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Daily Market Report | June 29, 2021

US FINANCIAL MARKET

Stocks Move Higher After Nasdaq, S&P 500 Records – Wall Street Journal, 6/29/2021

  • U.S. stocks edged higher Tuesday, with investors awaiting data on consumer confidence levels a day after indexes notched fresh records.
  • Stocks have climbed in recent weeks—with the S&P 500 and Nasdaq Composite hitting fresh highs Monday—propelled by investors’ confidence in the economic recovery and the prospect of fresh government spending.
  • Money managers remain cautious about whether highly infectious variants of Covid-19 could slow the global economic recovery or disrupt supply chains for crucial goods.
  • Still, most people expect stocks to grind higher, given the low yields coming from bonds and continued monetary support for the economy.
  • Shortly after the opening bell, Morgan Stanley rose 3.2%. The bank on Monday doubled its quarterly dividend and said it plans to buy back up to $12 billion of its stock. Goldman Sachs gained 1.8% after raising its dividend.
  • Brent crude, the international oil benchmark, rose about 0.9% to $74.82 a barrel. Brent has advanced over 44% this year.
  • The yield on the benchmark 10-year U.S. Treasury note edged up to 1.491%, from 1.478% on Tuesday.
  • Overseas, the Stoxx Europe 600 rose 0.6%.
  • Japan’s Nikkei 225 fell 0.9% by the close of trading, while the Hang Seng Index dropped 0.9%.
  • In mainland China, the Shanghai Composite Index fell 0.9%.

Wall Street Funnels Cash to Investors on Stress-Test Success – Bloomberg, 6/29/2021

  • Morgan Stanley led big U.S. banks in raising payouts to investors — by jacking up dividends or announcing plans to buy back shares — after amassing cash piles that easily met the Federal Reserve’s capital requirements.
  • Dividend payouts by the nation’s six largest lenders will rise, on average, by almost half — and that’s with Citigroup abstaining from an increase — according to statements issued Monday.
  • Morgan Stanley doubled its quarterly payout while also announcing as much as $12 billion in stock buybacks.
  • Wells Fargo, the troubled San Francisco-based lender, announced an $18 billion buyback program and doubled its dividend to 20 cents.
  • Investors may be less than enthralled with the payout, however, which stood at 51 cents about a year ago when the scandal-plagued firm cut it to 10 cents.
  • Goldman Sachs Group said it was boosting its quarterly payout 60% to $2 a share, effective Oct. 1, according to a statement.
  • And JPMorgan Chase is raising its dividend to $1 from 90 cents, and said it continues to be authorized to repurchase shares under a previous plan.
  • Bank of America will increase its dividend 17% to 21 cents, subject to board approval, according to a statement from the Charlotte, North Carolina-based bank.
  • Citigroup was an outlier among the big banks, holding its dividend steady at 51 cents a share — where it’s been for almost two years.

Government Antitrust Lawsuits Against Facebook Thrown Out by Federal Judge – Wall Street Journal, 6/29/2021

  • A federal judge dismissed antitrust lawsuits against Facebook filed by the U.S. government and most states, a major win for the company before the cases even got off the ground.
  • Judge Boasberg said the FTC’s lawsuit was “legally insufficient” because it didn’t plead enough allegations to support monopolization claims against Facebook. The judge, however, said the commission can try again and gave it 30 days to attempt to file an amended lawsuit.
  • The judge dismissed the case brought by 46 states in its entirety on the grounds that the attorneys general waited too long to bring their claims.
  • Judge Boasberg, an Obama appointee, said the FTC’s principal problem was that it didn’t make enough allegations to support its claims that Facebook has a monopoly in what the FTC described as a market for personal social-networking services.
  • The commission, he said, only made a bare minimum allegation that Facebook had a dominant market share exceeding 60%, and that no other social network of comparable scale exists in the U.S.

Amazon Demands One More Thing From Some Vendors: a Piece of Their Company – Wall Street Journal, 6/29/2021

  • Suppliers that want to land Amazon.com as a client for their goods and services can find that its business comes with a catch: the right for Amazon to buy big stakes in their companies at potentially steep discounts to market value.
  • The technology-and-retail giant has struck at least a dozen deals with publicly traded companies in which it gets rights, called warrants, to buy the vendors’ stock in the future at what could be below-market prices, according to corporate filings and interviews with people involved with the deals.
  • Amazon over the past decade also has done more than 75 such deals with privately held companies, according to a person familiar with the matter.
  • In all, the tech titan’s stakes and potential stakes amount to billions of dollars across companies that provide everything from call-center services to natural gas, and in some cases position Amazon among the top shareholders in those businesses.

