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Daily Market Report | May 06, 2021

Healthcare, Energy Stocks Lead Major Indexes Lower – Wall Street Journal, 5/6/2021

  • U.S. stocks bounced around the flatline Thursday as investors sold shares of healthcare and energy companies.
  • The S&P 500 fell 0.1% shortly after the opening bell, while the Nasdaq Composite slid 0.4%, putting the tech-heavy benchmark on pace for a fifth straight daily decline. The Dow Jones Industrial Average added around 73 points.
  • Many healthcare stocks in the S&P 500 traded in the red after the U.S. said a day earlier it would support the temporary waiver of intellectual property provisions that would allow developing countries to produce Covid-19 vaccines created by pharmaceutical companies.
  • Shares of vaccine makers led most other healthcare stocks lower.
  • Pfizer shed nearly 3%, while Johnson & Johnson slipped 0.4%.
  • Moderna fell 9.2% and AstraZeneca was recently down 1.3%.
  • The Labor Department said jobless claims dipped below 500,000 last week for the first time during the Covid-19 pandemic as layoffs declined and hiring accelerated. Initial claims for unemployment benefits, a proxy for layoffs, fell to 498,000 from 590,000 a week before.
  • Companies have blown past forecasts so far this earnings season. Of the 381 companies on the S&P 500 that had reported through Wednesday, 84% had topped analysts’ expectations, according to FactSet.
  • Yet many companies beating forecasts have seen a lackluster response in their share price. Some investors say that is a sign, alongside recent volatility in tech stocks, that the rally that began last March is beginning to flag.
  • In the bond market, the yield on 10-year Treasury notes slipped to 1.583% from 1.584% Wednesday.
  • Yields, which move in the opposite direction to bond prices, have fallen for four consecutive days.
  • Overseas, the Stoxx Europe 600 slipped 0.3%, weighed down by shares of oil, gas, travel-and-leisure and technology companies. In Asia, Japan’s Nikkei 225 rose 1.8% and China’s Shanghai Composite slipped 0.2%.

U.S. Covid-19 Cases Continue to Trend Lower – Wall Street Journal, 5/6/2021

  • Newly reported Covid-19 cases in the U.S. rose from a day earlier but are broadly edging lower, as the average number of vaccine doses administered continued to slide.
  • There were 44,510 new cases reported in the U.S. on Wednesday, according to the latest data compiled by Johns Hopkins University. That figure was up from 40,733 a day earlier but down from 55,125 a week earlier. More than 32.5 million cases have been reported in the U.S. overall, the data show.
  • Hospitalizations stood at 39,554, according to the latest data posted by the Department of Health and Human Services.
  • There were 776 deaths reported for Wednesday, according to Johns Hopkins data, bringing the U.S. death toll to more than 579,000. Wednesday’s figure was down from 934 a day earlier and 959 a week earlier.
  • The decline in Covid-19 cases comes as some 41.3% of U.S. adults have been fully vaccinated, and 56.7% have received at least one dose, according to Centers for Disease Control and Prevention data.
  • An average of 2.1 million doses a day were administered over the past week, according to a Journal analysis of CDC data. That was down from 2.2 million a day earlier and 2.7 million a week earlier.
  • Governors across the U.S. are broadly rolling back restrictions. New York Gov. Andrew Cuomo said Wednesday that Broadway shows can resume performances at 100% capacity Sept. 14, with tickets allowed to go on sale Thursday.
  • Theaters have been closed since March 2020 because of the Covid-19 pandemic. New York City businesses will be allowed to reopen fully from July 1, Mayor Bill de Blasio said last week.
  • As the U.S. begins to return to some semblance of normalcy, much of the world is fighting a fresh surge of the virus. The Biden administration said Wednesday it would back a proposal at the World Trade Organization to temporarily waive intellectual property protections for Covid-19 vaccines to help speed up global production.
  • Developing nations led by India and South Africa have been pushing for the waiver, saying it is needed to stem the coronavirus pandemic. The waiver is also supported by more than 100 members of Congress.

