Daily Market Report | Nov. 16, 2020

US FINANCIAL MARKET

U.S. Stocks Rise After Positive Moderna Vaccine Results – Wall Street Journal, 11/16/20

  • U.S. stocks jumped Monday, with the Dow Jones Industrial Average on pace to set a new all-time-high as positive results from another potential Covid-19 vaccine lifted shares of companies that have been walloped by the pandemic.
  • Monday’s rally was broad, with shares of megacap technology companies rallying alongside banks, retailers and travel stocks.
  • The moves came after Moderna said its experimental coronavirus vaccine was 94.5% effective at protecting people from Covid-19 in an early look at pivotal study results, making it the second vaccine to hit a key milestone.
  • Last week, Pfizer and partner BioNTech said its vaccine proved better than expected at protecting people from Covid-19.
  • The vaccine results boosted hopes for a faster economic rebound, sending the yield on 10-year Treasurys to 0.907%, from 0.892% on Friday. Bond yields and prices move in opposite directions.
  • Commodities rallied after strong economic data out of China and Japan pointed to healthy demand for industrial metals.
  • Chinese industrial production rose 6.9% in October from a year earlier.
  • Data showed Japan’s economy grew by its fastest pace in 40 years in the third quarter.
  • Copper jumped 1.9% to its highest level since June 2018. U.S. crude prices rose 3.9% to $41.68 a barrel.

Coronavirus Live Updates: Weekly U.S. Infections Surpass One Million – Wall Street Journal, 11/16/20

  • The U.S. reported more than a million coronavirus infections in the past week, including more than 133,000 on Sunday, as the national total surpassed 11 million.
  • The country also set a record for hospitalizations, with 69,987 as of Sunday, according to the Covid Tracking Project.
  • The 133,045 cases newly reported on Sunday, according to data compiled by Johns Hopkins University, bring the U.S. total to nearly 11.04 million, including 1.04 million reported in the preceding week.
  • The national seven-day rolling average was 145,401 as of Saturday, according to a Wall Street Journal analysis of Johns Hopkins data.
  • More than 246,000 people in the U.S. have died of Covid-19, including 616 reported Sunday, according to Johns Hopkins data. The nation’s seven-day average of daily reported deaths was 1,083 on Saturday, and the 14-day average was 1,034.

Moderna’s Covid-19 Vaccine Is 94.5% Effective in Early Results, Firm Says – Wall Street Journal, 11/16/20

  • Moderna said its experimental coronavirus vaccine was 94.5% effective at protecting people from Covid-19 in an early look at pivotal study results, the second vaccine to hit a key milestone.
  • Of 95 people in the study who developed Covid-19 with symptoms so far, 90 had received a placebo and only five Moderna’s vaccine, the company said Monday.
  • Moderna said it plans to ask federal health authorities by early December to clear the vaccine.
  • Federal officials said Friday that doses could become available that month.
  • Earlier this month Pfizer and BioNTech said their experimental Covid-19 vaccine was more than 90% effective at protecting people from symptomatic Covid-19 in a large clinical trial.

Tyson Foods beats profit estimates on strong pork, beef demand – Reuters, 11/16/20

  • Tyson Foods beat Wall Street estimates for fourth-quarter profit on Monday, as its beef and pork businesses returned to volumes growth and helped counter high costs incurred to keep its plants running during the COVID-19 crisis.
  • The company’s sales rose to $11.46 billion in the fourth quarter from $10.88 billion a year earlier.
  • Net income attributable to Tyson jumped about 88% to $692 million, or $1.90 per share, even as it incurred about $200 million in pandemic-related charges.
  • Tyson said it expects fiscal 2021 sales to be in a range of $42 billion to $44 billion, expecting its beef and pork segments remain strong, although not at fiscal 2020 levels. The company reported sales of $43.19 billion for fiscal 2020.
  • Springdale, Arkansas-based Tyson also raised its annual dividend by 6% from the fiscal 2020 level.

PNC Financial Services to Buy U.S. Arm of Spain’s BBVA for $11.6 Billion – Wall Street Journal, 11/16/20

  • PNC Financial Services Group agreed to buy the U.S. arm of Spain’s BBVA for $11.6 billion, the companies said Monday, in one of the largest bank tie-ups since the financial crisis.
  • A deal would create the fifth-largest U.S. retail bank with more than $550 billion in assets, a giant in an industry that has been slow to consolidate.
  • Acquiring BBVA’s U.S. operations—BBVA USA Bancshares and its subsidiary, BBVA USA—would bolster Pittsburgh-based PNC’s presence in fast-growing markets in the southeast and west. BBVA, which in 2007 bought Alabama-based Compass Bancshares, has about $100 billion of assets in the U.S. with branches across the Sunbelt, including a major presence in Texas.
  • PNC is strongest in the mid-Atlantic, Midwest and Southeast.

