US FINANCIAL MARKET

Stocks Pause After Dow’s 30000 Milestone – Wall Street Journal, 11/25/20

• U.S. stocks wavered a day after the Dow Jones Industrial Average breached 30000 points for the first time, and as investors looked ahead to a packed day of economic data.
• Stocks have been boosted in recent days by hopes that vaccines for Covid-19 could soon become widely available.
• The easing of concerns around the presidential transition have also boosted investor sentiment.
• Plus, President-elect Joe Biden’s pick of former Federal Reserve head Janet Yellen for Treasury secretary has increased hopes of sizable stimulus measures.
• Countering that optimism are concerns that the coronavirus pandemic continues to threaten households and raises the prospect of further restrictions.
• As of Tuesday, there were 88,080 hospitalized patients in the U.S., a record high for a 15th consecutive day, according to the Covid Tracking Project.
• Weekly figures from the Labor Department showed jobless claims rose for a second consecutive week, a sign that resurging Covid-19 cases are taking a toll on the labor market. Meanwhile, durable goods orders rose by more than forecast.
• Minutes from the Federal Reserve’s last monetary policy meeting earlier this month are also due at 2 p.m.

Coronavirus Live Updates: U.S. Hospitalizations Surpass 88,000 – Wall Street Journal, 11/25/20

• The U.S. reported nearly 173,000 new coronavirus cases as hospitalizations across the country hit another high.
• The number of people hospitalized in the U.S. because of Covid-19 hit a record for the 15th straight day. More than 88,000 people were hospitalized as of Tuesday, according to the Covid Tracking Project.
• The number of people requiring treatment in intensive-care units also reached a record of more than 17,100.
• California reported a record number of new infections for Tuesday, with nearly 17,000, while Nevada hit a record of more than 2,800 and Arizona recorded its third-highest daily total since the health crisis began.
• In response to a concerning rise in new infections and hospitalizations, California officials announced last week that a curfew would be in effect in counties that were in the purple tier, the worst of the state’s four-tier system. Forty-one of California’s 58 counties, representing over 90% of the state’s population, were categorized in the most restrictive tier as of Tuesday.
• The U.S. reported more than 2,000 new deaths for Tuesday, bringing the total close to 260,000.
• In France, new infections were down sharply as the government prepares to reopen parts of the economy in time for Christmas shopping.
• The seven-day average of new daily infections in the country fell to 16,723 on Tuesday, compared with 21,918 a day earlier.
• German Chancellor Angela Merkel and the country’s state premiers will hold a videoconference on Wednesday to discuss extending and possibly tightening a monthlong lockdown that has so far failed to reduce the number of infections.
• Germany recorded 18,633 new infections on Tuesday, according to the Robert Koch Institute for infectious diseases, up more than 1,000 from a week ago. There were 410 deaths linked to Covid-19, the highest daily number so far in the pandemic.
• In light of such numbers, the government will likely extend the lockdown, which has shuttered bars, restaurants and large entertainment venues but left all shops and workplaces open, until Dec. 20 and further limit the number of people allowed to meet inside, according to draft conclusions seen by The Wall Street Journal.
• England’s national lockdown ends Dec. 2, when the country will move into restrictive measures that will differ from region to region, depending on the severity of the outbreak in that area.
• U.K. case numbers continue to fall. An average daily 18,295 new cases were recorded in the week until Tuesday, down 27.6% on the week before. Daily hospitalizations were down 5.5% in the same period to 1,654, though daily Covid-related deaths—which lag two weeks or more behind new infections—continued to rise, averaging 442 a day, up 4% on a week earlier.
• In Italy, daily recorded deaths from Covid-19 reached 853 on Tuesday, the highest daily toll so far in the pandemic’s second wave. But new recorded infections, at 23,232 on Tuesday, continued to decline, raising hopes that deaths too will start to fall by early December.

Gap Reports Flat Quarterly Sales as Holiday Shopping Gets Under Way – Wall Street Journal, 11/25/20

• Gap’s quarterly sales rebounded from spring shutdowns but increased marketing weighed on profits. Executives cautioned that rising Covid-19 infections could slow visits to stores during the critical holiday shopping period.
• The company’s revenue was unchanged from a year ago at $3.99 billion for the quarter that ended Oct. 31.
• That was an improvement from the previous two quarters.
• Sales declined 20% at physical stores but rose 61% online.
• Comparable sales, which typically measure stores open at least a year, fell 5% at the Gap brand and declined 30% at Banana Republic. The measure increased 17% at Old Navy and jumped 37% at Athleta, the biggest increase in the brand’s history.
• The company behind the Gap, Old Navy, Banana Republic and Athleta brands said Tuesday sales for its fourth quarter, which includes the holiday stretch, will be flat or slightly higher than the year earlier.

Nordstrom tops earnings expectations, sees boost in online sales – Reuters, 11/25/20

• Nordstrom said on Tuesday a 37% surge in online sales helped the upscale department store top analysts’ earnings expectations and boost confidence about its holiday performance despite a more competitive, promotional playing field.
• The company’s net sales fell to about $3 billion in the third quarter ended Oct. 31, from $3.57 billion last year.
• With digital accounting for 54% of total sales, “We are a majority digital business right now,” Nordstrom said.
• Net earnings more than halved to $53 million, or 34 cents per share, while analysts on average were expecting a loss of 6 cents per share, according to IBES data from Refinitiv.
• On a conference call with analysts, however, company executives said they expect a percentage decline in fourth-quarter net sales in the low 20s range versus market estimates of a decline of about 11%. The company also expects shipping charges and premium holiday pay to hurt earnings.

