SEC Reportedly Halts Chinese Firm IPOs After Ride-Hailer DiDi Global’s $50 Billion Crash

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The Securities and Exchange Commission has stopped accepting registrations for the issuance of securities by China-based companies until it outlines the risks posed by such investments, Reuters reported Friday, marking the agency’s first set of action after mounting government interference in China this month erased billions of dollars in market value from recently listed DiDi Global and other China-based companies.

Key Facts

The SEC has said it won’t accept new registrations until it has released specific guidance on how companies should disclose the risks posed by China-based investments, unnamed sources familiar with the matter told Reuters. There are reportedly no such IPOs in the works, but it’s unclear how long the guidance may take to develop.

The reported decision comes after SEC commissioner Allison Lee on Tuesday said Chinese companies listed in the U.S. should disclose the risks of Chinese government interference to investors as part of their required reporting disclosures.

Similarly, a group of five GOP Senators on Wednesday urged SEC Chair Gary Gensler to “demand immediate and robust action” addressing a recent crackdown by Beijing officials on Chinese companies listed on U.S. stock exchanges. The SEC did not immediately respond to Forbes’ request for comment.

Key Background

In a matter of days, China introduced regulatory actions targeting both ride-hailing app DiDi and the nation’s education companies—harsh measures showing investors how risky investing in the market can be, Tom Essaye, author of the Sevens Report wrote in a Tuesday note. Days after DiDi’s massive U.S. IPO, the Cyberspace Administration of China ordered app stores to remove the ride-hailer from their platforms, claiming it “severely violat[ed] regulations around the collection of personal data.

” DiDi stock has plunged nearly 50% since the action, wiping out nearly $50 billion in market value in less than one month. Then, in a weekend order earlier this month, China’s education ministry barred “capitalized operations” among “online training institutions,” saying such companies can no longer turn a profit or raise money in the public markets and triggering a selloff in the space that erased nearly half the market value of many education firms.

Crucial Quote

“Yes, there’s a huge market and lots of growth potential, but obviously there are regulatory risks that seem to be growing larger with every passing month,” notes Essaye.

Surprising Fact

The Nasdaq Golden Dragon China index, which tracks Chinese companies trading in the United States, is down 12% this week and nearly 34% over the past six months.

Big Number

$12.8 billion. That’s how much Chinese listings in the United States have raised so far this year, according to Refinitiv data cited by Reuters. Genser said that he was concerned U.S. investors frequently don’t understand the structure of the companies whose shares they are buying.

In cases where China forbids foreign ownership, “many China-based operating companies are structured as Variable Interest Entities (VIEs). In such an arrangement, a China-based operating company typically establishes an offshore shell company in another jurisdiction, such as the Cayman Islands,” Gensler said.

The Chinese government has taken action against U.S.-listed Alibaba  (BABA) – Get Report and Didi Global  (DIDI) – Get Report in recent months. Days after Didi executed its IPO earlier in July, China forbade the ride-hailing titan from signing up new users.

Further Reading

Exclusive-U.S. regulator freezes Chinese company IPOs over risk disclosures -sources (Reuters)

US-Listed Chinese Tech Stocks Erase Nearly $150 Billion In Market Value This Week As China Stokes Regulatory Fears (Forbes)

The move comes as the SEC works on new guidelines for disclosing to investors the risk of continued regulatory crackdowns by China’s government, knowledgeable sources told Reuters. In a statement Friday, SEC Chairman Gary Gensler said “I have asked staff to seek certain disclosures from offshore issuers associated with China-based operating companies before their registration statements will be declared effective.”

Follow me on Twitter. Send me a secure tip.

I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at jponciano@forbes.com. And follow me on Twitter @Jon_Ponciano

Source: SEC Reportedly Halts Chinese Firm IPOs After Ride-Hailer DiDi Global’s $50 Billion Crash

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Critics:

The Wall Street Journal reported Thursday that Didi is contemplating going private to soothe Chinese regulators and make whole investors who have suffered losses as Didi’s shares declined since the IPO. Didi called The Journal’s report “not true.”

In any case, SEC commissioner Allison Lee said Tuesday that as part of their reporting chores, U.S.-listed Chinese companies must tell investors the risks of Chinese government interference in their activity, according to Reuters.

U.S. listings of Chinese stocks have jumped to a record $12.8 billion so far this year, according to Refinitiv. The market’s repeated surges to record highs have attracted Chinese companies. But the move against Didi has slowed things down.

Shares of Chinese companies listed in the U.S. tumbled late last week and early this week amid fears about the government crackdowns.Didi fell 30% from July 21 to July 27. It recently traded at $10.14, up 3%, but has dropped 28% since its IPO. Alibaba recently traded at $194.31, down 2%, and has slumped 15% in the last month.

Tokenized Apple, Tesla And Coinbase? Why Binance Is Bowing Out.

Binance Chief Executive Officer Zhao Changpeng Interview

Tokenized stocks, or digital assets pegged to the price of company shares, are no longer available for purchase on Binance.com. Offerings had included Tesla, Apple, and Coinbase shares, which Binance claims were fully backed through shares held by its partner, German-based investment firm CM-Equity AG.

Support for stock tokens was first made available on Binance.com in April, 2021, which was enabled through a partnership with Digital Assets AG, a firm focused on issuing tokenized financial products.

“Today, we are announcing that we will be winding down support for stock tokens on Binance.com to shift our commercial focus to other product offerings,” the announcement reads.

Although the exact reason for the about-face is unclear, Binance’s reversal on tokenized stocks comes as financial regulators around the world are putting pressure on the firm. Officials in Germany, Thailand, Japan, Canada, and the United Kingdom have all issued warnings about the exchange over recent months, the firm has been dropped by the payments processor Clear Junction, and certain banking relationships in Europe and around the world are coming into question.

More broadly, it raises doubts about Binance’s hyper growth strategy of rapidly launching new products around the world such as debit cards and derivatives products.

Users currently holding stock tokens have 90 days to sell their shares. Clients in the European Economic Area and Switzerland have the option to transfer their holdings to a new digital asset platform from CM-Equity AG. After October 14, 2021 they will not be able to manually sell or close their positions on the Binance site.

