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Daily Market Report | August 17, 2021


U.S. Stocks Open Lower After Retail Sales Data – Wall Street Journal, 8/17/2021

  • U.S. stocks slid Tuesday, retreating from a stretch of all-time highs as weaker-than-expected retail sales and concerns about the Delta variant of the coronavirus weighed on investor optimism.
  • The S&P 500 fell 0.6%, while Dow Jones Industrial Average lost about 230 points, or 0.7%. Both indexes closed Monday at fresh records, notching a five-day winning streak. For the blue-chip Dow index, it was the first such run in almost four years.
  • Economic data released Tuesday offered investors insight into consumer behavior amid concerns about the Delta variant.
  • Retail sales—a measure of purchases at stores, at restaurants and online—fell 1.1% in July from the prior month.
  • Economists surveyed by The Wall Street Journal had expected a 0.3% decline.
  • Among individual stocks, Tesla fell 2.7%, adding to a more than 4% loss Monday, driven by a probe into its autopilot system.
  • Videogame company Roblox declined 6.3% after reporting earnings late Monday that missed Wall Street forecasts.
  • In the bond market, the yield on the benchmark 10-Year U.S. Treasury note was little changed from 1.255% on Monday.
  • New industrial production data, however, offered some optimism. Industrial production—which includes factory, mining and utility output—increased at a seasonally adjusted 0.9% in July compared with June, beating expectations from economists.
  • Some of the biggest American retailers are reporting earnings this week.
  • Home Depot fell 3.6% after it said that customer transactions fell.
  • Lowe’s fell 3.7% ahead of the company’s earnings report Wednesday. Target is also due to post results on Wednesday.
  • Chinese technology stocks came under pressure again after China took aim at business practices that could harm consumers and limit market competition.
  • New draft guidelines released by China’s top market regulator Tuesday attempt to prevent Internet companies from adopting forced exclusivity and blocking competitors’ links and apps.
  • Hong Kong’s Hang Seng Index shed 1.7%, while in mainland China, the Shanghai Composite Index slipped 2%. Among individual tech stocks, Tencent retreated more than 4% while Tencent-backed China Literature fell more than 10%.

Biden Administration Expected to Call for Covid-19 Vaccine Booster Shots – Wall Street Journal, 8/17/2021

  • The Biden administration is expected to announce that Americans who have been fully vaccinated against Covid-19 should receive a booster shot to ensure continued protection, according to people familiar with the discussions.
  • The booster shot would be administered eight months after the second dose of the vaccine was received, the people said.
  • Senior Biden administration health and medical officials have been discussing the possibility of calling for booster shots for weeks and are nearing agreement on the issue, said the people, who added that a final decision hasn’t been made.
  • A formal announcement could come as soon as later this week.

Walmart Earnings, Sales Rose as Shoppers Returned to Stores Despite Delta Surge – Wall Street Journal, 8/17/2021

  • Walmart logged another quarter of rising U.S. sales as a return to in-store shopping offset slower online growth, at a time when retailers are navigating rising costs, supply chain snarls and an uptick in Covid-19 cases in many parts of the country.
  • Overall, Walmart reported fiscal second-quarter revenue rose 2.4% to $141 billion, as divestitures of stores in some international markets depressed total revenue.
  • Comparable sales, those from U.S. stores and digital channels operating for at least 12 months, rose 5.2% in the quarter ended July 30 compared with the same period last year.
  • U.S. e-commerce sales rose 6% from a year ago, when Covid restrictions kept many people home.
  • More shoppers came to Walmart stores, with U.S. transactions up 6.1% during the quarter, but they spent slightly less per visit, or around 0.8% less versus the same period last year.
  • The company had net income of $4.28 billion, down 34% from a year ago when it booked a gain on investment.
  • U.S. comparable sales will rise 5% to 6% for the year, Walmart said.
  • On Tuesday, the company said it was on track for $75 billion in e-commerce sales for the year.

Home Depot’s Sales Growth Flattens After a Year of Rapid Gains – Wall Street Journal, 8/17/2021

  • Sales for Home Depot continued their upward trend in the latest quarter, but the company’s year-over-year growth rate slowed against the comparison to last summer, when the coronavirus pandemic began driving higher home-improvement spending.
  • The Atlanta-based retailer logged sales of $41.12 billion for the three months through Aug. 1, a rise from $38.05 billion in the same quarter in 2020.
  • The number of customer transactions fell about 6%, but Home Depot made up that ground through a larger average transaction size.
  • Comparable sales in the quarter grew by 4.5%, including a 3.4% increase in the U.S. That marked slower growth compared with last year, when lockdowns, financial stimulus and a red-hot residential housing market were combining to give home-improvement spending a dramatic boost.
  • Home Depot’s profit was $4.81 billion, up from $4.33 billion in the year-ago quarter.
  • On a per-share basis, its earnings were $4.53. Analysts were forecasting earnings of $4.36 a share, according to FactSet.

