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Daily Market Report | May 12, 2021

Stocks Rise, on Track to Snap Three-Day Selloff – Wall Street Journal, 5/13/2021

  • U.S. stocks soared Thursday, chipping away at losses after suffering their worst three-day decline since late October.
  • The Dow Jones Industrial Average jumped 510 points, or 1.5%, lifted by shares of everything from manufacturers to technology giants. The S&P 500 gained 1.5%, and the Nasdaq Composite climbed 1.5%.
  • Thursday’s market moves marked a comeback for U.S. stocks after a jittery start to the week. Signs that inflation may be picking up faster than expected have put investors on edge, pressuring shares in the priciest corners of the market.
  • In a sign of optimism, technology stocks, among the biggest decliners in the market selloff earlier in the week, helped lead major indexes’ rebound Thursday. Facebook rose 1.4%, while added 1% and Alphabet gained 1.1%.
  • In bonds, the market for U.S. Treasurys stabilized after four consecutive days of selloffs. The yield on the 10-year Treasury note ticked down to 1.685%, from 1.693% on Wednesday, its highest level in more than a month. Yields fall when prices rise.
  • Overseas, the pan-continental Stoxx Europe 600 fell 0.1%.
  • Investors continued to sell European government bonds. The yield on the benchmark 10-year German bund climbed to minus 0.110%, trading around the highest level since May 2019.
  • In Asia, most major equity benchmarks declined. Hong Kong’s Hang Seng Index lost 1.8%.
  • Indexes in South Korea, Japan, Australia and China also all retreated. Taiwan’s benchmark Taiex shed 1.5%, declining for a fourth straight day. That put it in correction territory, meaning it has fallen at least 10% from a recent high.

Covid-19 Live Updates: New U.S. Case Count Remains Below 40,000 – Wall Street Journal, 5/13/2021

  • States were opening up appointments for Covid-19 shots to adolescents Thursday after the Centers for Disease Control and Prevention recommended that children between the ages of 12 and 15 receive the Pfizer-BioNTech vaccine.
  • In some parts of the country, doctors and parents had already started scheduling vaccination appointments, but most shot providers were waiting for the formal CDC recommendation.
  • The expansion is a boost for the country’s vaccination campaign, which has been slowing in recent weeks, and comes as coronavirus cases continue a broad decline across the U.S.
  • Newly reported infections have been below 40,000 for five consecutive days.
  • More than 45% of American adults are now fully vaccinated, according to CDC data. The increased vaccinations have helped boost reopening efforts, and the return to a pre-pandemic normal is gaining speed.

Strong user growth drives Bumble’s revenue beat, upbeat forecast – Reuters, 5/13/2021

  • Bumble forecast current-quarter revenue above estimates on Wednesday after beating expectations for the first, as more people turned to its online dating app to socialize while staying indoors during the COVID-19 pandemic.
  • The company reported revenue of $170.7 million for the first quarter, beating estimates of $164.6 million.
  • The owner of the dating app that requires women to make the first move said total paying users surged 30% in the first three months of the year to 2.8 million, driving a more than 40% jump in revenue.
  • Net earnings attributable to shareholders came in at $341.8 million, or $1.69 per share, compared with a loss of $55.8 million, or 2 cents per share, a year earlier.
  • Bumble forecast current-quarter revenue between $175 million and $178 million, above analysts’ estimates of $174.4 million, according to Refinitiv IBES data.

Colonial Pipeline Restarts Operations After Cyberattack – Wall Street Journal, 5/13/2021

  • The owner of the Colonial Pipeline said Wednesday that it has begun restarting operations following a cyberattack that shut down the main fuel conduit serving the East Coast.
  • Colonial Pipeline Co., operator of the vast 5,500-mile network of pipes taking 100 million gallons of fuel a day from Texas to New Jersey, said it initiated a restart at around 5 p.m. ET, but cautioned that the process of fully restoring the flow of fuel could take days.
  • The company, which estimates that it provides 45% of the East Coast’s fuel, shut down the pipeline last Friday after being hit by a ransomware attack. U.S. officials have linked the attack to a criminal gang known as DarkSide.
  • The shutdown, in its fifth full day Wednesday, spurred a run on gasoline in the southeastern and mid-Atlantic regions, which depend heavily on the pipeline.
  • The average U.S. gasoline price vaulted above $3 a gallon for the first time in 6½ years as motorists lined up at thousands of gas stations and purchased all of the available fuel.