PayPal profit tops estimates on digital payments boom – Reuters, 5/6/2021

  • PayPal reported its strongest first quarter on record and beat profit estimates on Wednesday, with a coronavirus-driven shift to online shopping and digital transactions boosting payment volumes.
  • Revenue also beat estimates, rising 31%.
  • San Jose, California-based PayPal processed a total of $285 billion in payments in the first quarter, up 50% from a year earlier, and added 14.5 million net new active customers.
  • Venmo, PayPal’s app which allows individuals in the United States to send each other money, processed $51 billion in payments in the quarter, up 63%.
  • PayPal reported first-quarter net income of $1.22 per share, beating analysts’ average estimates of $1.01 per share.
  • PayPal also said it expects to add 52–55 million net new active accounts in 2021, with an about 30% rise in total payments volume on a spot and forex neutral basis.
  • The company in February forecast an addition of about 50 million active users in 2021.

Uber’s First Quarter Shows Food Delivery’s Continuing Strength – Wall Street Journal, 5/6/2021

  • Uber Technologies’ first-quarter bookings rose despite weak demand for its ride-sharing service, as sustained growth in its food-delivery business offset the slump in its core operations.
  • The company reported revenue at $2.9 billion after setting aside $600 million tied to the U.K. changes.
  • That compares with revenue of $3.2 billion in the same period last year.
  • Uber’s bookings grew 24% year-over-year to $19.5 billion in the three months ended March, of which $12.5 billion came from its food-delivery arm.
  • Uber Eats’ bookings more than doubled from a year earlier, while Uber’s ride business declined 38% over the same period.
  • Uber reported a net loss of $108 million, compared with a loss of $2.9 billion in the year-earlier period.

Moderna Turns First-Ever Profit, Boosted by Its Covid-19 Vaccine – Wall Street Journal, 5/6/2021

  • Moderna’s Covid-19 vaccine lifted the biotech company to its first-ever quarterly profit, a milestone in the rise of a company that burst into the spotlight last year as it rapidly developed a shot against the coronavirus.
  • Vaccine sales were by far the largest contributor to Moderna’s total revenue, which rose to $1.94 billion, from $8 million a year earlier. Total revenue also includes grant and collaboration revenue.
  • The vaccine brought Moderna revenue of $1.73 billion in the first quarter, reflecting three full months of its use in the U.S. and initial international sales, the company said Thursday.
  • The company logged a profit of $1.22 billion, or $2.84 a share, compared with a loss of $124 million, or 35 cents a share, in 2020’s first quarter.
  • Moderna also boosted its full-year forecast of Covid-19 vaccine sales to $19.2 billion, based on advance purchase agreements, from $18.4 billion it previously predicted.

Kellogg lifts full-year forecasts on resilient pandemic demand – Reuters, 5/6/2021

  • Breakfast cereal maker Kellogg raised annual forecasts and beat first-quarter sales and profit estimates on Thursday, helped by a sustained snacking boom that began during the pandemic but continues even as the U.S. economy reopens.
  • Net sales rose to $3.58 billion in the quarter ended April 3 from $3.41 billion a year earlier.
  • Analysts were expecting sales of $3.38 billion, according to IBES Refinitiv.
  • Net income attributable to the company climbed to $368 million, or $ 1.07 per share, from $347 million, or $1.01 per share, a year earlier.
  • Kellogg, which also makes Pringles, Cheez-Its and Pop-Tarts, projected full-year organic net sales to be about flat, compared to its previous estimate of a decline of about 1%.

ViacomCBS beats quarterly revenue estimates on streaming, advertising boost – Reuters, 5/6/2021

  • ViacomCBS on Thursday beat Wall Street quarterly revenue estimates, driven by strong streaming revenue and advertising growth following the March launch of its rebranded Paramount+ service.
  • Revenue rose 14% to $7.41 billion in the quarter, beating estimates of $7.31 billion, IBES data from Refinitiv showed.
  • Advertising revenue jumped 21% to $2.68 billion, driven by CBS’ broadcasts of Super Bowl LV and NCAA basketball tournament games.
  • The company has 36 million global streaming subscribers after adding 6 million in the first quarter.
  • Streaming revenue rose 65% year-on-year.
  • Net earnings attributable rose to $899 million, or $1.42 per share, from $501 million, or 81 cents per share, a year earlier.
  • The company said it expects “strong double-digit advertising growth” in the second quarter.