Follow me on Twitter or LinkedIn. Check out my website.

Source: Tokenized Apple, Tesla And Coinbase? Why Binance Is Bowing Out.

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Critics:

Binance will list MicroStrategy, Microsoft and Apple, providing Binance users with exposure via the tokenization of equities. The tokens are expected to be denominated in the exchange’s stablecoin, BUSD.

The move means Binance users will be able to qualify for economic returns on the underlying shares, which will include potential dividends. The tokens also allow Binance customers to purchase as little as one-hundredth of a regular stock using BUSD.

Binance’s stock tokens are tokenized equities that can be traded on traditional stock exchanges. Each tokenized stock represents one ordinary share of the stock and is backed by a depository portfolio of underlying securities held by CM-Equity AG, Germany, according to the post.

Two stock tokens have begun trading on Binance including electric vehicle maker Tesla and cryptocurrency exchange Coinbase. Those listings are already ruffling the feathers of regulators who say the exchange has not acquired the necessary license to begin marketing equities to the public.

Cryptocurrency exchange Binance is allowing its users to buy fractions of companies’ shares with a new tokenized stock trading service, starting with Tesla.

  • The crypto exchange announced Monday the launch of Binance Stock Tokens, zero-commission digital tokens that qualify holders for returns including dividends.
  • As of 1:35 p.m. UTC (9:35 a.m. ET) April 12, users will be able to buy fractions of actual Tesla shares, which trade at $677 a share at the time of writing.
  • Users will be able to purchase as little as one-hundredth of a Tesla share, with prices settled in Binance USD (BUSD).
  • The exchange’s native crypto Binance Coin (BNB) has surged more than 25% in the last 24 hours, reaching an all-time high of $637.44. It is priced at $590.51 at press time. It’s not immediately clear what is driving the price of the coin.
  • It’s not the first tokenized stock play in crypto land: Terra Labs’ Mirror Protocol went live in December.
  • But where Mirror uses synthetic stocks (or tokenized representations of actual equities), the Binance product is “backed by a depository portfolio of underlying securities” managed by an investment firm in Germany.

See also: Binance Faces CFTC Probe Over US Customers Trading Derivatives: Report

Related Stories

Stocks, U.S. Futures Dip on Delta Strain Concerns: Markets Wrap

Asian stocks dipped Tuesday amid concerns a more infectious Covid-19 strain will derail an economic recovery. Treasuries and the dollar were steady after gains.

An MSCI index of Asia-Pacific shares was on track for its first decline in six days as countries in the region are struggling to contain the highly transmissible Delta variant of the virus. U.S. futures dipped after technology stocks led U.S. benchmarks to fresh records Monday. New limits on travel from Britain, which is seeing a spike in cases, dragged on cruise operators and airlines.

The Treasury yield curve flattened amid month-end index rebalancing and the break in auctions until July 12, reducing supply. Oil extended a decline with the market expecting OPEC+ producers to increase supply at an upcoming meeting. Bitcoin was steady around mid-$34,000.

Global stocks are poised to close out their fifth quarterly advance amid a worldwide vaccine rollout that powered an economic recovery and sparked concerns about increasing prices pressures and the withdrawal of stimulus measures. The recovery also drove the reflation trade as more economies reopened, though that is being hampered as some countries, especially in Asia, are falling behind in their vaccine strategies.

The U.S. is now the best place to be during the pandemic due to its fast and expansive vaccine rollout stemming what was once the world’s worst outbreak. Meanwhile, parts of the Asia-Pacific region that performed well in the ranking until now — like Singapore, Hong Kong and Australia — dropped as strict border curbs remain in place.

“The Delta variant has also emerged in our client conversations as a potential threat to reflation/inflation,” JPMorgan Chase & Co. strategists led by Marko Kolanovic said. “The economic consequences are likely to be limited given progress on vaccinations across developed market economies. It could, however, pose some risk of a delay in the recovery in countries where vaccination rates remain lower.”

Read: Asean Equities May Have Priced In Virus Setback: Taking Stock

For more market commentary, follow the MLIV blog.

Here are some events to watch in the markets this week:

  • OECD meets in Paris to finalize a proposal to overhaul global minimum corporate taxation Wednesday
  • China’s President Xi Jinping will deliver a speech as the nation marks the 100th anniversary of the founding of the Chinese Communist Party Thursday
  • OPEC+ ministerial meeting Thursday
  • ECB President Christine Lagarde speaks Friday
  • The U.S. jobs report is due Friday

These are some of the main moves in markets:

Stocks

  • S&P 500 futures dipped 0.1% as of 1:26 p.m. in Tokyo. The S&P 500 rose 0.2%
  • Nasdaq 100 futures fell 0.2%. The Nasdaq 100 rose 1.3%
  • Topix index fell 1%
  • Australia’s S&P/ASX 200 Index dropped 0.4%
  • Kospi index lost 0.6%
  • Hang Seng Index retreated 0.8%
  • Shanghai Composite Index was down 1%
  • Euro Stoxx 50 futures were little changed

Currencies

  • The yen traded at 110.56 per dollar
  • The offshore yuan was at 6.4638 per dollar
  • The Bloomberg Dollar Spot Index edged up
  • The euro traded at $1.1913

Bonds

  • The yield on 10-year Treasuries held at 1.48%
  • Australia’s 10-year bond yield dropped five basis points to 1.53%

Commodities

  • West Texas Intermediate crude was at $72.56 a barrel, down 0.5%
  • Gold was at $1,774.24, down 0.2%

— With assistance by Rita Nazareth, Vildana Hajric, and Nancy Moran

By:

Source: Stock Market Today: Dow, S&P Live Updates for Jun. 29, 2021 – Bloomberg

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Critics:

Beginning on 13 May 2019, the yield curve on U.S. Treasury securities inverted, and remained so until 11 October 2019, when it reverted to normal. Through 2019, while some economists (including Campbell Harvey and former New York Federal Reserve economist Arturo Estrella) argued that a recession in the following year was likely,other economists (including the managing director of Wells Fargo Securities Michael Schumacher and San Francisco Federal Reserve President Mary C. Daly) argued that inverted yield curves may no longer be a reliable recession predictor.

