Dow drops 900 points on fears of Covid rebound

Business

NBC News 19 July, 2021 - 12:28pm 28 views

The Dow dropped 900 points, exceeding January's 2 percent decline, while the S&P 500 fell 2.1 percent. The Nasdaq Composite fell 1.6 percent.

Stocks that would most directly benefit from a continuing swift reopening of the economy led the losses, with shares of United Airlines falling more than 7 percent. Key stocks linked to the global economy pulled back, with Boeing and General Motors each falling by more than 5 percent.

“Consumer concern about inflation as well as a rise in new cases of Covid-19 among vaccinated Americans could weigh on consumer sentiment in the coming months even as employment and incomes grow as the economy reopens,” Oppenheimer Chief Investment Strategist John Stoltzfus said in a report Monday.

Covid cases have rebounded in the U.S. this month with the delta variant spreading among the unvaccinated. The U.S. is averaging nearly 30,000 new cases a day in the last seven days ending Friday, up from a seven-day average of around 11,000 cases a day a month ago, according to data from the Centers for Disease Control and Prevention. Cases were already flaring up around the world because of the delta variant.

“The market appears ready to take on a more defensive character as we experience a meaningful deceleration in earnings and economic growth,” wrote Mike Wilson, Morgan Stanley’s chief U.S. equity strategist, in a note Monday. “Market breadth has been deteriorating for months and is just another confirmation of the mid-cycle transition, in our view. It usually ends with a material (10-20 percent) index level correction.”

Oil prices fell on fears of slowing growth and as OPEC+ agreed to begin phasing out production cuts. Energy stocks were among the worst performers in premarket trading with ConocoPhillips off by more than 3 percent Exxon Mobil lost 3 percent. WTI crude shed 3 percent to about $69.36 a barrel.

A busy week of earnings is on deck, with nine Dow components set to report and 76 S&P companies will provide quarterly updates. United Airlines and American Airlines will report, as will social media companies Snap and Twitter. CSX, Johnson & Johnson, Coca-Cola, Honeywell, IBM, Intel and Netflix are also on the docket.

Inflation fears weighed on stocks last week, with a U.S. consumer sentiment index from the University of Michigan released on Friday showing that consumers believe prices will jump 4.8 percent over the next year. This is the steepest climb since August 2008. Earlier in the week, the June Consumer Price Index showed that inflation jumped 5.4 percent year-over-year, spooking investors.

Read full article at NBC News

Stock market news live updates: Stocks suffer biggest drop in months as rising COVID cases shake confidence

Yahoo Finance 19 July, 2021 - 12:31pm

This week's batch of earnings will include industry leaders like Netflix (NFLX) and Johnson & Johnson (JNJ), offering a fuller picture of how companies are faring as more parts of the economy reopened in the spring and early summer. All eyes will also be on retail trading upstart Robinhood, which early Monday filed its prospectus to go public at a valuation of $35 billion. The platform is targeting a $2 billion capital raise, and aims to price the stock within a range of $38 to $42 per share.

But in early dealings, fears about a resurgence in coronavirus cases drove the Nasdaq and S&P 500 to their biggest drop in two months, and sent benchmark yields to their largest decline in over 3 months.

Last week, major benchmarks gave up early gains and closed in the red as traders digested a slew of earnings results, and June consumer spending data that blew away expectations. However, a print on consumer sentiment disappointed, hinting at growing price pressures that may derail the recovery.

In Europe's Monday session, bourses sank as the United Kingdom celebrated its "Freedom Day", which ironically began with the Prime Minister and the Chancellor having to isolate after being notified they came into contact with someone who was COVID-19 positive. 

The incident refocused attention on the Delta variant, which is driving a surge of new cases across the U.S., and sent the safe-haven 10-year Treasury bond yield (TNX) to its lowest levels since early March. In Los Angeles, indoor masking requirements have made a comeback, with other regions considering similar measures.

"Concerns that the Delta mutation will slow or even reverse the recovery efforts appear to be sapping risk-taking appetites," said Marc Chandler, chief market strategist at Bannockburn Global Forex.

Last week, Federal Reserve Chair Jerome Powell suggested it was still too early for the central bank to step in and dial back some ultra-accommodative monetary policies to rein in inflation, given the labor market and other areas of the economy still need to recover more fully from the pandemic.

“The composition of recent data suggests that inflation will largely prove transitory as the Fed has stated,” said Ryan Detrick, LPL Financial's chief market strategist, in a note to clients last week.

“Just how long ‘transitory’ will prove to be is the big question. We are in the middle of the season when we expected to see some hot prints, so this week has not necessarily been a surprise," Detrick added. "But with each passing report market participants will be increasingly anxious to see those numbers start to moderate.”

Against the backdrop of surging demand and prices, Corporate America continues to surprise investors to the upside with second-quarter earnings results. About 8% of S&P 500 companies have reported results so far, mostly banks. Of those reporting, 85% have topped estimates, according to FactSet data.

Banks including Bank of America (BAC), JPMorgan Chase (JPM) and Morgan Stanley (MS) have topped consensus estimates, but have also showed signs of slowing growth beneath the hood in core business segments, as loan demand and fixed-income trading came in lighter than expected. 

Late Sunday, Zoom (ZM) — the company that became synonymous with remote working during COVID-19 lockdowns — announced an all-stock $15 billion deal to buy cloud provider Five9. The video communications standout is facing stiffening competition from the likes of Facebook (FB) and Google (GOOG), both of which are ramping up their video capabilities. 

Meanwhile, Wall Street is cautiously eyeing a growing resurgence of COVID-19 infections, as the Delta variant takes hold. Last week, Los Angeles revived its indoor masking policy amid a jump in new coronavirus diagnoses, and as the U.S. case count set a three-month high — underscoring how the mass vaccination effort appears to have lost momentum.