Boeing Nears Fix for 777 Engine Covers – Wall Street Journal, 5/13/2021

  • Boeing is nearing a fix for engine covers like the one that broke apart on a United Airlines 777 jet over Colorado earlier this year, people briefed on the matter said.
  • The fix, expected to be completed as soon as early June, would strengthen the engine covers to prevent plane parts from detaching midair and striking the aircraft or falling to the ground below, these people said.
  • After a United 777’s engine failed shortly after takeoff from Denver in February, its external cover broke apart, raining metal on a nearby suburb. No one was injured, and the flight landed safely.

Boeing wins FAA OK for 737 MAX electrical fix, notifies airlines – Reuters, 5/13/2021

  • Boeing on Wednesday won approval from U.S. regulators for a fix of an electrical grounding issue that had affected about 100 737 MAX airplanes, clearing the way for their quick return to service after flights were halted in early April, the planemaker said.
  • An FAA official confirmed that the agency had approved the service bulletins and associated instructions.Boeing sent two bulletins to air carriers on Wednesday on the fixes.
  • The announcement is a relief for U.S. air carriers that have been anxiously waiting to get the planes back into service before the traditional late May start to the summer travel season as air travel demand increases.

McDonald’s-owned U.S. restaurants boost pay to lure new workers – Reuters, 5/13/2021

  • McDonald’s announced on Thursday a 10% average hourly pay raise at the nearly 660 U.S. restaurants it operates, joining the industry’s scramble to lure workers back into kitchens and dining rooms as pandemic restrictions ease.
  • The wage increases do not apply to employees at the roughly 13,025 U.S. McDonald’s restaurants owned and operated by franchisees.
  • McDonald’s said the pay hikes for more than 36,500 hourly restaurant workers had already begun and would continue over several weeks. Under the new pay scale, entry-level crew will make at least $11 to 17 per hour, and shift managers will earn at least $15 to $20 an hour.
  • The company, which wants to hire 10,000 more hourly employees over the next three months, expects average pay at all company-owned restaurants to hit $15 per hour by 2024, up from about $13.

Amazon to hire 75,000 workers, offers $100 extra for vaccination proof – Reuters, 5/13/2021

  • will give $100 more to new hires with proof of COVID-19 vaccination, the world’s largest e-commerce retailer said on Thursday, as part of its plan to employ 75,000 workers for fulfillment and logistics operations.
  • Amazon will pay the new hires an average starting pay of more than $17 per hour, reflecting recent hikes of between 50 cents and $3 an hour for about half a million fulfillment-center workers in the United States.
  • It will also pay a sign-on bonus of up to $1,000.

Alphabet Waymo self-driving unit CFO following CEO out the door – Reuters, 5/13/2021

  • The chief financial officer of Alphabet’s self-driving unit Waymo is following its chief executive out the door, the company said on Wednesday.
  • Waymo confirmed that CFO Ger Dwyer is leaving the company. Also leaving is Adam Frost, the head of automotive partnerships. The departures come just after the exit of CEO John Krafcik, who was replaced by two co-executives.

JPMorgan, Others Plan to Issue Credit Cards to People With No Credit Scores – Wall Street Journal, 5/13/2021

  • Some of the largest U.S. banks plan to start sharing data on customers’ deposit accounts as part of a government-backed initiative to extend credit to people who have traditionally lacked opportunities to borrow.
  • JPMorgan Chase, Wells Fargo, U.S. Bancorp and others will factor in information from applicants’ checking or savings accounts at other financial institutions to increase their chances of being approved for credit cards, according to people familiar with the matter.
  • It is aimed at individuals who don’t have credit scores but who are financially responsible. The banks would consider applicants’ account balances over time and their overdraft histories, the people said.
  • Some 53 million adults in the U.S. don’t have traditional credit scores, according to Fair Isaac, the creator of FICO credit scores. Many are often limited to payday loans and other costly forms of credit.

U.S. weekly jobless claims decline; producer prices accelerate – Reuters, 5/13/2021

  • The number of Americans filing new claims for unemployment benefits fell more than expected last week as companies held onto their workers amid a growing labor shortage that helped to curb job growth in April.
  • Initial claims for state unemployment benefits fell 34,000 to a seasonally adjusted 473,000 for the week ended May 8, the Labor Department said. That was the lowest since mid-March 2020, when mandatory closures of nonessential businesses were enforced to slow the first wave of COVID-19 infections.
  • The number of people receiving benefits after an initial week of aid fell 45,000 to 3.655 million in the week ended May 1. Some people are finding work, while others are exhausting their eligibility for benefits, limited to 26 weeks in most states.
  • About 5.3 million people were on extended benefits during the week ended April 24.
  • Another 433,209 were on a state program for those who have exhausted their initial six months of aid. At least 16.9 million people were collecting unemployment checks under all programs at the end of April.
  • In another report on Thursday, the Labor Department said its producer price index for final demand rose 0.6% in April after surging 1.0% in March. A 0.6% increase in the cost of services accounted for about two-thirds of the rise in the PPI.
  • Services increased 0.7% in March. Goods prices gained 0.6% last month after surging 1.7% in March.
  • In the 12 months through April, the PPI shot up 6.2%. That was the biggest year-on-year rise since the series was revamped in November 2010 and followed a 4.2% jump in March.