Roblox results come in below Street expectations, shares decline – MarketWatch, 8/17/2021

  • Roblox declined in the extended session Monday after the social-gaming platform’s results came in below Wall Street expectations.
  • Roblox reported that revenue rose to $454.1 million from $200.4 million in the year-ago quarter, while bookings grew to $655.5 million from $494.2 million in the year-ago period.
  • The company, which began publicly trading its shares in March, reported a second-quarter loss of $140.1 million, or 25 cents a share, compared with a loss of $71.5 million, or 40 cents a share, in the year-ago period.
  • Analysts, on average, had forecast earnings of 12 cents a share on revenue of $684.8 million.

T-Mobile Says Hackers Breached Company Database – Wall Street Journal, 8/17/2021

  • T-Mobile said it suffered an intrusion into a company database and was investigating the extent of the breach, after personal data on some of its wireless subscribers was found for sale on the web.
  • The company, which has more than 100 million subscribers, said Monday that “unauthorized access to some T-Mobile data occurred” but that it hadn’t determined whether personal information was involved.
  • The data breach, reported earlier by Vice’s Motherboard tech news website, was said to cover customers’ names, addresses, Social Security numbers and drivers-license details.

Companies Are Hoarding Record Cash Amid Delta Fears – Wall Street Journal, 8/17/2021

  • Companies are sitting on a record amount of cash amid lingering uncertainty about disruptions from Covid-19, defying expectations earlier this year that a waning pandemic would unleash a spending spree.
  • Cash and short-term investments on corporate balance sheets globally are at an all-time high of $6.84 trillion, according to data from S&P Global, extrapolated from second-quarter earnings reports.
  • That is 45% higher than the average in the five years preceding the pandemic and a 2.6% increase from the previous quarter.


U.S. Retail Sales Fell 1.1% in July as Spending Fell Across Categories – Wall Street Journal, 8/17/2021

  • Spending at U.S. retailers fell sharply in July, amid cooling purchases of goods and signs of some pullback in consumer demand as U.S. Covid-19 cases tied to the Delta variant rose.
  • Retail sales—a measure of purchases at stores, at restaurants and online—fell 1.1% last month compared with June, the Commerce Department reported Tuesday.
  • Excluding autos—a category where supply-chain issues have limited available inventory—sales were down 0.4%.
  • Sales dropped across several categories, primarily autos—which was down 3.9%—but also clothing, sporting goods and furniture.
  • Restaurants and bars were a bright spot, with sales rising 1.7% over the month, while sales at nonstore retailers—a proxy for online retail sales—fell 3.1%.
  • Sales in July were about $91.9 billion, or 17.5%, higher than in February 2020, just before the pandemic’s onset in the U.S.

U.S. Factory Output Rose by Most in Four Months, Lifted by Autos – Bloomberg, 8/17/2021

  • Production at U.S. factories strengthened in July by the most in four months, rebounding above pre-pandemic levels and indicating manufacturers are coping with snarled supply chains and shortages.
  • The 1.4% increase followed a revised 0.3% drop in June, Federal Reserve data showed Tuesday.
  • Total industrial production, which also includes mining and utility output, rose 0.9% in July.
  • The Fed’s industrial output report showed production of motor vehicles increased 11.2% last month — the most in a year — after a 5.9% decline the previous month.
  • Excluding autos and parts, manufacturing output rose 0.7% after a 0.1% gain.
  • Manufacturing capacity utilization, a measure of plant use, jumped to 76.6%, finally breaking above the pre-pandemic level of 75.5%. Total industrial capacity rose to 76.1%.

U.S. Homebuilder Sentiment Drops to 13-Month Low – Bloomberg, 8/17/2021

  • U.S. homebuilder sentiment fell to a 13-month low in August amid high prices and costs as well as continuing supply shortages.
  • A gauge of builder sentiment decreased for a third month to 75 from a July reading of 80, the largest drop since April 2020, National Association of Home Builders/Wells Fargo data showed Tuesday. The median forecast in a Bloomberg survey of economists called for no change in the index from the month before.
  • The report also showed that current sales conditions and prospective buyer traffic fell to levels not seen since July 2020. At the same time, sales expectations for the next six months remained unchanged.
  • The Midwest and the South posted decreases in August, reaching the lowest sentiment levels since last summer. Meanwhile, the Northeast and the West slightly rose.

