Daily Market Report | Nov. 24, 2020

US FINANCIAL MARKET

U.S. Stocks Climb as Election Uncertainty Ebbs – Wall Street Journal, 11/24/20

  • U.S. stocks rose Tuesday after President Trump said his aides would cooperate with President-elect Joe Biden’s transition to the White House, easing investors’ concerns about a drawn-out period of uncertainty.
  • Investors are cheering signs that a protracted fight over control of the White House is potentially drawing to a close, reducing political risks over the winter months. The General Services Administration chief said Monday that her agency would provide Mr. Biden federal resources meant to assist in a smooth transfer of power. Mr. Trump also said he has instructed aides to help with the transition.
  • Optimism also increased Monday after The Wall Street Journal reported that Mr. Biden plans to select former Federal Reserve Chairwoman Janet Yellen as Treasury secretary. Ms. Yellen has said recently the recovery will be uneven and lackluster if Congress doesn’t spend more to fight unemployment and keep small businesses afloat.
  • Among European equities, travel stocks rose after the U.K. government said it would allow travelers to reduce the number of quarantine days, starting Dec. 15, if they test negative for Covid-19.
  • Travel stocks rose in U.S. trading as well, with American Airlines, United Airlines Holdings, Southwest Airlines and Alaska Air Group climbing over 3%. Royal Caribbean Group gained 6.1%.

 

 

Coronavirus Live Updates: U.S. Hospitalizations Pass 85,000 – Wall Street Journal, 11/24/20

  • The U.S. recorded 169,190 new coronavirus cases on Monday, and the number of patients hospitalized reached a new high for the 14th straight day.
  • There were a further 889 Covid-19 deaths Monday, bringing the total to 257,701.
  • Hospitalized patients as of Monday totaled 85,836, according to the Covid Tracking Project. The U.S. has set a record every day since hospitalizations first passed 60,000 on Nov. 10, according to the project’s data.
  • The U.S. seven-day moving average of new cases, which smooths out the numbers, climbed to 172,118 as of Monday, according to a Wall Street Journal analysis of Johns Hopkins data. That’s higher than the 14-day moving average of 163,225, a sign cases are on the rise.
  • French President Emmanuel Macron is expected to deliver a national address Tuesday evening, explaining the government’s strategy for loosening lockdown restrictions in the runup to Christmas and beyond.
  • France emerged as Europe’s biggest hotspot when a wave of infections hit the continent this fall. Since then, the number of new daily infections has steadily declined, falling to 4,452 on Monday, after exceeding 50,000 cases a day earlier this month.
  • Germany’s central and regional governments are to meet on Wednesday to discuss an extension and a possible tightening of the country’s moderate lockdown after the limited measures failed to substantially lower new coronavirus cases, hospitalization and deaths.
  • Germany hit a fresh one-day record for new infections late last week. On Monday, it registered 13,554 new infections, 865 fewer than a week earlier, according to figures released by the Robert Koch Institute for infectious diseases.
  • Italian government officials have said they don’t want to relax restrictions too much in December, to avoid repeating the problems of the summer, when Italians resumed socialization and nightlife soon after the national lockdown ended, planting the seeds of renewed contagion.
  • New recorded cases in the U.K. continued to fall and hospitalizations also appear to have turned a corner. The daily average of new cases in the seven days to Monday dropped 22.8% to 19,545, while average daily hospitalizations fell 2.9% to 1,665. Covid-related deaths, however, rose 6.0% to 441.

Nearly a Quarter of New Yorkers Say They Won’t Take Covid-19 Vaccine – Wall Street Journal, 11/24/20

  • Nearly a quarter of New Yorkers say they are unlikely to take a vaccine against the coronavirus when it becomes available, according to a poll released Tuesday.
  • Twenty-four percent of the 803 New York state voters surveyed by the Siena College Research Institute last week said they would either probably not or definitely not take a coronavirus vaccine if approved by the Food and Drug Administration.
  • The survey showed 35% said they definitely would take the vaccine, and 34% said they would probably take it.

