Tech Stocks Climb on Waning Rate Worries – Wall Street Journal, 5/7/2021
- A lackluster monthly jobs report sparked a rebound in technology shares and other growth stocks Friday while triggering a decline in government-bond yields.
- The Nasdaq Composite added 1.3%, outpacing its peers. The S&P 500 ticked up 0.7%, a day after the broad-market index closed near its all-time high. The Dow Jones Industrial Average inched up 146 points, or 0.4%.
- The yield on the benchmark 10-year U.S. Treasury note fell as low as 1.487%, according to Tradeweb, compared with roughly 1.570% just before the report was released and 1.561% Thursday.
- But it was recently back to 1.544%—at the lower end of its trading range for the past several weeks—and on track for a sixth consecutive day of declines.
- The monthly jobs report showed employers added 266,000 jobs in April and the unemployment rose to 6.1%.
- These figures significantly missed the expectations of economists who estimated that payrolls grew by one million and the unemployment rate fell to 5.8%. It sat at a record 14.8% in April 2020 in the midst of the early stages of the pandemic.
- In commodities, copper prices surpassed their 2011 highs and were on course to close at a record, fueled by bets on the global economic rebound and on rising demand from efforts to decarbonize the power and transportation sectors.
- Three-month copper forwards rose 2.4% to $10,355 a metric ton on the London Metal Exchange. In New York, copper futures on CME Group’s Comex rose 2.5% to $4.72 a pound.
- Overseas, the pan-continental Stoxx Europe 600 climbed 0.6%.
- The Shanghai Composite Index pulled back 0.7%, and Japan’s Nikkei 225 advanced 0.1%.
Covid-19 Live Updates: Nearly a Third of the U.S. Population Is Fully Vaccinated – Wall Street Journal, 5/7/2021
- Newly reported coronavirus cases in the U.S. remained under 50,000 for the third day in a row, as the number of fully vaccinated people neared a third of the population.
- The U.S. reported just over 47,000 new cases for Thursday, according to data compiled by Johns Hopkins University that was published early Friday Eastern Time. The data may update later.
- Thursday’s figure was up slightly from Wednesday’s total of 44,510 but down from the 58,199 new cases reported a week ago.
- The U.S. death toll from Covid-19 topped 580,000, with 786 fatalities reported for Thursday, according to Johns Hopkins data.
- Vaccinations in the U.S. continued at a slower pace than last month, with an average of 2.1 million doses administered a day over the past week.
- Even so, 32.8% of the U.S. population is now fully vaccinated, according to a Journal analysis of data from the Centers for Disease Control and Prevention. Levels are higher among the elderly, with more than 70% of people age 65 or older fully vaccinated.
- New York City, meanwhile, plans to offer tourists a shot of a Covid-19 vaccine as part of a push to draw more foot traffic to city attractions, Mayor Bill de Blasio said Thursday.
- Tourists would be offered the one-dose Johnson & Johnson vaccine. The initiative still requires state approval because current regulations allow only people living or working in the state to get vaccinated, Mr. de Blasio said.
Roku Reports 79% Jump in Revenue in Latest Quarter – Wall Street Journal, 5/7/2021
- Roku reported that first-quarter revenue surged 79% in the latest quarter as the streaming-media service continued to get a boost from homebound customers consuming more content during the Covid-19 pandemic.
- The company’s revenue rose to $574.2 million for the March quarter, up from $320.8 million a year earlier.
- Analysts had estimated $491.6 million, according to FactSet.
- Revenue at Roku’s platform business, which includes ad sales, doubled to $466.5 million.
- Roku’s player unit had 53.6 million active accounts at the end of the quarter.
- Those accounts streamed a total of 18.3 billion hours in the quarter, an increase of 49% over the previous year.
- Average revenue per user was $32.14, a 32% increase from last year.
