Daily Market Report | May 11, 2021
Stocks Keep Falling, Led by Tech – Wall Street Journal, 5/11/2021
- U.S. stocks and global indexes fell Tuesday after concerns about rising inflation resurfaced, prompting a selloff in highflying technology stocks.
- The S&P 500 dropped 1.6% in morning trading, a day after the broad market index declined 1% from its record closing level.
- The Nasdaq Composite also tumbled 1.6%, extending its losses for the week to about 4%. The Dow Jones Industrial Average fell about 545 points, or 1.6%.
- Investors are betting that inflation is likely to climb steeply in coming months, driven by pent-up spending as well as supply bottlenecks and a leap in commodity prices.
- A sharp and sustained jump in inflation would erode returns on fixed-income assets and stocks whose valuations rely on future earnings. Some money managers are concerned that it may also prompt the Federal Reserve to pare back its easy money policies sooner than anticipated.
- Tech companies are bearing the brunt of inflation concerns this year. Growth stocks led the market’s steep rally since last spring.
- Investors are increasingly worried that their high valuations may not be justified if inflation crimps the value of future earnings. This week, those concerns have spilled over to other sectors as well, leading to a broader selloff.
- Novavax shares plummeted 20% after the company said it had delayed plans to seek regulatory clearance for its Covid-19 vaccine.
- In bond markets, the yield on the 10-year U.S. Treasury note edged up to 1.621%, from 1.601% on Monday, marking its third consecutive trading day of gains. Yields rise as prices fall.
- Overseas, the pan-continental Stoxx Europe 600 dropped 2.3%.
- In Hong Kong, the Hang Seng Index fell 2%. Japan’s Nikkei 225 slumped 3.1%, while South Korea’s Kospi index retreated 1.2%.
Covid-19 Live Updates: New Reported U.S. Cases Under 40,000 for Third Day – Wall Street Journal, 5/11/2021
- Newly reported coronavirus cases in the U.S. stayed under 40,000 for the third consecutive day, as Covid-19 vaccinations appeared set to be expanded to younger people.
- The U.S. reported 36,231 new cases for Monday, according to the latest data compiled by Johns Hopkins University. Monday’s figure was lower than the week-earlier tally of 50,560 but was up from Sunday’s total of 21,392.
- About a third of states don’t report new cases or deaths on the weekends, and many don’t report Covid-19 data on a daily basis.
- Hospitalizations stood at 35,527, according to the latest data posted by the Department of Health and Human Services. The nation’s death toll topped 582,100, as the country reported 399 fatalities for Monday, according to Johns Hopkins data.
- The nation’s vaccination efforts made progress, with an average of 2.1 million doses of Covid-19 vaccines administered a day over the past week, according to a Journal analysis of data from the Centers for Disease Control and Prevention.
- Some 34.8% of the total U.S. population is now fully vaccinated, according to CDC data. Levels are higher among the elderly, with more than 71% of people age 65 and older fully vaccinated.
Palantir reports 49% revenue growth for its first quarter – CNBC, 5/11/2021
- Palantir, the maker of software and analytics tools for the defense industry and large corporations, reported 49% revenue growth for its first quarter, beating Wall Street estimates. It also came in line with top-line estimates.
- Revenue: $341 million vs. $332.2 million expected in the survey.
- Adjusted earnings per share: 4 cents vs. 4 cents expected in a Refinitiv survey of analysts
- The company said U.S. government revenue gained 83% year over year, while U.S. commercial revenue gained 72% from a year earlier.
- The company said average revenue per customer grew to $8.1 million. In its fourth-quarter report, the company said average revenue for 2020 came to $7.9 million. Average revenue for its top 20 customers hit $36.1 million.
- As of this past quarter, Palantir has 149 customers. The company first disclosed in its prospectus last fall it had 125 customers in the first half of 2020.
- Palantir said it expects to bring in $360 million in revenue in its second quarter compared with the $344.3 million expected in a Refinitiv survey of analysts.
- For the full fiscal year, the company anticipates adjusted free cash flow in excess of $150 million. The company also reaffirmed that it expects annual revenue growth of 30% or more for 2021 through 2025.
- Palantir added in the company’s earnings call that it was considering adding bitcoin to its balance sheet, saying the cryptocurrency was “definitely on the table.” It also accepts bitcoin as a form of payment.
Roblox reveals bookings surge in first post-debut report – Reuters, 5/11/2021
- Roblox on Monday trounced quarterly bookings estimates in its first earnings report since a blockbuster debut as the U.S. gaming company benefited from a surge in spending by kids stuck at home due to the pandemic.