According to the NBER, the official arbiter of recessions, the downturn that began with the COVID-19 outbreak in February of 2020 ended in April of that same year — making it the shortest retrenchment ever. 

A flood of selling is hitting the major benchmarks at midday, with virtually everything in the red. Dow is off by over 2%, its worst showing since October, while the S&P and Nasdaq aren't far behind. 

Even still, some analysts think the market may be overreacting: "There are some silver linings," Clearbridge Investment Strategy Analyst Josh Jamner told Yahoo Finance Live, speaking about Delta variant concerns. "So far, hospitalizations remain low. It seems like the vaccines are very effective against this. That leads us to be optimistic.

The online clothing rental firm is going the confidential route, with the number of shares and the target price range for its IPO undisclosed. New York-based Rent the Runway allows customers to rent clothes and shop second-hand merchandise from over 750 designer brands.

Here's where major indexes were trading as of 12 p.m.: 

S&P 500 (^GSPC): 4,258.00, -69.16 (-1.60%)

Dow (^DJI): 33,921.09, -766.76 (-2.21%)

Nasdaq (^IXIC): 14,280.00, -147.24 (-1.02%)

...so says CFRA's Sam Stovall, who in a morning research note pointed out that, in spite of a strong start to quarterly earnings, many stocks across sectors and sizes have tumbled in price. Why?

Investors appeared confounded by the contradiction of stronger-than-expected [year over year] gains in consumer and producer prices, along with Fed Chair Powell’s acknowledgment of accelerating inflation during his semi-annual Humphrey-Hawkins testimony, which were then met by a near percentage point decline in the 10-year yield. In the week ahead, investors will likely regard a further weakening of bond yields as a potential “canary in the coal mine.” 

And if Monday's rocky session is any indication, investors may want to fasten their seat belts, Stovall wrote: 

In an attempt to divine this message, the market may dismiss future better-than-expected EPS growth as symptomatic of the transition from the windward to the leeward slope of the current EPS cycle as it passes its peak, resulting in increased volatility.

Crypto cohorts are on the decline with the drop in risk appetite, with Bitcoin (BTC-USD) and dogecoin (DOGE-USD) leading the charge. Bitcoin is hovering perilously close to $30,000, while the meme coin shed 9%.

U.S. homebuilder confidence in the market for single family homes fell in July to its lowest level since August 2020.

The NAHB/Wells Fargo Housing Market index declined to a reading of 80 this month from 81 in June. Economists polled by Reuters had expected the index to advance marginally to a reading of 82. A reading above 50 means more builders view market conditions as favorable than poor. The index hit an all-time high of 90 in November 2020.

Here's where major indicators were trading at the opening bell

S&P 500 (^GSPC): 4,276.64, -50.52 (-1.17%)

Dow (^DJI): 34,238.96 -448.89 (-1.29%)

Nasdaq (^IXIC): 14,235.50, -191.74 (-1.33%)

Crude (CL=F): $69.13 per barrel, -$2.68 (-3.73%)

Gold (GC=F): $1,813.80 per ounce, -$1.20 (-0.07%)

Here were the main moves in markets, as of 7:01 a.m. ET: 

S&P 500 futures (ES=F): 4,284.25, -34.25 (-0.79%)

Dow futures (YM=F): 34,188.00, -376.00 (-1.09%)

Nasdaq futures (NQ=F): 14,614.75, -55.75 (-0.38%)

Crude (CL=F): $69.85 per barrel, -$1.96 (-2.73%)

Gold (GC=F): 1,803.10 per ounce, -$11.90(-0.66%)

10-year Treasury (^TNX): yielding 1.24%, lowest since March 4

Javier David is an editor for Yahoo Finance. Follow Javier on Twitter: @TeflonGeek

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The official body tasked with declaring recessions on Monday said that the pandemic-induced recession in the U.S. ended in April 2020.

In the 1990s movie The Shipping News, an old newspaperman explains to Kevin Spacey how to cover the news. Yes, the inflation forecasts were surging months ago, and hit 8-year highs. The bond market’s 5-year inflation forecast is now lower than it was in mid-March.

The Dow Jones Industrial Average dived 800 points Monday on rising Covid-19 fears. Apple and Tesla stock sold off in morning trade.

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(Reuters) -Robinhood Markets Inc is targeting a valuation of up to $35 billion in its initial public offering in the United States, the company revealed in a filing on Monday, setting the stage for one of the highly anticipated stock market listings of the year. The listing plans come just months after the online brokerage found itself at the center of a confrontation between a new generation of retail investors and Wall Street hedge funds in late January. Robinhood was aiming for an IPO valuation of up to $40 billion, Reuters had previously reported.

"Builders are contending with shortages of building materials, buildable lots and skilled labor as well as a challenging regulatory environment," said NAHB Chief Economist Robert Dietz. The NAHB survey's measure of single-family home sales expectations in the next six months rose two points to a reading of 81 in July, while a gauge of current sales conditions decreased one point to 86. Housing starts in June are forecast to rise, according to a survey of economists polled by Reuters about the data due for release on Tuesday.

In this article, we discuss the 10 worst-performing stocks of Reddit’s WallStreetBets. If you want to skip our detailed analysis of these stocks, go directly to the Meme Stock Crash: 5 Worst-Performing Stocks of Reddit’s WallStreetBets. On July 1, legendary investor Michael Burry, the chief of California-based Scion Asset Management, told finance magazine Barron’s that […]

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Churchill Capital IV (NYSE: CCIV), the special-purpose acquisition company (SPAC) set to merge with Lucid Motors, was down about 2.2%. Ford Motor Company (NYSE: F) was down about 2.8%. General Motors (NYSE: GM) was down about 2.4%.

