Daily Market Report | Dec. 01, 2020

US FINANCIAL MARKET

Stocks Rise, Putting S&P 500 On Course for Fresh Record – Wall Street Journal, 12/1/20

  • U.S. stocks rose Tuesday, putting the S&P 500 on course for a fresh record, as the optimism behind the November market rally extended into a new month.
  • Investors’ sentiment has been buoyed in recent weeks by the development of Covid-19 vaccines, which could curtail infection levels and let social and business activity return to pre-pandemic levels.
  • Pfizer partner BioNTech and U.S. drugmaker Moderna have applied for their coronavirus vaccines to be approved in the European Union, the EU’s chief medicines regulator said Tuesday.
  • All 11 S&P 500 sectors rose Tuesday, led by economically-sensitive groups like energy and financials.
  • Shares in Zoom Video Communications dropped 11%.
  • The videoconferencing company on Monday signaled that higher sales in recent months have come with higher costs, disappointing investors.

Coronavirus Live Updates: Newly Reported U.S. Cases Climb After Dip – Wall Street Journal, 12/1/20

  • The number of people hospitalized with Covid-19 in the U.S. set yet another record, with patients in the ICU also hitting a fresh high, according to the Covid Tracking Project, as the fall surge continues to strain healthcare systems across the country.
  • Newly reported cases, off earlier highs after the Thanksgiving holiday disrupted data reporting, climbed higher to 157,901, according to data compiled by Johns Hopkins University,
  • On Tuesday, a panel of vaccine experts advising the U.S. government is expected to recommend who should get initial limited supplies of Covid-19 vaccines.
  • The Food and Drug Administration is weighing authorizing use of vaccines developed by Moderna and by Pfizer and partner BioNTech. The drugmakers, meanwhile, applied for their coronavirus vaccines to be approved in the European Union.

Zoom’s margins dented by booming free user base, cloud costs – Wall Street Journal, 12/1/20

  • Zoom Video Communications posted another quarter of record sales and again lifted its outlook as remote working and distance schooling drags on during the pandemic, but the growth has come with higher costs that disappointed investors.
  • The company reported sales of $777.2 million in the latest quarter, up from $166.6 million a year earlier, as it posted a profit of $198.4 million.
  • Analysts surveyed by FactSet had expected sales of $694 million and net income of $149 million for the three months ended October 31.
  • Gross margin for the quarter fell to 67%, down from 71% in the prior three-month period, as the company spent heavily on cloud-computing service to facilitate all its users.
  • It said it now has 433,700 customers with more than 10 employees, up almost six times from the previous year’s figure.
  • The number of its most lucrative customers, those paying more than $100,000 a year, has more than doubled from the year before.
  • The company said it expects sales in the current quarter of $806 million to $811 million and adjusted per-share earnings of 77 cents to 79 cents. Wall Street is forecasting adjusted earnings per share of 62 cents for the quarter on sales of $728 million.
  • Zoom said it now expects sales in the current financial year ending in January to reach around $2.58 billion, up from the previous quarter’s guidance of sales reaching as much as $2.39 billion.

UnitedHealth’s 2021 profit forecast misses estimates on virus hit – Reuters, 12/1/20

  • UnitedHealth Group on Tuesday forecast 2021 adjusted profit below Wall Street estimates, hit by the COVID-19 pandemic and uncertainties related to it.
  • Health insurers benefited in the first few quarters of this year as people delayed non-urgent surgeries due to the pandemic, but that is likely to change as deferred surgeries pick up pace.
  • UnitedHealth, however, expects 2021 revenue to be in the range of $277 billion to $280 billion, in-line with analysts’ expectations of $278.53 billion, according to data from Refinitiv IBES.
  • The industry bellwether expects 2021 adjusted net earnings of $17.75 to $18.25 per share, compared with analysts’ average estimate of $18.33 per share, according to IBES data from Refinitiv.
  • The company said its forecast assumes a $1.80 per share hit due to treatment and testing costs related to COVID-19.