Best Buy Continues Gains from Home Products, Online Sales – Wall Street Journal, 11/24/20

  • Best Buy continued benefiting from online sales and items that help consumers work, learn and cook from home during the coronavirus pandemic, pushing sales up 21% in the latest quarter.
  • The retailer on Tuesday reported $11.85 billion in third-quarter sales, up from $9.76 billion in the same three months last year and beating Wall Street estimates.
  • Domestic comparable sales rose 23%, while international comparable sales rose 27%.
  • Comparable online sales nearly tripled in the U.S., its largest market.
  • For the quarter ended Oct. 31, Best Buy posted a profit of $391 million, or $1.48 a share, compared with $293 million, or $1.10 a share, in the year-ago period.
  • Best Buy warned that the pandemic-driven lift will eventually taper off, and it didn’t issue financial outlook due to the pandemic’s uncertainty.

Dollar Tree beats estimates, to expand into higher-priced items – Reuters, 11/24/20

  • Dollar Tree reported better-than-expected quarterly results on Tuesday, as the discount store operator benefited from higher demand for cheaper groceries and household items during a coronavirus-induced economic downturn.
  • Net sales rose 7.5% to $6.18 billion, beating expectations of $6.13 billion.
  • Same-store sales at the company’s eponymous business increased 4% in the quarter ended Oct. 31, while they rose 6.4% at Family Dollar stores.
  • Net income rose to $330 million, or $1.39 per share, from $255.8 million, or $1.08 per share, a year earlier.
  • Analysts on average were expecting a profit of $1.15 per share, Refinitiv IBES data showed.
  • Shares of Dollar Tree gained 6.3% in premarket trading as the company also said it would expand its higher-priced offering, Dollar Tree Plus, into about 500 stores starting in the spring of 2021, after an initial test in more than 100 stores.

Tiffany beats profit estimates on soaring China demand – Reuters, 11/24/20

  • Tiffany & Co, which is being bought by French luxury giant LVMH, beat Wall Street expectations for quarterly profit on Tuesday as the U.S. jeweler benefited from an over 70% rise in sales in China and a recovery in demand at home.
  • Tiffany’s net sales fell about 1% to $1.01 billion in the third quarter ended Oct.31, but beat expectations of $980.71 million, according to IBES data from Refinitiv.
  • Tiffany said sales in the Asia-Pacific region rose 30%, while sales in the Americas region declined 16% – much smaller than the 46% drop seen in the preceding quarter.
  • Tiffany forecast a mid-single-digit percentage decline in holiday quarter sales, while analyst had predicted a 3% drop.
  • It also expects a high-single-digit percentage increase in earnings for the current quarter.
  • As of Nov. 20 though, approximately 60% of Tiffany’s retail stores in Europe were temporarily closed.

Abercrombie quarterly results beat Wall Street estimates on online strength – Reuters, 11/24/20

  • Abercrombie & Fitch surged past Wall Street expectations for quarterly profit and sales on Tuesday, as the apparel retailer reined in costs and benefited from growing online demand from stuck-at-home consumers, sending its shares up about 10%.
  • Net sales fell 5% to $819.7 million, but beat estimates of $739.36 million.
  • Abercrombie’s digital sales, which jumped 43%, were also boosted by demand for its Gilly Hicks brand’s activewear and loungewear as customers staying at home turn to comfortable clothing.
  • Excluding one-time items, the company reported a profit of 76 cents per share in the third quarter ended Oct. 31, compared with expectations of break-even, according to IBES data from Refinitiv.