- The company, famous for its games “Jailbreak” and “MeepCity”, reported a 161% jump in bookings to $652.3 million in the first quarter. Analysts had expected bookings – primarily the value of virtual currency that users purchased on the platform – of $504.6 million, according to Refinitiv IBES data.
- Roblox, among the world’s most popular gaming sites for children, said gamers spent 9.7 billion hours on the platform in the quarter, with engagement more than doubling in markets outside of the United States and Canada.
- Quarterly net loss attributable to common stockholders widened to $134.2 million, or 46 cents per share, from $74.4 million, or 44 cents per share, a year earlier.
- Still, Roblox warned it expects year-over-year growth rates in key metrics to decline as COVID-19 restrictions begin to lift around the world.
Virgin Galactic ‘evaluating’ timeline for next flight test, shares drop – Reuters, 5/11/2021
- Billionaire Richard Branson’s Virgin Galactic Holdings said on Monday it was evaluating the timing of its next flight test, sending shares down 9.4% in extended trade.
- “Following Eve’s last post slide inspection, we tagged a potential wear and tear issue as requiring further evaluation and analysis to see if any additional action is necessary,” said Michael Moses, president of the company’s space missions & safety, on a post earnings conference call.
- Virgin Galactic, which delayed its quarterly results by about a week, said total future astronauts remained at about 600, as of March 31.
- It also posted a first-quarter loss of $130 million, compared to a $377 million net loss last year.
Simon Property beats profit estimates as Americans return to malls – Reuters, 5/11/2021
- Simon Property Group reported better-than-expected quarterly results on Monday, as the largest U.S. mall operator benefited from the return of pandemic-weary shoppers to brick-and-mortar stores.
- Simon Property’s lease income fell 9.3% to $1.15 billion in the first quarter ended March 31, but it exceeded a Refintiv IBES estimate of $1.13 billion.
- Net profit of $1.36 per share also topped analysts’ expectations of 96 cents per share.
- The company raised its full-year outlook for funds from operations to $9.70 to $9.80 per share, from $9.50 to $9.75 per share.
- However, it lowered its full-year profit per share forecast to between $4.47 and $4.57, from $4.60 to $4.85 per share previously.
Occidental Petroleum loss narrows as chemicals, oil exports gain – Reuters, 5/11/2021
- Occidental Petroleum on Monday surpassed Wall Street expectations by reporting a smaller first-quarter loss than a year ago, boosted by earnings from chemicals and oil exports.
- Its oil and gas business lost $62 million for the quarter compared with a pre-tax gain of $179 million the year before.
- Chemicals posted income of $251 million, down from $186 million the year prior. Stronger pricing was partially offset by storm interruptions and cost rises, the company said.
- Midstream and marketing income was $282 million, compared with last year’s $1.3 billion loss on impairment charges. The business handles its crude oil exports.
- The oil and gas producer reported an adjusted loss of $136 million, or 15 cents per share, for the March quarter, compared with a loss of $467 million, or 52 cents per share, in the first quarter of 2020.
Novavax delays timelines for COVID-19 vaccine regulatory filings, production – Reuters, 5/11/2021
- Novavax on Monday again delayed its timeline for ramping up COVID-19 vaccine production and said it does not expect to seek regulatory authorization for the shot in the United States, Britain and Europe until the third quarter of 2021, sending its shares tumbling.
- Novavax reported a net loss for the first quarter of $223 million. It had $447 million in revenue, mostly payments from the U.S. government for its COVID-19 vaccine research, and spent $593 million on research and development.
- Novavax said it does not expect to hit its production target of 150 million shots per month until the fourth quarter of 2021, later than its previous forecast of sometime in the third quarter. It had also previously said it could see U.S. regulatory authorization as soon as May.
- The company has promised to supply 200 million shots to countries around the globe, in addition to the 1.1 billion doses it has committed to the COVAX international vaccine sharing program, Trizzino said.
Foxconn’s iPhone output in India down amid COVID surge-sources – Reuters, 5/11/2021
- Production of the Apple iPhone 12 at a Foxconn factory in India has slumped by more than 50% because workers infected with COVID-19 have had to leave their posts, two sources told Reuters.
- The Foxconn facility in the southern state of Tamil Nadu produces iPhones specifically for India, the world’s No.2 smartphone market.
- Tamil Nadu is one of the worst hit states in the second coronavirus wave engulfing India. Officials imposed a full lockdown in the state from Monday, closing public transport and shuttering shops, to try slow surging infections.