- The streaming-media hub recorded a first-quarter profit of $76.3 million, or 54 cents a share, compared with a loss of $54.6 million, or 45 cents a share, in the year-earlier period. Analysts were projecting a per-share loss of 13 cents.
- For the current quarter, Roku targeted revenue of $610 million to $620 million, above analysts’ current $550 million projection.
Square sails past profit estimates as bitcoin volumes surge – Reuters, 5/7/2021
- Payments firm Square handily beat Wall Street expectations for quarterly profit on Thursday, as surging demand for bitcoin fueled a jump in cryptocurrency transactions on its peer-to-peer payment service Cash App.
- Total net revenue jumped nearly four-fold to $5.06 billion.
- Cash App generated $3.51 billion in bitcoin revenue, up eleven times from a year earlier, in a quarter when the most popular cryptocurrency hit $1 trillion in market capitalization for the first time.
- Gross payment volumes (GPV), a measure of the transactions processed on Square’s platform, rose 29% in the first quarter to $33.1 billion.
- Stripping out one-time costs, the payments firm, led by Twitter top boss Jack Dorsey, earned 41 cents per share.
- Analysts on average had expected 16 cents per share, according to Refinitiv IBES data.
Datadog stock surges on earnings, outlook beat – MarketWatch, 5/7/2021
- Datadog reported a first-quarter loss of $13.1 million versus net income of $6.5 million in the year-ago period.
- Revenue rose to $198.5 million from $131.2 million in the year-ago quarter.
- Analysts surveyed by FactSet had forecast revenue of $186.6 million.
- Datadog expects adjusted earnings of 3 cents to 4 cents a share on revenue of $211 million to $213 million in the second quarter, and 13 cents to 16 cents a share on revenue of $880 million to $890 million for the year.
- Analysts forecast 3 cents a share on revenue of $196.6 million for the quarter, and 14 cents a share on revenue of $833.7 million for the year.
Expedia Beats Estimates With Travel Demand ‘Roaring Back’ – Bloomberg, 5/7/2021
- Expedia Group blitzed analysts’ estimates for several growth metrics in the first quarter, buoyed by a surge in domestic travel and vacation-rental demand.
- Gross bookings were down only 14% compared with a year earlier — a significant improvement from the nearly 70% decline in the previous two quarters and better than analysts had expected.
- Revenue fell 44% to $1.25 billion, the Seattle-based company said Thursday in a statement, slightly ahead of analysts’ estimates.
- Vrbo, which competes directly with Airbnb Inc., has weathered the pandemic better than its parent as travelers sought out regional staycations and remote work getaways. Expedia doesn’t disclose Vrbo metrics, but analysts expect the unit will lead Expedia’s recovery.
- Expedia reported an adjusted loss before interest, taxes, depreciation and amortization of $58 million.
- Analysts were expecting a loss of $137.3 million.
- The adjusted loss per share was $2.02, beating the average analyst estimate of $2.27.
DraftKings raises full-year guidance, expecting a return in sports – CNBC, 5/7/2021
- Sports-betting company DraftKings on Friday reported a better-than-feared loss per share and higher revenue for its first quarter and raised its full-year revenue guidance.
- Revenue: $312 million vs $236.2 million expected in the Refinitiv survey
- DraftKings said it had 1.5 million monthly unique paying customers as of its first quarter, holding onto the gains in made in its fourth quarter. It was expected to report 1.31 million, according to FactSet.
- Average revenue per monthly unique paying customer came in at $61 in the first quarter, representing a 48% increase versus the same period in 2020.
- Loss per share: 36 cents vs an expected loss of 42 cents in a Refinitiv survey of analysts
- The company also raised its fiscal year 2021 revenue guidance to a range of $1.05 billion to $1.15 billion from $900 million to $1 billion, which equates to year-over-year growth of 63% to 79%. DraftKings credited the expected return of normal sports seasons for the increase in guidance.
