Daily Market Report | Dec. 17, 2020

U.S. Stocks Rise to Records on Stimulus Bets – Wall Street Journal, 12/17/20

  • U.S. stocks rose to record levels Thursday as lawmakers closed in on a deal to extend a new financial lifeline to businesses and individuals that could support the economy through the coronavirus pandemic’s deadliest phase.
  • Congressional leaders on Wednesday closed in on a roughly $900 billion coronavirus relief deal that includes another round of direct payments to households.
  • The stimulus package under discussion in Washington was expected to include, along with direct checks, $300 a week in enhanced unemployment insurance and funding for vaccine distribution.
  • Congressional aides noted that the negotiations were continuing and no final agreement had been reached.
  • After months of gridlock, the emerging agreement represented a breakthrough at a critical time in the pandemic, with vaccine distribution under way but hospitalizations hitting record highs.
  • Time is tight. Lawmakers expect to attach the aid bill to a full-year spending bill needed to keep the government running after its current funding expires at 12:01 a.m. Saturday.
  • Labor-market data on Thursday added to evidence that the economy has hit a speed bump. Initial claims for unemployment benefits rose by 23,000 to 885,000 in the week ending Dec. 12, whereas economists were expecting a small decline.
  • In bonds, the yield on 10-year Treasury notes edged up to 0.926% from 0.920% Wednesday. The dollar extended its recent slide. The WSJ Dollar Index fell 0.4%, after dropping to its lowest level since April 2018 on Wednesday.
  • That decline came after the Federal Reserve said $120 billion a month in asset purchases will continue until substantial progress has been made toward its employment and inflation goals.

Covid-19 Live Updates: U.S. Sets Records for Newly Reported Infections, Deaths – Wall Street Journal, 12/17/20

  • A federal vaccine-advisory committee is expected today to recommend the Food and Drug Administration authorize a second Covid-19 vaccine for broad distribution in the U.S.
  • The arrival of a Covid-19 vaccine comes as the pandemic in the U.S. reaches new heights, with the virus widespread in many communities and the holiday season posing fresh challenges for containment.
  • The nation reported more than 247,000 new cases on Wednesday, according to data compiled by Johns Hopkins University, up from 198,357 a day earlier and surpassing the previous record of 233,133 reported for Friday.
  • The data include a surge of cases in California, which on Tuesday reported a record 41,081 infections in addition to a backlog of around 12,500 cases.
  • Johns Hopkins showed 63,817 cases for Wednesday in California, up from 33,249 Tuesday.
  • Subtracting the backlog, the overall number of infections reported for Wednesday in the U.S., according to Johns Hopkins, would be more than 234,000.
  • The U.S. also reported 3,656 deaths for Wednesday, according to Johns Hopkins data, surpassing a record 3,306 reported Friday.
  • It reported 3,019 deaths for Tuesday.
  • Hospitalizations were also at a record high, for the 11th day in a row, according to the Covid Tracking Project, which reported 113,090 people in hospitals across the country. That included another record of 21,936 in intensive care.
  • Italy’s government is debating a lockdown over the holiday period, something it promised Italians it would do its best to avoid.
  • Some ministers are pushing for the closure of stores, restaurants and bars for a few days around Christmas and again over New Year, as well as tight restrictions on nonessential movement.
  • Infections and deaths have peaked but are declining only slowly.
  • Italy recorded around 17,500 new infections on Wednesday and 680 deaths.
  • Currently, Italy allows stores, restaurants and bars to open within limited hours. Residents can move about, but must be home by 10 p.m.
  • Germany tightened its lockdown on Wednesday, closing all nonessential shops and schools, after failing to bring the virus under control.
  • The country recorded 26,923 new cases on Wednesday and 698 new deaths, according to the Robert Koch Institute for infectious diseases, putting it on course to register its third consecutive week of sharply increasing infections.
  • Case numbers continued to rise steeply in the U.K., with the government expected to announce on Thursday that more areas of England would be subject to the most severe regional restrictions
  • Cases in the U.K. rose 36.2% in the week to Wednesday compared with the week before, to a daily average of 20,923, while hospitalizations were up 17% to 1,662 a day. Deaths also turned upward with an average 422 a day, up 2.4% on the previous week.
  • French President Emmanuel Macron tested positive for Covid-19, his office said Thursday, delivering a blow to a country that has been among Europe’s hardest hit by the pandemic.

