Daily Market Report | Nov. 04, 2020
US FINANCIAL MARKET
Wall Street surges on tech boost as presidential race remains undecided – Reuters, 11/4/20
- Technology stocks pushed Wall Street’s major averages higher on Wednesday as the race for the White House went down to the wire, although investors remained worried about the prospect of a contested result.
- In a race that has been too close to call, both President Donald Trump and Democratic nominee Joe Biden still have possible paths to reach the needed 270 Electoral College votes to win as states keep counting a surge in mail-in ballots.
- Trump won the battlegrounds of Florida, Ohio and Texas, but former Vice President Biden said he was confident and was on track to winning the White House by taking three key Rust Belt states.
- Biden was also back as favorite to win the election in online betting markets, according to data from three aggregators, after he overtook Trump in the state of Wisconsin.
- Ten of the 11 major S&P indexes were up in morning trading, led by information technology and healthcare sectors, as investors said chances faded for Democrats to score a big win in the U.S. Senate, lowering bets of higher antitrust scrutiny and capital gains taxes.
- Still, the prospect of political uncertainty sent investors to U.S. Treasuries, sparking the biggest one-day drop in 10- and 30-year bond yields since June. Shares of U.S. banks, which typically track Treasury yields, slipped 2%.
Coronavirus Live Updates: Daily U.S. Cases Second-Highest on Election Day – Wall Street Journal, 11/4/20
- The U.S. reported its second-highest count of daily new Covid-19 cases on record and hospitalizations reached their highest levels since early August, on the day Americans voted in a presidential election where the coronavirus pandemic was a central issue.
- The country added more than 91,500 new cases on Tuesday, according to data compiled by Johns Hopkins University, up from 84,089 a day earlier.
- States including Ohio, Pennsylvania, Minnesota, Idaho, New Mexico and Maine logged record-high daily tallies Tuesday.
- More than 50,000 people are hospitalized with the disease across the U.S., according to the Covid Tracking Project, the highest number since Aug. 7.
- Heading into the election, a national voter survey conducted for The Wall Street Journal and other news organizations found that nearly six in 10 voters nationally said they disapproved of the job President Trump has done in handling the pandemic, while about four in 10 approved.
California Voters Exempt Uber, Lyft, DoorDash From Reclassifying Drivers – Wall Street Journal, 11/4/20
- Uber Technologies, Lyft and DoorDash won a pivotal vote in California that exempts them from reclassifying their drivers as employees, according to the Associated Press.
- With more than 60% of ballots counted, the vote was running 58% in favor of the measure and 42% against, prompting the Associated Press to project it would pass.
- The effort to win popular support did lead the companies to guarantee new protections. The companies told voters they would provide health insurance for drivers who work 15 hours or more a week, occupational-accident insurance coverage and 30 cents for every mile driven, among other protections.
- The companies, along with Postmates Inc. and Instacart Inc., collectively contributed around $200 million to support Proposition 22, a measure that allows them to bypass a state law intended to provide employee-like protections for their drivers.
Comcast, Walmart in Talks to Develop and Distribute Smart TVs – Wall Street Journal, 11/4/20
- Comcast is in talks with Walmart to develop and distribute smart TVs, according to people familiar with the matter, as the cable giant looks to become a dominant hub for streaming apps, not just TV channels.
- Under the terms the companies are discussing, retail giant Walmart would promote TV sets running Comcast software, and would get a share of recurring revenue from Comcast in return, the people said.
- A third party would likely manufacture the sets, and one possibility is that they could carry Walmart branding, they said.
- The strategy would enable Comcast to market to consumers nationwide, a change in a U.S. cable industry where players have stuck for decades to their regional footprints.
- Comcast would be able to promote its new streaming service, Peacock, front and center in the smart TVs, the people familiar with the matter said.