Home Depot to buy building products distributor HD Supply in $8 billion deal – Reuters, 11/16/20

  • Home Depot said on Monday it would buy HD Supply Holdings in a deal valued at about $8 billion, setting itself up to regain control over the industrial material wholesaler after spinning it off over a decade ago.
  • The home improvement chain said it would offer $56 per share in cash to HD Supply shareholders, a near 25% premium to the stock’s last close. It expects to fund the deal through cash on hand and debt.
  • Home Depot said the deal is expected to close in its fiscal fourth quarter, which ends on Jan. 31, and is likely to be accretive to earnings in 2021.

U.S. approval for 737 MAX return nears as challenges remain for Boeing – Reuters, 11/16/20

  • After a standoff with global regulators, management turmoil and a massive safety review, Boeing is set to win U.S. approval on Wednesday to resume flights of its grounded 737 MAX.
  • Before returning it to the skies, airlines must complete software updates and fresh pilot training, a process that will take at least 30 days
  • Industry sources familiar with the branding say the “MAX” name will likely be phased out over time in favor of the formal names assigned to each variant, like “737-7” or “737-8.”
  • Anticipating FAA approval, American Airlines plans to relaunch commercial MAX flights on Dec. 29 from Miami to New York City.
  • Southwest Airlines, the world’s largest MAX operator, does not plan to schedule flights on the aircraft until the second quarter of 2021.

OPEC+ weighs further steps to support market, sees weaker compliance – Reuters, 11/16/20

  • OPEC and its allies discussed weaker compliance with pledged oil output cuts on Monday and weighed further action to support the market as the second wave of coronavirus hits demand.
  • An option gaining support among OPEC+ is keeping the existing supply curbs of 7.7 million bpd for another three to six months, OPEC+ sources said, rather than tapering the cut to 5.7 million bpd in January as currently called for.
  • Monday’s JTC meeting also discussed figures showing OPEC+ compliance with pledged curbs in October was 96%, which was less than previously thought, once compensatory cuts for past excess production by some countries were included, an OPEC+ source said.
  • Russia’s cumulative overproduction was seen at 531,000 bpd and Iraq’s at 610,000 bpd, the source said.

US ECONOMY & POLITICS

Biden Turns Up Pressure for Administration Recognition – Wall Street Journal, 11/16/20

  • President-elect Joe Biden’s top adviser said Sunday that a government agency’s delay in officially acknowledging his electoral victory could hinder his efforts to prepare for the distribution of a coronavirus vaccine, among other critical issues.
  • Ron Klain, named to become Mr. Biden’s White House chief of staff, said Sunday that the transition team would press the General Services Administration this week to issue a designation that would allow his aides to meet with Health and Human Services officials over the looming logistical hurdles of manufacturing and distributing a vaccine for Covid-19, the disease caused by the coronavirus.
  • The GSA designation has become the focal point in the polarized debate around whether President Trump should concede after Mr. Biden earlier this month secured the electoral votes necessary to become the next president, according to the Associated Press and major media organizations.
  • While Senate Republicans have largely backed Mr. Trump’s right to mount legal challenges to the election’s outcome, an increasing number have called for Mr. Biden to receive intelligence briefings as part of a transition.

Millions of Unemployed Americans Face Loss of Benefits at Year’s End – Wall Street Journal, 11/16/20

  • Two key programs Congress passed this year to expand and enhance unemployment insurance expire on Jan. 1, leaving millions of people without benefits unless lawmakers can break a monthslong deadlock over a fresh round of pandemic relief.
  • Unemployed workers in most states get 26 weeks of benefits, plus additional weeks when the economy is poor.
  • Congress in March provided an additional 13 weeks of benefits.
  • It also expanded eligibility to include people who ordinarily wouldn’t qualify for benefits, such as freelancers, contract workers and people who were forced out of work by the pandemic—for example, because they contracted the disease or had to care for a sick family member.
  • As of Oct. 24, the latest week for which data are available, more than 13 million people were enrolled in one of the two programs.
  • The number of people receiving extended benefits is expected to rise in coming weeks as more workers—many of them jobless since the pandemic began—exhaust their regular benefits.
  • Senate Majority Leader Mitch McConnell (R., Ky.) and House Speaker Nancy Pelosi (D., Calif.) have both said Congress should pass another economic relief bill by the end of the year. But they remain far apart on the cost.
  • Democrats seek a bill topping $2 trillion, which would extend the programs set to expire and restore the $600-a-week supplemental benefit.
  • Republicans favor a $650 billion proposal that would increase payments by $300 a week but not renew the expiring programs.
  • President-elect Joe Biden has also said he wants to see an aid bill passed by year’s end.

New York City Restaurants in Precarious State as Winter Nears – Wall Street Journal, 11/16/20

  • As winter approaches, New York City’s beleaguered restaurant owners are doing their best to prepare while crossing their fingers that officials don’t reimpose bans on sit-down dining.
  • Indoor dining was banned until Sept. 30 and remains limited to 25% capacity, while restaurants elsewhere in New York are allowed 50% capacity.
  • The prospect of loosening capacity restrictions dimmed last week, as New York’s infection rate steadily increased and Gov. Andrew Cuomo enacted a statewide 10 p.m. to 5 a.m. curfew on indoor and outdoor dining at all establishments with state liquor licenses.
  • A recent survey of more than 400 restaurants, bars and nightlife establishments by the industry group NYC Hospitality Alliance found 88% couldn’t pay their full rent in October and 30% paid no rent at all.