The yield curve on U.S. Treasuries would not invert again until 30 January 2020 when the World Health Organization declared the COVID-19 outbreak to be a Public Health Emergency of International Concern, four weeks after local health commission officials in Wuhan, China announced the first 27 COVID-19 cases as a viral pneumonia strain outbreak on 1 January.

The curve did not return to normal until 3 March when the Federal Open Market Committee (FOMC) lowered the federal funds rate target by 50 basis points. In noting decisions by the FOMC to cut the federal funds rate by 25 basis points three times between 31 July and 30 October 2019, on 25 February 2020, former U.S. Under Secretary of the Treasury for International Affairs Nathan Sheets suggested that the attention of the Federal Reserve to the inversion of the yield curve in the U.S. Treasuries market when setting monetary policy may be having the perverse effect of making inverted yield curves less predictive of recessions.

See also

 

It’s Not Just Crypto Crashing: Here Are All The Market Bubbles Popping So Far This Year

Stock exchange market display screen board on the street showing stock market crash sell-off in red colour

As stocks stumble and cryptocurrency markets reel from a steep $400 billion correction, JPMorgan analysts warned in a Monday morning research note that other risky pockets in the broader market, including buzzy special purpose-acquisition companies and clean-energy stocks, are starting to approach bear market territory, unraveling the massive gains priced in under the longest bull market in history as investors worry about problematic inflation ahead.

Though global stocks are only down 2.5% from their peaks in April and May, some stock indexes—including the tech-heavy Nasdaq—are down about twice as much in a telltale sign that “markets are expensive and inflation is running hot” enough to doubt the central bank policy that’s been supporting economic growth, JPMorgan analysts wrote in a Monday note.

Headlining the stark reversal of fortunes, the value of the world’s cryptocurrencies—after roughly tripling this year—has crashed nearly 18% from a Wednesday high due in large part to a slew of negative tweets from billionaire Elon Musk, a vocal cryptosupporter who’s recently soured on the world’s largest cryptocurrency.

Meanwhile, clean energy stocks, which tripled last year in anticipation of sweeping progressive climate legislation, have fallen more than 35% since January as the broader tech sector slips and inflation hikes up the prices of the commodities necessary to manufacture products in the field.

Blockbuster public-market debuts have been a hallmark of the pandemic stock market—with new listings from Airbnb, Coinbase, DoorDash and more—but after soaring more than 100% in a year to a peak in February, newly listed U.S. stocks are down 26%, according to the Renaissance IPO ETF.

It gets even worse for SPACs (themselves a frothy market indicator) and the companies they’ve taken public, which have plummeted an average of nearly 38% from a February high, according to the first-ever SPAC ETF.

That big drop is in line with the 34% plunge the ARK Innovation ETF—a fund invested in “disruptive” tech and whose biggest holding is Tesla—has witnessed since February.

Crucial Quote

“All of these moves are consistent with a chain reaction that occurs when markets are expensive . . . but the ecosystem connecting the economy, markets and the [Federal Reserve] isn’t a nuclear power plant destined for meltdown,” JPMorgan analysts led by John Normand wrote Monday, pointing out that past market cycles have shown about 80% of “seemingly expensive asset classes” that crash in one business cycle end up returning to previous highs in the next cycle.

Key Background

Analysts agree that the Federal Reserve’s unprecedented pandemic stimulus efforts have helped lift stocks and other assets to meteoric new price highs. However, concerns that pent-up demand and an economy awash with cash could spark problematic inflation and force the Fed to rethink its policy are now starting to rock the market. Stocks posted their worst week in three months last week, and at the same time, other assets have become increasingly sensitive to unpredictable shocks—most notably in the crypto market’s volatile reactions to Musk’s hot-and-cold tweets.

What To Watch For

“An inflation-induced stock market correction is possible, but an inflation-fueled shift in market leadership is more likely,” analysts at wealth advisory Glenmede wrote in a Monday note to clients, echoing commentary from other experts predicting that value stocks in recently hard-hit sectors like energy and financials will lead the market this year, as opposed to longtime market leaders in technology.

Tangent

Noteworthy investments to protect against inflation include energy stocks, gold and Treasury bonds indexed to inflation (also known as TIPS).

Further Reading

Elon Musk Sends Bitcoin Tumbling With A One-Word Tweet (Forbes)

These Solar Stocks Were Among The Worst Performers Of The Week. Here’s Why. (Forbes)

Stocks Finish Rough Week Down Over Rising Inflation Fears (Forbes)

I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at jponciano@forbes.com.

Source: The 12 Best Laptops For Working, Studying, Creating And Playing Anywhere You Can Imagine

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References

Surowiecki, James (January 5, 2009). “WHAT PRECIPITATED THE STOCK MARKET CRASH OF 2008?”. The New Yorker.

 

Stocks Fall Again As Experts Worry About ‘Extremely Bullish’ Market Indicators

After closing at record highs last week, stocks are falling for the second day in a row as corporate earnings—which lifted the market to new highs during the pandemic—start to show signs of weakness, all while speculative pockets of investor mania continue to rage on.

Shortly after the open, the Dow Jones Industrial Average fell 147 points, or 0.4%, while the S&P 500 also slipped 0.4%, and the tech-heavy Nasdaq, which underperformed Monday, shed 0.3%.

Far outperforming any other stock in the S&P, shares of railroad company Kansas City Southern are soaring 15% after Canada National proposed to acquire the company in a $33.7 billion deal—topping Canadian Pacific’s $25 billion bid from last month and setting the stage for a potential bidding war.

Heading up the S&P’s losses, Marlboro parent Altria Group’s stock is slumping 6% after reports that Joe Biden’s administration (which has not commented on the matter) is considering a reduction in the amount of nicotine allowed in tobacco products.

On the earnings front, shares of IBM are climbing 2.5% after the software giant surpassed first-quarter expectations with revenue of $5.4 billion—bolstered by ongoing growth in its enterprise cloud business—and adjusted earnings of $2.2 billion.