No, it's the S&P 500 index, for a good reason: The index always includes the 500 largest companies that trade on U.S. stock exchanges. As it turns out, another biotech stock is set to take Alexion's spot: Moderna (NASDAQ: MRNA). S&P Global announced last Thursday evening that Moderna would be added to the S&P 500, effective prior to the market open on July 21.

Covid-19 Delta variant fears were the trigger for a selloff on Monday. But markets were due for a correction. It could be a chance to buy the dip.

Tractor Supply (NASDAQ: TSCO) shareholders lost ground to a falling market on Monday. The retailer's stock fell 7% two hours into the trading day compared to a 1.5% drop in the broader market, according to data provided by S&P Global Market Intelligence. Wall Street found reasons to complain about its recent earnings report, even though that announcement showed strong sales growth in the fiscal second quarter.

Virgin Galactic Holdings (NYSE: SPCE) and Roblox (NYSE: RBLX) fit the bill as they reimagine the tourism and video gaming industries, respectively. Let's explore the reasons why these growth stocks look poised for bull runs. On July 11, Virgin Galactic completed a historic feat by sending its founder, Sir Richard Branson, to lower space, beating out rivals Blue Origin and SpaceX, both of which are attempting similar missions.

Stocks Sink And Yields Tumble As COVID-19 Fears Circle The World

NPR 19 July, 2021 - 10:52am

NEW YORK — Stocks are falling sharply Monday as worries sweep from Wall Street to Sydney that the worsening pandemic in hotspots around the world will derail what's been a strong economic recovery.

The S&P 500 was 1.9% lower in morning trading, after setting a record high just a week earlier. In another sign of worry, the yield on the 10-year Treasury dropped close to its lowest level in five months. It sank below 1.20% as investors scrambled for safer places to put their money.

The Dow Jones Industrial Average was down 769 points, or 2.2%, at 33,918, as of 10:17 a.m. Eastern time. The Nasdaq composite was 1.7% lower.

Airlines, hotels and stocks of other companies that would get hurt the most by potential COVID-19 restrictions were taking some of the heaviest losses, similar to the early days of the pandemic in February and March 2020. Mall owner Simon Property Group tumbled 7.8%, and cruise operator Carnival lost 7.5%.

Experts are saying Indonesia has become a new epicenter for the pandemic as outbreaks worsen across Southeast Asia. Meanwhile, some athletes have tested positive for COVID at Tokyo's Olympic Village, with the Games due to open Friday.

"The more transmissible delta variant is delaying the recovery for the ASEAN economies and pushing them further into the doldrums," said Venkateswaran Lavanya, at Mizuho Bank in Singapore.

In Japan, the world's third-largest economy, the vaccine rollout came later than in other developed nations and has stagnated lately. Japan is totally dependent so far on imported vaccines, and just one in five Japanese have been fully vaccinated.

Financial markets have been showing signs of increased concerns for a while, but the U.S. stock market had remained largely resilient. The S&P 500 has had just two down weeks in the last eight.

The bond market has been louder in its warnings, though. The yield on the 10-year Treasury tends to move with expectations for economic growth and for inflation, and it has been sinking from a perch of roughly 1.75% in March. It was at 1.19% Monday morning, down from 1.29% late Friday.

Besides the new variants of the coronavirus, other risks to the economy include fading pandemic relief efforts from the U.S. government and a Federal Reserve that looks set to begin paring back its assistance for markets later this year.

Worries about a possible sharp slowdown have particularly hurt stocks whose profits are most closely tied to the strength of the economy. Stocks of smaller companies, for example, have been scuffling since hitting a peak in March even though many reports on the economy still show it's growing at a very healthy rate.

The selling pressure was widespread, with more than 90% of the stocks in the S&P 500 lower. Even Big Tech stocks were falling, with Apple down 3.1% and Mircosoft 1.5% lower. During earlier hiccups for the stock market, investors would often big up such stocks further on expectations they will continue to grow almost regardless of the economy's strength.

Among the few gainers on Wall Street were potential winners of a return to a stay-at-home economy. Clorox rose 1.2%, and Campbell Soup gained 1%.

In Europe, Germany's DAX lost 2.9%, and France's CAC 40 fell 2.9%. The FTSE 100 in London slumped 2.6%.

In Asia, Japan's Nikkei 225 lost 1.3%, Hong Kong's Hang Seng fell 1.8%, South Korea's Kospi dropped 1%. Australian stocks sank 0.9%.

Stock market volatility can be an opportunity for investors. Here’s why

CNBC 19 July, 2021 - 09:42am

The U.S. stock market is falling, again.

On Monday, all three major U.S. indexes slid, led by travel stocks, on fears that a Covid-19 rebound would damage the economic recovery. The Dow fell more than 700 points in the morning, while the S&P 500 and tech-heavy Nasdaq both slumped about 1.2%.

The sharp downturn came after all three indexes snapped weeks-long winning streaks Friday as inflation fears ticked up. Just weeks earlier, stocks were at all-time highs.

While volatility can be troubling for investors, experts caution against any hasty selling when markets fall. In addition, slumping stock prices can be a prime buying opportunity that investors should take advantage of.

First, accept market volatility — which is relatively common — as a normal part of the process of investing and the best way to outrun inflation, said certified financial planner Brad Lineberger, president of Carlsbad, California-based Seaside Wealth Management, which manages about $165 million in assets.

"Embrace the volatility, because it's why investors are getting paid to own stocks," he said.