Airlines set to lose $157 billion amid worsening slump: IATA – Reuters, 11/24/20

  • Airlines are on course to lose a total $157 billion this year and next, their main global body warned on Tuesday, further downgrading its industry outlook in response to a second wave of coronavirus infections and shutdowns afflicting major markets.
  • The International Air Transport Association (IATA), which in June had forecast $100 billion in losses for the two-year period, said it now projects a $118.5 billion deficit this year alone, and a further $38.7 billion for 2021.
  • Passenger numbers are expected to drop to 1.8 billion this year from 4.5 billion in 2019, IATA estimates, and will recover only partially to 2.8 billion next year.
  • Passenger revenue for 2020 is expected to have plunged 69% to $191 billion.
  • Air cargo, a rare bright spot for the industry as the grounding of flights pushes freight prices higher, will likely see global revenue rise 15% to $117.7 billion this year despite an 11.6% decline in volume to 54.2 million tonnes, IATA said.

GE Plans More Job Cuts in Aviation Division – Wall Street Journal, 11/24/20

  • General Electric warned employees that more job cuts are coming to the conglomerate’s jet-engine business because of the pandemic’s impact on commercial air travel even with the promise of a vaccine on the horizon.
  • In an internal video message delivered a week before the Thanksgiving holiday, GE Aviation’s new boss John Slattery said business conditions are difficult and the unit would need to shrink over the next 18 months, according to people familiar with the matter.
  • More jobs would be lost, he said, but the cuts would be more focused than two rounds of layoffs earlier this year that ultimately eliminated 25% of the division’s 52,000 global employees.
  • Mr. Slattery didn’t disclose the number of jobs that would be cut in the video, which was reviewed by The Wall Street Journal.

BlackRock to Buy Equity-Index Provider Aperio for $1 Billion – Wall Street Journal, 11/24/20

  • BlackRock is acquiring Aperio Group, a firm that helps build custom portfolios for wealthy individuals, for $1.05 billion, in a push by the world’s largest money manager to add more personalization to its offerings.
  • In buying Aperio, BlackRock is betting on growing interest by individuals for portfolios tailored to their values.
  • Aperio is part of the so-called direct indexing industry, a small-but-expanding part of the financial space.
  • These portfolios are created for single investors rather than forcing investors to be stuck with others in a fund.
  • A provider of such separately managed accounts for U.S. wealth managers, BlackRock said the combination will help increase those assets by about 30% to over $160 billion.

U.S. states prepare second antitrust lawsuit against Google for December – Reuters, 11/24/20

  • A bipartisan group of U.S. states plans to file an antitrust lawsuit against Google as early as next month, according to two people briefed on the matter, potentially beating a more widely anticipated lawsuit from a different group of states led by Texas.
  • The bipartisan group — made up of Colorado, Iowa, Nebraska, New York, North Carolina, Tennessee, and Utah — is sometimes referred to as the Colorado/Nebraska group and has said it planned to combine its case with the federal government’s.
  • The pending legal actions follow an antitrust lawsuit filed by the U.S. Justice Department against Alphabet’s Google in October.
  • Two people briefed on the matter said the Colorado/Nebraska group planned to file their lawsuit around mid-December, with one of the people saying a filing was expected in federal district court.

US ECONOMY & POLITICS

 

Consumer Confidence Dropped in November Amid Rising Covid-19 Cases – Wall Street Journal, 11/24/20

  • Consumers’ views of the economic outlook soured in November as coronavirus cases soared across the country, according to survey data released Tuesday.
  • The Conference Board, a private research group, said its index of consumer confidence fell to 96.1 this month, from a revised 101.4 in October. Economists surveyed by The Wall Street Journal had expected a reading of 98.0.
  • Americans’ dimming view of the economy’s prospects in the months ahead drove the index’s decline, said Lynn Franco, senior director of economic indicators at the Conference Board.

U.S. Home-Price Growth Accelerated in September – Wall Street Journal, 11/24/20

  • Home-price growth accelerated in September, as a widespread shortage of homes for sale spurred competition among home buyers.
  • The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 7% in the year that ended in September, up from a 5.8% annual rate the prior month.
  • Sales of previously owned homes, which make up the bulk of the housing market, rose 9.4% in September from a month earlier to the highest level since 2006, according to the National Association of Realtors.
  • The Case-Shiller 10-city index gained 6.2% over the year ended in September, compared with a 4.9% increase in August.
  • The 20-city index rose 6.6%, after an annual gain of 5.3% in August.
  • A separate measure of home-price growth by the Federal Housing Finance Agency also released Tuesday found a 9.1% increase in home prices in September from a year earlier.