Saudis, Other OPEC Producers Consider Deeper Cuts Amid Pandemic – Wall Street Journal, 11/4/20
- Saudi Arabia and other OPEC members are considering deepening oil production cuts amid rising Covid-19 cases in the West and fresh economic lockdowns in Europe that could curb oil demand further, according to oil officials and advisers in these countries.
- Last month, The Wall Street Journal reported that Saudi Arabia and other producers had started debating whether or not to delay opening up the spigots by three months.
- Such a scenario, at a minimum, is now increasingly likely, OPEC officials said.
- Amid increasingly bearish oil prospects more recently, Saudi Arabia and other oil producers in the OPEC alliance are also now considering new cuts as one of several options to deal with lackluster demand, officials in these countries said.
- Deeper curbs “is now an option,” said one of these officials.
U.S. cruise industry will extend suspension through December 31 – Reuters, 11/3/20
- The cruise industry will extend its suspension of U.S. cruise operations through Dec. 31, an industry group that represents 95% of global ocean-going cruise capacity said on Tuesday.
- The Cruise Lines International Association (CLIA) said its members will use the remainder of the year to prepare for the implementation of measures to address COVID-19 safety issues.
- The Centers for Disease Control and Prevention on Friday issued a framework for a phased resumption of cruise ship operations after a no-sail order issued in March in response to the coronavirus pandemic was to expire on Saturday.
- CLIA estimates the suspension has resulted in a loss of $25 billion in economic activity and over 164,000 American jobs.
US ECONOMY & POLITICS
Election 2020: Push to Seize Edge in Presidential Count Begins – Wall Street Journal, 11/4/20
- With counting resuming in a handful of closely contested battleground states, President Trump prematurely claimed victory and former Vice President Joe Biden said he was on track for a win as the prospect of an extended, bitter battle for the presidency loomed.
- Ahead of the election, Mr. Biden held a wide lead in national polls, but battleground state polls had been tighter.
- Few polls, however, predicted such a close race.
- On a divided national map, the president won Ohio, Iowa, Texas and the key prize of Florida, while Mr. Biden flipped an electoral vote in a Nebraska congressional district and won Arizona, the first time the state has gone to a Democratic presidential candidate since 1996.
- The battlegrounds still outstanding included Michigan, Wisconsin and Pennsylvania—the Great Lakes states Mr. Trump narrowly won in 2016—along with North Carolina, Georgia and Nevada.
- Mr. Trump saw initial leads from Election Day voting in Michigan, Pennsylvania and Wisconsin tighten overnight, and disappear in the case of Wisconsin, as mail-in ballots were tallied.
- Meanwhile, Democrats worried about their narrow lead in Nevada, a state many had expected would go blue, even as Mr. Biden’s campaign expressed confidence in a win there.
- The president led in Georgia and North Carolina, but the outcomes there remained too close to call.
Republicans Win Senate Seats in Texas, Iowa; Democrats Flip Colorado, Arizona – Wall Street Journal, 11/4/20
- Republicans scored key Senate victories in Tuesday’s elections, with wins in Iowa and Alabama, while Democrats flipped two seats, with former Democratic Gov. John Hickenlooper unseating incumbent GOP Sen. Cory Gardner in Colorado, and Democrat Mark Kelly, a former astronaut, toppling Republican Sen. Martha McSally in Arizona, the Associated Press projected.
- In the early hours of Wednesday morning, AP projected that Iowa’s incumbent GOP Sen. Joni Ernst had defeated Democratic challenger Theresa Greenfield, a Des Moines businesswoman.
- Republicans picked up a seat by ousting Democratic Sen. Doug Jones in deep red Alabama, with Tommy Tuberville, the Republican candidate and former Auburn head football coach, winning.
- Control of the chamber still remains in doubt as a number of other GOP-held races hang in the balance.
- Democrats now have a net gain of one seat.
- They need to gain three seats to win a majority if Democrat Joe Biden wins the White House or four if President Trump wins re-election.