- More than 50% of the plant’s capacity had been cut, both sources said, declining to be named as they were not authorised to speak to the media.
Dell chief executive sees chip shortage lasting a few years – Reuters, 5/11/2021
- A worldwide lack of semiconductors is proving a challenge for computer manufacturers, but the shortage is likely to persist for some years, the chief executive and founder of Dell Technologies told Germany’s Handelsblatt newspaper.
- “The shortage will probably continue for a few years,” Michael Dell said in an interview published on Tuesday. “Even if chip factories are built all over the world it takes time.”
- With an annual order volume of $70 billion, the firm is one of the most important customers of many semiconductor makers, but still had to pay a premium to secure supply, Dell added.
- “We are talking, in particular, about components that are in the one-dollar range and are used practically everywhere,” he said. “But even newer technologies are not easy to come by.”
U.S. pump prices head for highest since 2014 as hacked fuel pipeline shut – Reuters, 5/11/2021
- U.S. gasoline prices at the pump jumped 6 cents in the latest week, according to the American Automobile Association (AAA), and could soon be headed for the highest level since 2014 due to a cyber attack that shut down the country’s biggest fuel pipeline system.
- Average U.S. pump prices increased 6 cents per gallon in the latest week to $2.967 per gallon for regular unleaded gasoline, the AAA said. An increase of 3 more cents would make the national average the most expensive since November 2014.
- On Monday, Colonial said it expects to “substantially” restore operational service by the end of this week. Still, some drivers on the East Coast were filling tanks as a precaution as gasoline demand picks up ahead of summer vacation season, and as more people are vaccinated against COVID-19.
- The Colonial network ships more than 2.5 million barrels per day (bpd) of gasoline, diesel and jet fuel from the Gulf Coast to populous southeastern and northeastern states, making up nearly a half of U.S. East Coast fuel supply.
U.S. Job Openings Reach Record High Despite Hiring Slowdown – Wall Street Journal, 5/11/2021
- Job openings reached a record level of 8.1 million at the end of March, reflecting a widening gap between open positions and workers willing to take those roles.
- Available jobs rose by a seasonally adjusted 600,000 in March to exceed the prior record of 7.6 million set in November 2018, the Labor Department said Tuesday.
- Data from job search site Indeed.com separately showed job posting continued to rise in April, ending the month 24% higher than February 2020’s pre-pandemic level.
- Openings in loading and stocking jobs, which include those at e-commerce warehouses, were up more than 60% in late April, compared with February 2020, according to Indeed. Construction jobs were up a similar amount, reflecting strong demand for new-home construction. Manufacturing jobs were up 65%, reflecting strong demand for goods such as vehicles and appliances.
- According to Indeed data, the hospitality and tourism industry, including restaurants, still had about 9% fewer job openings in late April, compared with before the pandemic.
U.S. Home Prices Surge the Most on Record in Buying Frenzy – Bloomberg, 5/11/2021
- The median price for a single-family home in the U.S. rose the most on record in the first quarter, as buyers fought over a dearth of inventory, according to the National Association of Realtors.
- Prices jumped 16.2% from a year earlier to a record high of $319,200. The growth eclipsed the 14.8% rate in the fourth quarter, which was the highest in data going back to 1989, the group said in a report Tuesday.
- Of the 183 metro areas measured by the group, 163 had double-digit price gains, up from 161 in the fourth quarter. Springfield, Illinois, was the only area where prices fell.
Biden Administration to Start Doling Out $350 Billion in Aid to State, Local Governments – Wall Street Journal, 5/11/2021
- The Biden administration will begin distributing $350 billion to state and local governments this month, giving them money to pay for pandemic-related costs, fill revenue shortfalls and pay for water, sewer and broadband projects—but not to cut state taxes.
- Money could start flowing to state, local and tribal governments within days, senior administration officials said Monday.
- Many state and local governments struggled during the pandemic as tax revenue temporarily dropped and businesses closed.
- But the shortfalls were, in some cases, not as bad as initially feared or nonexistent, and the federal aid could leave some governments unusually flush.
- California Gov. Gavin Newsom, expecting a $75.7 billion budget surplus, proposed on Monday a $100 billion stimulus and relief plan.
Biden says unemployed offered jobs must take them or lose benefits – Reuters, 5/11/2021
- U.S. President Joe Biden on Monday defended himself against critics who say expanded unemployment benefits offered in the COVID-19 relief bill passed in March are keeping Americans from taking new jobs.
- Biden said the administration will remind U.S. states this week that any unemployed American offered a comparable job must take it or risk losing unemployment benefits.
