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Daily Market Report | June 01, 2021

Stocks Climb Ahead of Manufacturing Data – Wall Street Journal, 6/1/2021

  • U.S. stocks climbed Tuesday to kick off the first day of June, as investors looked ahead to manufacturing data that will give fresh insights into the state of the economic recovery.
  • The S&P 500 added 0.4% shortly after the opening bell, following a fourth consecutive monthly advance for the broad stocks gauge before the Memorial Day weekend on Friday.
  • The Dow Jones Industrial Average rose about 155 points, or 0.4%. The technology-focused Nasdaq Composite gained 0.6%.
  • Investors have grown more confident that rising inflation won’t lead central banks to unwind stimulus measures, pushing major indexes back toward all-time highs in recent weeks.
  • Data showing a jump in U.S. inflation had prompted markets to stutter earlier in May.
  • The S&P 500 closed Friday at its third-highest level in history.
  • AMC Entertainment, a popular stock among individual traders, added 15%. The movie-theatre operator said it had sold new shares valued at $230.5 million to Mudrick Capital Management, raising cash at a premium to its closing stock price from Friday.
  • Other favorites among amateur investors rallied, including cannabis company Sundial Growers, which rose 10%.
  • Videogame retailer GameStop added 3.3%.
  • In the bond market, yields on 10-year Treasury notes edged up to 1.627%, from 1.592% Friday.
  • Yields, which rise when bond prices fall, have waffled around the 1.6% mark since mid-April.
  • In overseas markets, the Stoxx Europe 600 rose 1.1%, putting the pan-continental stocks gauge on track to close at a record.
  • In Asia, the Shanghai Composite Index rose nearly 0.3%, and Japan’s Nikkei 225 ticked down 0.2%.

Abbott cuts 2021 profit forecast on lower COVID-19 testing demand – Reuters, 6/1/2021

  • Abbott Laboratories on Tuesday cut its full-year 2021 profit forecast due to a projected drop in COVID-19 diagnostic testing demand, sending its shares down 4.1% before the bell.
  • The company now expects full-year adjusted profit from continuing operations of $4.30 to $4.50 per share.
  • It had forecast at least $5 per share in January. Analysts expect $5.04 per share, according to Refinitiv data.
  • Abbott sees second-quarter adjusted profit from continuing operations of at least $1 per share, compared with analysts’ estimates of $1.23 per share.

KKR, CD&R Strike $5.3 Billion Deal to Buy Cloudera – Wall Street Journal, 6/1/2021

  • Private-equity firms KKR & Co. and Clayton Dubilier & Rice LLC agreed to buy Cloudera for roughly $5.3 billion in a deal that would take the software company private.
  • The pair on Tuesday said they would pay $16 a share for the data-cloud company, representing a roughly 24% premium to where the shares closed Friday.
  • Founded in 2008 by a group of engineers from Alphabet’s Google, Facebook, Oracle and Yahoo, Cloudera was an early player in the open-source software framework Hadoop, which enables large amounts of data to be processed quickly.
  • But it struggled to shift to the now-dominant public cloud, where it faces steep competition from much larger firms including’s Amazon Web Services.

‘A Quiet Place’ Sequel Reboots Summer Moviegoing – Wall Street Journal, 6/1/2021

  • Led by the long-delayed and much-anticipated horror sequel “A Quiet Place Part II,” the combined North American box office raked in at least $97 million, according to media measurement firm Comscore.
  • “A Quiet Place Part II” captured the bulk of that, grossing $57 million in the U.S. and Canada during the Memorial Day holiday weekend, according to preliminary studio estimates.
  • Last year, this weekend—typically the start of a busy summer full of Hollywood blockbusters—saw box-office revenues plummet to $843,000, according to Comscore.
  • While the weekend’s total represents a significant rebound, domestic ticket sales for all movies during the Memorial Day holiday pre-Covid have tended to surpass $200 million.

Supreme Court Won’t Consider Johnson & Johnson Challenge to Baby Powder Judgment – Wall Street Journal, 6/1/2021

  • The Supreme Court on Tuesday declined to consider a Johnson & Johnson appeal that sought to challenge a $2.1 billion civil judgment awarded to 20 women who alleged the company’s talcum baby powder caused ovarian cancer.
  • The court rejected the J&J appeal in a brief written order, leaving in place a Missouri appeals court ruling against the company.
  • The women, who used J&J baby powder and other company products containing talc, brought their case in 2015, alleging that the company’s talc products contained asbestos and that J&J long knew this and kept it secret.