Exxon Slashes Spending, Writes Down Assets – Wall Street Journal, 12/1/20

  • Exxon Mobil is retreating from a plan to increase spending to boost its oil and gas production by 2025 and preparing to slash the book value of its assets by up to $20 billion, as the struggling company reassesses its next decade.
  • The Texas oil giant, which has lost more than $2.3 billion over the first three quarters of this year after the coronavirus wreaked havoc on fossil-fuel demand, released a reduced spending outlook Monday for the next five years.
  • It now plans to spend $19 billion or less next year and $20 billion to $25 billion a year between 2022 and 2025.
  • It had previously planned to spend more than $30 billion a year in capital expenditures through 2025.
  • Exxon also said it would stop investing in certain natural-gas assets and telegraphed a massive write-down of between $17 billion and $20 billion to come in the fourth quarter.
  • Exxon cut its expectations for future oil prices for each of the next seven years by 11% to 17% as part of a financial-planning process conducted this fall, The Wall Street Journal reported last week, citing internal documents.

Online sales reach $10.8 billion on Cyber Monday, the biggest U.S. e-commerce day ever, Adobe says – CNBC, 12/1/20

  • Holiday shoppers went online Monday and spent $10.8 billion, setting a record for the largest U.S. online shopping day ever, according to Adobe Analytics data.
  • Cyber Monday spending rose 15.1% year over year, according to Adobe, which analyzes website transactions from 80 of the top 100 U.S. online retailers. That came in short of Adobe’s original forecast of $12.7 billion.
  • Adobe cut its online sales forecast for the entire holiday season to $184 billion, which is a 30% increase from last year.
  • It originally estimated online sales of $189 billion.
  • Thanksgiving Day and Black Friday also set records for online shopping, according to Adobe.
  • Online spending rose nearly 22% year over year to $5.1 billion on Thanksgiving Day.
  • On Black Friday, online spending jumped by about the same amount to a total of $9 billion.

Google, Facebook and Amazon Gain as Coronavirus Reshapes Ad Spending – Wall Street Journal, 12/1/20

  • For the first time, more than half of U.S. advertising spending is set to go to digital platforms such as Google and Facebook, the world’s largest ad buyer said, a reflection of marketers’ strategy shift as the pandemic pummeled the industry this year.
  • GroupM expects marketers to spend $110.1 billion on digital ads this year, or 51% of the total $214.6 billion total U.S. advertising-spending forecast, excluding political ad outlays.
  • Next year, it expects U.S. ad spending to grow 12% to $240 billion, and digital advertising to account for $130 billion, or 54% of the total.
  • Three years ago, digital advertising accounted for just one-third of all U.S. ad spending, GroupM said—about the same size as newspapers, radio, magazines and local TV combined.
  • As of 2020, these four categories’ combined share of the U.S. advertising market has shrunk to 21%.
  • Digital advertising is dominated by three competitors—Facebook, Amazon.com and Alphabet’s Google—which together account for nearly two-thirds of ad dollars spent on U.S. digital advertising this year, according to research company eMarketer.

Amazon Makes Mac Commitment, Opening Door to Apple Developers – Wall Street Journal, 12/1/20

  • Tech giants Amazon.com and Apple are joining forces to support the growing number of companies developing apps and other software for Apple devices.
  • Under the agreement disclosed Monday, Amazon is making Apple computers available through Amazon Web Services, its cloud-computing business—enabling Apple developers to make and fully test apps remotely, rather than having to buy and maintain their own versions of the machines.
  • Initially, the Apple computers in Amazon’s data centers will be a version of the Mac Mini that has been available for some time, but David Brown, an AWS vice president, said the hardware will be updated as Apple launches new equipment.
  • In November, Apple unveiled a Mac Mini powered by a chip it designed, called the M1, supplanting Intel chips.
  • Mr. Brown said Amazon aims to install M1-based Macs early next year.