Meanwhile, medical device company Abbott, which makes Covid-19 test kits, reported worse-than-expected revenue of $10.5 billion Tuesday morning as Covid-related sales fell nearly 10% quarter to quarter, sending shares down about 3%.

Reflecting ongoing uncertainty over the economic recovery, epicenter stocks—or those belonging to companies hard-hit by the pandemic—are also driving losses Tuesday, with chemicals firms Dupont De Nemours, cruise-liner Carnival Corp. and Delta Air Lines all falling about 2%.

Crucial Quote

“The reopening news is directionally positive, but the big problem is that many epicenter stocks have already seen their enterprise values return to pre-Covid levels, while some are well beyond where they stood in 2019,” Vital Knowledge Media Founder Adam Crisafulli said in a Tuesday morning note.

Tangent

In a break from tradition, the Bank of Japan revealed Tuesday that it opted out of buying exchange-traded funds despite weakness in Japanese stocks. Crisafulli says the move is “perhaps the most important piece of news today” because it signals the central bank is dialing back its economic support—at a time when central banks around the world, including the Federal Reserve, have revved up their accommodative policy to help the economy and usher in new stock-market highs. Japan’s Nikkei 225, the nation’s benchmark index, fell 2% Tuesday and is now down 4.5% from a February high.

Key Background

Boosted by massive fiscal stimulus, an accelerating vaccine rollout and falling unemployment, stocks have had a strong start to the year, with the S&P pulling off 23 new all-time highs in 2021, according to LPL Financial Chief Market Strategist Ryan Detrick. “Many of our favorite sentiment gauges are becoming extremely bullish, which could be a near-term contrarian warning,” Detrick says of indicators like sentiment, at a three-year high, and low cash allocations from portfolio managers increasingly piling into stocks.

Surprising Fact

The price of dogecoin is soaring Tuesday, climbing back near record territory from last week, as retail traders around the world stage a rally around cannabis holiday 4/20. The cryptocurrency, modeled after a meme and originally developed as a joke, has climbed eight-fold over the past month, nabbing a staggering $49 billion market capitalization.

Further Reading

S&P And Dow Score New Record Highs, For The Week: Health Care, Materials And Utilities Sectors Lead Gains (Forbes)

Peloton Shares Drop After It Resists Regulator Warnings About Treadmill Following Child’s Death  (Forbes)

I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at jponciano@forbes.com.

Source: Stocks Fall Again As Experts Worry About ‘Extremely Bullish’ Market Indicators

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Related Blog Posts:

Elon Musk tweets that Autopilot had not been enabled as Tesla crash brings scrutiny

Apple stock update: The key numbers you need to look at now

IBM surprises with revenue gain, see growth returning to pre-COVID-19 levels

Kansas City Southern’s stock soars after Canadian National’s ‘superior’ bid valued at $33.7 bln

 

 

Bitcoin, Tesla And GameStop: 10 Numbers That Sum Up The Fastest Market Recovery Ever

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Within just five weeks last year, the longest bull market on record erased three years worth of stock gains, crashing more than 30% from an all-time high in February to a pandemic low on March 23, the day Federal Reserve Chair Jerome Powell pledged to use the central bank’s “full range of tools to support the U.S. economy in this challenging time.” Exactly one year and trillions of dollars in government spending later, stocks have staged a historic rally, taking investors on a wild ride.

Some highlights: Electric-carmaker Tesla is now one of the most valuable companies in the world, the cryptocurrency market has swelled to more than $1 trillion and so-called meme stocks dominate Wall Street commentary with volatile swings that force exchanges to halt trading. It’s still unclear how long the new bull market can last, but one year after one of the worst stock-market crashes in history, here’s a look at its monumental recovery.

S&P 500

Up 76%

 The S&P 500 has skyrocketed over the past year, hitting its latest high on Wednesday and marking what LPL Financial Chief Market Strategist Ryan Detrick calls the “best start to a bull market ever.” It took just five months forthe index to recover its steep Covid-induced losses, the fastest recovery ever for a correction of more than 30%. To compare, it took the S&P a staggering 20 months to recover after the index crashed by 34% in 1987.

High-flying technology stocks like Amazon, Zoom and Tesla led the market to new highs last year, but this year, energy stocks have been heading up the index’s resurgence. The S&P 500 Energy Index is still about 10% off its pre-pandemic levels, but it’s surged 103% over the past year. Materials and financials aren’t far behind, climbing 92% and 90%, respectively.

Dow Jones Industrial Average

Up 76%

The Dow, which counts 30 market leaders in its ranks, has also soared 76% over the past year, though its pandemic low was on March 16, one week before the S&P’s trough. A testament to the economy’s impending recovery, cyclical stocks–which tend to outperform during periods of growth but fall hard during recessions–have driven the index’s gains.

Top-performer Boeing tanked more than 70% in the pandemic’s early days, but it’s rocketed 165% over the past year. Meanwhile, storied investment bank Goldman Sachs nabs the Dow’s second-biggest gain, surging 145% as analysts look toward financials to lead the market this year. Equipment-maker Caterpillar, commodities giant Dow Inc. and Walt Disney round out the top five Dow stocks over the past year–all surging at least 125%.

Nasdaq

Up 95%

A new stay-at-home normal that catapulted stocks like Peloton, Zoom and Slack helped the tech-heavy Nasdaq climb to meteoric highs during the pandemic, but tech’s dominance has been threatened in recent weeks. The index is down about 5% from a high on February 12, as rising Treasury yields fuel concerns that investors may sell-off high-priced tech stocks in favor of the risk-free asset class. But experts aren’t too worried yet. “It’s a buckle-your-seatbelt moment for tech stocks, but we believe this sell-off has created a golden opportunity for investors to own secular tech winners for the next 3 to 5 years,” says Wedbush analyst, Dan Ives.

Russell 2000

Up 126%

Massive fiscal stimulus spending, including nearly $720 billion in forgivable loans doled out to small businesses, has been a boon to the Russell 2000, a basket of small-cap stocks with market values that are typically less than $1 billion. The index has outperformed the broader market and posted its best quarter ever during the pandemic. With President Joe Biden’s lofty $1.9 trillion stimulus plan shoring up fresh funding for the economic recovery–and an even bigger $3 trillion infrastructure plan in the works, Bank of America analysts say they think small-caps will continue to outperform larger companies this year.