This means investors should stay calm even through extreme movements. As stocks have gyrated in recent months, long-term market returns are still based on the same things: dividend yields, earnings growth and change in valuation, according to Zach Abrams, a CFP and manager of wealth management at Shaker Heights, Ohio-based Capital Advisors, which manages around $800 million in assets.

Movements up and down can also be a good time to review your asset allocation. If you're worried about a big drop, you could rotate part of your portfolio into some less-risky stocks to protect from a potential market correction, which is a drop of more than 10%.

For example, now may be a good time to look at consumer staples, according to Morgan Stanley analysts.

In addition, sharp moves down can also be opportunities to buy more stocks and set yourself up for future gains, according to Abrams.

This is because when stocks fall from recent highs, they're trading at a discount and will likely rebound at some point, which sets investors up for larger returns.

Continuing to put money in the market when it's down as opposed to selling is a great way to make sure you don't miss out on a rebound. Data shows that selling when the market goes down can take you out of the game for some of the strongest rebounds.

For example, if you missed the best 20 days in the S&P 500 over the last 20 years, your average annual return would shrink to 0.1% from the 6% you'd have earned if you'd stayed the course.

And, even with the market's recent downturn, stocks have had a strong performance this year. Through Friday's close, the S&P 500 is up over 15% year to date.

Of course, even if you know that stock market volatility can benefit you in the long-run, financial advisors still recommend having a cash emergency fund on hand so that you can make it through a market meltdown without selling.

If the stock market falls, it's better to spend the money in your emergency fund than sell assets at a loss that can't be recouped, according to Tony Zabiegala, chief operations officer and senior wealth advisor at Strategic Wealth Partners, an Independence, Ohio-based firm with more than $500 million in assets under management.

This also keeps stock investments in the game for big rebounds, which generally come shortly after market corrections or even smaller dips.

For example, an investor would have only needed three months to six months of living expenses in an emergency fund to avoid taking losses during the March 2020 meltdown, said Lineberger at Seaside Wealth Management.

This approach would have also kept investments in the market for the record-breaking rally stocks enjoyed after the pandemic slump.

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Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes, and Market Data and Analysis.

Stocks tumble amid concerns over the Delta variant’s impact on growth.

The New York Times 19 July, 2021 - 06:14am

As of

Data delayed at least 15 minutes

The potential for a fast spreading outbreak of the Delta variant of the coronavirus gripped financial markets on Monday, putting Wall Street on track for its worst daily decline in months.

The S&P 500 fell as much as 2 percent, on pace for its sharpest daily decline since mid-May. The Stoxx Europe 600 dropped 2.3 percent, its worst decline this year. Major indexes in Hong Kong and Japan also ended the day sharply lower.

The sell-off was broad, reflecting a range of concerns about economic growth and the potential for rising Covid-19 infections to lead to the return of restrictions on travel and tourism. With oil prices tumbling, energy stocks led the declines, but shares of travel companies were also sharply lower. Norwegian Cruise Line and American Airlines each fell about 5 percent. Banks, also sensitive to the outlook for the economy, tumbled as well.

The Dow Jones industrial average was down about 2.7 percent, in what would be its biggest daily loss this year.

Yields on government bonds also slid as investors turned to them in search of a less-risky place to park their cash. Bond yields fell as their prices rose. The yield on 10-year Treasury notes slid to 1.19 percent, while yields in Britain and Germany were also lower.

“There’s a fear that this is as good as it’s going to get for risky assets,” said Edward Moya, a senior market analyst at Oanda, a foreign currency exchange. “We’re still in the early stages of earnings season, where we’re going to see companies continue to voice concerns over pricing pressures.”

Consumers are also worried about the rise in prices. A consumer survey released by the University of Michigan on Friday showed that the inflation rate has become a primary concern for households, and led to a drop in consumer sentiment in early July. On Thursday, Jerome H. Powell, the Federal Reserve chair, told the Senate Banking Committee that inflation had risen to uncomfortably high levels and said that he and his colleagues were watching price gains carefully.

The drop on Monday comes with the S&P 500 close to record highs. Even after Monday’s decline, the index has gained close to 13 percent this year as investors bet on economic recovery, though there have been short, turbulent stretches amid concerns about growth and inflation. The rise of the Delta variant seemed to give investors a new reason to pull back.

The highly contagious variant now makes up the majority of new cases in the United States, which are now averaging over 31,000 a day. Los Angeles County on Sunday became the first major county to revert to requiring masks for all people indoors in public spaces.

Cases are also rising fast in Europe and Asia. In recent days, Indonesia has emerged as the epicenter of the current outbreak, after overtaking India and Brazil as the nation with the highest count of new infections, and Singapore on Monday said that it was facing the highest levels of infection in almost a year.

In Japan, more than two dozen athletes, coaches, referees and other officials participating in the Tokyo Olympics have tested positive for the virus. A teenage alternate on the U.S. women’s gymnastics team tested positive for the coronavirus, the United States Olympic and Paralympic Committee confirmed Monday.

Oil prices fell after major oil producers reached a deal on Sunday to increase production. OPEC and Russia agreed to pump more oil next month, increasing worldwide supplies by 2 percent, but supplies are likely to remain tight until at least the fall, analysts said. West Texas Intermediate, the U.S. crude benchmark, dropped 6.7 percent to $66.99 a barrel. Shares for Occidental Petroleum Corporation fell more than 5 percent while ConocoPhillips dropped more than 4 percent.

The Japanese public has expressed strong opposition to the Games — delayed for a year because of the pandemic — with many worrying that the influx of visitors from around the world could turn it into a Covid-19 superspreader event, undoing national efforts to keep coronavirus levels low.