United Airlines Bets on Post-Pandemic Growth With Its Biggest Ever Jet Order – Wall Street Journal, 6/29/2021

  • United Airlines is making its largest ever plane order, adding Boeing and Airbus jets to fuel its post-pandemic growth plans.
  • The Chicago-based airline said Tuesday that it will purchase 200 of Boeing’s 737 MAX jets and 70 larger Airbus A321neos, a deal valued at more than $30 billion at list prices before customary discounts.
  • United is looking to replace most of its 50-seat jets and other smaller, older aircraft with these larger planes that can carry more passengers and allow it to sell more premium seats.
  • The order—the largest by a U.S. airline since American Airlines ordered 460 new aircraft from Boeing and Airbus in 2011—is the latest sign of U.S. airlines’ growing confidence that travel is on course to snap back after being decimated by the coronavirus pandemic last year.

Car Dealers Are Selling More Vehicles Above the Sticker Price – Wall Street Journal, 6/29/2021

  • The sticker price on cars isn’t sticking. In some cases, it’s going up.
  • In mid-June, about three-quarters of all vehicles sold in the U.S. went for the sticker price or above, according to research firm J.D. Power.
  • That is up from 67% at the end of May and higher than the average of around 36% before the pandemic, the firm’s data shows.

Steel sector may be saddled with up to $70 billion stranded assets – report – Reuters, 6/29/2021

  • The global steel industry may have to write down up to $70 billion in assets in the coming years because it is still building new blast furnaces using coal that will become obsolete as the world cuts carbon emissions, a report said on Tuesday.
  • Some 50 million tonnes of steelmaking capacity is under development using blast furnace technology, largely in top producer China, U.S.-based think-tank Global Energy Monitor (GEM) said in the report.
  • Blast furnaces using coal could become unnecessary or inoperable, resulting in “stranded assets” worth $47 billion to $70 billion, the report said.
  • “Based on projections from the IEA and other groups, (they could become stranded) quite likely by 2030-2040.
  • It could be sooner if more aggressive carbon taxes/restrictions are applied,” said Caitlin Swalec, lead author of the report.

Disney delays test cruise on ‘inconsistent’ COVID-19 test results – Reuters, 6/29/2021

  • Walt Disney’s cruise division said on Monday it had postponed its first test cruise since the onset of the pandemic after a few volunteers showed inconsistent COVID-19 test results.
  • Several cruise lines have planned to resume voyages from the United States after many months, with Royal Caribbean’s Celebrity Edge last weekend becoming the first vessel from a major operator to sail from a U.S. port.
  • The Disney Dream ship was scheduled to set sail with about 300 volunteers on Tuesday, but the cruise was cancelled as a small number of employees showed inconsistent COVID-19 test results that were considered positive by the U.S. Centers for Disease Control and Prevention.

US ECONOMY & POLITICS

U.S. Home-Price Growth Rose to Record in April – Wall Street Journal, 6/29/2021

  • Home-price growth climbed to a record high in April, as buyers competed for a limited number of homes for sale.
  • The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 14.6% in the year that ended in April, up from an 13.3% annual rate the prior month.
  • The Case-Shiller 10-city index gained 14.4% over the year ended in April, compared with a 12.9% increase in March.
  • The 20-city index rose 14.9%, after an annual gain of 13.4% in March. Price growth accelerated in all of the 20 cities.
  • A separate measure of home-price growth by the Federal Housing Finance Agency also released Tuesday found a 15.7% increase in home prices in April from a year earlier, a record in data going back to 1991.
  • The median existing-home sales price in May rose almost 24% from a year earlier, topping $350,000 for the first time, the National Association of Realtors said earlier this month.

U.S. Consumer Confidence Soars on Upbeat Views About Economy – Bloomberg, 6/29/2021

  • U.S. consumer confidence soared in June to a fresh pandemic high as Americans became more upbeat about the economy and job market.
  • The Conference Board’s index increased to 127.3 from an upwardly revised 120 reading in May, according to a report Tuesday.
  • The June figure exceeded all forecasts in a Bloomberg survey of economists.
  • The share of consumers that said jobs are plentiful increased to a 21-year high of 54.4%.
  • The closely watched labor differential also improved. The share of respondents who said jobs were plentiful exceeded the share of those who said they were hard to get by the most since 2000.
  • Meanwhile, 18.6% of respondents said they expect their incomes to increase in the next six months, the highest since March 2020.
  • U.S. consumers in Tuesday’s report showed 37.4% of respondents intended to take a vacation in the next six months, the most since October.

Biden to Highlight Infrastructure Deal’s Roads and Bridges, Not Legislative Path – Wall Street Journal, 6/29/2021

  • President Biden plans to open a sales pitch this week for the roads, bridges and broadband at the center of the bipartisan infrastructure deal, seeking to shift the focus away from its complicated legislative path in Congress and his own messaging stumbles.
  • The White House has backed both the roughly $1 trillion infrastructure deal and a separate, broader antipoverty effort that could cost trillions more and is expected to draw only Democratic support.
  • Mr. Biden is seeking to put the focus back on the contents of his agenda, and leaving the process and timing to Congress, after he was forced to back away from issuing a veto threat to the infrastructure bill if it isn’t tied directly to the larger partisan bill.
  • Underscoring the fight over the two tracks, in a statement Monday, Senate Minority Leader Mitch McConnell (R., Ky.) said Mr. Biden should push congressional Democratic leaders to also delink the fate of the bipartisan bill from the broader antipoverty plan.