- He is also directing the U.S. Labor Department to work with states to reinstate requirements that those receiving unemployment benefits must demonstrate they are actively looking for work.
- “If you’re receiving unemployment benefits and you’re offered a suitable job, you can’t refuse that job and just keep getting unemployment benefits,” Biden said.
EUROPE & WORLD
China’s Census Highlights Its Looming Population Problem – Wall Street Journal, 5/11/2021
- China said its population hit 1.41 billion in 2020, eking out a tiny rise from the previous year, underlining how the world’s most populous nation is going to have to face its demographic challenges sooner than expected.
- The number—up from the 1.40 billion official data showed for 2019—indicated that China’s population has only gone up by 72 million since the last census, in 2010.
- In a news conference after the release, Ning Jizhe, head of the National Bureau of Statistics, said there were 12 million births last year, which would represent an 18% drop from the 14.65 million the year before, a trend that is likely to increase pressure on Beijing to ease remaining birth restrictions.
- It was the fourth straight year of declining births after a rise in 2016, the first year after China ended the three-decade-old one-child policy.
- Mr. Ning said China’s fertility rate—the average number of babies a woman will have over her lifetime—dropped to 1.3 last year, which he acknowledged as a low level. By comparison, the U.S.—also in a fertility slump—last week reported a total fertility rate of 1.64 last year.
- The data showed a sharp rise in the percentage of Chinese aged 60 and above, to 18.7% of the population from 13.3% in 2010.
- The portion of Chinese aged between 15 and 59 stood at 63.35% in 2020, down from 70.1% in 2010.
Chip shortage dampens Nissan’s route back to profit after record loss – Reuters, 5/11/2021
- Nissan Motor expects to break even this business year, defying expectations for a return to profitability, as the global chip shortage curbs the car maker’s recovery from a record annual operating loss.
- The forecast by Nissan, Japan’s No.3 carmaker by sales, to break even for the year that began April 1 was lower than a 241.7 billion yen ($2.23 billion) profit predicted by SmartEstimate.
- The company said its annual operating loss in the year ended March 31 widened to 150.65 billion yen, from a 40 billion yen shortfall in the previous year.
- However, it beat its February forecast of a 205 billion yen loss thanks to cost cutting and a sales recovery led by China and the United States.
- Nissan plans to sell 4.4 million vehicles this business year, up from 4.052 million in the previous 12 months but still significantly less than the 4.9 million vehicles it sold two years earlier.
Airbus tells suppliers to get ready for 18% output hike in 2022 – Reuters, 5/11/2021
- Airbus is asking key suppliers to get ready for a further 18% increase in A320-family jet output by the end of 2022, on top of existing targets for this year, as airlines eye a partial return to normal travel, industry sources said.
- The tentative new planning goal would lift output of the workhorse domestic and medium-haul jet, which competes with Boeing’s 737 MAX, to 53 a month, they told Reuters.
- The number being floated for the end of next year remains informal and Airbus has only committed so far to raising output in two steps to 45 a month by the end of 2021, from 40 now.
- Airbus, which had been enjoying record jet demand before the virus triggered widespread travel bans, cut output of its best-selling model by a third to 40 a month one year ago.
Israel, Hamas Prepare for Wider Conflict as Rocket Attacks Resume – Wall Street Journal, 5/11/2021
- Hamas launched a fresh barrage of rockets Tuesday afternoon at two coastal Israeli cities, as tensions from days of clashes in the contested city of Jerusalem dramatically escalated overnight and both sides prepared for a wider conflict.
- The military wing of Hamas said it fired 137 rockets toward Israel in five minutes and said “we still have a lot to show.” The barrage comes after Israel’s military struck scores of Hamas targets in Gaza in response to rocketfire beginning Monday evening.
- The Palestinian Ministry of Health said 28 people have died, mostly from Israeli strikes, including nine children. Israel’s military said it is investigating reports that children were killed and that some casualties may be the result of rockets that exploded in Gaza before reaching Israel.
- Israel’s military said it has so far struck 130 targets belonging to Gaza-ruler Hamas, including weapons manufacturing sites, military facilities and tunnels on the border that Israel says Hamas uses to launch attacks.
Factmonster – TODAY in HISTORY
- IBM’s supercomputer, Deep Blue defeated Garry Kasparov, the reigning world champion, in a six game chess match (2 for blue, 1 for Kasparov, and 3 ties). (1997)
- India set off atomic blasts. (1998)
- 91% of Lithuanian voters opted to join the European Union—the first former Soviet nation to do so. (2003)
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