Pet food, baking product sales drive General Mills profit beat – Reuters, 12/17/20

  • General Mills beat second-quarter profit estimates on Thursday, boosted by sales of its pet foods and baking products, and said it expects the demand trend to continue at the same levels it has seen over the past few months.
  • Overall, net sales climbed nearly 7% to $4.72 billion in the quarter ended Nov. 29, beating market estimate of $4.65 billion, according to Refinitiv IBES.
  • People also spent more on their pets, driving sales in General Mills’ pet segment up 18% in the quarter, in part due to increased distribution and media investments around brands such as BLUE.
  • Asian and Latin American markets were also robust, the company said, with organic net sales growing 10% on the back of strong demand of its Wanchai Ferry dumplings in China and Häagen-Dazs retail ice cream.
  • Excluding items, General Mills earned $1.06 per share, beating analysts’ expectation of 97 cents.
  • The Minneapolis-based company expects third-quarter organic sales to be up roughly 7%, similar to growth it witnessed in the second quarter.
  • The company also said it expects full-year fiscal 2021 adjusted operating margins to be in line or better than year-ago levels.

Lennar beats quarterly profit estimates on housing market strength – Reuters, 12/17/20

  • Homebuilder Lennar beat quarterly profit and revenue estimates on Wednesday, as it reined in construction costs and benefited from a strong U.S. housing market.
  • Revenue fell to $6.83 billion in the fourth quarter ended Nov. 30, from $6.97 billion a year earlier.
  • Analysts were expecting revenue of $6.65 billion.
  • Net earnings attributable to the company rose to $882.8 million, or $2.82 per share, from $674.3 million, or $2.13 per share, a year earlier. Analysts had expected earnings of $2.37 per share.
  • The company forecast first-quarter delivery of 12,200 to 12,500 homes, above analysts’ estimates of 11,592, according to IBES data from Refinitiv.

Accenture forecasts upbeat full-year revenue – Reuters, 12/17/20

  • Consulting and outsourcing services provider Accenture raised its full-year sales forecast and beat quarterly revenue estimates on Thursday, as an extended work-from-home period boosted its digital, cloud and security services.
  • Total revenue rose to $11.76 billion in the first quarter ended Nov. 30 from $11.36 billion a year earlier, beating analysts’’ estimate of $11.36 billion, according to IBES data from Refinitiv.
  • Accenture expects second-quarter revenue to be between $11.55 billion and $11.95 billion, above Wall Street estimates of $11.35 billion.
  • The company forecast fiscal year 2021 revenue growth between 4% and 6%, above its previous estimate of growth between 2% and 5%.

Ten States Sue Google, Alleging Deal with Facebook to Rig Online Ad Market – Wall Street Journal, 12/17/20

  • Ten states sued Google Wednesday, accusing the search giant of running an illegal digital-advertising monopoly and enlisting rival Facebook in an alleged deal to rig ad auctions that was code-named after “Star Wars” characters.
  • The complaint, filed in U.S. District Court in Texas, alleges that Facebook emerged in 2017 as a powerful new rival to Google, challenging the Alphabet unit’s established dominance in online advertising.
  • Google responded by initiating an agreement in which Facebook would curtail its competitive moves, in return for guaranteed special treatment in Google-run ad auctions, the lawsuit claims.
  • Google’s internal code name for the alleged Facebook deal referenced characters from Star Wars, according to the suit, which redacted specifics. A person familiar with the matter said the code name was “Jedi Blue,” after the sci-fi franchise’s Jedi knights.
  • Nine other attorneys general, all Republicans like Mr. Paxton, joined the lawsuit. Noticeably absent were Democrats who had initially joined Texas in launching a bipartisan state investigation of Google last fall, though it is possible more states could join the suit later.
  • A separate, bipartisan group of state attorneys general is preparing another antitrust case against Google, which is expected to target its search business and could filed as soon as Thursday.

Facebook Wades Into ‘Fortnite’ Maker’s Dispute with Apple – Wall Street Journal, 12/17/20

  • Facebook said it would assist the company behind the popular videogame “Fortnite” in its high-profile legal battle with Apple, as the social-media giant ramps up its own counterattack against what it says are the iPhone maker’s self-serving measures cloaked in the interest of privacy.
  • As part of a pledge to assist challenges to what it called Apple’s anticompetitive behavior, Facebook plans to provide supporting materials and documents to Epic Games.
  • The “Fortnite” parent sued Apple this year, claiming the tech giant’s App Store operates like a monopoly.
  • Facebook said it isn’t joining the lawsuit but helping with discovery as the case heads to trial next year.
  • Apple has said starting early next year its iOS 14 operating system will give iPhone and iPad users the option to no longer share personal information that many developers rely on to tailor ads. When users open an app, they will see a message asking permission to track what other apps and websites they visit, their location and other behaviors.

