By: Ella Koeze·Source: Refinitiv
The S&P 500 is on track to mark its strongest month since April, propelled by announcements of several effective coronavirus vaccines and investor relief that a noisy, contested presidential election season in the U.S. appears to be all but over.
Even with a decline on Monday — the first full day of trading since the Thanksgiving holiday — the U.S. benchmark was on track to notch a gain of more than 10 percent in November, a result that ranks as the fourth-best month for the index in the last 30 years.
On Monday, parts of the stock market sensitive to the shorter-term outlook for economic were a drag, as the rapidly expanding Covid-19 pandemic continues hurt current economic activity.
Airlines and energy companies were some of the worst performers. Retailers like Gap Inc. and apparel branding company PVH Corp., which owns Calvin Klein and Tommy Hilfiger, also tumbled after a lackluster Black Friday, the traditional start to the holiday shopping season.
But the market’s performance over the last month has mirrored a widespread willingness among investors to mostly look past the current nationwide surge of Covid-19 cases, after announcements from Pfizer, Astra-Zeneca and Moderna suggested that viable vaccines could be weeks or months away.
Such drug makers have seen solid market gains in November. Pfizer is up more than 13 percent. Shares of Moderna — a far smaller company — have more than doubled, rising roughly 115 percent. Cambridge, Mass.,-based Moderna rose another 14 percent on Monday, after the company said that it would ask regulators in Europe and the United States for emergency approval of its vaccine candidate.
Companies in industries such as travel and hospitality that have been battered by virus — and thus reliant on a vaccine to restore their fortunes — were some of November’s best performers.
Cruise lines rose: Carnival climbed more than 50 percent and Royal Caribbean rose over 40 percent. Casino companies Wynn Resorts and MGM Resorts each rose more than 30 percent in the month. Aircraft-maker Boeing rose more than 45 percent, also boosted after the Federal Aviation Administration cleared its troubled 737 MAX jet to return to American skies.
The Russell 2000 index of small capitalization stocks, which is more heavily reliant on the outlook for growth in American domestic economy, rallied nearly 19 percent in November.
Analysts say the rally also reflects investor relief that the 2020 election season is all but over. Despite the unprecedented wave of litigation launched by President Trump seeking overturn the results of the vote, it now appears that President-elect Joseph R. Biden Jr. is all but assured of be sworn in as president on Jan. 20.
Mr. Biden’s early personnel announcements for economic policy posts have been largely well-received on Wall Street. On Monday, he officially announced his economic team, including Janet Yellen, the former Fed chair, as the first woman to lead the Treasury Department.
The stock market’s rally in November, with the S&P 500 up about 10 percent this month, came as several drugmakers touted their progress in developing a coronavirus vaccine.
Investors in one of them, Cambridge, Mass.,-based Moderna, have reaped even bigger gains. The stock is up roughly 117 percent in November, and surged 15 percent on Monday after the company said would apply to the Food and Drug Administration to authorize its coronavirus vaccine for emergency use. The first injections may occur as early as Dec. 21 if the process goes smoothly and approval is granted, Moderna’s chief executive said in an interview.
Moderna’s gains have far outpaced those of other vaccine developers, in part because it is a far smaller company, and in part because the announcement could help it generate actual profits for the first time. Since the company went public in December 2018, it has never posted a quarterly profit.
Still, even after a sevenfold increase in its market value this year, Moderna is worth about $58 billion; fellow vaccine-developer Pfizer’s value is more than $200 billion. For its part, Pfizer is up more than 13 percent this month, while U.S.-listed depository shares of BioNTech, the smaller German firm with which Pfizer collaborated in its vaccine effort, is up nearly 40 percent.
The U.S.-listed shares of Britain’s AstraZeneca, which also has a promising candidate in development, are up about 5 percent.
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 offered 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.
During earnings calls this month, several retail executives said that they were uncertain about how much holiday shopping had actually been done in October and early November thanks to promotions that started well before Halloween. Matthew Bilunas, chief financial officer at Best Buy, said “it’s really difficult to predict exactly how much was pulled into” the third quarter.
Most retailers operate on a calendar where the fourth quarter starts in November and ends in January, in part to fully capture the holiday shopping season.
“We think it’s going to be a prolonged shopping season,” Brian Cornell, chief executive of Target, said on a separate call. “We’re going to see very different shopping patterns. We don’t expect to see those big spikes during Black Friday and on weekends.”
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 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.
DoorDash is setting its sights high for its stock market debut.
The food-delivery company said on Monday that it hopes to raise up to $2.8 billion from its initial public offering, in a sale that could value the company at as much as $31.6 billion, including all shares and options. It has set a price range of $75 to $85 a share for the I.P.O.