WarnerMedia’s CNN plans new streaming service ahead of Discovery merger – WSJ – Reuters, 6/1/2021

  • WarnerMedia’s cable news network CNN, owned by AT&T, is planning a new streaming service, known informally as CNN+, the Wall Street Journal reported on Tuesday.
  • The service will feature new shows from the network’s major anchors, including Anderson Cooper and Don Lemon, the report said, citing people familiar with the matter.
  • The news comes after AT&T, which also owns HBO and Warner Bros studios, and Discovery, home to lifestyle TV networks such as HGTV and TLC, said last month they will combine their content to form a standalone global entertainment and media business.

Tesla’s vehicle price increases due to supply chain pressure, Musk says – Reuters, 6/1/2021

  • The price of Tesla vehicles is increasing due to supply chain pressures across the auto industry, particularly for raw materials, Elon Musk said on Monday in response to a tweet.
  • “Prices increasing due to major supply chain price pressure industry-wide. Raw materials especially,” Musk said in a tweet.
  • Earlier on Monday, the Electrek reported that new Tesla Model Y owners are reporting that their electric SUVs are being delivered without lumbar support on the passenger side.
  • In response to the removal of lumbar support on the passenger side in Tesla’s Model Y, Musk said, “Moving lumbar was removed only in front passenger seat of 3/Y (obv not there in rear seats). Logs showed almost no usage. Not worth cost/mass for everyone when almost never used.”

Oil Hits Two-Year High With OPEC+ Striking Bullish Tone – Bloomberg, 6/1/2021

  • U.S. crude futures climbed to the highest in more than two-and-a-half years after the OPEC+ alliance forecast a tightening global market, while international efforts to revive a nuclear deal with Iran were yet to reach a breakthrough.
  • West Texas Intermediate rose as much as 3.8% from Friday’s close to $68.87 a barrel, while global benchmark Brent topped $70, a level it has failed to hold for a sustained period since 2019.
  • OPEC+ stuck to its plan to hike oil output in July, as Saudi Arabia’s energy minister struck a bullish tone about the global recovery.
  • The group will press ahead with an increase of 841,000 barrels a day in July, following hikes in May and June, according to delegates.

U.S. manufacturing sector picks up in May; work backlogs rising – ISM – Reuters, 6/1/2021

  • U.S. manufacturing activity picked up in May as pent-up demand amid a reopening economy boosted orders, but unfinished work piled up because of shortages of raw materials and labor.
  • The Institute for Supply Management (ISM) said on Tuesday its index of national factory activity increased to a reading of 61.2 last month from 60.7 in April.
  • The survey’s forward-looking new orders sub-index jumped to 67.0 from a reading of 64.3 in April. Inventories at factories are barely growing and business warehouses are almost bare.
  • But production is being constrained by worker shortages. A measure of factory employment dropped to a six-month low in May. Labor is scarce despite nearly 10 million Americans being officially unemployed.
  • The shortages are also keeping input prices elevated. The ISM survey’s measure of prices paid by manufacturers hovered near levels last seen in July 2008, when the economy was in the throes of the Great Recession.

U.S. construction spending rises moderately in April – Reuters, 6/1/2021

  • U.S. construction spending increased less than expected in April as gains in private homebuilding were blunted by losses in outlays on nonresidential structures and public projects.
  • The Commerce Department said on Tuesday that construction spending rose 0.2% after surging 1.0% in March.
  • Economists polled by Reuters had forecast construction spending gaining 0.5%.
  • Construction spending, which accounts for about 4% of gross domestic product, jumped 9.8% on a year-on-year basis in April.
  • Spending on private construction projects rose 0.4%, lifted by investment in single-family homebuilding.
  • Outlays on residential projects increased 1.0% in April.
  • Spending on private nonresidential construction like gas and oil well drilling dropped 0.5% in April.
  • Spending on public construction projects fell 0.6% in April. State and local government outlays slipped 0.2%, while federal government spending declined 6.2%.