Google wins EU antitrust nod for $2.1 billion Fitbit deal – Reuters, 12/17/20

  • Alphabet’s Google won EU antitrust approval on Thursday for its $2.1 billion bid for Fitbit after agreeing restrictions on how it will use customers’ health related data.
  • The deal had triggered criticism from privacy advocates on both sides of the Atlantic, consumer organizations and Google rivals about the company’s market power and the use of people’s health data in targeted advertising.
  • The European Commission said it had agreed concessions with Google, valid for 10 years with the possibility of another 10-year extension, addressing competition concerns, confirming a Reuters story in October.
  • Google will store Fitbit user data separately from Google data used for advertising, and will not use data from Fitbit and other wearable devices for Google Ads. Users can decide whether to store their health data in their Google or Fitbit account.

Wells Fargo extends work from home until at least March 1 – Reuters, 12/17/20

  • Wells Fargo & Co has extended the ability to work from home for employees until at least March 1 amid the ongoing coronavirus outbreak, a spokeswoman for the bank said on Wednesday.
  • “Through at least March 1, we will continue with our current operating model, which includes about 200,000 employees working from home and maintaining safety measures in locations that remain open”, the spokeswoman said in an emailed statement.
  • The statement added that it was not known when the bank would return to a more “traditional operating model” and that it would give employees “sufficient notice” before any changes.

Robinhood Financial to Pay $65 Million to Settle SEC Probe – Wall Street Journal, 12/17/20

  • Robinhood Financial has agreed to pay $65 million to settle regulatory claims that it didn’t sufficiently disclose its business deals with high-speed trading firms, the Securities and Exchange Commission said Thursday.
  • The deal resolves an SEC investigation that looked at Robinhood’s failure until 2018 to reveal on its website how it makes money from its deals with speedy trading firms such as Citadel Securities and Virtu Financial.
  • The practice, known as payment for order flow, can create a conflict of interest for brokers like Robinhood because of the incentive to send orders to the highest bidder.
  • However, Robinhood’s customers got prices “that were inferior to other brokers’ prices,” the SEC said in a press release. The firm nonetheless claimed on its website from 2018 to 2019 that its order-execution quality was as good or better than its rivals’, the SEC said.

Exclusive-Canada regulator to approve Boeing 737 MAX design change as soon as Thursday -sources – Reuters, 12/17/20

  • Transport Canada is set to announce approval of design changes to Boeing’s 737 MAX as early as Thursday, in a first step toward bringing the aircraft back to the country’s skies after a near two-year flight ban, two sources familiar with the matter said.
  • The Canadian regulator, however, is not expected to issue an immediate airworthiness directive, which is needed to help clear the way for the lifting of the ban on commercial flights.
  • Transport Canada’s move would follow earlier announcements by the European Union Aviation Safety Agency (EASA) along with Boeing’s main regulator, the U.S. Federal Aviation Administration (FAA), which lifted its own ban on Nov. 18.


U.S. Unemployment Claims Remain Elevated as Recovery Slows – Wall Street Journal, 12/17/20

  • The number of workers seeking unemployment benefits increased to a three-month high, another sign the economy is entering a winter slowdown as coronavirus cases rise and trigger new business restrictions.
  • Initial jobless claims in regular state programs rose by 23,000 to 885,000 in the week ended Dec. 12, Labor Department data showed Thursday. On an unadjusted basis, the figure fell by about 21,000.
  • Continuing claims, a proxy for the number of people collecting unemployment benefits through regular state programs, fell to 5.5 million in the week ended Dec. 5, from 5.8 million a week earlier, on a seasonally adjusted basis, according to the Labor Department.
  • Continuing claims declined throughout the summer and into the fall, a sign many laid-off workers returned to jobs.
  • Many individuals, though, are experiencing long spells of unemployment. About 4.8 million people who had exhausted state benefits were receiving aid through a federal extended-benefits program in the week ended Nov. 28, up from 4.5 million a week earlier.

U.S. housing starts, building permits power ahead in November – Reuters, 12/17/20

  • U.S. homebuilding and permits increased solidly in November, pointing to sustained housing market strength even as the broader economic recovery is slowing amid a resurgence in new COVID-19 cases and lack of additional government money.
  • Housing starts rose 1.2% to a seasonally adjusted annual rate of 1.547 million units last month, the Commerce Department said on Thursday. Homebuilding surged 12.8% on a year-on-year basis.
  • Single-family homebuilding, the largest share of the housing market, rose 0.4% to a seasonally adjusted annual rate of 1.186 million units, the highest level since April 2007.
  • Starts for the volatile multi-family segment accelerated 4.0% to a pace of 361,000 units.
  • Permits for future homebuilding raced 6.2% to a rate of 1.639 million units in November. Permits typically lead starts by one to two months.
  • Single-family building permits jumped 1.3% to a rate of 1.143 million units in November.
  • Building permits for multi-family housing projects soared 19.2% to a rate of 496,000 units.