Meme Stock Mania

GameStop: Up 5,005%

Perhaps most emblematic of the market’s bullish mania are the staggering gains in the meme stocks popularized by an army of Reddit traders in late January. Heading up gains is GameStop, the past year’s best-performing stock in the Russell 2000. The Grapevine, Texas-based video game retailer reached a meteoric high on January 27 as retail traders coordinated an effort to buy up Wall Street’s most heavily shorted companies, stirring a panic among hedge funds that exited their positions with steep losses. Short interest has plummeted since, and the rally’s taken a breather, but two months into the frenzy GameStop’s still sporting eye-popping gains that have landed prices at more than 10 times analysts’ average one-year price expectations. Meanwhile, meme stocks AMC Entertainment and Blackberry are also holding up, climbing 300% and 200%, respectively, over the past year.

The S&P’s Biggest Gainer

ViacomCBS: Up 790%

ViacomCBS, the S&P’s best-performing stock over the past year (save for a couple new additions on Monday–Penn National Gaming and Caesars Entertainment), is another testament to the recent retail trading frenzy. The company, founded in 2019 by the merger between CBS and Viacom, has long garnered bearish calls from analysts, but with short interest that’s roughly five times greater than the S&P’s average, shares have skyrocketed in the months since Reddit traders started plowing into heavily shorted stocks. Though its Paramount+ streaming service has helped improve its outlook, one analyst last week said the stock has “run too far” and climbed too high.

The S&P’s Few Losers

Gilead Sciences: Down 10%

The past year’s raging bull market is not without its losses. The S&P’s worst-performing stock over the period belongs to California-based Gilead Sciences, which surged alongside other biotech companies in January 2020 as the pandemic took hold, but has floundered ever since. The company’s Covid-19 treatment, remdesivir, pulled roughly $3 billion in sales last year, and it was even hailed as a miracle treatment by former President Donald Trump, but like with other biotechs last year, investors lost interest. Only four S&P stocks have fallen over the past year, and three of them, including Biogen and Viatris, are biotechs.

Tesla’s New Dominance

Up 670%

Shares of electric carmaker Tesla–last year’s best-performing S&P 500 stock–are down for the year and have plunged nearly 25% from a late-January high—yet another sign the recently booming market for tech stocks could be over once post-pandemic spending drives growth into other industries. Tesla made its S&P debut in December and now carries about 1.5% of the index’s weight, but some experts are worried the stock’s increased volatility could spell trouble for the index-tracking funds that represent trillions in market value.

Bitcoin’s Resurgence

Up 730%

The price of the world’s largest cryptocurrency has skyrocketed over the past year amid booming institutional adoption and heightened inflationary concerns fueled by massive government spending to combat the pandemic. Just this month, Morgan Stanley became the first big bank to offer up bitcoin exposure to wealthy clients (though it’s limiting the funds to investors with “an aggressive risk tolerance”), and Goldman Sachs is also dabbling in the space with a cryptocurrency trading desk that opened up this month.

Oil’s Wild Ride

Up 160%

At $61.55, the price of a barrel of U.S. oil benchmark West Texas Intermediate stands at nearly three times the price of $23.36 one year ago, but the oil market’s volatile ride has been anything but a straight shot up. Prices seeped into negative territory for the first time in history last April, when pandemic lockdowns led to a glut in supply that became too expensive to maintain. Now, experts are bullish that prices can continue to bounce back as the world reopens.

“We’re going to need more supply as demand comes roaring back, and add to that all the stimulus that’s been pumped out by governments, the massive growth in money supply and I think we’re headed toward a global synchronized economic recovery that’s going to be pretty strong,” NOV Inc Chair and CEO Clay C. Williams said in an earnings call last month of energy’s impending boom.Follow me on Twitter. Send me a secure tip.

I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at jponciano@forbes.com.

Source: Bitcoin, Tesla And GameStop: 10 Numbers That Sum Up The Fastest Market Recovery Ever

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Discussing what I’m coining “Movement Investing” and the implications on the future of stocks, companies and investing opportunities. Social 🐦 Twitter https://mobile.twitter.com/heydave7 🎧 Apple Podcast: https://podcasts.apple.com/us/podcast… 🎙️Spotify https://open.spotify.com/show/2iin015… 📸 Instagram https://www.instagram.com/heydave7
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[…] Equity Author: Paul Pignataro A step-by-step guide on developing financial models for evaluating stock investments In this book, ‘Financial Modeling and Valuation’, Paul Pignataro packs an easy to follow […] to follow, comprehensive and practical resource for financial modeling aimed at the valuation of stock investments […]
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Dow Climbs 835 Coints To Pare Some Gains After Soaring To a Record Intraday High

Stocks sailed to record highs Monday before paring some gains as traders took in promising data on a leading COVID-19 vaccine candidate as well as President-elect Joe Biden’s victory in the U.S. presidential election, ending a days-long nail-biter over which candidate would prevail in winning the White House.

[Click here to read what’s moving markets heading into Tuesday, Nov. 10]

The S&P 500 jumped as much as 3.9% to more than 3,600 at session highs, topping its previous record intraday high of 3,588.11 from September, and its record closing high from that same day. The Dow gained as many as 1,610 points, or 5.7% to its own all-time high of more than 29,800. The Dow’s previous record intraday high was 29,568.57 from February. Both indices cut gains in the minutes leading up to market close, however.

The Nasdaq lagged and closed in negative territory, however, as hopes for a vaccine prompted traders to turn away from software stocks and other members of “stay-at-home” trade. Shares of Zoom Video Communications (ZM) and Peloton (PTON) each sold off on Monday. However, stocks poised to benefit from a broader economic reopening including airlines, cruise lines and lodging firms each surged.

Shares of Pfizer (PFE) jumped more than 7.5% after the company announced that their clinical trial showed that their vaccine candidate was more than 90% effective in preventing COVID-19 in participants with no evidence of a previous coronavirus infection. Shares of BioNTech (BNTX), which is working on the vaccine alongside Pfizer, also gained more than 16%.