- The races in North Carolina and Georgia were too close to call, and the outcomes in Michigan and Maine were uncertain.
- The Democrats’ opportunities to pick off seats dwindled as the vote counting deepened.
- In Maine, analysts gave Republican Sen. Susan Collins an edge over Democrat Sara Gideon, with slightly more than 10% of precincts uncounted as of Wednesday morning, saying she had outperformed in rural areas.
- In Montana, Democratic Gov. Steve Bullock lost his challenge to Republican Sen. Steve Daines, the AP said.
GOP Lawsuit in Pennsylvania Questions Validity of Some Mail-In Ballots – Wall Street Journal, 11/4/20
- Pennsylvania Republicans planned to ask a judge Wednesday morning to block the counting of some mail-in ballots in a key Philadelphia suburb as the presidential election hinged on late results in the state and a few other battlegrounds.
- The race for president has yet to be called in Pennsylvania, and the state’s top election official, Secretary of the Commonwealth Kathy Boockvar, said she expected most of the state’s votes would be counted by Friday.
- The lawsuit, filed by Republicans in federal court Tuesday, contends that Montgomery County elections officials were illegally sorting through and identifying problems with about 1,200 ballots received before Election Day.
- A hearing was set for Wednesday morning in Philadelphia.
U.S. private payrolls growth slows in October: ADP – Reuters, 11/4/20
- U.S. private payrolls increased less than expected in October, providing an early sign of a slowdown in economic activity as fiscal stimulus diminishes and new COVID-19 infections surge across the country.
- Private payrolls increased by 365,000 jobs last month, the ADP National Employment Report showed on Wednesday.
- Data for September was revised up to show 753,000 jobs added instead of the initially reported 749,000.
- Economists polled by Reuters had forecast private payrolls would rise by 650,000 in October.
U.S. factory orders rise solidly; outlook uncertain – Reuters, 11/3/20
- New orders for U.S.-made goods increased solidly in September, but further gains could be limited amid an anticipated slowdown in consumer spending as government money for businesses and workers impacted by the COVID-19 pandemic runs out.
- The Commerce Department said on Tuesday that factory orders rose 1.1% after climbing 0.6% in August.
- Economists polled by Reuters had forecast factory orders would rise 1.0% in September.
- Unfilled orders at factories fell 0.2% in September after declining 0.6% in August. Inventories at factories were unchanged for a second straight month, while shipments of manufactured goods rose 0.3%.
- Shipments of core capital goods, which are used to calculate business equipment spending in the GDP report, rose 0.5%. They were previously reported to have gained 0.3%.
U.S. Trade Deficit Narrowed in September as Exports Rose – Wall Street Journal, 11/4/20
- The U.S. trade deficit narrowed in September as exports continued to recover from the global economic downturn caused by the coronavirus pandemic while imports slowed.
- The U.S. posted a deficit of $63.86 billion in September, compared with $67.04 billion in August and $47.84 billion a year earlier, the Commerce Department said Wednesday.
- Exports rose 2.6% to $176.35 billion, while imports rose 0.5% to $240.22 billion, their slowest pace of growth since trade bottomed out in May.
- U.S. purchases of consumer goods from abroad fell 3.6% from August to $55.77 billion, the first monthly decline since April, led by a sharp drop in imports of cellphones and other household goods.
U.S. service sector cools in October – ISM survey – Reuters, 11/4/20
- U.S. services industry activity slowed in October, with growth in new orders and employment moderating, likely reflecting concerns about ebbing fiscal stimulus and a resurgence in new COVID-19 cases across the nation.
- The Institute for Supply Management (ISM) said on Wednesday its non-manufacturing activity index fell to a reading of 56.6 last month from 57.8 in September.
- The ISM survey’s measure of new orders for the services industry dropped to a reading of 58.8 in October from 61.5 in September. But backlog orders and export orders increased last month.