Toyota will refrain from airing television ads at home during the Games, and its chief executive, Akio Toyoda, will not attend the opening ceremony, a company spokesman told local news media during an online news conference.

“Various aspects of this Olympics aren’t accepted by the public,” said the spokesman, Jun Nagata, according to the business daily Yomiuri Shimbun.

The ads will still be shown in other markets, Toyota Motor North America said in a statement. “In the U.S., the campaign has already been shown nationally and will continue to be shown as planned with our media partners during the Olympic and Paralympic Games Tokyo 2020,” the statement said.

The company had prepared ads for the event but will not air them because of concerns that emphasizing its connection to the Games could create a backlash, said a person familiar with the company’s thinking, who spoke on condition of anonymity because he was not authorized to speak publicly.

Toyota will continue its commitments to supporting Olympic athletes and providing transportation services during the Games, a spokesman said.

The company’s decision is “a big body blow to the Olympics,” said David Droga, the founder of the Droga5 ad agency.

“You’d think that Toyota would be through thick and thin all in, but obviously the situation is more polarizing than we realize,” he said.

The vast majority of the Japanese public is opposed to holding the Games — set to begin on Friday — under current conditions, polling shows, with many calling for them to be canceled outright.

The Japanese authorities and Olympic officials have played down the concerns, saying strict precautions against the coronavirus will allow the Games to be held safely.

Anxieties have continued to mount, however. This month, Tokyo entered its fourth state of emergency in an effort to stop a sudden rise in virus cases as the country faces the more contagious Delta variant. Cases, which remain low in comparison with many other developed nations, have exceeded 1,000 a day in the city, raising apprehension that measures that had succeeded in controlling the spread of the coronavirus could be losing their effectiveness.

Further complicating the situation is a steady drip of news reports about Olympic staff and athletes testing positive for the illness after arriving in Japan.

Toyota became a top Olympic sponsor in 2015, joining an elite class of corporate supporters that pay top dollar for the right to display the iconic rings of the Games in their advertising.

Until the pandemic hit, the company was one of the most visible supporters of the Olympics. In the run-up to the event, much of Tokyo’s taxi fleet was replaced with a sleek, new Toyota model prominently featuring the company’s logo alongside the Olympic rings. And the company pledged to make the event a showcase for its technological innovations, including self-driving vehicles to ferry athletes around the Olympic Village.

Toyota’s move could prompt other brands to follow suit, but several advertising experts do not expect a ripple effect.

“If you’re a Coca-Cola type, I don’t think it’ll be a retreat — the benefits of being a global sponsor will still work its magic in the U.S. and all the other countries,” Mr. Droga said. “It’s different when you’re in the center, actually in Japan, because that’s where the biggest contrast is going to be, where the Olympics aren’t like previous Olympics.”

Many companies are afraid of sacrificing more exposure, said Rick Burton, a sports management professor at Syracuse University and the chief marketing officer for the U.S. Olympic Committee at the Beijing Summer Olympics in 2008.

My guess is that they’re going to try and push through so that they don’t lose the investment completely,” he said. “There’s an interesting calculus: If I pull out, how does that get translated in every language? In certain countries, it could seem like I did the right thing, but in others, it could be that I abandoned the one thing that gave the world hope.”

In an updated prospectus, Robinhood said it planned to sell shares at $38 to $42 each. At the midpoint of that range, it would raise $2.2 billion and be valued at about $33 billion; at the high end, it would be worth about $35 billion.

The announcement will formally kick off the final part of Robinhood’s long road to going public: a roadshow in which the company will pitch prospective investors on its financial performance.

It will test investor appetite for the online brokerage firm that forced a sea change in stock trading by eliminating commissions and becoming a platform of choice for a new generation of day traders — but has became a target for regulators and lawmakers that have accused it of misleading customers. At a House hearing in the wake of frenzied trading in so-called meme stocks, Vlad Tenev, the chief executive and a co-founder of Robinhood, faced sharp questions from lawmakers about the company’s policies and business model.

In an unusual move, Robinhood is reserving as much as a third of I.P.O. shares for its own customers, instead of the standard universe of mutual funds and other big institutional investors.

That fits into the company’s stated goal of “democratizing finance,” but it could also make trading in the offering even more volatile than in a traditional stock sale, potentially opening itself to even more criticism.

In the updated prospectus, Robinhood also provided estimates for how it performed in the second quarter, including continued growth in revenue and paying customers from the first three months of the year. Its net loss also shrank, though the first quarter had included a onetime accounting charge related to the billions of dollars it had raised earlier in the year.

It is set to begin trading on the Nasdaq market by the end of next week.

But as the so-called Freedom Day arrived, the nation is reporting nearly 50,000 new coronavirus cases a day in a population that is about two-thirds fully vaccinated. And now, a “pingdemic,” in which hundreds of thousands of people are being pinged by the National Health Service’s track-and-trace app and told to self-isolate because they were near someone who tested positive, is causing staff shortages in all industries.

Rather than a stampede of workers returning to their offices, many large companies are approaching the reopening cautiously as the government says there needs to be “personal and corporate responsibility” over some measures. By 10 a.m. on Monday, travel on the London Underground was 38 percent of normal demand, no higher than the same period last week, and the vast majority of people were still wearing masks.

And so, most employers are keeping a return to the office as voluntary, requiring mask-wearing away from desks and limiting their office capacity to prevent crowding. For example, the Bank of England is asking staff to return only once a week starting in September. But there was some loosening of policies on Monday inside the central bank — restrictions on the use of elevators were eased and spaces between desks will be removed.