Clarity around the results of the presidential election also helped fuel a market rally. Biden, alongside Vice President-elect Kamala Harris, is set to usher in a push for bigger fiscal stimulus, a public option in health care, investment in sustainability, and a more measured approach to foreign policy and trade, among other key issues. And in his victory speech Saturday, Biden promised to work toward these goals with an eye toward uniting a deeply divided nation, calling for an end of “this grim era of demonization in America” and underscoring that “if we can decide not to cooperate, then we can decide to cooperate.”

So far, traders have cast bets that some of the suspected “market negative” potential of a Biden presidency, such as a move to raise corporate taxes, would be tempered by a Senate that remained under Republican control. Two Senate races remain outstanding in Georgia and will not be decided until January, though prediction markets have so far given Democrats relatively slim odds of winning both seats needed for the party to claim a majority in the chamber.

“A divided government would constrain the Biden administration’s ability to implement plans for large-scale fiscal stimulus and public investment, tax, healthcare and climate related legislation,” analysts from BlackRock Investment Institute said in a note Saturday. “We see an increased focus on sustainability under a divided government, but through regulatory actions, rather than via tax policy or spending on green infrastructure. It also would likely signify a return to more predictable trade and foreign policy – even as U.S.-China rivalry is set to stay elevated due to bipartisan support for a more competitive stance.”

The analysts added that “some fiscal stimulus looks possible” during the lame-duck session in Congress, though the size and scope of any forthcoming package is likely to be much smaller than what a united Democratic government might have advanced.

“We’re monitoring the fiscal response closely, as a premature retrenchment could set back an economic restart that has so far surprised to the upside,” they said.

Other economists also expressed optimism that a stimulus package might get passed ahead of Inauguration Day, even after the months’ worth of discussions between Trump administration officials and congressional lawmakers fizzled out without an agreement.

“We are becoming increasingly hopeful that pressure from business leaders and vulnerable Republican Senators in 2022 will mean that something can pass before the end of the year, and very preferably before the end of the month,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, said in a note Sunday.

And for the high-flying tech stocks that have driven the market higher for much of this year, a Biden presidential victory with a likely Republican Senate poses the “goldilocks Election outcome,” according to WedBush analyst Dan Ives.

“Investors should expect a ratcheting down of US/China tensions and the ‘decoupling path’ of the Cold Tech war, which is a bullish sign for Apple (AAPL) and semi [semiconductor] stocks looking ahead,” Ives said in a note Saturday. Concerns of a tougher antitrust environment for Big Tech companies have also likely eased, he added.

Biden is also set to strike a more serious tone on combatting the coronavirus pandemic, with the outbreak having already taken the lives of more than 230,000 Americans, sickened more than 9.8 million and dragged U.S. economic activity to a historic nadir. And while vote counts were under way last week, coronavirus cases hit a grim milestone in the United States: A record more than 120,000 new cases reported on Friday alone. Biden announced a new 13-person coronavirus task force on Monday, as one of his first major acts during his presidential transition.

4:04 p.m. ET: Dow climbs 835 points, or 3%, to pare some gains after soaring to a record intraday high

Here were the main moves in markets as of 4:04 p.m. ET:

  • S&P 500 (^GSPC): +41.08 (+1.17%) to 3,550.52
  • Dow (^DJI): +834.57 (+2.95%) to 29,157.97
  • Nasdaq (^IXIC): -181.45 (-1.53%) to 11,713.78
  • Crude (CL=F): +$2.92 (+7.86%) to $40.06 a barrel
  • Gold (GC=F): -$86.20 (-4.42%) to $1,865.50 per ounce
  • 10-year Treasury (^TNX): +13.8 bps to yield 0.9580%

2:37 p.m. ET: Crude oil posts biggest jump in 6 months amid vaccine hopes

U.S. West Texas intermediate crude oil prices (CL=F) jumped 8.5%, or $3.15 per barrel, to settle at $40.29 per barrel Monday afternoon, as hopes of a vaccine and broader economic reopening drove optimism over heightened energy demand. The energy sector far and away led gains in the S&P 500 Monday afternoon, surging more than 15% versus the broader market’s gain of just over 2.6%.

Still, crude oil prices remain lower by more than 30% for the year to date, with futures at one point having turned negative this spring before recovering.

11:45 a.m. ET: Why Pfizer’s promising vaccine data is bullish for Moderna: Morgan Stanley

Pfizer’s upbeat vaccine trial data, showing a more than 90% efficacy in preventing COVID-19 in patients without prior history of infection, points to potentially promising results for Moderna’s (MRNA) own vaccine candidate, according to Morgan Stanley equity analyst Matthew Harrison. Shares of Moderna were up more than 7.5% intraday on Monday.

Moderna’s candidate, like Pfizer’s, is based on messenger RNA (mRNA) technology, which produces a synthetic version of the mRNA a virus uses to build its proteins to teach cells how to create their own and eventually build immunity. Moderna calls its vaccine candidate mRNA-1273.

“Pfizer’s strong data should translate to mRNA-1273 since the level of neutralizing antibodies for mRNA-1273 is the same or better than Pfizer in earlier stage studies,” Harrison said in a note Monday. “We await potential differentiation in patient sub-groups or secondary endpoints (such as non-symptomatic infections).”

Harrison added that Modern’s vaccine candidate, if successful, will likely be easier to transport and thereby distribute en masse, since it does not require the same ultra-cold temperatures for storage.

“Moderna requires transport at -20C (vs. -80C for Pfizer), and can be stored at regular refrigeration for a week (vs. 24 hours for Pfizer) and requires no one-site dilution (vs. dilution required for Pfizer),” he said. “We see these factors as helping to maintain a commercial edge even with similar efficacy.”

9:54 a.m. ET: Stay-at-home trade comes unwound after promising vaccine data, while reopening stocks rally

Shares of companies that comprised the “stay-at-home” trade, or those viewed as beneficiaries of widespread social distancing and working and schooling from home, tumbled Monday morning after Pfizer and BioNTech released promising data around the efficacy of their COVID-19 vaccine candidate.