Fox to Acquire Clay Travis’s Outkick Media, a Sports and Culture News Site – Wall Street Journal, 5/6/2021

  • Fox said it agreed to acquire Outkick Media, a news outlet focused on sports, politics and culture that was founded by provocateur Clay Travis.
  • The company said revenue fell 6.5%, primarily as a result of not broadcasting the Super Bowl, as it did in the year-ago quarter.
  • Revenue at Fox’s cable programming unit was essentially flat at $1.47 billion as an increase in the price distributors pay to carry its TV networks was offset by a 7% decline in advertising revenue.
  • Profit jumped to $567 million, or 96 cents a share, from $78 million, or 13 cents a share, in the year-earlier quarter, due largely to a change in the value of the company’s investments.

Albemarle profit beats expectations on rising lithium demand – Reuters, 5/6/2021

  • Albemarle, the world’s largest producer of lithium, posted a quarterly profit on Wednesday that easily beat Wall Street’s expectations on rising demand from the electric vehicle industry.
  • The company reported first-quarter net income of $95.7 million, or 84 cents per share, compared with $107.2 million, or $1.01 per share, in the year-ago period.
  • Albemarle said the outlook for lithium sales has improved since 2020, when the coronavirus pandemic forced the company to pause expansions and production in some regions. Prices for the white metal should improve for the rest of the year, the company forecast.

MetLife moves past worst of pandemic as investment gains drive profit beat – Reuters, 5/6/2021

  • MetLife said on Wednesday the worst of the pandemic was behind it after the U.S. insurer beat Wall Street estimates for first-quarter profit, with large investment gains cushioning the hit from coronavirus-related claims.
  • The New York-based insurer’s net investment income jumped nearly 74% to $5.31 billion on strong returns from private-equity investments.
  • MetLife said it booked $2.24 billion in losses on its hedging strategy, which is designed to offset the hit from declining interest rates. The benchmark 10-year Treasury yield rose nearly 83 basis points to 1.7460% in the first quarter.
  • The company reported adjusted earnings of $2 billion, or $2.20 per share, for the first quarter ended March 31, from $1.45 billion, or $1.58 per share, a year earlier.

Global pharma shares sink as Biden backs COVID-19 vaccine IP waiver – Reuters, 5/6/2021

  • Shares of COVID-19 vaccine makers plunged after U.S. President Joe Biden backed a proposed waiver for intellectual property rights even as the pharmaceutical industry, analysts and experts doubted its impact, saying the real problem is a lack of raw materials and know-how.
  • The Biden administration move drew applause from patent activists and the World Health Organization as it could increase availability of vaccines to poorer nations including India, which is under the grip of a deadly second wave of infection.
  • However, implementing such a move could be a lengthy process as all 164 WTO member countries are required to arrive at a consent.
  • The pharmaceutical industry, which has long defended patents as the key to research and development of new treatments, criticized the move, with its biggest lobby group warning that it would undermine pandemic response and compromise safety.

North American companies buying more robots to keep up with demand – Reuters, 5/6/2021

  • North American companies boosted spending on industrial robots in the first quarter as they scrambled to keep up with surging demand in the wake of the COVID-19 pandemic.
  • Companies ordered 9,098 robots in the first quarter, a 19.6% increase over a year ago, according to the Association for Advancing Automation, an industry group based in Ann Arbor, Michigan. The orders were valued at over $466 million in total.
  • The strongest growth in the latest quarter was to metal producers, where orders surged 86%. Orders to life science, pharmaceutical and biomedical companies rose 72%, while orders to consumer goods companies increased 32%.