Iran-Backed Militias Fire Rockets in New Attack Aimed at U.S. Forces – Wall Street Journal, 6/29/2021

  • U.S. troops in northeast Syria came under rocket fire Monday night after Iran-backed militias vowed revenge for U.S. airstrikes earlier that day in Iraq and Syria, a sign that fighting may be evolving into sustained confrontation.
  • A spokesman for the U.S.-led coalition, Col. Wayne Marotto, said that multiple rockets had been fired at U.S. troops and that American forces responded by firing artillery at the rocket launching positions. There were no U.S. injuries, he added.
  • The rocket attack, which a pro-militia news agency said had occurred near Syria’s al-Omar oil field, came as the Biden administration warned Monday that it stood ready to defend U.S. troops.
  • Secretary of State Antony Blinken said that President Biden is “fully prepared to act and act appropriately and deliberately to protect U.S. interests,” if Iran-backed militia continued to attack American forces in the region.

Americans Are Leaving Unemployment Rolls More Quickly in States Cutting Off Benefits – Wall Street Journal, 6/29/2021

  • The number of unemployment-benefit recipients is falling at a faster rate in Missouri and 21 other states canceling enhanced and extended payments this month, suggesting that ending the aid could push more people to take jobs.
  • Federal pandemic aid bills boosted unemployment payments by $300 a person each week and extended those payments for as long as 18 months, well longer than the typical 26 weeks or less.
  • The benefits are set to expire in early September, but states can opt out before then.
  • The number of workers paid benefits through regular state programs fell 13.8% by the week ended June 12 from mid-May—when many governors announced changes—in states saying that benefits would end in June, according to an analysis by Jefferies LLC economists.
  • That compares with a 10% decline in states ending benefits in July, and a 5.7% decrease in states ending benefits in September.
  • Workers on state programs would lose the $300 weekly federal enhancement but could continuing receiving the state benefits.

EUROPE & WORLD

Half of Australia’s Population in Lockdown as Delta Spreads – Bloomberg, 6/29/2021

  • More than 12 million Australians — close to half of the population — are now in lockdown as the nation struggles to contain a spread of the delta coronavirus variant.
  • On Tuesday, Brisbane became Australia’s fourth regional capital city to restrict movement outside of homes except for essential reasons such as shopping and exercise for at least three days, less than 24 hours after a similar move in Perth.
  • They followed Sydney and Darwin, which over the weekend announced longer lockdowns of up to two weeks.
  • The clusters show the limits of Australia’s so-called “Covid-zero” strategy, which has relied on closed international borders and rigorous testing to eliminate community transmission of the virus.
  • The outbreak in Sydney now numbers about 150 cases, with 19 more infections announced by New South Wales state on Tuesday.

Sony Buys Game Developer of PlayStation Bestseller Returnal – Bloomberg, 6/29/2021

  • Sony said Tuesday it purchased the Finnish game development studio Housemarque to make games for PlayStation consoles.
  • Housemarque, which was founded in 1995, is best known for the recent game Returnal, which is exclusive to Sony’s PlayStation 5. Returnal ranked eighth among the best-selling games of April, according to industry analysis firm NPD Group.
  • Sony may have also made another major purchase that it hasn’t yet officially announced.
  • A since-deleted tweet from PlayStation’s Japanese Twitter account included an image showing the acquisition of Bluepoint Games, an Austin, Texas-based company that also recently released a PlayStation 5 exclusive.

Electric car sales surge as Europe’s climate targets bite – Reuters, 6/29/2021

  • One in every nine new cars sold in Europe last year was an electric or plug-in hybrid vehicle, with low-emission car sales surging even as the COVID-19 pandemic knocked overall vehicle sales, the European Environment Agency said on Tuesday.
  • The uptick in electric car sales caused a 12% drop in average CO2 emissions of new cars sold in Europe last year, compared with in 2019, reversing a trend that had seen such emissions increase for three consecutive years.
  • Of the 11.6 million new cars registered in the EU, Iceland, Norway and Britain last year, 11% were fully electric or plug-in hybrid electric vehicles, according to the provisional data.
  • Those vehicles tripled their share of new car sales, from 3.5% in 2019.

Factmonster – TODAY in HISTORY

  • London’s Globe Theatre burned down during a performance of Shakespeare’s Henry VIII. (1613)
  • The British Parliament approved the Townshend Acts. (1767)
  • The shuttle Atlantis and the Russian space station Mir docked, forming the largest man-made satellite ever to orbit Earth. (1995)

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