faster than traditional methods of doing the same tasks.
- Arm said that Marvell Technology is making a chip using its new technology.
- It also said that Oracle will use Arm-based chips made by Ampere Computing in its growing cloud computing business, and that Chinese technology giant Alibaba is preparing to offer Arm-based cloud computing services, though the chip vendor was not disclosed.
- Lyft is selling its self-driving division to a unit of Toyota Motor for $550 million, a move the ride-hailing giant said will help it turn a profit sooner than previously expected.
- Woven Planet Holdings, a Toyota subsidiary focused on autonomous technology, will pay $200 million up front as part of the deal, Lyft said Monday. The remaining $350 million will be paid in cash over a five-year-period.
- Lyft said the sale would help it save $100 million in operating expenses, accelerating its path to profitability. The company said it now expects to become profitable on an adjusted basis before interest, taxes, depreciation and amortization in the third quarter.
Consumer Confidence in U.S. Climbed in April to Pandemic High – Bloomberg, 4/27/2021
- U.S. consumer confidence climbed sharply in April for a second month, reaching a pandemic high, as Americans grew more upbeat about the economy and job market.
- The Conference Board’s index increased to 121.7, the highest since February last year, from a revised 109 reading in March, according to a Tuesday report. The median estimate in a Bloomberg survey of economists called for the gauge to rise to 113.
- In the past two months, the reading has increased 31.3 points, the most in records back to 1967.
- The surge in confidence was led by the group’s measure of current conditions, which rose to 139.6, the highest in more than a year. At the same time, consumers’ economic expectations also advanced, though modestly.
U.S. Home Prices Surge Most Since 2006 With Tight Inventory – Bloomberg, 4/27/2021
- U.S. home prices soared the most in 15 years, with low mortgage rates and a scant inventory of properties to buy fueling a tight housing market.
- Nationally, the S&P CoreLogic Case-Shiller index of property values climbed 12% in February from a year earlier, the biggest jump since 2006. That followed an 11.2% gain in January.
- Home prices in 20 U.S. cities jumped 11.9%, meanwhile, beating the median estimate of 11.8% in a Bloomberg survey of economists.
- Phoenix reported the biggest year-over-year gains among the 20 cities in February with a 17.4% increase. That was followed by San Diego at 17% and Seattle with a 15.4% increase.
- Nineteen of the 20 cities reported higher price increases in the year ending February 2021 versus the year ending January 2021.
South and West to Gain Power in House of Representatives – Wall Street Journal, 4/27/2021
- Several states in the South and Mountain West will gain more seats in the U.S. House, boosting their political power, according to new census numbers showing stronger population gains there. Texas will gain two House seats, more than any other state.
- Five states will gain at least one seat each: Colorado, Florida, Montana, North Carolina and Oregon. Texas, with its growing population, will gain two more seats in Congress.
- Seven states will lose one seat each: California, Illinois, Michigan, New York, Ohio, Pennsylvania, and West Virginia. This is the first time that California, the nation’s most populous state, has lost a seat.
- The new numbers also will inform redistricting, a process of redrawing political boundaries that varies by state and takes into account the number of residents living within each district, plus the overseas federal employees and their dependents living with them who could be allocated to their home states.
- The changes are expected to favor Republicans because red-leaning states are gaining more seats on net, and because the GOP has more control in redrawing the new congressional maps.
- Republicans will be in charge of drawing new maps in 187 congressional districts this year, compared with 75 for Democrats, down from the GOP’s 219-44 advantage a decade ago, according to the Cook Political Report.
Senate Earmarks Are Back: Democrats Make It Official – Wall Street Journal, 4/27/2021
- The Senate will once again accept earmarks on a bipartisan basis for spending bills for the next fiscal year, with added measures to boost transparency and accountability, said the chairman of the Appropriations Committee, Sen. Patrick Leahy (D., Vt.).
- Under Mr. Leahy’s guidelines, senators’ earmarks—Mr. Leahy prefers the term “congressionally directed spending items”—will be subject to pre-existing rules that require senators to make any requests in writing and certify that they and their families don’t hold financial stakes in any of the projects for which they are seeking funding.