Peloton Cuts Forecast Due to Treadmill Recall – Wall Street Journal, 5/7/2021
- Peloton Interactive said a recall of its treadmills will dent revenue and profit, as the company grapples with returns and halted sales while tries to fix the design of the machines.
- Revenue for the quarter rose to $1.26 billion, up from $524.6 million a year earlier, as demand for remote workout classes and at-home fitness gear continues to surge during the pandemic.
- Peloton said the number of people subscribing to its remote fitness classes reached 2.08 million in the quarter ended March 31, an indicator of demand for its stationary bicycles and treadmills. The tally stood at 1.67 million at the end of December.
- Peloton reported a loss of $8.6 million, compared with a $55.6 million loss a year ago.
- The connected-fitness company on Thursday predicted recalling and halting sales on two lines of treadmills will cost $165 million in the current quarter, and it lowered sales and profit forecasts for the fiscal year ending June 30. Executives said it isn’t clear when the treadmills will return to the market.
Beyond Meat loss exceeds forecasts on higher costs, slow restaurant sales – Reuters, 5/7/2021
- Beyond Meat on Thursday reported a wider quarterly loss than expected, as the plant-based meat maker incurred higher freight costs, spent heavily on testing new product launches, and sold less to pandemic-hit restaurants.
- In the first quarter ended April 3, net revenue rose about 11% to $108.2 million, missing estimates of $113.7 million.
- Its bottom line swung to a net loss of $26.8 million from a profit of $1.8 million a year ago.
- Beyond Meat expects second-quarter revenue in the range of $135 million to $150 million, a rise of 19% to 32%. Analysts had forecast revenue of $142.8 million, according to IBES data from Refinitiv.
News Corp quarterly revenue beats on digital push – Reuters, 5/7/2021
- Wall Street Journal parent News Corp beat Wall Street estimates for quarterly revenue on Thursday, as the company’s digital push helped its Dow Jones unit attract more subscribers.
- The Rupert Murdoch-led publisher’s total revenue rose 3% to $2.34 billion in the three months ended March 31, above analysts’ estimate of $2.2 billion, according to Refinitiv IBES data.
- Revenue from Dow Jones, which provides news and business information, rose 6% to $421 million during the quarter.
- The Wall Street Journal’s digital-only subscriptions grew 29% to 2.63 million average subscriptions in the quarter, and represented 78% of its total subscriptions.
AIG profit beats estimates on general insurance, retirement gains – Reuters, 5/7/2021
- American International Group beat first-quarter profit estimates on Thursday, as strong performance in its general insurance and life and retirement units blunted the hit from winter storms and coronavirus-related mortality claims.
- Gross premiums written rose 6% to $10.73 billion in the general insurance business, driven by the insurer’s North America and international commercial lines.
- The insurer’s general insurance accident year combined ratio – which excludes catastrophe losses – was 92.4 for the quarter, compared with 95.5 a year earlier.
- AIG’s life and retirement unit posted a 57% jump in adjusted pre-tax income to $941 million, driven partly by higher private equity returns.
- The company posted an underwriting income of $73 million in its general insurance business in the quarter, compared with a loss of $87 million a year earlier, when it booked large losses related to the pandemic.
- AIG, one of the largest U.S. insurers, said it had set aside $422 million for catastrophe losses in the unit, primarily related to winter storms, but estimated no COVID-19-related losses.
- Adjusted after-tax income attributable to AIG common shareholders rose to $923 million in the quarter ended March 31, from $105 million a year earlier.
Walmart Deal Shows Expansion in Telehealth, New Front With Amazon – Wall Street Journal, 5/7/2021
- Walmart said Thursday it purchased telehealth provider MeMD and plans to offer nationwide virtual health care services, another sign of the retail behemoth’s healthcare ambitions.
- The acquisition will allow Walmart to expand its Walmart Health service around the country, the company said.
- The retail giant didn’t disclose the financial details of the transaction.