At JPMorgan Chase’s offices in London, usually home for 12,000 employees, masks still need to worn in communal spaces and meeting rooms, social distancing indicators are still marked around the buildings, and capacity remains capped at 50 percent. The biggest change on Monday is that employees from any team are allowed to return to their office if they wish, which has slightly increased occupancy from about 30 percent recently, but is still far below capacity. Over the summer, the bank intends to gradually raise the limit.

In the City of London, the capital’s main financial district, the health and safety measures in Goldman Sachs’s 826,000-square-foot European headquarters are staying the same. That means workers must wear a mask when not sitting at their desk and continue to take part in the on-site testing program. Social distancing will reduce the office’s normal capacity. Recently, on average, about 30 percent to 40 percent of the bank’s 6,5000 employees have been in the office.

Goldman Sachs is also monitoring vaccination rates from voluntary surveys of its staff, which has shown a “significant upward trajectory” since June, according to an internal memo.

“We will continue to monitor local case rates and public health safety guidance, and will update our in-office protocols as and when appropriate,” the memo, sent by Richard Gnodde, the chief executive officer of Goldman Sachs International.

At the London office of McKinsey & Company, masks will be required only in busy areas beginning Monday, the one-way system around the building will be abandoned, there won’t be limits on how many people can use a meeting room, and staff won’t have to get their temperature checked when entering the building. But there is still no requirement to return to the office.

Even Prime Minister Boris Johnson will be working from home on Freedom Day as he too has been pinged by the National Health Service to self-isolate for 10 days.

Under the proposed deal, Mr. Ackman’s special purpose acquisition company, or SPAC, would have purchased a 10 percent stake in Universal Music, the label behind Taylor Swift, Lil Wayne and Lady Gaga, valuing the company at more than $40 billion.

But the deal would have been complicated, and the S.E.C. was concerned whether it qualified as a SPAC deal at all. These blank-check companies, which use capital from the public market to invest in a private company, taking it public in the process, have drawn a lot of attention from investors over the past year — and increasing regulatory scrutiny.

In a letter to investors, Mr. Ackman said the team at his investment company, Pershing Capital, had failed to change the agency’s mind about the multilayered deal. Investors in the SPAC, known as Pershing Capital Tontine Holdings, seemed wary, too: Its shares had lost nearly a fifth of their value since the deal was announced.

We underestimated the reaction that some of our shareholders would have to the transaction’s complexity and structure,” Mr. Ackman wrote.

The deal called for the Pershing Square Tontine to invest $4 billion for a 10 percent stake in Universal Music, which was already being taken public by its parent, Vivendi. That would have left $1.5 billion in the investment vehicle, which would have been rolled over into a new publicly traded acquisition fund that would have looked to do another deal. Existing investors in Pershing Square Tontine would have received a financial instrument that gave them the right to buy into yet another deal vehicle, which would seek its own takeover target.

While Mr. Ackman’s SPAC is stepping back from the Universal Music deal, Mr. Ackman is not — his hedge fund will buy the stake directly instead.

Pershing Square Tontine now has 18 months to find and close a new deal, unless shareholders give it more time, and “our next business combination will be structured as a conventional SPAC merger,” Mr. Ackman said.

Bezos goes to space: Jeff Bezos, who just stepped down as chief executive of Amazon, hopes to become the second billionaire rocket company founder to go to space, following Richard Branson.

Netflix earnings: Everyone you know signed up for Netflix during the pandemic. What happened in the quarter when everyone wasn’t stuck at home?

United Airlines earnings: First of three progress reports this week from U.S. air carriers navigating their way out of the pandemic.

Southwest Airlines and American Airlines earnings: Delta Air Lines last week said domestic leisure travel had fully recovered to 2019 levels. But there’s still a huge question whether businesses will continue to curb travel, perhaps permanently.

Tokyo Summer Olympics: The event, delayed a year, begins as the city of Tokyo is under a state of emergency because of the pandemic. Most spectators are banned in response to a sudden jump in coronavirus cases. NBC Universal will also offer highlights from the games and coverage of the men’s basketball contest on its year-old streaming service Peacock.

On Monday, the company, now a global luxury fashion house that owns the Thom Browne brand, took a major step onto the public stock markets — through one of the biggest trends on Wall Street in recent years.

Zegna announced that it would gain a listing on the New York Stock Exchange by merging with a publicly traded acquisition fund known as a SPAC. The deal is expected to value Zegna at about $3.2 billion, including debt, and may pave a path for other privately held luxury giants to follow.

The deal is also the latest sign that big luxury fashion companies are gearing up to get even bigger, seeing an opportunity in taking over rivals and becoming empires. It is a trend that has perhaps been exemplified by LVMH Moët Hennessy Louis Vuitton, the fashion empire that in recent years has struck deals to buy the likes of Tiffany & Company.

Such takeovers have soared in recent years, with rivals across the ocean taking on similar empire-building ambitions. Capri Holdings, formerly known as Michael Kors Holdings, acquired the Italian fashion house Versace for $2.1 billion in 2018, while Tapestry, once known as Coach, has bought companies including Kate Spade and Stuart Weitzman.

The luxury industry has been resilient, as consumers have kept up spending on jewelry, apparel and other indulgences — including as the global economy slowly emerges from a pandemic. Shares of LVMH, whose brands include Dior, Stella McCartney and Fenty, are up more than 60 percent this year; those in Kering, the parent of labels like Gucci and Saint Laurent, are up 45 percent.

For much of its existence, Zegna was known primarily as a top-tier maker of men’s wear fabrics and, later, suiting. (It still makes suits for other high-end labels, notably Tom Ford.) But with its purchase in 2018 of a majority stake in the fashion label Thom Browne, Zegna began its own ambitious plan to become a stable of luxury brands.

