January 23, 2021

Market and Financial News Aggregator

Stocks Set to Complete Strongest Monthly Rally Since April: Live Updates

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Credit…Robyn Beck/Agence France-Presse — Getty Images
  • The S&P 500 is about to complete its strongest month since April, propelled by the promise of several effective coronavirus vaccines that could bolster the economic recovery next year. But on Monday, U.S. stocks were set to open slightly lower, the first full day of trading since Wednesday after the Thanksgiving break.

  • Shares of Moderna surged in premarket trading after the drug maker said it would ask the Food and Drug Administration on Monday to authorize its coronavirus vaccine for emergency use, and that the first injections could begin by Dec. 21.

  • European indexes were lackluster and Asian stocks fell. The Stoxx Europe 600 index was little changed; energy stocks declined the most, but were offset by gains among health care companies. Britain’s FTSE 100 index rose 0.3 percent, the DAX in Germany rose 0.3 percent and the CAC in France fell 0.1 percent. The Nikkei 225 in Japan fell 0.8 percent and the Kospi in South Korea lost 1.6 percent.

  • The S&P 500 has gained more than 11 percent over the past month after Joseph R. Biden Jr. won the U.S. presidential election. He is expected to install former Federal Reserve chair Janet Yellen to be Treasury secretary, raising the prospects of more fiscal stimulus. Investors also predicted that an expected split Congress, with the Republican Party keeping control of the Senate, would hold off major tax hikes and regulation that would dampen the returns on their investments.

  • Oil prices fell on Monday as OPEC, a cartel of some of the world’s largest oil exporters, begins two days of teleconferences to discuss with Russia whether they should go ahead with a planned increase in production in January or maintain the current level of output restraints. Lockdowns have been decreasing demand for oil.

  • Analysts at Goldman Sachs suggested in a recent note that increasing oil output could lead prices to fall by $5 a barrel. On Monday, Brent futures, the European benchmark, fell 2 percent to $47.19 a barrel. West Texas Intermediate futures dropped 1.8 percent to $44.72 a barrel.

  • Gold prices extended their decline on Monday as traders moved away from the safe asset. This month, gold prices have fallen 5.8 percent, the worst monthly drop since November 2016.

Credit…Salgu Wissmath for The New York Times

This year’s Black Friday looked nothing like a usual one. Crowds at suburban malls and city shopping districts were comparatively sparse. With the coronavirus touching virtually every corner of the United States, social distancing, restrictions on business activity and health concerns kept many people home.

They shopped online, however.

According to Adobe Analytics, which scans 80 percent of online transactions across the top 100 U.S. web retailers, consumers spent $9 billion on Friday. That’s a 21.6 percent increase over Black Friday in 2019 and the second-biggest number for online retailers Adobe has ever tracked.

Another research firm, Facteus, which monitors millions of debit and credit card payments made in the United States, found that department stores’ in-person sales fell 17 percent on Friday, but that their online sales rose 79 percent. The firm found a similar pattern for electronics retailers.

And Friday’s online sales surge is expected to be outdone on Monday, which is Cyber Monday, a promotional event concocted in 2005 when most retailers still offer deep discounts online.

A large portion of consumer spending moved online long before the pandemic, but the global health crisis is accelerating that trend. About 59 percent of shoppers had started their holiday shopping by early November this year, the National Retail Federation estimated.

The holiday shopping season comes at a critical moment for the U.S. economy, which is struggling again as the number of coronavirus cases surges with the colder weather in many parts of the country. Millions of people are still out of work or have been forced into part-time employment. Overall consumer spending, which drives as much as two-thirds of economic activity, has slowed in recent months along with the expiration of some emergency government spending programs.

Sapna Maheshwari contributed reporting.

S&P Global, the owner of stock indexes like the Dow and the S&P 500, said on Monday that it plans to acquire IHS Markit for $44 billion, including debt. The transaction would create a financial information powerhouse at a time when data increasingly fuels automated trading.

The all-stock deal — the biggest announced so far this year — would give S&P Global control of IHS Markit, whose software is used by many of the world’s biggest financial institutions.

It is the latest show of strength by big companies amid the pandemic. Corporate boards have increasingly come to believe that getting bigger will help them ride out the turbulence caused by the coronavirus, while investors have encouraged companies to use stocks and cheap debt to buy growth.

Other big deals struck so far this year include Nvidia’s $40 billion takeover of the computer chip designer Arm and Aon’s $30 billion acquisition of its rival insurance broker Willis Towers Watson.

Financial data has long been one of the most coveted commodities on Wall Street, as demonstrated by the multibillion-dollar value of Bloomberg L.P., the empire of former New York City Mayor Michael R. Bloomberg.

Big deals in recent years have further illustrated its worth: Last year, the parent of the London Stock Exchange agreed to buy Refinitiv, the former data arm of Thomson Reuters, for $14.5 billion.

IHS Markit itself was the product of a 2016 merger between IHS, which was founded in 1959 as a repository for aerospace data, and Markit, which was created in 2003 as a source of price information about the financial derivatives known as credit-default swaps.

Under the terms of the deal, S&P Global will own nearly 68 percent of the combined company, while investors in IHS Markit will own the remainder.

The companies expect the deal to close in the second half of next year, pending approval from shareholders and antitrust regulators.

Salesforce has approached Slack about a deal that could be announced as soon as this week, according today’s DealBook newsletter. The potential deal is a bet on remote working, an area that bankers believe will be a hot spot for consolidation in the months ahead, as highly valued software companies look to roll up the fragmented market for collaboration tools.

The premise behind such moves is that work practices may never return to pre-pandemic norms, so Salesforce and others are hoping to cash in on the shift by assembling a suite of services to make remote working easier.