- The MeMD deal opens another front in which Walmart and Amazon will compete, as Amazon recently announced plans to provide its telehealth service, Amazon Care, to its nearly one million U.S. employees by summer.
- Amazon Care, which now serves company workers in Washington state, will also be offered to other employers.
NYSE to Delist Chinese Telecoms Carriers After Rejecting Appeals – Wall Street Journal, 5/7/2021
- China’s big three telecoms carriers lost their appeals against being kicked off the New York Stock Exchange and will be delisted to comply with an investment ban introduced by former President Donald Trump.
- In separate filings Friday in Hong Kong, China Mobile, China Unicom (Hong Kong) and China Telecom said they expected the NYSE to apply to the Securities and Exchange Commission for permission to delist their American depositary receipts.
- The delistings will take effect 10 days after the SEC is notified.
- The trio said Friday that investors may swap outstanding ADRs for Hong Kong shares by returning them to the Bank of New York Mellon. All three reiterated that they had followed laws, regulations and listing requirements since going public.
- The blacklist covers dozens of companies in sectors such as energy, aviation, transportation and technology, although most other targets weren’t listed in the U.S. The order has led index providers such as MSCI Inc., FTSE Russell and S&P Dow Jones Indices to cut some securities from their indexes.
U.S. Employers Added 266,000 Jobs in April as Hiring Slowed – Wall Street Journal, 5/7/2021
- U.S. employers added a modest 266,000 jobs in April, far short of the 1 million expected among economists, and unemployment rose to 6.1%.
- The deceleration came after payrolls rose a downwardly revised 770,000 in March and an upward revision of 536,000 in February, the Labor Department said Friday.
- Unemployment rose from 6% a month earlier, but more people entered the workforce in April.
- The leisure and hospitality sector, including restaurants, accounted for the bulk of employment creation in April, adding 331,000 jobs. The Labor Department said that reflected an easing of pandemic-related restrictions in many parts of the country.
- Those gains were partly offset by job losses in several other sectors. Temporary-help employment declined by 111,000 last month, manufacturing employment was down 18,000—predominantly in motor vehicles where chip shortages idled some factories. Retail jobs fell by 15,000 and healthcare jobs declined by 4,000.
- Wages for workers rose in April, a sign that some employers were lifting pay to attract or retain employees.
- Average hourly earnings for private-sector employees rose by 21 cents to $30.17 in April.
- The gain is notable because strong hiring in the lower-wage hospitality sector would typically put downward pressure on average earnings.
- Economists are concerned that the labor-force participation rate, or share of people working or seeking work, will recover slowly.
- The rate was at 61.5% in March, down from 63.3% in February 2020 before the pandemic hit.
U.S. wholesale inventories rise solidly in March – Reuters, 5/7/2021
- U.S. wholesale inventories rose sightly less than initially estimated in March as sales surged amid robust demand.
- The Commerce Department said on Friday that wholesale inventories increased 1.3%, instead of 1.4% as estimated last month.
- Stocks at wholesalers gained 1.0% in February.
- The component of wholesale inventories that goes into the calculation of gross domestic product increased 1.3% in March.
- Wholesale inventories shot up 4.5% in March from a year earlier.
- Sales at wholesalers jumped 4.6% after being unchanged in February.
- At March’s sales pace it would take wholesalers 1.22 months to clear shelves, down from 1.26 months in February.
U.S. Chamber calls for end to $300-a-week jobless aid to ease labor shortage – Reuters, 5/7/2021
- The U.S. Chamber of Commerce on Friday said the federal government should end the $300 weekly supplemental unemployment benefit in President Joe Biden’s $1.9 trillion COVID-19 aid package to ease a labor shortage that limited hiring in April.
- “The disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market,” the Chamber’s chief policy officer Neil Bradley said in a statement, adding that unfilled positions threaten to slow economic recovery.
- “Based on the Chamber’s analysis, the $300 benefit results in approximately one in four recipients taking home more in unemployment than they earned working,” Bradley said.