Zegna now runs nearly 300 stores in 80 countries. And in a sign of optimism about revived consumer spending on fashion, the company expects its sales this year to come close to prepandemic levels.

While Zegna’s pursuit of more resources to expand is not novel, how it is doing so is.

It is merging with a SPAC — formally known as a special purpose acquisition company — a fund that is raised in the stock markets solely for the purpose of merging with a privately held company and giving it a stock listing.

“We will continue to invest in creativity, innovation, talent and technology in order to sustain Zegna’s leadership position in the global luxury market,” Ermenegildo Zegna, the company’s chief executive and grandson of its founder, said in a statement.

Such funds have exploded in popularity over the past two years for allowing companies to join stock markets more quickly than through a traditional initial public offering. (SPACs have increasingly come under scrutiny by regulators in the United States, where most of these funds are listed.)

Merging with Zegna is a fund run by Investindustrial, a European investment firm. The deal will give Zegna about $880 million in fresh cash while allowing its founding family to retain a roughly 62 percent stake.

“Our goal now is to support Zegna in this important new chapter of its history while opening the opportunity to the public to invest in one of the last great iconic independent luxury brands,” Sergio Ermotti, the chairman of the Investindustrial SPAC, said in a statement.

The deal is expected to close by the end of the year, pending approval by the SPAC’s shareholders.

The deal, reached on Sunday by the countries in a group known as OPEC Plus, could help ease the pressure on gas prices and inflation as economies around the world recover after pandemic lockdowns.

Gasoline prices in the United States have been steadily rising, and the average price of a gallon of regular gasoline in the United States is now $3.17, according to AAA. A year ago, as pandemic lockdowns kept people close to home, gas cost just $2.18 a gallon on average. And the higher gas prices have been adding to inflation, a key measure of which climbed at the fastest pace in 13 years in June.

Under the deal announced on Sunday, OPEC Plus, a group of 23 nations led by Saudi Arabia and including Russia, will increase output each month by 400,000 barrels a day, beginning in August. That will add about 2 percent to the world’s supply by the end of the year. The group accounts for roughly 40 percent of the world’s crude oil.

Ms. Yellen’s comments, made in an interview with The New York Times last week, come as the Biden administration is seven months into an extensive review of America’s economic relationship with China, write The Times’s Alan Rappeport and Keith Bradsher. The review must answer the central question of what to do about the deal that former President Donald J. Trump signed in early 2020 that included Chinese commitments to buy American products and reform its trade practices.

Tariffs that remain on $360 billion of Chinese imports are hanging in the balance, and the Biden administration has said little about the deal’s fate. President Biden has not moved to roll back the tariffs, but Ms. Yellen suggested that they were not helping the economy.

“Tariffs are taxes on consumers, in some cases it seems to me what we did hurt American consumers and the type of deal that the prior administration negotiated really didn’t address in many ways the fundamental problems we have with China,” she said.

But reaching any new deal could be hard given rising tensions between the two countries on other issues. The Biden administration warned U.S. businesses in Hong Kong on Friday about the risks of doing business there, including the possibility of electronic surveillance and the surrender of customer data to authorities.

Chinese officials would welcome any unilateral American move to dismantle tariffs, according to two people involved in Chinese policymaking. But China is not willing to halt its broad industrial subsidies in exchange for a tariff deal, they said.

Academic experts in China share the government’s skepticism that any quick deal can be achieved.

“Even if we go back to the negotiating table, it will be tough to reach an agreement,” said George Yu, a trade economist at Renmin University in Beijing.

Wall Street’s New Fear Is That the Economy Has Already Peaked By Bloomberg

Investing.com 19 July, 2021 - 12:00am

(Bloomberg) -- Investment strategists are starting to consider a new bearish scenario: the economy has already hit its speed limit.

With the ferocious spread of Covid-19’s delta variant and central banks already talking about tighter monetary policy to bring inflation under control, there’s a growing sense of worry that financial markets have become too optimistic.

The shift in narrative was evident across assets on Monday. S&P 500 futures lost 1% and small-caps took a beating. In Europe, the main stock benchmark sank more than 2% with the most severe losses in energy, banks and travel companies. Treasuries rallied, with the 10-year yield sliding to 1.23%.

“Peak growth is starting to become a more concerning element,” Frank Benzimra, head of Asia equity strategy at Societe Generale (OTC:SCGLY) SA, said on Bloomberg Television. “This is actually one of the elements which has pushed us to reduce the allocation into risk assets in our global allocation. You have inflation, but you have also this growth element.”

In the minds of many investors, the moves represent a pullback in overextended areas of the market, like cyclicals. Others pointed to the usual volatility that comes with earnings season and thin summer trading.

Investors had earlier delighted in the prospect of a strong worldwide economic rebound fueled by easy money and vaccine rollouts. But the combination of price pressures and soaring infection rates raises the risk that growth could fall short of rosy forecasts. And with global equities teetering at all-time highs, there’s no room for error.

“While macro conditions remain overall supportive for equities, valuations, seasonal trends and positioning leave the room for price corrections and volatility spikes as the one we are seeing today,” said Antonio Cavarero, head of investments at Generali (MI:GASI) Insurance Asset Management.

Other strategists urged clients to use the weakness as a time to buy.

“I am firmly in the buy the dip camp,” said Marija Veitmane, senior multi-asset strategist at State Street (NYSE:STT) Global Markets. “Stocks had a very strong first half supported by the earnings recovery and we expect corporate earnings to remain strong.”

For Ruchir Sharma, head of emerging markets and chief global strategist at Morgan Stanley (NYSE:MS) Investment Management, there’s still a worry that growth expectations are too high. China’s regulatory crackdown on its technology sector and U.S. consumers saving more than they spend are among the key risks, he said.