U.S. Ran Record $1.9 Trillion Budget Deficit in First Seven Months of Fiscal Year – Wall Street Journal, 5/13/2021

  • The U.S. budget gap widened in the first seven months of the fiscal year, as federal spending continued to outpace rising tax receipts while the nation recovers from the economic fallout from the Covid-19 pandemic.
  • The government ran a $1.9 trillion deficit from October through April, a record for the seven-month period and a 30% increase from a year earlier, the Treasury Department said Wednesday.
  • Outlays rose 22%, to a record $4.1 trillion, driven by higher safety-net spending such as jobless benefits and nutrition assistance, as well as Covid-19 relief programs including emergency small business loans and stimulus checks.
  • Tax revenue rose 16%, to $2.1 trillion, primarily due to higher receipts from individuals and corporations, which are larger so far this year compared with 2020, when Congress delayed tax-payment deadlines until July.
  • Federal tax receipts also hit a record for the seven-month period ending in April.
  • Over the past 12 months, the U.S. deficit totaled $2.7 trillion, or 12.2% of gross domestic product, according to the Treasury data.

Business Leaders Push for Infrastructure Deal, Minus the Corporate Tax Hikes – Wall Street Journal, 5/13/2021

  • In private talks with dozens of business leaders, Biden administration officials are pitching the president’s $2.3 trillion infrastructure proposal as an investment they will benefit from, emphasizing support for new job-training programs as much as better roads, officials and executives say.
  • Some have suggested alternative ways to fund infrastructure projects, while others haven’t offered specifics.
  • Several executives and business groups have said they are eager for Mr. Biden to fulfill a pledge to seek compromise with Republican lawmakers—some of whom have proposed a narrower infrastructure package funded by gas taxes and other user fees, not corporate tax increases.
  • The Business Roundtable, a trade group of corporate executives, said if necessary the government should borrow more, arguing that every dollar in investment generates more economic growth.
  • Mr. Biden, whose overall spending proposals already reach $6 trillion, has resisted more debt in private conversations with lawmakers. He has traveled to states to pitch his proposals, including to an aging water plant in New Orleans, and has additional meetings with lawmakers this week.

Mexico union was losing scrapped GM worker vote – report – Reuters, 5/13/2021

  • General Motors workers in Mexico were on track to defeat one of the country’s biggest unions in a contract vote last month that has prompted U.S. action under the countries’ trade deal, a Mexican government report shows.
  • The Biden administration on Wednesday called for a probe into allegations that worker rights were denied at GM’s Silao pickup truck plant during the vote to ratify workers’ collective contract with the Confederation of Mexican Workers (CTM).
  • The CTM, which is aligned with the Institutional Revolutionary Party (PRI) that ruled Mexico for decades, is one of several traditional unions accused by workers and activists of putting business interests over workers’ rights.
  • Mexico’s labor ministry said on Tuesday it had found “serious irregularities” in April’s union-led vote by the plant’s 6,000 union workers and ordered a new vote within 30 days. Officials have said some ballots were destroyed.


Alibaba Logs Higher Quarterly Sales but Posts Loss on Antitrust Fine – Wall Street Journal, 5/13/2021

  • Chinese e-commerce giant Alibaba Group posted revenue growth on stronger retail and cloud-computing results in the latest quarter, but a large fine levied by the Chinese government dragged the company to a quarterly loss.
  • Alibaba’s sales rose to 187.4 billion yuan, or about $28.6 billion, from 114.31 billion yuan in 2020’s comparable quarter. Analysts were forecasting sales of 180.2 billion yuan, according to FactSet.
  • In the quarter that ended in March, revenue from Alibaba’s core commerce segment grew to 161.37 billion yuan, from 93.87 billion yuan in 2020’s equivalent quarter. Cloud-computing revenue improved to 16.76 billion yuan, from 12.22 billion yuan in the prior-year period.
  • For the 12 months that ended in March, annual active customers on Alibaba’s Chinese retail marketplaces grew to 811 million, an increase of 32 million above the 2020 calendar year.
  • After the fine of 18.23 billion yuan, or roughly $2.78 billion, Alibaba posted a net loss of 1.99 yuan per American depository share, or about 30 cents per ADS, compared with earnings of 1.16 yuan per ADS in the year-ago quarter.
  • Alibaba Chief Financial Officer Maggie Wu said that the company expects to record revenue of more than 930 billion yuan, or about $144.04 billion, in the 2022 fiscal year. That outlook topped the 925.31 billion yuan estimate that analysts had arrived at, according to FactSet.