- The survey’s index of services industry employment slipped to 50.1 from a reading of 51.8 in September.
EUROPE & WORLD
Covid-19 Surge Forces Europeans to Stay Home, Dragging on Economy – Wall Street Journal, 11/4/20
- Europe’s service providers reported a fresh decline in activity as a surge in coronavirus infections in October pushed consumers to avoid face-to-face services ranging from entertainment to eating out, a contrast with Asian countries such as China, which continued to see a rebound.
- Data firm IHS Markit said its services Purchasing Managers Index for the eurozone fell to 46.9 in October from 48.0 in September.
- Spain saw the largest drop in activity during October. Figures released Tuesday by the country’s statistics agency showed how severely its key tourism sector has been hit by the pandemic, with spending by foreign visitors in the first nine months of the year down 89.9% on the same period in 2019.
- A similar survey of Chinese service providers painted a very different picture. With the spread of the coronavirus largely contained, service providers reported the second-largest increase in activity for a decade, with the PMI rising to 56.8 from 54.8 in September.
- In India, where restrictions have been eased even as infections remain high, service providers reported an increase in activity for the first month since February, as the PMI rose to 54.1 from 49.8.
SK Hynix expects soft server demand after third-quarter profit surge – Reuters, 11/3/20
- SK Hynix, the world’s No.2 memory chip maker, said it expected inventory build-up by Huawei’s competitors in China to boost mobile demand in the current quarter, but its mainstay server demand would remain week.
- The chipmaker reported third-quarter operating profit of 1.3 trillion won ($1.2 billion), up from 473 billion won a year earlier as Huawei’s rush of orders before U.S. restrictions offset weak server demand.
- DRAM chips took up 72% of SK Hynix’ total revenue in the third quarter, and about 40% of that was server DRAM, according to its earnings document.
- The South Korean company, which counts Apple and Huawei among its customers, said Chinese smartphone vendors were building up inventory to gain market share as Huawei faced U.S. restrictions.
- The market for server chips however would remain difficult until customers begin to stock up again later this quarter or early next year, it added.
BMW Sales Boosted by China’s Strong Covid-19 Recovery – Wall Street Journal, 11/4/20
- BMW, the German luxury car maker, reported strong growth in profits and new vehicle sales in the third quarter, as China’s robust recovery from the pandemic continues to bolster premium auto brands.
- Revenue for the group dropped to €26.28 billion from €26.67 billion.
- The sale of BMW-branded vehicles rose 9.8% in the third quarter, driven by a 31% surge in sales in China, which helped dull the effect of a 16% drop in U.S. sales.
- In China, sales of new BMW, Rolls-Royce, and Mini brands rose 6.4% to 560,367 vehicles, a record for the Munich-based auto maker.
- In the nine months to Sept. 30, BMW’s overall new vehicle sales fell 12.5% to 1.64 million vehicles, pulled down by a 25% drop in U.S. sales and a 20% decline in Europe.
- BMW’s net profit rose to €1.79 billion, equivalent to $2.1 billion, in the quarter, from €1.52 billion a year earlier.
Factmonster – TODAY in HISTORY
- Howard Carter discovered the tomb of Tutankhamen in Egypt. (1922)
- The American embassy in Tehran, Iran, was seized by militants and 90 Americans were taken hostage. (1979)
- Democratic senator Barack Obama wins the presidential election against Sen. John McCain, taking 338 electoral votes to McCain’s 161. Obama becomes the first African American to be elected president of the United States. (2008)
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. Historical performance is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
All investing involves risk including loss of principal. No strategy assures success or protects against loss. Any economic forecasts set forth may not develop as predicted.
All company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.
Material presented is excerpts derived from third party content and you may need a subscription to access the full the content. The views and opinions expressed are those of the authors and do not necessarily reflect the views of Pence Wealth Management or LPL Financial.
Prior to making any investment decision please consult your financial advisor regarding your specific situation.