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A vaccine has been viewed by many market pundits, business executives and policymakers as the key tenet of a sustained rebound in economic activity and corporate profitability, since without one, consumers would likely remain to some extent on the sidelines on returning to previous spending behaviors.

“The strong results from the Pfizer vaccine were better than most expected and means we could be opening back up sooner than expected,” Ryan Detrick, chief market strategist for LPL Financial, said in an email to Yahoo Finance Monday morning. “Coupled with an economy that continues to surprise to the upside and the stock market is now pricing in the prospects of a much better economy in ’21.”

Software stocks including Zoom Video Communications (ZM), Netflix (NFLX), Peloton (PTON), Etsy (ETSY), eBay (EBAY), Chewy (CHWY), Slack (WORK) and Amazon (AMZN) each sank shortly after market open.

The “reopening trade,” meanwhile, came roaring back to life. These included stocks like American Airlines (AAL), Delta Airlines (DAL), Southwest Airlines (LUV), Carnival (CCL), Norwegian Cruise Line Holdings (NCLH), Wynn Resorts (WYNN), Planet Fitness (PLNT), which each gained by double-digit percentages Monday morning. Each of these stocks stand – among many others – stand to benefit from a pick-up in travel and leisure spending, which had been weighed down by the pandemic.

Elsewhere in risk assets, West Texas intermediate crude oil prices (CL=F) and Brent crude (BZ=F) also each jumped by more than 9% Monday morning, with an increase in travel poised to drive a pick-up in demand for energy.

9:37 a.m. ET: Stocks soar to record levels, Dow adds more than 1,450 points

The Dow and S&P 500 each surged Monday morning as markets opened for trading.

Here were the main moves in markets, as of 9:37 a.m. ET:

  • S&P 500 (^GSPC): +132.72 points (+3.78%) to 3,642.16
  • Dow (^DJI): +1,486.64 points (+5.25%) to 29,810.04
  • Nasdaq (^IXIC): +110.27 points (+0.92%) to 11,998.57
  • Crude (CL=F): +$3.85 (+10.37%) to $40.99 a barrel
  • Gold (GC=F): -$69.20 (-3.55%) to $1,882.50 per ounce
  • 10-year Treasury (^TNX): +10.9 bps to yield 0.929%

9:20 a.m. ET: Biden announces 13 health experts will comprise his Transition COVID-19 Advisory Board

Confirming reports from over the weekend, Biden on Monday announced 13 health experts would be part of his Transition COVID-19 Advisory Board to help inform his approach to combatting the pandemic in the U.S.

“The advisory board will help shape my approach to managing the surge in reported infections; ensuring vaccines are safe, effective, and distributed efficiently, equitably, and free; and protecting at-risk populations,” Biden said in a statement.

The board will be co-chaired by three individuals, including Dr. David Kessler, who served as FDA Commissioner from 1990 to 1997, Dr. Vivek Murthy, who served as U.S. Surgeon General from 2014 to 2017, and Dr. Marcella Nunez-Smith, whose work at Yale University focuses on promoting health-care for structurally marginalized populations.

8:28 a.m. ET: Biden applauds Pfizer’s vaccine progress, but warns ‘end of the battle against COVID-19 is still months away”

Biden, in a statement Monday morning, congratulated Pfizer for its work on its COVID-19 vaccine, but urged Americans to remain vigilant in wearing masks and social distancing to keep the spread of the virus under control.

“The end of the battle against COVID-19 is still months away,” Biden said in the statement. “This news follows a previously announced timeline by industry officials that forecast vaccine approval by late November. Even if that is achieved, and some Americans are vaccinated later this year, it will be many more months before there is widespread vaccination in this country.”

“This is why the head of the CDC warned this fall that for the foreseeable future, a mask remains a more potent weapon against the virus than the vaccine,” he added. “Today’s news does not change this urgent reality. Americans will have to rely on masking, distancing, contact tracing, hand washing, and other measures to keep themselves safe well into next year. Today’s news is great news, but it doesn’t change that fact.”

7:16 a.m. ET: Dow futures surge more than 1,400 points after upbeat vaccine data, Biden victory

Here were the main moves in equity markets, as of 7:16 a.m. ET:

  • S&P 500 futures (ES=F): 3,629.40, up 119.5 points or 3.4%
  • Dow futures (YM=F): 29,737.00, up 1,456 points or 5.15%
  • Nasdaq 100 futures (NQ=F): 12,144.25, up 98.25 points or 0.8%

7:10 a.m. ET Monday: Pfizer, BioNTech, say their COVID-19 vaccine candidate is more than 90% effective

Shares of Pfizer and German drug-maker BioNTech each soared Monday morning after the companies announced that their Phase 3 clinical trials showed their COVID-19 vaccine candidate was more than 90% effective in preventing the coronavirus in participants with no evidence of a previous infection.

The trial’s analysis assessed 94 confirmed COVID-19 infections among nearly 44,000 participants.

“The case split between vaccinated individuals and those who received the placebo indicates a vaccine efficacy rate above 90%, at 7 days after the second dose,” the companies said in a statement. “This means that protection is achieved 28 days after the initiation of the vaccination, which consists of a 2-dose schedule.”

The companies added that they planned to submit a request for Emergency Use Authorization of their vaccine candidate to the U.S. Food and Drug Administration after they have a total of two months’ worth of data to achieve the agency’s safety requirements. This is expected to take place in the third week of November.