Trump Clears Way for Biden Transition Process to Begin After Weeks of Delay – Wall Street Journal, 11/23/20

  • President Trump said his administration would cooperate with President-elect Joe Biden’s transition to the White House, ending a delay that had come under increasing criticism from members of both parties as Mr. Trump’s long-shot effort to overturn the election foundered.
  • The General Services Administration chief Emily Murphy, who had been formally holding up the transition for more than two weeks citing uncertainty in the results, said Monday that her agency would provide Mr. Biden federal resources meant to assist in a smooth transfer of power.
  • Mr. Trump said he had instructed aides to cooperate with the transition approved by the GSA, though he pledged to continue his legal efforts to overturn the election result.

Biden Picks Janet Yellen for Treasury Secretary – Wall Street Journal, 11/23/20

  • President-elect Joe Biden plans to nominate former Federal Reserve Chairwoman Janet Yellen, an economist at the forefront of policy-making for three decades, to become the next Treasury secretary, according to people familiar with the decision.
  • Ms. Yellen, who was the first woman to lead the Fed, would become the first person to have headed the Treasury, the central bank and the White House Council of Economic Advisers.
  • Separately, Mr. Biden’s transition team said he would nominate Alejandro Mayorkas to lead the Department of Homeland Security and Avril Haines as director of national intelligence.
  • John Kerry, who was secretary of state under President Barack Obama, will serve as special presidential envoy for climate change.

EUROPE & WORLD

 

Novartis starts share buyback, highlights product pipeline – Reuters, 11/23/20

  • Novartis is initiating a previously announced share buyback worth up to $2.5 billion, it said here on Tuesday as it highlighted its research and development pipeline in an investor presentation.
  • The Swiss drugmaker also increased its target for a technical operations productivity program starting in 2021 to $2 billion from $1.5 billion and said it was committed to driving constant margin expansion.
  • Novartis said its product pipeline was set to fuel growth in the mid-to long-term.

Xiaomi’s profit jumps as smartphone shipments surge – Reuters, 11/24/20

  • Xiaomi on Tuesday reported a 19% jump in third-quarter net profit, beating estimates, as the Chinese smartphone maker’s shipments over the quarter surged by 45.3% on a year earlier.
  • Xiaomi’s smartphone revenue rose to 47.6 billion yuan, an increase of 47.5% in the same period, it said in a statement.
  • Overall, quarterly revenue rose to 72.1 billion yuan, up from 53.7 billion yuan.
  • The company became the third-biggest seller of handsets in the third quarter, shipping 47.1 million units with 45% growth, consultancy Canalys said.

Ryanair trims winter plans, sees full service in autumn 2021 – Reuters, 11/24/20

  • Recent COVID-19 lockdowns mean Ryanair will fly fewer passengers than planned this winter and Europe’s biggest low-cost airline doesn’t expect to return to pre-pandemic levels of service until next autumn, its chief executive said on Tuesday.
  • The Irish airline said earlier this month it expected to fly 38 million passengers in its financial year to March 31. That is now likely to fall to “the mid-30s”, Group CEO Michael O’Leary said in an interview.
  • In the following year, Ryanair could fly anywhere between 80 million and 130 million passengers, depending on how the roll-out of COVID-19 vaccines progress, he said.
  • O’Leary said the group expected to fly between 60% and 80% of last year’s capacity for much of next year, falling to 60-70% during the peak summer period.

Factmonster – TODAY in HISTORY

  • Darwin’s Origin of Species was published. (1859)
  • The National Rifle Association was incorporated. (1871)
  • Jack Ruby shot Lee Harvey Oswald, JFK’s accused assassin, in the garage of Dallas police headquarters. (1963)

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