Stocks Climb After Jobs Report – Wall Street Journal, 6/4/2021
- U.S. stocks rose Friday, heading for slight weekly gains, after the monthly employment report showed the labor market continued its slow recovery in May.
- The Dow Jones Industrial Average gained 138 points, or 0.4%, to 34715 shortly after the opening bell.
- The S&P 500 added 0.5%, while the Nasdaq Composite advanced 0.7%.
- Labor Department data showed the U.S. economy added slightly fewer jobs than economists had expected, while the unemployment rate fell more than expected.
- Together, the mixed data offered investors one main takeaway: the labor market is improving, but not at a pace that will make the Federal Reserve rush to pare back additional support from the economy.
- In bond markets, the yield on the 10-year U.S. Treasury note fell to 1.611%, compared with 1.624% Thursday. Investors had said a better-than-expected jobs report could prompt selling in safe government bonds, while the reverse could lead to buying. Yields fall as bond prices rise.
- Shares of Pershing Square Tontine Holdings fell 11% after the blank-check company led by hedge-fund billionaire William Ackman confirmed that it is in talks to acquire a stake in Universal Music Group.
- Ford Motor shares added almost 3%, extending gains from Thursday, after the auto maker said total U.S. sales in May rose as a jump in SUV and electrified-vehicle sales offset declines in truck and car sales.
- Overseas, the pan-continental Stoxx Europe 600 ticked up 0.1%. In Asia, major benchmarks were mixed. The Shanghai Composite Index ticked up 0.2%. Japan’s Nikkei 225 declined 0.4%, and Hong Kong’s Hang Seng Index slid 0.2%.
U.S. Covid-19 Deaths Fall to Lowest Point Since March 2020 – Wall Street Journal, 6/4/2021
- The average number of daily Covid-19 deaths in the U.S. has fallen to the lowest point in more than a year, a fresh sign that vaccinations are lessening the worst effects of the pandemic.
- The seven-day average for newly reported deaths fell to 432 on Thursday, according to a Wall Street Journal analysis of data collected by Johns Hopkins University.
- The figure hasn’t been this low since late March 2020, in the early days of the pandemic, the data show.
- Hospitalizations have also been steadily falling, with the latest data posted by the Department of Health and Human Services showing 24,115 Covid-19 patients in hospitals across the U.S., down from 39,843 a month ago and a high of 142,273 in mid-January.
- More than half of the U.S. adult population has reached full-vaccination status, according to the Centers for Disease Control and Prevention. For those 65 and older, that figure stands at 75%.
Broadcom forecasts upbeat current-quarter sales on 5G ramp up – Reuters, 6/4/2021
- Broadcom forecast current-quarter revenue above Wall Street expectations on Thursday, as the semiconductor firm is set to benefit from the rising adoption of 5G technology.
- Revenue rose to $6.61 billion in the second quarter ended May 2, from $5.74 billion a year earlier.
- Analysts had expected revenue of $6.51 billion.
- The company reported net income of $1.49 billion, or $3.30 per share, in the second quarter, compared with $563 million, or $1.17 per share, a year earlier.
- The company, which also makes chips for data centers and servers, estimates third-quarter revenue to be about $6.75 billion, exceeding analysts’ estimates of $6.6 billion, according to Refinitiv IBES data.
CrowdStrike earnings and outlook top Street view – MarketWatch, 6/4/2021
- The cybersecurity company’s quarterly results and outlook topped Wall Street estimates.
- Revenue rose to $302.8 million from $178.1 million in the year-ago quarter.
- Annual recurring revenue, a software-as-a-service metric that shows how much revenue the company can expect based on subscriptions, increased 74% to $1.19 billion for the quarter, while the Street expected $1.12 billion.
- CrowdStrike expects adjusted fiscal second-quarter earnings of 7 cents to 9 cents a share on revenue of $318.3 million to $324.4 million, while analysts forecast earnings of 6 cents a share on revenue of $310.6 million, according to FactSet.