Dogecoin’s 12,000% Rally Spurs Hunt for Next Crypto Winner – Wall Street Journal, 5/6/2021

  • After bitcoin and dogecoin’s blistering rally this year, individual investors are venturing further out into the cryptocurrency universe in search of the next big thing.
  • A more than 12,000% rally this year in dogecoin, a cryptocurrency that was set up as a joke and serves no purpose, sent its price to a record 69 cents per token this week. Bitcoin climbed briefly to over $60,000 apiece last month, more than doubling its price since the end of 2020.
  • The jump from one speculative asset to another is indicative of the broader frenzy that has driven up prices for a range of assets including stocks, commodities such as silver and cryptocurrencies. It also shows how new investors with savings bolstered by stimulus checks and who are spending more time at home during the Covid-19 pandemic have become a volatile new force in financial markets.

Chicken Shortage Sends Prices Soaring, and Restaurants Can’t Keep Up – Wall Street Journal, 5/6/2021

  • After a year promoting takeout wings and crispy chicken sandwiches, restaurants including KFC, Wingstop and Buffalo Wild Wings say they are paying steep prices for scarce poultry. Some are running out of or limiting sales of tenders, filets and wings, cutting into some of their most reliable sales.
  • Independent eateries and bars have gone weeks without wings, owners say. Chicken breast prices have more than doubled since the beginning of the year, and wing prices have hit records, according to market-research firm Urner Barry.
  • Boneless skinless chicken breast, the poultry industry’s flagship product, last year averaged around $1 a pound, according to Urner Barry. Now boneless chicken breast is trading at $2.04 a pound, the firm said. Over the past decade, the price averaged about $1.32 a pound.
  • One reason for the higher prices is the chicken sandwich wars of recent years. Fast-food chains including McDonald’s, Popeyes Louisiana Kitchen and Wendy’s have introduced new crispy and spicy offerings. More chains plan to introduce new chicken sandwiches in the coming months, including a hand-breaded version that Burger King plans to sell nationally by this summer.

U.S. weekly jobless claims drop to fresh 13-month low – Reuters, 5/6/2021

  • Fewer Americans filed new claims for unemployment benefits last week as the labor market recovery gains steam amid an economic boom, which is being fueled by a rapidly improving public health situation and massive government financial assistance.
  • Initial claims for state unemployment benefits tumbled 92,000 to a seasonally adjusted 498,000 for the week ended May 1, the Labor Department said.
  • That was the lowest since mid-March 2020, when mandatory shutdowns of nonessential businesses were enforced to slow the first wave of COVID-19 infections.
  • The claims report also showed the number of people receiving benefits after an initial week of aid increased 37,000 to 3.690 million in the week ended April 24.
  • About 5.0 million people were on government-funded extended benefits during the week ended April 17. Another 453,653 were on a state program for those who have exhausted their initial six months of aid.
  • There were 16.2 million people receiving benefits under all programs in mid-April.

U.S. productivity rebounds in first quarter – Reuters, 5/6/2021

  • U.S. worker productivity rebounded in the first quarter, depressing labor costs growth, but the data has been severely distorted by the COVID-19 pandemic to provide a clear trend.
  • The Labor Department said on Thursday that nonfarm productivity, which measures hourly output per worker, increased at a 5.4% annualized rate last quarter. Data for the fourth quarter was revised higher to show productivity falling at a 3.8% rate instead of the previously reported 4.2% pace.
  • Compared to the first quarter of 2020, productivity rose at a 4.1% pace. Hours worked increased at a 2.9% rate last quarter, slowing from a 10.0% growth pace in the October-December period.
  • Unit labor costs – the price of labor per single unit of output – fell at a 0.3% rate. They grew at a 5.6% pace in the fourth quarter. Unit labor costs increased at a 1.6% rate from a year ago. They have also been distorted by the pandemic’s disproportionate impact on lower-wage industries.
  • Hourly compensation rose at a 5.1% rate last quarter. That followed a 1.6% growth pace in the fourth quarter. Compensation increased at a 5.8% rate compared to the first quarter of 2020.