U.S. Single-Family Rents Soar 7.5% in June, Accelerating Pace – Bloomberg, 8/17/2021

  • U.S. single-family home rental prices jumped 7.5% in June, showing no sign of abating amid a hot housing market and construction lags.
  • The year-over-year pace accelerated from 6.6% in May, which was the biggest percentage gain since at least 2005, according to CoreLogic Inc., which tracks changes nationally.
  • The most expensive homes saw the biggest jump in rents, at 9.6%.
  • Rent prices are now higher than if they had stayed on their pre-pandemic track.
  • Because rents are not as volatile as other items, continuing gains will be harder to reverse, and could fuel inflation in the longer term.
  • The highest single-family rent price increases continue to be recorded in the Southwest, with Phoenix and Las Vegas up by 16.5% and 12.9%, respectively, CoreLogic said.

NY region service sector business growth slows in August -NY Fed survey – Reuters, 8/17/2021

  • The New York area saw business activity grow at a slower but still significant pace in early August, according to a survey released Tuesday by the New York Federal Reserve.
  • The survey’s headline business activity index fell to 27.8 in August from 41.7 in July, moving away from record-setting pace of growth seen over the past few months.
  • While still optimistic, business owners were less positive about future conditions than they were in recent months, according to the survey of firms in New York, northern New Jersey and southwestern Connecticut.
  • More than half of respondents said they expect employment to increase in the coming months and the index for future employment held near its record high. The survey was conducted between August 2 and August 9.


Euro zone growth confirmed at 2% in Q2, employment rises – Reuters, 8/17/2021

  • The euro zone economy grew 2% in the second quarter, the European Union statistics office said on Tuesday, confirming its earlier reading as the easing of coronavirus restrictions spurred economic activity after a brief recession.
  • In a separate release Eurostat also said that employment in the 19-nation bloc grew 0.5% in the April-June period compared to the previous quarter, in line with forecasts of economists polled by Reuters.
  • The quarter-on-quarter growth followed two quarters of GDP decline with the euro zone economy shrinking by 0.6% in the last quarter of 2020 and by 0.3% in January-March.
  • Among the euro zone’s largest economies, Spain and Italy posted the largest GDP rises, growing respectively by 2.8% and 2.7% on the quarter, Eurostat data showed, confirming its previous reading.
  • Germany and France recorded more moderate GDP increases, respectively of 1.5% and 0.9% on the quarter.

China Unveils New Rules Targeting Anticompetitive Practices by Internet Companies – Wall Street Journal, 8/17/2021

  • China issued new draft guidelines that would prevent its internet companies from engaging in anticompetitive practices such as unfairly blocking rival platforms, extending Beijing’s efforts to rein in the powerful technology sector.
  • The guidelines, released by China’s State Administration for Market Regulation on Tuesday, include a detailed list of prohibited behaviors that regulators said could harm internet users and limit market competition, including controlling user traffic, blocking competitors’ products and discriminatory pricing.
  • Shares of Chinese tech companies declined Tuesday, extending a monthslong slump driven by heightened regulatory oversight.
  • Alibaba fell 4.8% and Tencent more than 4%, while short-video specialist Kuaishou Technology, video and gaming group Bilibili, and search giant Baidu fell to record lows.
  • The Hang Seng Tech index in Hong Kong, which includes Tencent and Alibaba stocks, has declined some 40% in the past six months.

Taliban Consolidate Control in Afghanistan’s Capital; Thousands Remain Stranded – Wall Street Journal, 8/17/2021

  • The Taliban strengthened control of the Afghan capital Tuesday as many stores reopened, traffic police returned to their posts and a senior official from the Islamist movement arrived for contacts with political leaders affiliated with the fallen Afghan republic.
  • Later Tuesday, a White House official said Tuesday that the Hamid Karzai International Airport was open and that flights could land and depart, including on the civilian side.
  • In Kabul, the Taliban, who proclaimed the Islamic Emirate of Afghanistan when they first seized the country in 1996, have so far refrained from the kind of radical actions that brought world-wide condemnation in the past. They issued an amnesty for government officials and on Tuesday allowed female presenters on television channels.

Factmonster – TODAY in HISTORY

  • Robert Fulton’s steamboat, the Clermont, began its trip up the Hudson River to Albany. (1807)
  • Prospectors found gold in Alaska, a discovery that set off the Klondike gold rush. (1896)
  • U.S. swimmer Michael Phelps won his eighth gold medal, breaking the record set by Mark Spitz in the 1972 Games. Phelps also set the record for the most golds in a single Olympics. (2008)

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