Global Economy Faces Hard Winter Despite Covid-19 Vaccine Hopes – Wall Street Journal, 12/1/20

  • Government restrictions and consumers’ fear of infection will continue to weigh on the global economy well into next year, even as vaccine developments offer hope of an end to the pandemic, the Organization for Economic Cooperation and Development said Tuesday.
  • The group cut its growth forecasts for most leading economies, citing a recent surge in infections across the Northern Hemisphere that had prompted new restrictions on households and businesses and caution among consumers.
  • It now expects the global economy to grow by 4.2% in 2021, having contracted by the same degree this year.
  • In September, when it last released quarterly forecasts, it expected the economy to grow by 5% next year.
  • The OECD cut its forecast for economic growth in 2021 in the U.S. to 3.2% from 4%, and its forecasts for the eurozone to 3.6% from 5.1%. It left its growth forecast for China at 8%.
  • U.S. output is expected to recover to its pre-pandemic level by that time, but the eurozone’s output is projected to be 3% lower, and the U.K.’s 6.4% down on the final quarter of last year.
  • The OECD said the world outlook remained highly uncertain. A more rapid deployment of effective vaccines could boost global growth to 5% in 2021 and 5.5% in 2022, while a slower deployment would weaken the expansion to 1.45% next year and 2.2% in 2022.

US ECONOMY & POLITICS

Lawmakers unveil bipartisan $900 billion coronavirus stimulus package as stalemate drags on – CNBC, 12/1/20

  • Bipartisan lawmakers unveiled a coronavirus stimulus package Tuesday after months of congressional inaction on curbing the economic damage from the outbreak.
  • The roughly $908 billion proposal includes $288 billion in Paycheck Protection Program small business loans, $160 billion in state and local government aid and funding for enhanced unemployment benefits, according to a draft framework.
  • It would put $16 billion into vaccine distribution, testing and contact tracing, and put funds into rental assistance, child care and broadband.
  • It is unclear whether congressional leaders will embrace the proposal or if it will lead to a breakthrough before the end of the year, when many programs expire.
  • Democrats have opposed liability protections and pushed for a $600 per week supplemental jobless benefit, while the GOP has pushed against new state and local aid.
  • Leaders of the Democratic-held House and GOP-controlled Senate have not held formal talks on stimulus since the 2020 election on Nov. 3.

EUROPE & WORLD

NATO Should Expand Its Focus to Include China, Report Says – Wall Street Journal, 12/1/20

  • The North Atlantic Treaty Organization should devote much more of its time and resources to security threats posed by China even while seeking to deter Russian aggression, a high-level assessment of the alliance’s future says in a report to be made public Tuesday.
  • The report will be discussed by NATO foreign ministers, who are convening Tuesday and Wednesday by videoconference and will for the first time address the rise of China with colleagues from non-NATO member countries, including Australia and Japan.
  • “China does not share our values,” Mr. Stoltenberg told reporters Monday. “It does not respect fundamental human rights and tries to intimidate other countries.”

Samsung may discontinue high-end Galaxy Note smartphones – sources – Reuters, 11/30/20

  • Samsung Electronics may discontinue its premium Galaxy Note phone next year, sources with knowledge of the matter said, a move that would reflect the sharp drop in demand for high-end smartphones due to the coronavirus pandemic.
  • At present, the South Korean tech giant does not have plans to develop a new version of the Galaxy Note for 2021, three sources said, declining to be identified as the plans were not public.
  • Instead, the Galaxy S series’ top model, the S21, will have a stylus and the next version of Samsung’s foldable phone will be compatible with a stylus, which will be sold separately, one of the sources said.
  • A second source said company development efforts that normally would have been directed to the Note would now be channeled into its foldable phone range.

Factmonster – TODAY in HISTORY

  • The presidential election between John Q. Adams, Andrew Jackson, William Crawford, and Henry Clay was turned over to the House of Representatives due to the lack of an electoral-vote majority. (1824)
  • Exxon and Mobil agreed to merge, creating the world’s largest corporation. (1998)

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