MongoDB shares climb after results beat estimates – MarketWatch, 6/4/2021
- MongoDB said its first-quarter subscription revenue rose 40% and its overall revenue increased 39% for a strong start to its fiscal year.
- The New York-based database-software provider reported a net loss of $64 million, or $1.04 a share, compared with a loss of $54 million, or 94 cents a share, in the year-ago period. Adjusted for stock-based compensation and other costs, the company’s first-quarter loss was 25 cents a share. Revenue rose to $181.6 million from $130.3 million in the year-ago quarter.
- Analysts surveyed by FactSet had forecast a loss of 36 cents a share on revenue of $169.8 million.
- MongoDB expects a second-quarter adjusted net loss of 40 cents a share to 43 cents a share on revenue of $180 million to $183 million, while analysts had forecast a loss of 32 cents a share on revenue of $180.9 million.
Sustained workout wear demand drives Lululemon’s upbeat 2021 forecasts – Reuters, 6/4/2021
- Lululemon Athletica forecast full-year net revenue and profit above Street estimates on Thursday, anticipating continued demand for its workout wear despite easing COVID-19 restrictions in many of its top markets.
- For the first quarter, Lululemon’s net revenue rose 88% to $1.23 billion from a year earlier, as sales at stores that Lululemon operates more than doubled. Analysts on average had expected net revenue of $1.13 billion.
- Lululemon said it expects adjusted earnings to be between $6.73 and $6.86 per share, compared with its prior range of $6.30 to $6.45. Analysts on average were expecting earnings of $6.48 per share on net revenue of $5.68 billion, according to IBES data from Refinitiv.
- The owner of Mirror home-fitness platform said it expects fiscal 2021 net revenue to be in the range of $5.83 billion to $5.91 billion, compared with its prior range of $5.55 billion to $5.65 billion.
William Ackman SPAC Nears $40 Billion Universal Music Deal – Wall Street Journal, 6/4/2021
- Hedge-fund billionaire William Ackman’s special-purpose acquisition company is nearing a deal with Universal Music Group that would value the world’s largest music business at about $40 billion, people familiar with the matter said.
- A deal, if consummated, would be the largest SPAC transaction on record, exceeding the roughly $35 billion that Singaporean ride-hailing company Grab Holdings was valued at in a similar deal recently, according to Dealogic.
- It would have a so-called enterprise value, taking into consideration Universal’s debt, of about $42 billion.
- The deal, which would hand Mr. Ackman’s entities a 10% stake in a newly public Universal, would have a €33 billion, or $40 billion, equity value and a €35 billion enterprise value, a measurement that takes into consideration the amount of debt and cash a company has on its balance sheet.
- Universal had about €7.4 billion in revenue last year, accounting for nearly half of Vivendi’s total. Tencent owns about 20% of Universal after the Chinese internet conglomerate doubled its stake last year in a deal that valued the business at about €30 billion.
Facebook Use of Advertiser Data Faces Antitrust Probes in EU, U.K. – Wall Street Journal, 6/4/2021
- The European Union and the U.K. opened formal antitrust investigations into Facebook’s classified-ads service Marketplace, ramping up regulatory scrutiny for the company in Europe.
- Both the European Commission—the EU’s top antitrust enforcer—and the U.K.’s Competition and Markets Authority said Friday they are investigating whether Facebook repurposes data it gathers from advertisers who buy ads in order to give illegal advantages to its own services, including its Marketplace online flea market.
- The U.K. added that it is also investigating whether Facebook uses advertiser data to give similar advantages to its online-dating service. The two competition watchdogs said they would coordinate their investigations.
Global M&A surges to record high for third straight month – Reuters, 6/4/2021
- Global mergers and acquisition (M&A) activity hit a record high for the third straight month in May, driven mainly by low interest rates, soaring equities and higher dealmaking interest in sectors that have received a boost from the COVID-19 pandemic.