Biden willing to accept 25% corporate tax rate to fund spending programs – Reuters, 5/7/2021
- U.S. President Joe Biden said a corporate tax rate between 25% and 28% could help pay for badly needed infrastructure, suggesting he could accept a lower rate than what he has proposed in his search for Republican support for the funding.
- “The way I can pay for this, is making sure that the largest companies don’t pay zero, and reducing the (2017 corporate) tax cut to between 25 and 28” percent, Biden said during a visit to Lake Charles, Louisiana.
- Biden’s visit to storm-battered Louisiana, which has backed Republican presidential candidates for the past 20 years, is part of his “Getting America Back on Track Tour” to promote a $2.25 trillion infrastructure spending plan and a $1.8 billion education and childcare proposal.
Fed Says Covid Is Major Financial Risk, Asset Prices Vulnerable to ‘Significant Declines’ – Wall Street Journal, 5/7/2021
- The Covid-19 pandemic remains one of the biggest near-term risks to the stability of the financial system, the Federal Reserve said, while noting that asset prices are vulnerable to significant declines if investor sentiment shifts.
- “Should risk appetite decline from elevated levels, a range of asset prices could be vulnerable to large and sudden declines, which can lead to broader stress to the financial system,” the central bank said in its semiannual Financial Stability Report.
- Such scenarios could materialize if progress on containing the virus falls short of expectations or the recovery stalls, straining some households and firms, the Fed said.
- The report said other parts of the financial system appear resilient. Banks remain well capitalized, it said, and leverage is low among broker-dealers. Household debt is manageable, and businesses are better able to service their obligations as interest rates remain low and earnings improve, it said.
- Fed Chairman Jerome Powell has described parts of the market, including equities, as “a bit frothy.”
Rent Surges on Single-Family Homes With Landlords Testing Market – Bloomberg, 5/7/2021
- Record occupancy rates are emboldening single-family landlords to hike rents aggressively, testing the limits of booming demand for suburban rentals.
- American Homes 4 Rent, which owns 54,000 houses, increased rents 11% on vacant properties in April, according to a statement Thursday.
- Invitation Homes, the largest landlord in the industry, boosted rents by similar amount, an executive said on a recent conference call.
- Invitation Homes reported an occupancy rate of more than 98% during the first quarter, freeing the company to raise prices by more than 10% on vacant houses in April. Invitation Homes is targeting increases of as much as 8% for tenants seeking to renew leases in coming months, an executive said on a recent conference call.
- In the early months of the pandemic, the big single-family rental companies slowed rent hikes, preferring to maximize occupancy during an uncertain time for the economy. Now, low vacancies are giving them pricing power.
EUROPE & WORLD
Chinese Consumers Are Opening Their Wallets Again – Wall Street Journal, 5/7/2021
- China’s post-coronavirus recovery has been strong but uneven. A burst of data released Friday, however, suggests the world’s second-largest economy is rebalancing as consumer spending—the weak link so far in the recovery—picks up steam.
- China’s outbound shipments jumped 32.3% in April compared with a year earlier, data from the General Administration of Customs showed Friday—higher than March’s 30.6% year-over-year increase and far outpacing the 21% gain predicted by economists polled by The Wall Street Journal.
- In April, the Caixin China services purchasing managers index, a private gauge of services activity, rose to 56.3, up from 54.3 in March and hitting the highest level since December, Caixin Media Co. and research firm IHS Markit said Friday.
- During the five-day Labor Day holiday that began on May 1, official data showed Chinese travelers made a total of 230 million trips, topping the 195 million trips recorded during the same holiday in 2019 and marking the first time that traveler numbers have surpassed their pre-virus levels for any public holiday normally associated with heavy traffic.
- China’s box office also broke new records for revenue and visitor numbers during the five-day holiday. Movie ticket sales rose to 1.67 billion yuan, the equivalent of $258 million—a 9.4% increase from the same holiday period in 2019. Movie theaters were shut down during last year’s Labor Day holiday.