Biden Plan to Forgive Student Debt Hinges on Democratic Control of Senate – Wall Street Journal, 11/16/20

  • President-elect Joe Biden’s ability to deliver on his plan to forgive hundreds of billions of dollars in student debt faces steep odds unless Democrats take control of the Senate.
  • Barring that outcome—which hinges on two Georgia races in January—Democrats have urged a second option: bypassing Congress through executive action. It isn’t clear whether such a move would survive a legal challenge.
  • During the election campaign, Mr. Biden said he would push to forgive $10,000 in debt for every American with federal student loans to help them cope with the economic disruption caused by the coronavirus pandemic.
  • Congressional Democrats sought to forgive $10,000 for all borrowers early this year as part of a broad pandemic-relief bill known as the Cares Act, but the Republican-controlled Senate opposed it.

EUROPE & WORLD

China Economy Gathers Steam, Setting Stage for a Strong End to the Year – Wall Street Journal, 11/16/20

  • China’s economic activity posted a broad-based recovery in October, paving the way for a faster economic rebound in the final quarter of the year.
  • Industrial output, which has led the nation’s economic recovery in recent months, rose 6.9% in October from a year earlier, on par with September’s pace and higher than market expectations for a 6.5% increase, according to data released Monday by the National Bureau of Statistics.
  • Fixed-asset investment rose 1.8% in the January-October period, accelerating from 0.8% growth in the first three quarters of the year and coming in higher than the 1.6% increase expected by economists polled by The Wall Street Journal.
  • Retail sales, a key gauge of Chinese consumer spending, rose 4.3% in October from a year ago, accelerating from a 3.3% increase in September, but lower than a 4.6% increase expected by surveyed economists.
  • The Chinese government’s main unemployment measure, the urban surveyed jobless rate, which excludes migrant workers who were once employed in cities but returned home for various reasons, also fell slightly to 5.3% in October, compared with September’s 5.4%.
  • Economists widely expected growth of between 5% and 6% in the fourth quarter, putting the world’s second largest economy on track to record an expansion of about 2% for all of 2020.

Japan’s Economy Expands as It Recovers from Coronavirus Pandemic – Wall Street Journal, 11/15/20

  • The Japanese economy expanded at its fastest pace in at least 40 years in the July-September period as private consumption and exports improved along with the reopening of the global economy.
  • The world’s third-largest economy after the U.S. and China expanded 5% in the third quarter of 2020 from the previous quarter, the first growth in four quarters and the biggest expansion since 1980, the period for which comparable data are available.
  • Private spending rose 4.7% from the previous quarter as consumers went out more for shopping and dining. Meanwhile, external demand added 2.9% to growth.
  • On an annualized basis, which reflects what would happen if the third-quarter pace continued for a full year, Japan’s economy expanded 21.4%, compared with a consensus forecast of 18.9%.
  • In the third quarter, the nation’s gross domestic product totaled an annualized 508 trillion yen, equivalent to $4.85 trillion, recovering a little more than half of what it lost in the coronavirus pandemic.

China’s JD.com beats estimates on online sales boom – Reuters, 11/16/20

  • Chinese e-commerce company JD.com posted a better-than-expected quarterly profit on Monday as online sales remained strong even after coronavirus-led restrictions were lifted in the world’s second-largest economy.
  • JD.com’s net revenue rose 29% to 174.21 billion yuan in the third quarter ended Sept. 30.
  • Analysts had expected revenue of 170.2 billion yuan, according to IBES data from Refinitiv.
  • Sales in JD.com’s product segment, which includes online retail sales, rose 27% to 151.4 billion yuan ($22.99 billion) in the quarter.
  • Excluding items, JD.com earned 3.42 yuan per American depository share (ADS) while analysts had expected a profit of 2.65 yuan per ADS.

Time is running out for Brexit deal, EU tells Britain – Reuters, 11/15/20

  • European Union diplomats warned Britain on Monday that time was fast running out for a Brexit deal, and that it may already be too late to ratify one, as negotiators in Brussels began a last-ditch attempt to avoid a tumultuous exit at the end of December.
  • Ireland, the EU nation most exposed to Brexit, said there were just days, or possibly weeks, left to find a way to unlock trade talks, while a senior EU official said there may no longer be time to put any trade deal agreed into force.
  • “It’s getting terribly late and may be too late already,” said the senior EU official, as talks between the bloc’s negotiator Michel Barnier and his British counterpart, David Frost, resumed in Brussels.
  • Britain said there had been some progress and that the two sides had common draft treaty texts, though significant elements were yet to be agreed.

Factmonster – TODAY in HISTORY

  • General Sherman and his troops began their “March to the sea” during the Civil War. (1864)
  • The United States and the Soviet Union established diplomatic relations. (1933)
  • President George W. Bush nominated Condoleezza Rice to replace Colin Powell as secretary of state. (2004)

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