- According to Refinitiv data, the total value of pending and completed deals announced from the January-May period touched$2.4 trillion, an all-time record.
- Last month, $532.9 billion worth of deals were recorded, the highest for the month of May.
- Acquisitions by blank-check companies or SPACs (special-purpose acquisition companies) also hit a record $348 billion in the January-May period.
- During the five months, 428 deals worth over $1 billion were struck, compared to 131 during the same period last year.
- The United States witnessed $1.3 trillion worth of M&A activity this year, while Europe and the Asia-Pacific saw $411 billion and $387 billion, respectively.
U.S. Employers Added 559,000 Jobs in May – Wall Street Journal, 6/4/2021
- U.S. employers added 559,000 jobs in May and the unemployment rate fell to 5.8%, in a pickup of the labor market’s recovery from the pandemic amid signs that businesses struggled to fill job openings.
- Last month’s gain represented an improvement from April, when the unemployment rate was 6.1% and the economy added a revised 278,000 jobs, a gain much smaller than economists had forecast.
- The labor force participation rate, the share of adults working or looking for work, edged slightly lower in May to 61.6%, down from 63.3% in February 2020.
- The participation rate for prime-age workers, those 25 to 54, remains depressed compared with pre-pandemic levels.
- Roughly two million fewer of those workers were in the labor force in April compared with February 2020.
- Average hourly pay for private-sector employees increased by 15 cents to $30.33 in May.
- Hourly wage rose 2% from a year earlier.
U.S. factory orders fall more than expected in April – Reuters, 6/4/2021
- New orders for U.S.-made goods fell more than expected in April as a global semiconductor shortage weighed on the production of motor vehicles and electrical equipment, appliances and components.
- The Commerce Department said on Friday that factory orders dropped 0.6% in April after increasing 1.4% in March.
- Economists polled by Reuters had forecast factory orders slipping 0.2%. Orders surged 14.2% on a year-on-year basis.
- Factory goods orders in April were weighed down by a 6.1% decrease in orders for motor vehicles and parts.
- Orders for electrical equipment, appliances and components fell 0.7%.
- Unfilled orders at factories gained 0.2% after rising 0.5% in March.
- The Commerce Department also reported that orders for non-defense capital goods, excluding aircraft, which are seen as a measure of business spending plans on equipment, surged 2.2% in April instead of 2.3% as reported last month.
- Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, increased 0.9%, unrevised from last month’s estimate.
Biden Signals Flexibility on Taxes for Infrastructure – Wall Street Journal, 6/4/2021
- President Biden signaled he could accept a narrower infrastructure package that didn’t include raising the corporate tax rate, telling a top Senate Republican that he wants $1 trillion in new spending and floating alternative ways to pay for the measure, according to people briefed on the matter.
- The new proposal, which includes a minimum corporate tax of 15% for the nation’s largest companies and the repurposing of some Covid-19 aid funding, marks a late shift from the White House, as Mr. Biden and Senate Republicans kick off what is expected to be a final flurry of talks on the size of the infrastructure plan and how to fund it.
- Under one of Mr. Biden’s suggestions, the biggest companies would pay a minimum corporate tax of 15%, according to people briefed on the matter.
- According to details the administration released earlier this year, the tax would apply only to companies with income exceeding $2 billion.
- The result is that just 180 companies would even meet the income threshold and just 45 would pay the tax, according to administration estimates.
- Tax lawyers and accountants have argued that a 15% minimum tax on financial-statement income could be difficult to administer and implement and would cede some U.S. tax rules to accounting regulators.
- Mr. Biden also suggested repurposing $75 billion in previously approved Covid-19 relief aid, according to a person familiar with the matter.
- Any new spending would be on top of $400 billion in projected federal spending over five years if current programs continued, one of the people familiar with the matter said.
U.S. House Democrats propose $547 billion surface transport plan – Reuters, 6/4/2021
- A group of key U.S. House Democrats were to introduce legislation on Friday to authorize $547 billion in additional spending over five years on surface transport, a plan that would mostly go to fixing existing U.S. roads and bridges and increase funding for passenger rail and transit.