Holiday Inn owner sees busy U.S. summer as demand returns – Reuters, 5/7/2021
- Holiday Inn owner IHG said on Friday demand was coming back strongly and forecast a busy U.S. summer season as travelers take advantage of an easing of coronavirus lockdowns.
- While revenue per available room (RevPAR), a key performance indicator, was down 50.6% in the first quarter, it was up 20.8% in March, with the Greater China region seeing a jump of 288.6%.
- IHG, which also owns the Crowne Plaza brand, said there was a notable pick-up in March, particularly in the United States and China, which had carried on into April.
- IHG, which had called 2020 the most challenging year in its 200 year history, said the risk of volatility remained.
British Airways owner IAG expects travel recovery from July – Reuters, 5/7/2021
- British Airways owner IAG is confident travel will recover from July onwards after forecasting only a minimal increase in its capacity to 25% for the April to June quarter.
- IAG’s first-quarter operating loss before exceptional items of 1.14 billion euros was slightly better than the 1.17 billion euro loss forecast by analysts.
- IAG, which also owns Iberia and Vueling in Spain and Aer Lingus in Ireland, declined to forecast how much it would fly from July but said the recovery would be properly underway by then after more than a year of pandemic restrictions.
- The rise to 25% of pre-pandemic capacity puts IAG’s plans behind those of rival airlines, and is only a marginal increase from the 19.6% it flew in the first three months of 2021.
Adidas shrugs off China boycott call to raise outlook – Reuters, 5/7/2021
- German sportswear company Adidas sees only a short-term impact from Chinese calls in March for a boycott of its products, raising its 2021 sales forecast on Friday as it expects a resumption of big sporting events to drive demand.
- Adidas said first-quarter sales rose 20% to 5.268 billion euros ($6.35 billion), ahead analysts’ average forecast of 5 billion, while net income from continuing operations jumped to 502 million euros.
- Before the boycott call, sales jumped 156% in greater China in the first quarter, a year after the coronavirus pandemic hit there, to account for more than a quarter of total sales.
- Adidas now sees sales growing at a high-teens percentage rate in 2021, compared with a March forecast for mid-to-high teens growth, with a jump of around 50% expected in the second quarter.
- Adidas said the more upbeat outlook took into account problems with freight transport due to congestion at U.S. ports and the recent blockage of the Suez Canal, as well as ongoing lockdowns in Europe, with 91% of stores now reopened globally.
BMW confirms its 2021 targets despite worsening chip shortages – Reuters, 5/7/2021
- BMW remains on course to meet its profit targets for 2021 despite rising raw material costs, though the global chip shortage will worsen and may hit production in the second quarter, the German carmaker said on Friday.
- BMW had already reported a 370% jump in pre-tax profit as it bounced back more strongly than expected from a pandemic-ravaged first quarter last year.
- Rebounding demand from consumers in China in the second half of last year helped BMW and its German rivals Volkswagen and Daimler post solid profits for 2020 despite the coronavirus pandemic.
- BMW reported solid first-quarter growth in other regions too, including a 17.4% jump in sales in North America, driven by strong demand from U.S. drivers.
- BMW said sales of its electrified vehicles more than doubled in the first quarter, when it also benefited from higher prices and strong demand in China, where sales almost doubled in the first quarter from last year.
- The carmaker said it expected to have 2 million fully-electric cars on the road by 2025.
- Beethoven’s 9th Symphony premiered in Vienna. (1824)
- The British ocean liner Lusitania was sunk by a German submarine in World War I off the coast of Ireland. (1915)
- Germany unconditionally surrendered to the allies in Rheims, France. (1945)
- The 56-day-long battle of Dienbienphu ended with Ho Chi Minh’s forces defeating the French, signaling the end of French power in Indochina. (1954)
- Vladimir Putin was inaugurated as Russia’s president. (2000)