Biden Blocks Trump-Era Gig-Worker Rule – Wall Street Journal, 5/6/2021

  • The Biden administration blocked a Trump-era regulation that would have made it easier for businesses to categorize gig workers and others as independent contractors, and signaled it would take a tougher enforcement stance against employers on worker classification.
  • The Labor Department said Wednesday it is nullifying a rule it completed in early January that sought to make it more difficult for a gig worker, such as an Uber or DoorDash driver, and other workers to be counted as an employee under federal law.
  • Having status as an employee, rather than a contractor, means those workers are covered by federal minimum-wage and overtime laws.
  • Gig-economy companies were among the most vocal proponents of the Trump-era rule, seeking to cement drivers and similar workers as contractors after California’s legislature passed a law requiring the companies to reclassify their drivers as employees, eligible for broad employment benefits.

National Eviction Moratorium Thrown Out by Federal Judge – Wall Street Journal, 5/6/2021

  • A federal judge threw out a national eviction moratorium Wednesday after concluding it was legally unsupportable, upending a Covid-19 relief measure that has protected millions of tenants but created hardships for landlords.
  • The Centers for Disease Control and Prevention, citing public health grounds, had extended the moratorium through June for tenants who have fallen behind on their rent during the pandemic.
  • But a series of conflicting lower-court rulings had previously called into question the measure’s legality, and Wednesday’s decision is perhaps the biggest blow to Washington’s efforts to provide eviction protections.
  • The moratorium originated from an executive order signed by then-President Donald Trump in September.
  • An analysis by the Urban Institute, a Washington think tank, found that the amount of unpaid rent could exceed $52 billion. According to a Census Bureau survey conducted last month, about one in seven renters are now behind on their payments—roughly three times the typical rate.

EUROPE & WORLD

EU ‘ready to discuss’ COVID vaccine patent waiver as drugmakers push back – Reuters, 5/6/2021

  • The European Union is willing to discuss a proposal to waive intellectual property rights for COVID-19 vaccines, European Commission President Ursula von der Leyen said on Thursday, as drugmakers fought their ground as their share prices tumbled.
  • The World Health Organization said in April that of 700 million vaccines administered around the world, only 0.2% had been in low-income countries. A recent surge of infections in India, the world’s second most populous country, has underlined the point.
  • WHO chief Tedros Adhanom Ghebreyesus reached for capital letters in a tweet calling Biden’s move a “MONUMENTAL MOMENT IN THE FIGHT AGAINST #COVID19”, and said it reflected “the wisdom and moral leadership of the United States”.
  • Von der Leyen, speaking to the European University Institute in Florence, said the European Union was ready to discuss any proposals that address the crisis “in an effective and pragmatic manner”.

Chip crisis to eat into Volkswagen’s Q2 profits – Reuters, 5/6/2021

  • Volkswagen boss Herbert Diess said Europe’s top carmaker was in “crisis mode” over an ongoing lack of badly needed automotive chips, adding the impact of the shortage would intensify and hit profits in the second quarter.
  • “We will do everything to offset a significant amount of the lost cars in the second half of the year,” Diess told journalists. “But the incidents in the U.S. and in Japan will hurt us definitely.”
  • Volkswagen’s operating profit came in at 4.8 billion euros ($5.8 billion) in January-March, helped by cost cuts and higher sales, versus 900 million euros in the same period last year, which was hit by the COVID-19 pandemic.
  • During the first quarter, deliveries of Porsches and Audis both rose by about a third year on year, Volkswagen has said. Sales of electric vehicles more than doubled to 133,300 vehicles.
  • It now expects an operating profit margin of 5.5-7%, up from a previous forecast of 5.0-6.5%.
  • Diess said while the problem had cut production by around 100,000 cars in the first quarter, there was more to come.

Budweiser APAC to boost premium and non-beer offerings – Reuters, 5/6/2021

  • Budweiser Brewing APAC will step up promotion of premium beer brands including Hoegaarden and Corona and expand non-beer offerings, betting a rising middle class will boost demand for higher-end products, its chief executive said on Thursday.
  • The Hong Kong-listed Asia arm of Anheuser-Busch reported a 63.7% rise in first-quarter revenue, with total volume up 64.6%, driven by strong consumption over the Lunar New Year holiday and a low base for comparison due to the COVID-19 outbreak early last year.
  • Revenue doubled in China from the same period last year and grew by double digits compared to the first quarter of 2019. Revenue generated from premium brands increased by high double digits year on year, it said.