Software companies are riding high on surging stock prices, sitting on large cash piles and able to tap more capital easily if they need to. In addition to Salesforce, potential buyers include Adobe (which bought Workfront earlier this month), Twilio (purchaser of Segment and Sendgrid) and ServiceNow. Potential targets include Airtable, Asana, Box, DocuSign, Dropbox and Smartsheet. These deals won’t be cheap, but as the shares of buyers rise in tandem with targets, that may simply mean more stock-for-stock deals.

Slack as recorded somewhat muted growth in its share price compared with rivals, but it’s not a minor purchase: the messaging firm had a market capitalization of about $17 billion before The Wall Street Journal first reported the talks with Salesforce, and is now worth around $23 billion.

Looming large in the work-from-home market is Microsoft. Its Office software is already installed on many workplace computers, which makes it easy to integrate its Slack-like collaboration tool, Teams. (Slack contends in an antitrust suit against Microsoft in Europe that its bundling of Teams with Office is anticompetitive.) Microsoft has been acquisitive throughout the pandemic, trying to scoop up TikTok and announcing a deal to buy the gaming company Zenimax Media.

It may face more regulatory scrutiny than rivals, but it can certainly afford plenty more purchases. Microsoft is sitting on roughly $136 billion in cash and it is one of the few companies with a AAA credit rating.

Credit…Eugene Hoshiko/Associated Press

The head of the Tokyo Stock Exchange resigned on Monday, nearly two months after a technical glitch at the exchange shut down equities trading across Japan in a major if temporary disruption to the financial markets in the world’s third largest economy.

The decision by the exchange’s president and chief executive, Koichiro Miyahara, followed an announcement earlier in the day by Japan’s financial regulator that it had issued a business improvement order to the exchange and its parent company, the Japan Exchange Group.

In a news conference on Monday, Akira Kiyota, chief executive of the parent company, announced that he would be taking over from Mr. Miyahara and pledged to avoid future shutdowns. He also said that he would take a 50 percent pay cut as an expression of contrition for the problems caused by the shutdown.

The disruption occurred early on the morning of Oct. 1 after the system that runs the exchange failed to switch to a backup in response to a hardware problem. The problem cascaded across Japan, shutting down most of the country’s major exchanges for a full day and rattling investor confidence.

The Tokyo Stock Exchange is the world’s third-largest equity market, behind the New York Stock Exchange and the Nasdaq Stock Market, with nearly $6.2 trillion worth of stocks, according to the World Federation of Exchanges. It has the most listed companies of any major exchange and handles tens of billions of dollars of business on an average day.

Japan had last experienced a systemwide shutdown in 2005.

Credit…Sylvia Jarrus for The New York Times

Nearly a year into a pandemic that has ravaged the global economy, the only clear pathway toward improved fortunes depends on containing the virus.

With the United States suffering its most rampant transmission yet, and with major nations in Europe again under lockdown, prospects remain grim for a worldwide recovery before the middle of next year, Peter S. Goodman reported in The New York Times. Substantial job growth could take longer.

The most significant hope emerged this month in the form of three vaccine candidates, easing fears that humanity could be subject to years of intermittent, wealth-destroying lockdowns.

The prospects of a global turnaround can be seen in China’s aggressive efforts to contain the virus after initially covering up the epidemic. Its factories roared back to life, and its 1.4 billion people resumed spending, making China a rare engine of growth in the world economy.

Between July and September, as the apparent containment of the virus proved effective along with the lifting of government restrictions, most major economies expanded sharply. The United States grew more than 7 percent compared with the previous quarter, and Germany by more than 8 percent. The British economy expanded by nearly 16 percent, and France’s economy grew 18 percent. Such performances were embraced by some as proof that economies would snap back as soon as the virus was gone.

Unlike in the aftermath of the global financial crisis, when households were contending with crippling debts — especially in the United States — many households in large economies are this time flush with cash, given the enforced savings regimen of the lockdowns.

“You have a lot of pent-up money,” said Kjersti Haugland, chief economist at DNB Markets, an investment bank in Oslo. “This is definitely a scenario for a rebound.”

Credit…Brendan Mcdermid/Reuters

Amazon has embarked on an extraordinary hiring binge this year, vacuuming up an average of 1,400 new workers a day and solidifying its power as online shopping becomes more entrenched during the coronavirus pandemic.

The spree has accelerated since the onset of the pandemic, which has turbocharged Amazon’s business and made it a winner of the crisis. Starting in July, the company brought on about 350,000 employees, or 2,800 a day, The New York Times’s Karen Weise reports. Most have been warehouse workers, but Amazon has also hired software engineers and hardware specialists to power enterprises such as cloud computing, streaming entertainment and devices, which have boomed in the pandemic.

The scale of hiring is even larger than it may seem because the numbers do not account for employee churn, nor do they include the 100,000 temporary workers who have been recruited for the holiday shopping season. They also do not include what internal documents show as roughly 500,000 delivery drivers, who are contractors and not direct Amazon employees.

The new hires have increased Amazon’s global work force to more than 1.2 million employees.

Amazon’s rapid employee growth is unrivaled in the history of corporate America. It far outstrips the 230,000 employees that Walmart, the largest private employer with more than 2.2 million workers, added in a single year two decades ago. The closest comparisons are the hiring that entire industries carried out in wartime, such as shipbuilding during the early years of World War II or home building after service members returned, economists and corporate historians said.

The company has also almost tripled the number of U.S. warehouses used for last-mile deliveries this year, said Marc Wulfraat, founder of the logistics consulting firm MWPVL International, who tracks Amazon’s operations. The delivery drivers are usually contractors, so Amazon does not disclose their numbers in regulatory filings.

“They have built their own UPS in the last several years,” Mr. Wulfraat said. “This pace of change has never been seen before.”

The New York Times


2020-11-30 08:13:43


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