- The practice became politically toxic a decade ago, following a series of high-profile cases of fraud, corruption and misuse. In 2011, Congress imposed a moratorium.
- But some lawmakers on both sides of the aisle have come to believe that the absence of earmarks has contributed to gridlock and exacerbated partisan divisions, while ceding congressional power to the executive branch.
- The White House isn’t expected to include a measure aimed at lowering the price of prescription drugs in its coming antipoverty package, according to people familiar with the matter, in an omission likely to disappoint top Democrats on Capitol Hill.
- President Biden will detail the roughly $1.8 trillion proposal during a speech to Congress later this week, rolling out another major spending plan weeks after he released a $2.3 trillion infrastructure plan. While officials are still finalizing the plan, it is set to include funding for child care, universal prekindergarten and tuition-free community college, among other measures.
- The White House official said at one of the briefings that the administration will propose raising the top income-tax rate to 39.6%, up from 37%; tax capital gains at that same rate for households making more than $1 million, and adjust how capital gains are taxed at death, according to the aide.
- President Biden will sign an executive order Tuesday requiring that federal contractors pay a $15-an-hour minimum wage, the White House said.
- The order would affect hundreds of thousands of people working on federal contracts, the White House said, including cleaning and maintenance workers, as well as nursing assistants and food-service workers.
- Under the order, starting Jan. 30, 2022, all agencies will need to include a $15 minimum wage in new contract solicitations, and by March 30, 2022, all agencies will need to implement it into new contracts. Agencies will also need to incorporate it into existing contracts when they are extended.
- The current minimum wage for workers performing work on covered federal contracts is $10.95. The order would also phase out the use of a tipped minimum wage for federal contractors, currently $7.65 an hour, by 2024.
Biden eyes $80 billion IRS boost to help fund family programs -NY Times – Reuters, 4/27/2021
- President Joe Biden will seek an extra $80 billion to fund U.S. tax collections that would help pay for his plan to bolster childcare, universal prekindergarten education and paid leave for workers, the New York Times reported on Tuesday.
- The Democratic president’s proposal to boost the Internal Revenue Service’s budget over 10 years would help the agency curb tax evasion through audits of high earners and large corporations and include new disclosure requirements, the Times said, citing two people familiar with the plan.
- IRS chief Charles Rettig told lawmakers earlier this month tax evasion costs the United States $1 trillion or more each year.
EUROPE & WORLD
Ant IPO-Approval Process Under Investigation by Beijing – Wall Street Journal, 4/27/2021
- Beijing is investigating how Jack Ma won speedy approvals for his Ant Group’s stock listing last year, according to people with knowledge of the matter, signaling that state actors are getting embroiled in the crackdown on the tech billionaire.
- The central-government investigation, which started early this year, focuses on regulators who greenlighted the initial public offering, local officials who advocated it and big state firms that stood to gain from it.
- Mr. Ma’s relationships with these state stalwarts are being examined as part of the scrutiny, according to the people.
- The probe means uncertainty continues to loom over the future of Ant and controlling shareholder Mr. Ma. The usually flamboyant entrepreneur has kept a low profile since the IPO was stopped last-minute in November.
- He won’t be allowed to leave China until Ant completes a business overhaul ordered by regulators and the government’s investigation is over, the people say.
Factmonster – TODAY in HISTORY
- John Wilkes Booth, Lincoln’s assassin, was surrounded by federal troops in a barn in Virginia. He was shot and killed, either by the soldiers or by his own hand. (1865)
- The worst nuclear power plant accident in history occurred at Chernobyl, near Kiev, U.S.S.R. (1986)
- The first multi-racial elections were held in South Africa. (1994)
- Vermont Governor Howard Dean signed the nation’s first bill allowing same-sex couples to form civil unions. (2000)
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. Historical performance is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
All investing involves risk including loss of principal. No strategy assures success or protects against loss. Any economic forecasts set forth may not develop as predicted.
All company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.
Material presented is excerpts derived from third party content and you may need a subscription to access the full the content. The views and opinions expressed are those of the authors and do not necessarily reflect the views of Pence Wealth Management or LPL Financial.
Prior to making any investment decision please consult your financial advisor regarding your specific situation.