The fund-raising goal, disclosed in the food-delivery company’s latest I.P.O. prospectus, signals the company’s ambitions as it begins pitching prospective investors. It was valued at $16 billion in a private fund-raising round in June.
The company is hoping that investors will overlook losses and a thicket of potentially costly labor regulations and clamor for a piece of a fast-growing gig-economy giant.
DoorDash expects to price its offering in the next few weeks — making it one of the last companies to go public in 2020 — and will trade on the New York Stock under the ticker symbol “DASH.”
Monday’s prospectus also shed more light on how much control DoorDash’s founders — and in particular Tony Xu, its chief executive — will hold even after the company goes public, thanks to their holdings of a special class of stock, a common feature in Silicon Valley corporate governance.
Mr. Xu, Andy Fang and Stanley Tang will control shares that give them at least 69 percent of voting power at the company. Moreover, Mr. Xu has the right to vote the shares held by his co-founders.
President-elect Joseph R. Biden Jr. officially named top members of his economic team on Monday, showcasing his commitment to diversity and placing several women in top economic roles.
With the picks, which require Senate confirmation, Mr. Biden is sending a clear message that economic policymaking in his administration will be shaped by liberal thinkers with a strong focus on worker empowerment as a tool for economic growth. They include:
Cecilia Rouse, a Princeton labor economist, to run the three-member Council of Economic Advisers. She would be the first Black woman to lead the council. A labor economist, she worked on Mr. Obama’s Council of Economic Advisers for two years and at the White House’s National Economic Council during the Clinton administration.
Neera Tanden, the chief executive of the Center for American Progress, to lead the Office of Management and Budget. Ms. Tanden, who would be the first Indian-American to lead the Office of Management and Budget, has advocated aggressive spending to alleviate economic harm from the pandemic and has dismissed concerns about adding to the deficit at the current moment.
Janet L. Yellen, the former Federal Reserve chair, as Treasury secretary. Ms. Yellen, who is also a labor economist, was one of the first officials to suggest allowing the labor market to run “hot” — meaning leaving interest rates lower for longer — in order to help lift wages and get more people into jobs.
Jared Bernstein and Heather Boushey were named to join Ms. Rouse on the Council of Economic Advisers, which is a three-member team that advises the president on economic policy. They both come from a liberal, labor-oriented school of economics that views rising inequality as a threat to the economy and emphasizes government efforts to support and empower workers. Mr. Bernstein was Mr. Biden’s first chief economist when he was vice president. Ms. Boushey was a top policy adviser to Mrs. Clinton in 2016. Both have advocated a large stimulus package to help workers and businesses hurt by the pandemic recession.
Adewale Adeyemo, known as Wally, a senior international economic adviser in the Obama administration, as deputy Treasury secretary. An immigrant from Nigeria, he has extensive experience working at the Treasury Department during the Obama administration, when he was a senior adviser and deputy chief of staff.
Brian Deese, a former Obama economic aide who helped lead that administration’s efforts to bail out the American automotive industry, has also been selected to lead the National Economic Council, according to three people with knowledge of the selection. Mr. Deese is a veteran of economic policymaking, having served as the acting head of the Office of Management and Budget and the deputy director of the Economic Council under Mr. Obama, as well as a special adviser on climate change.
The appointments could fall short of hopes within the progressive wing of the Democratic Party, which has been frustrated that their views are not being sufficiently represented in early personnel decisions. In particular, the decision to select Ms. Tanden, a divisive and partisan figure in the party, could culminate in an intraparty fight, as well as a confirmation battle.
Republicans, who are fighting to retain control of the Senate, are unlikely to easily pass Ms. Tanden, who advised Hillary Clinton’s 2016 presidential campaign and has been one of the most outspoken critics of President Trump.
Mr. Biden’s other picks are expected to be less contentious.
Ajit V. Pai, the Republican chairman of the Federal Communications Commission, said Monday that he would leave his post the day that President-elect Joseph R. Biden Jr. is sworn in, capping a tenure of sweeping deregulation across the telecommunications industry.
Mr. Pai’s most prominent effort was rolling back net neutrality rules that forbid internet providers from blocking content, slowing down its delivery or charging for higher priority on their networks. His Democratic predecessor put the rules in place with the support of liberal activists over the opposition of companies like AT&T and Comcast. But Mr. Pai undid the rules within a year of being appointed by President Trump.
Mr. Pai eliminated lower-profile rules governing the telecommunications industry, loosening media ownership restrictions and lifting some price caps in the lucrative market for business broadband connections. He also faced a global race to develop next generation wireless networks and more recently was drawn into the debate over the rules governing social media platforms like Facebook and YouTube.
He was widely expected to step down after Mr. Biden won the presidential election.
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 takeover that could be announced as soon as this week, DealBook reports.
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.
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.
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.”
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.”