U.S. business inventories increase solidly in October – Reuters, 12/16/20

  • U.S. business inventories increased solidly in October, suggesting inventory investment could help to keep the economy on a moderate growth path in the fourth quarter amid a resurgence in COVID-19 cases and lack of more fiscal stimulus.
  • Business inventories rose 0.7% in October after increasing 0.8% in September, the Commerce Department said on Wednesday.
  • They were down 4.0% on a year-on-year basis in October.
  • Retail inventories rose 0.9% in October instead of 0.8% as estimated in an advance report published last month.
  • That followed a 1.6% jump in September.
  • Business sales increased 0.9% in October, matching September’s rise.
  • At October’s sales pace, it would take 1.31 months for businesses to clear shelves, down from 1.32 months in September.

Lawmakers Race to Finish $900 Billion Covid-19 Aid Package – Wall Street Journal, 12/17/20

  • Lawmakers face a rapidly approaching deadline to wrap up negotiations on another coronavirus relief bill, racing Thursday to complete the details of the roughly $900 billion package and pass it through Congress before the end of the week.
  • Top Republicans and Democrats are closing in on a relief package that would send another direct check to many Americans, enhance unemployment benefits, provide aid to small businesses and fund the distribution of the Covid-19 vaccine, among other measures.
  • As of Wednesday, lawmakers were still discussing the duration of a $300 weekly boost to unemployment benefits and whether to include $90 billion in emergency aid for the Federal Emergency Management Agency, according to people familiar with the talks.
  • Senate Majority Whip John Thune (R., S.D.) said Wednesday that the package will include a direct check that will likely be worth $600 to $700, a decrease from the $1,200 check sent to many Americans earlier this year.

Fed Reinforces Plans to Provide Open-Ended Stimulus to Spur Recovery – Wall Street Journal, 12/17/20

  • Federal Reserve officials put the final touches Wednesday on a months long effort to clarify their plans to support the economy for longer than they have following prior downturns, concluding one of the most active years in the central bank’s history.
  • On Wednesday, officials updated their formal guidance around how long those purchases would continue, complementing an earlier pledge in September that set a higher bar to raise interest rates.
  • The Fed has been buying $80 billion in Treasuries and $40 billion in mortgage bonds a month since June while pledging to maintain those purchases “over coming months.”
  • On Wednesday, the central bank stated those purchases would continue “until substantial further progress has been made” toward broader employment and inflation goals.
  • Officials don’t expect to reach those goals for years, according to projections they released Wednesday.


Top Pentagon General Meets with Taliban to Prod Afghan Peace Talks – Wall Street Journal, 12/17/20

  • The Pentagon’s top officer met with Taliban officials in Qatar this week as part of an unprecedented effort to spur stalled peace talks that could help end the nearly 20-year-old conflict in Afghanistan.
  • Army Gen. Mark Milley, chairman of the Joint Chiefs of Staff, met with members of the Taliban in Doha on Tuesday in hopes of persuading the group to stop fighting and move quickly toward a peace accord with the government of Afghanistan.
  • The visits took place as the U.S. is scrambling to reduce the number of American troops in Afghanistan from about 4,500 to 2,500 by mid-January, under an order by President Trump.

Samsung works its way into European 5G race to fill Huawei gap – Reuters, 12/17/20

  • European mobile operators are starting to consider Samsung Electronics, long seen as a non-starter, in the race to replace China’s Huawei as the supplier of their fledgling 5G systems, although early talks suggest it will still be an uphill struggle.
  • After Samsung unexpectedly landed a $6 billion deal with U.S. giant Verizon in September, Spain’s Telefonica and France’s Orange have both held talks with the South Korean firm, company executives say.
  • Huawei’s hardware makes up nearly half of the European 4G network that will form the foundation for super-fast 5G, alongside that of Nokia and Ericsson.

Factmonster – TODAY in HISTORY

  • France recognized American independence. (1777)
  • Orville and Wilbur Wright made the first flight in a heavier-than-air plane at Kitty Hawk, N.C. (1903)
  • The U.S. Army announced the end of its policy of holding Japanese-Americans in internment camps, allowing “evacuees” to return home. (1944)
  • The U.S. Air Force ended its “Project Blue Book” and concluded that there was no evidence of extraterrestrial activity behind UFO sightings. (1969)

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