American Eagle posts 3% quarterly sales decline on pandemic hit – Reuters, 11/25/20

• American Eagle Outfitters reported an about 3% fall in third-quarter revenue on Tuesday, as store traffic slumped due to the COVID-19 pandemic.
• Total revenue fell to $1.03 billion, from $1.07 billion a year earlier.
• Revenue at the American Eagle label fell 11% during the quarter ended Oct. 31, while the Aerie brand recorded a revenue jump of 34%.
• Net income attributable to the company fell to $58.1 million, or 32 cents per share, from $80.76 million, or 48 cents per share.

Dell sees sales above estimates on booming demand for remote-work tools – Reuters, 11/25/20

• Dell Technologies forecast current-quarter sales above market expectations as a pandemic-driven shift to remote work and learning powered demand for its desktops and notebooks, helping it post a surprise rise in third-quarter revenue.
• Total revenue rose nearly 3% to $23.48 billion in the three months ended Oct. 30, while analysts had estimated a drop of 4.4% to $21.85 billion, according to IBES data from Refinitiv.
• Sales at VMware rose about 8% to $2.89 billion. Dell plans to spin off its 81% stake in the software unit to help reduce debt.
• While the health crisis lifted demand for Dell’s remote workstation products, the company’s data center business remained under pressure, with revenue from the unit falling about 4% to $8.02 billion in the quarter.
• Net income attributable to the company rose to $832 million, from $499 million a year earlier.
• The company said, on an earnings call with analysts on Tuesday, that it expects fourth-quarter revenue to rise 3% to 4% sequentially, implying a range between $24.18 billion and $24.42 billion, compared with analysts’ expectation of $23.09 billion.

Deere Expects More Machinery Sales as Crop Prices Rise – Wall Street Journal, 11/25/20

• Deere raised expectations for profits next year, anticipating that higher crop prices will lead to improving demand from U.S. farmers for its tractors and harvesting combines.
• Net equipment sales, including Deere’s construction and forestry machinery, were $8.65 billion.
• Analysts were expecting earnings of $1.49 a share and $7.56 billion of equipment sales, according to FactSet.
• The Moline, Ill.-based maker of tractors reported a 5% increase in profit for its latest quarter, despite a 1% decline in equipment sales compared with the same period last year.
• The company reported net income of $757 million for the quarter, or $2.39 a share, compared with $722 million, $2.27 a share, during the same period last year.
• For Deere, the result is a better outlook for demand from farmers for its green-and-yellow machinery.
• Deere said Wednesday that it expects net income next year in a range of $3.6 billion to $4 billion.
• It earned $2.75 billion in fiscal 2020, which ended Nov. 1.
• Analysts were expecting the company to forecast income of $3.36 billion for 2021.

Exxon Documents Reveal More Pessimistic Outlook for Oil Prices – Wall Street Journal, 11/25/20

• Exxon Mobil has lowered its outlook on oil prices for much of the next decade, according to internal company documents reviewed by The Wall Street Journal.
• As part of an internal financial-planning process conducted this fall, Exxon cut its expectations for future oil prices for each of the next seven years by 11% to 17%, according to the documents.
• In 2019, Exxon had internally forecast that Brent oil prices, the global benchmark, would average around $62 a barrel for the next five years before increasing to $72 a barrel in 2026 and 2027, the documents state.
• This summer, the company lowered that forecast to between $50 and $55 a barrel for the next five years, before eventually topping out at $60 a barrel in 2026 and 2027, according to the documents, which were dated September.

California regulator flags concerns over PG&E’s wildfire safety measures – Reuters, 11/25/20

• The California Public Utilities Commission (CPUC) has raised concerns over certain deficiencies that it says could affect PG&E Corp’s ability to provide safe and reliable service, the power provider disclosed in a regulatory filing on Wednesday.
• The regulator, in a letter bit.ly/37007E8 to PG&E dated Tuesday, said it will require remediation on specific issues identified in the San Francisco-based utility’s wildfire mitigation plan progress reports.
• The regulator said its staff had “identified a volume and rate of defects in PG&E’s vegetation management that is notably higher than those observed for the other utilities.”

The Stock Market Keeps Rising, but Millennials Aren’t Reaping the Benefits – Wall Street Journal, 11/25/20

• Many millennials, having suffered through two nasty bear markets in the first years of their working lives, are missing out on some of the gains from the rally that brought the Dow Jones Industrial Average to 30,000.
• About half of millennials—generally defined as people born from about 1981 until 1996, sometimes called Generation Y—are invested in the stock market, roughly the same ratio as members of Generation X were at the same age, according to the Federal Reserve Bank of St. Louis.
• The difference is that the value of their holdings is nearly a third lower than their counterparts at the same age, according to the St. Louis Fed.
• Stock ownership was more common between 2001 and 2008, when 62% of U.S. adults said they owned stock, on average.
• As of June 2020, only 55% of Americans said the same.
• The Federal Reserve’s data show that the top 1% of income earners and the bottom 60% each owned about 20% of total household wealth when the stock market bottomed out in the first quarter of 2009.
• By the second quarter of 2020, the top 1% of income earners owned about 25% of household wealth, versus 15% for the bottom 60% of earners.