Air France-KLM falls further into red as European recovery lags – Reuters, 5/6/2021

  • Air France-KLM sales are showing little sign so far of the travel recovery it still hopes to see by summer, the airline group said on Thursday, as it posted a wider first-quarter operating loss.
  • The operating loss increased to 1.18 billion euros ($1.42 billion) from 815 million in the first quarter of 2020, which was only partially affected by the pandemic.
  • Revenue fell 57% to 2.16 billion euros.
  • The group, which took a 10.4-billion-euro government-backed bailout last year, raised 1 billion euros in an April share issue that saw the French state double its holding to 28.6%.
  • Air France-KLM expects to operate 50% of its pre-pandemic flight capacity in the second quarter under way, picking up to 55% to 65% in July-September.

Aston Martin posts smaller loss as sales more than double – Reuters, 5/6/2021

  • Carmaker Aston Martin posted a smaller first quarter loss in 2021 of 42.2 million pounds ($59 million) and said it continued to take steps towards profitability, as its sales to dealers more than doubled.
  • That compared with the 110.1 million pound loss the luxury brand posted in the same period last year, when it brought in fresh investment from billionaire Executive Chairman Lawrence Stroll to shore up its finances.
  • In the first quarter of 2021, total sales to dealers more than doubled to 1,353 vehicles and the firm said it was maintaining its full-year guidance that volumes will stand at around 6,000 vehicles.
  • It hopes to reach around 10,000 cars and revenue of roughly 2 billion pounds by 2024/25.

Ray-Ban maker EssilorLuxottica lifts quarterly sales with China, U.S. help – Reuters, 5/6/2021

  • EssilorLuxottica posted a 14.3% rise in first-quarter sales on Thursday powered by a strong rebound in China and the United States as the maker of Oakley and Ray-Ban sunglasses targets a full recovery from the pandemic this year.
  • Sales in the first quarter jumped 14.3% at constant currencies from a year earlier to 4.06 billion euros ($4.9 billion).
  • The company, formed from the merger of French lens manufacturer Essilor and Italian spectacles maker Luxottica, confirmed that it expected to deliver savings from the tie-up amounting to 300 million to 350 million euros in adjusted operating profit by the end of 2021 and 420 million to 600 million by the end of 2023.

Bombardier burns less cash, profit jumps, as wealthy travelers return to flying – Reuters, 5/6/2021

  • Canada’s Bombardier reported a 43% increase in quarterly adjusted profit on Thursday and used less free cash, helped by a recovery in business aviation, as rising COVID-19 vaccinations encourage travel.
  • Business jet revenue increased by 18% to $1.3 billion in the quarter.
  • Bombardier’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose to $123 million in the first quarter, from $86 million a year earlier.
  • Bombardier said its first quarter book-to-bill, which measures orders to deliveries, was greater than 1.0 on strong sales activity, which is expected to continue into the second quarter.
  • It remains on track to deliver between 110 and 120 business aircraft in 2021 after full-year deliveries fell 20% to 114 jets in 2020.

Norwegian Cruise says 2022 first half bookings ahead of pre-pandemic levels – Reuters, 5/6/2021

  • Norwegian Cruise Line Holdings said on Thursday bookings for the first half of 2022 was ahead of pre-pandemic levels, as the cruise operator prepares to resume sailing after over-a-year-long pause due to the COVID-19 pandemic.
  • In the first quarter ended March 31, the company’s revenue slumped more than 99% to $3.1 million due to an ongoing suspension of voyages.
  • Norwegian Cruise, however, said it continues to expect a loss until sailings resume.
  • The company also reiterated its plans to resume sailing in the United States in July, after the U.S. Centers for Disease Control and Prevention said last week it was “committed” to the resumption of passenger operations in the country by mid-summer.

Factmonster – TODAY in HISTORY

  • Congress passed the Chinese Exclusion Act over President Chester A. Arthur’s veto. (1882)
  • The German airship Hindenburg blew up and burst into flames at Lakehurst, N.J. (1937)
  • Dictator Joseph Stalin became the premier of Russia. (1941)
  • The Chunnel between England and France officially opened. (1994)

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