- The plan introduced by DeFazio and other senior committee Democrats would authorize $343 billion on roads, bridges and safety – including $4 billion in electric vehicle charging infrastructure.
- The panel will hold a June 9 hearing on the proposal to consider amendments.
- DeFazio’s plan also calls for $109 billion for transit and $95 billion for rail, including tripling funding for U.S. passenger railroad Amtrak to $32 billion. It would require Amtrak to set aside at least 2.5% of all annual government funding “to enhance the passenger experience on long-distance routes.”
- It would authorize $4.1 billion on grants to buy electric transit buses, create a $500 million grant program to reduce traffic gridlock in large metropolitan areas and $1 billion to address the shortage of parking for commercial motor vehicles and allow for heavier electric vehicles on U.S. roads and mandate additional safety features in new school buses.
Fed to Sell Corporate Bonds and ETFs Acquired During Covid-19 Crisis – Wall Street Journal, 6/4/2021
- The Federal Reserve will soon begin selling off the corporate bonds and exchange-traded funds it amassed last year through an emergency-lending vehicle set up to contain the Covid-19 pandemic’s economic fallout.
- The vehicle, known as the Secondary Market Corporate Credit Facility, or SMCCF, held $5.21 billion of bonds from companies including Whirlpool, Walmart and Visa as of April 30.
- In addition, it held $8.56 billion of exchange-traded funds that hold corporate debt, such as the Vanguard Short-Term Corporate Bond ETF.
- In Wednesday’s statement, the Fed said it plans to sell the bonds and ETF holdings in a gradual and orderly way that seeks to minimize “the potential for any adverse impact on market functioning.”
Biden Expands Blacklist of Chinese Companies Banned From U.S. Investment – Wall Street Journal, 6/4/2021
- President Biden expanded a prohibition on Americans investing in Chinese companies with purported links to China’s military, adding more businesses to a blacklist that has angered Beijing and caused consternation among investors.
- An executive order Mr. Biden signed Thursday brings to 59 the total number of Chinese companies banned from receiving American investment and shows how his administration is continuing some of the hard-line China policies left by former President Donald Trump.
- Many of the newly targeted companies are subsidiaries and affiliates of major state-owned companies and other businesses named on the earlier blacklist. They include a clutch of companies tied to the state-owned aerospace giant Aviation Industry Corporation of China and two financing affiliates of telecommunications gear-maker Huawei Technologies.
- The new order prevents Americans from investing in those companies, with a 60-day grace period, until Aug. 2, before sanctions begin and a one-year period for Americans already invested in the firms—either directly or via mutual and index or other funds—to divest themselves.
EUROPE & WORLD
Hong Kong locks down Tiananmen vigil park amid tight security, arrests organizer – Reuters, 6/4/2021
- Police blocked off a Hong Kong park to prevent people gathering to commemorate the anniversary of China’s 1989 Tiananmen Square crackdown on Friday and arrested the planned vigil’s organizer.
- The ban on the vigil came amid growing concern in the pro-democracy movement and internationally about the suppression of the semi-autonomous city’s traditional freedoms, notably a national security law imposed by Beijing last year.
- The annual June 4 vigil is usually held in the former British colony’s Victoria Park, with people gathering to light candles for the pro-democracy demonstrators killed by Chinese troops in Beijing 32 years ago.
- This year, with thousands of police deployed across the city, some marked the anniversary in churches or at home amid fears of being arrested.
- The Sierra Club, led by John Muir, was incorporated in San Francisco. (1892)
- Henry Ford took his first car out for a test drive. (1896)
- The Battle of Midway, a decisive Allied victory in World War II, began. (1942)
- People’s Army of China opened fire on crowds of prodemocracy demonstrators in Tiananmen Square, killing thousands. (1989)
- Martha Stewart was indicted on charges of insider trading. (2003)