Biden Administration Extends Bipartisan Infrastructure Talks Into June – Wall Street Journal, 6/1/2021

  • The Biden administration said Sunday that talks over a $1.7 trillion infrastructure package would need to show a “clear direction” toward agreement by the time Congress returns from recess in early June, signaling that Democrats might be preparing to go it alone on a broad plan to rebuild roads and bridges, expand broadband service and create programs to help care for the elderly and disabled Americans.
  • Transportation Secretary Pete Buttigieg said President Biden and members of his team would continue negotiating privately this week and said the talks with Republican lawmakers were encouraging.
  • But he identified the return of Congress on June 7 as when the talks would need to indicate an endpoint.
  • A sticking point is funding for the projects. Republicans want to tap at least two sources to help pay for rebuilding roads and bridges: repurposed, unspent funds from the $1.9 trillion Covid-19 relief law from earlier this year; as well as user fees on electric vehicles.
  • The Biden administration has proposed funding the measure through tax increases on corporations, including by raising the corporate rate to 28% from 21%, a plan that has drawn strong objections from Republicans.


China’s Factory Activity Slipped in May, but Consumer Spending Held Up – Wall Street Journal, 6/1/2021

  • An official gauge of Chinese factory activity slipped in May on weaker export demand and higher commodity prices, while the country’s nonmanufacturing sector was bolstered by stronger construction and holiday spending.
  • China’s official manufacturing purchasing managers index slipped slightly to 51.0 in May from the previous month’s 51.1 reading, according to data released Monday by the National Bureau of Statistics.
  • A recent surge in prices for raw materials such as iron ore, crude oil and coal sent the subindex for input prices to 72.8 in May, the highest level since November 2010, while output prices notched up a record-high reading of 60.6, according to Monday’s PMI data.
  • Total new orders retreated to the lowest level in a year as fewer bookings from overseas markets pushed new export orders into contraction territory, the statistics bureau said.
  • Separately on Monday, China reported that its nonmanufacturing PMI, which includes services and construction activity, rose to 55.2 in May from 54.9 in the previous month.
  • The subindex measuring construction activity climbed to 60.1 in May from April’s 57.4, the statistics bureau said, while those for transportation and accommodations marked a second month above 65—indicating a sustained rebound in travel.
  • However, expansion for the service industry as a whole narrowed slightly to 54.3 in May, compared with 54.4 in April, held back in part because of production-linked services, according to the statistics bureau.

New orders drive record surge in UK manufacturing in May: PMI – Reuters, 6/1/2021

  • A deluge of new orders helped to drive a record increase in British manufacturing activity last month as the economy began to recover from the COVID-19 pandemic, a survey showed on Tuesday.
  • The IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) rose to 65.6 in May from 60.9 in April.
  • While a little lower than the preliminary “flash” reading of 66.1, it still marked the highest since the survey started in 1992.
  • The survey’s gauges of growth in new orders and employment also hit record highs, although so too did the measure of input cost inflation paid by factories for goods as they cited poor harvests, port disruption and Brexit.
  • Tuesday’s survey showed that export orders increased at the fastest rate on record, although survey compiler IHS Markit said this was driven mainly by larger companies, with smaller manufacturers seeing less demand.

China Three-Child Policy Aims to Rejuvenate Aging Population  – Wall Street Journal, 6/1/2021

  • China said Monday that it would allow all married couples to have as many as three children and provide government support for education and child rearing, a move that comes as Beijing struggles to reverse a worsening demographic situation that presents a host of social and economic challenges.
  • The shift comes more than five years after Beijing ended its decadeslong “one-child policy” to let all couples have two children, and follows the May 11 release of census figures showing China’s population on the cusp of a historic turning point after years of rapid growth.
  • The announcement came after a Monday meeting of the Politburo, the Chinese Communist Party’s top decision-making body, chaired by leader Xi Jinping —a signal of concern over the demographic situation at the country’s highest levels.
  • State-run Xinhua News Agency said the change would “improve the country’s population structure, actively implement the national strategy to respond to the aging population, and maintain the country’s demographic advantage.”
  • Under the new policy, the government said it would offer more equitable educational resources and reduce educational expenditures for families—policies aimed at removing obstacles widely seen by experts as holding back couples from having more children.

Factmonster – TODAY in HISTORY

  • The first issue of Action Comics, featuring Superman, was published. (1938)
  • General Charles De Gaulle became the premier of France. (1958)
  • Cable News Network (CNN) debuted. (1980)

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