Stalling vaccination rates, especially in the U.S., are also dragging down market sentiment, wrote Deutsche Bank (DE:DBKGn) AG’s George Saravelos. At the same time, rising prices have caused consumer demand to stall in many economies.

“This is part of broader post-Covid scarring; it is also part of bottleneck demand destruction,” he wrote. “This is the opposite of what one would expect if the environment was genuinely inflationary. It shows the global economy has a very low speed limit.”

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Asian markets fall on COVID-19 spread, Wall Street declines

MarketWatch 18 July, 2021 - 11:02pm

“Asia stocks look set for a weak start,” said Yeap Jun Rong, market strategist at IG. “This comes as investors look beyond positive catalysts such as corporate earnings outperformance, focusing on several risk factors,” such as higher inflation and more COVID-19 cases.

Outbreaks are growing in Indonesia, Malaysia and Thailand, as well as parts of Japan, including Tokyo, where the Olympics are set to open Friday. The first cases among athletes in the Olympic Village were confirmed Sunday.

“The more transmissible delta variant is delaying the recovery for the ASEAN economies and pushing them further into the doldrums,” said Venkateswaran Lavanya, at Mizuho Bank in Singapore, referring to Southeast Asian nations.

A good part of the pullback on Wall Street was attributable to declines in big technology stocks, like Apple and Amazon, as well as banks and companies that rely on consumer spending. Energy and industrial stocks also helped drag the market down, outweighing gains in health care and utilities companies.

Investors’ attention now turn to earnings. The bulk of companies will report their results this week and in following weeks. Expectations are high, with profits in the S&P 500 expected to be up 64% from a year earlier, according to FactSet.

Beneath the surface of a relatively sanguine U.S. government-bond market is an undercurrent of worry.

Investors dump stocks, buy bonds as virus fears flare again

Associated Press 18 July, 2021 - 10:54pm

NEW YORK (AP) — Resurgent pandemic worries knocked stocks lower from Wall Street to Tokyo on Monday, fueled by fears that faster-spreading variants of the virus may upend the economy’s strong recovery.

The S&P 500 fell 2.1% in afternoon trading, after setting a record just a week earlier. In another sign of worry, the yield on the 10-year Treasury touched its lowest level in five months as investors scrambled for safer places to put their money.

The Dow Jones Industrial Average was down 935 points, or 2.7%, at 33,753, as of 1:50 p.m. Eastern time. The Nasdaq composite was 1.4% lower.

Across the country, the daily number of COVID has soared by nearly 20,000 over the last two weeks to about 32,000. The vaccine campaign has hit a wall, with the average number of daily inoculations sinking to the lowest levels since January, and cases are on the rise in all 50 states.

That’s why markets are concerned, even though reports show the economy is still recovering at a fantastically high rate and the general expectation is for it to deliver continued growth. Any worsening of virus trends threatens the high prices that stocks have achieved on expectations the economy will fulfill those lofty forecasts.

Financial markets have been showing signs of increased concerns for a while, but the U.S. stock market had remained largely resilient. The S&P 500 has had just two down weeks in the last eight, and the last time it had even a 5% pullback from a record high was in October.

Several analysts pointed to that backdrop of high prices and very calm movements for weeks while dissecting Monday’s drop.

“It’s a bit of an overreaction, but when you have a market that’s at record highs, that’s had the kind of run we’ve had, with virtually no pullback, it becomes extremely vulnerable to any sort of bad news,” said Randy Frederick, vice president of trading & derivatives at Charles Schwab. “It was just a matter of what that tipping point was, and it seems we finally reached that this morning” with worries about the delta variant.

He and other analysts are optimistic stocks can rebound quickly. Investors have been trained recently to see every dip in stocks as merely an opportunity to buy low.

Barry Bannister, chief equity strategist at Stifel, was more pessimistic. He says the stock market may be in the early stages for a drop of as much as 10% following its big run higher in prices. The S&P 500 nearly doubled after hitting its bottom in March 2020.

“The valuations, they just got too frothy,” he said. “There was just so much optimism out there.”

The bond market has been louder and more persistent in its warnings. The yield on the 10-year Treasury tends to move with expectations for economic growth and for inflation, and it has been sinking since late March, when it was at roughly 1.75%. It fell to 1.19% Monday from 1.29% late Friday.

Analysts and professional investors say a long list of reasons is potentially behind the sharp moves in the bond market, which is seen as more rational and sober than the stock market. But at the heart is the risk the economy may be set to slow sharply from its current, extremely high growth.

Besides the new variants of the coronavirus, other risks to the economy include fading pandemic relief efforts from the U.S. government and a Federal Reserve that looks set to begin paring back its assistance for markets later this year.

Monday’s selling pressure was widespread, with nearly 95% of the stocks in the S&P 500 lower. Even Big Tech stocks were falling, with Apple down 3% and Microsoft 1.6% lower. Such stocks seemed nearly immune to virus fears during earlier downturns, rising on expectations they’ll continue growing almost regardless of the economy’s strength.

Even companies reporting strong profit growth got swept up in the downdraft. Tractor Supply said its quarterly profit and revenue topped Wall Street’s expectations, for example, but its stock fell 4.5%.

Across the S&P 500, analysts are forecasting profit growth of nearly 70% for the second quarter from a year earlier. That would be the strongest growth since 2009, when the economy was climbing out of the Great Recession.

But just like worries are rising that the economy’s growth has already peaked, analysts are trying to handicap by how much growth rates will slow in upcoming quarters and years for corporate profits.

AP Business Writer Yuri Kageyama contributed.

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