Rolls-Royce sticks to guidance for 2021 – Reuters, 5/13/2021

  • British engineering company Rolls-Royce stuck to its guidance to turn free cash flow positive at some point during the second half of 2021 as vaccinations kick in and travellers return to the skies.
  • In the year to date, the company said its operational and financial performance had been in line with expectations, suggesting the return of some stability after a torrid 2020 for one of the last vestiges of Britain’s manufacturing industry.
  • Over the first four months of 2021, Rolls-Royce said that large engine flying hours were around 40% of pre-pandemic levels, in line with its expectations. Good progress was also being made with a cost-cutting plan, the company added.
  • It also plans to sell 2 billion pounds ($2.8 billion) worth of assets to help repair its finances, and said on Thursday that there was an “encouraging range” of parties interested in buying its Spanish unit ITP Aero, for which it hopes to get 1.5 billion euros.

Burberry’s cautious margin outlook takes shine off sales recovery – Reuters, 5/13/2021

  • Burberry said its sales were recovering from their COVID-19 hit, partly due to a rebound in China, but cautioned profit margins in its new financial year would be dented by increased investment, sending its shares sharply lower.
  • Burberry reported a 10% drop in sales for the year to March 27 to 2.34 billion pounds ($3.29 billion) hit by store closures and reduced tourism.
  • However, fourth-quarter comparable store sales increased 32% year on year, despite an average of 16% of stores still being closed.
  • It said full-price sales rose 63% in the quarter driven by mainland China, Korea and the United States.
  • Adjusted operating profit of 396 million pounds was above analysts’ average forecast of 378 million but down 8% from 433 million in 2019-20.
  • The full-year dividend was reinstated at 2019 levels of 42.5 pence.
  • Taking full-year 2020 as the base year, Burberry expects revenue to grow in the medium term at “a high, single-digit percentage” compound annual growth rate at full-year 2021 constant exchange rates.
  • Burberry said 2021-22 adjusted operating margins would be impacted by higher operating expenses as the pandemic recedes and increased investment to drive growth.

Samsung boosts non-memory chip investment to $151 bln as S.Korea offers bigger tax breaks – Reuters, 5/13/2021

  • Samsung Electronics on Thursday raised its planned investment in non-memory chips to 171 trillion won ($151 billion) through 2030, joining a rush of firms ramping up investments amid a global semiconductor shortage.
  • Some 153 chip companies including global No.1 and 2 memory chip makers Samsung and SK Hynix already have plans to invest a combined 510 trillion won or more between this year and 2030, according to the Korea Semiconductor Industry Association.
  • Samsung’s increased investment target, up from 133 trillion won announced in 2019, is expected to be used for its goal to become the world’s No. 1 logic chipmaker by 2030.
  • It wants to challenge bigger rivals TSMC in contract chip manufacturing and Qualcomm in mobile processing chips.

Israel Steps Up Airstrikes Against Hamas in Gaza, Tries to Contain Violence at Home – Wall Street Journal, 5/13/2021

  • Israel struck more targets in Gaza on Thursday in what officials said was a campaign against Hamas militants, as the government scrambled to contain escalating communal violence within its own borders.
  • Since Monday, Israel has struck 600 targets that it described as Hamas and Palestinian Islamic Jihad weaponry and infrastructure, and killed more than 30 militants, according to Lt. Col. Jonathan Conricus, a military spokesman. Of those, more than 10 were senior leaders in the group, he said.
  • The strikes have killed more than 83 people in Gaza, including 17 children, according to Palestinian officials.
  • Six Israelis, including one child, have been killed in the rocket fire from Gaza, while one soldier was killed by an antitank missile, according to Israeli authorities.
  • Col. Conricus said Israel is also advancing plans for a ground maneuver for later review by Israel’s political leaders, but no decision has been made yet.

Factmonster – TODAY in HISTORY

  • Mary Queen of Scots was defeated at the Battle of Langside and immediately fled to North England. (1568)
  • Louis Armstrong and his orchestra recorded the New Orleans’s jazz classic, When the Saints Go Marching In, on Decca Records. (1938)
  • Winston Churchill gave his first speech as prime minister: “I have nothing to offer but blood, toil, tears and sweat.” (1940)

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