6:01 p.m. ET Sunday: Stock futures open higher after Biden named winner of presidential election

Here were the main moves in markets, as of 6:01 p.m. ET Sunday evening:

  • S&P 500 futures (ES=F): 3,517.00, up 16.25 points or 0.46%
  • Dow futures (YM=F): 28,334.00, up 130 points or 0.46%
  • Nasdaq futures (NQ=F): 12,141.5, up 66.5 points or 0.55%

By: Emily McCormick

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Stock futures surged after Pfizer and BioNTech said trial data indicated their Covid-19 vaccine is 90% effective in preventing Covid-19 among those without evidence of prior infection. CNBC’s Jim Cramer discusses what this means for the markets. Subscribe to CNBC PRO for access to investor and analyst insights: https://cnb.cx/2Vtntx6 » Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision » Subscribe to CNBC: https://cnb.cx/SubscribeCNBC » Subscribe to CNBC Classic: https://cnb.cx/SubscribeCNBCclassic Turn to CNBC TV for the latest stock market news and analysis. From market futures to live price updates CNBC is the leader in business news worldwide. The News with Shepard Smith is CNBC’s daily news podcast providing deep, non-partisan coverage and perspective on the day’s most important stories. Available to listen by 8:30pm ET / 5:30pm PT daily beginning September 30: https://www.cnbc.com/2020/09/29/the-n… Connect with CNBC News Online Get the latest news: http://www.cnbc.com/ Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC Follow CNBC News on Facebook: https://cnb.cx/LikeCNBC Follow CNBC News on Twitter: https://cnb.cx/FollowCNBC Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBChttps://www.cnbc.com/select/best-cred…#CNBC#CNBCTV

Wall Street Strategists Are Already Telling Clients What To Expect In 2021

And Wall Street strategists are starting to move on to 2021. In a note to clients published Thursday, Sean Darby, global equity strategist at Jefferies, unveiled his S&P 500 price target for 2021. And Darby expects stocks will continue going up next year.

“We expect the market to reach 3,750 by end of 2021,” Darby wrote, unveiling his year-ahead price target for the first time. On Thursday, the S&P 500 closed at 3,510, implying just under a 7% gain for the benchmark index through the end of next year.

Underpinning Darby’s positive outlook is an improved outlook for corporate earnings amid a strengthening economy and an accommodative Federal Reserve.

“All of our US macro-equity-bond indicators are positive or beginning to turn,” Darby writes.

S&P 500 earnings are finally beginning to reflect the better underlying health of the economy as the backlog of orders increases. Similarly, the Russell 3000 earnings are just turning at the same time as job openings are recovering.”

Darby adds that, “One key underwriter for the markets, under either candidate, has been the Fed with its intervention in both fixed income and credit markets. The influence of the Fed’s balance sheet should not be underestimated as the forward PE ratio has certainly tracked the ‘excess money’ in the economy.”

So while some may argue that the Fed is “out of ammo” after the unprecedented expansion of its credit facilities in the early part of this pandemic, the Fed is still a driving force behind flows in the market. On Thursday, Fed Chair Jerome Powell reiterated the central bank’s stance, saying at a press conference, “We are committed to using our full range of tools to support the economy and to help assure that the recovery from this difficult period will be as robust as possible.”

And as Canaccord Genuity’s Tony Dwyer wrote in a note to clients this week, “Remember, a significant and sustainable period of economic retrenchment comes when there is a need for money to fund forward growth but very little access to it. The opposite is true today.”

Darby also expects the political situation to serve as a tailwind to investors. At least as far as market history is concerned.

As of Friday morning, the race for president had yet to be called. However, former Vice President Joe Biden’s odds of winning improved as he took the lead in the battleground state of Georgia over President Trump. Meanwhile, the prospect of a “blue wave” in Congress has been all but ruled out by investors.

In scenarios where a Democrat is in the White House but Republicans control at least one chamber of Congress, average returns for U.S. equities have been fantastic, with the S&P 500 rising an average of 33.9% during these periods since 1989.

Divided government under Democratic presidents has been great for the stock market over the last three decades. (Source: Jefferies)

As Darby writes, “Although we think the equity markets ‘churn’ until a result is determined, history suggests that periods of Democrat Gridlocked Congress tend to deliver positive returns.”

By Myles Udland, reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland

What to watch today

Economy

  • 8:30 a.m. ET: Change in Non-farm Payrolls, October (593,000 expected, 661,000 in September)
  • 8:30 a.m. ET: Unemployment Rate, October (7.7% expected, 7.9% in September)
  • 8:30 a.m. ET: Average Hourly Earnings month-over-month, October (0.2% expected, 0.1% in September)
  • 8:30 a.m. ET: Average Hourly Earnings year-over-year, September (4.6% expected, 4.7% in September)
  • 8:30 a.m. ET: Labor Force Participation Rate, October (61.5% expected, 61.4% in September)
  • 10:00 a.m. ET: Wholesale Inventories month-over-month, September final (-0.1% in prior print)

Earnings

Pre-market

  • Before market open: Viacom (VIAC) is expected to report adjusted earnings of 81 cents per share on revenue of $5.96 billion
  • 6:00 a.m. ET: Coty (COTY) is expected to report an adjusted loss of 20 cents per share on revenue of $1.14 billion
  • 6:30 a.m. ET: CVS Health Corp (CVS) is expected to report adjusted earnings of $1.33 per share on revenue of $66.66 billion
  • 7:00 a.m. ET: Marriott International (MAR) is expected to report an adjusted loss of 8 cents per share on revenue of $2.23 billion

Top News

US election fuels strong week of gains on global stock markets [Yahoo Finance UK]

Uber beats Q3 earnings expectations powered by growth in Eats business, Rides falls short [Yahoo Finance]

Petco retail chain says it’s filed confidentially for U.S. IPO [Bloomberg]

Tesla unveils ‘Tesla Tequila’ for $250, product sold-out on website [Reuters]

YAHOO FINANCE HIGHLIGHTS

How Trump’s legal woes will worsen once he leaves office

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These states suffer the worst unemployment as the pandemic recovery continues

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Peter Boockvar, chief investment officer at Bleakley Advisory Group, joins “Squawk Box” to discuss what trends he expects to see in the market as he looks ahead to 2021. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi » Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision » Subscribe to CNBC: https://cnb.cx/SubscribeCNBC » Subscribe to CNBC Classic: https://cnb.cx/SubscribeCNBCclassic Turn to CNBC TV for the latest stock market news and analysis. From market futures to live price updates CNBC is the leader in business news worldwide. The News with Shepard Smith is CNBC’s daily news podcast providing deep, non-partisan coverage and perspective on the day’s most important stories. Available to listen by 8:30pm ET / 5:30pm PT daily beginning September 30: https://www.cnbc.com/2020/09/29/the-n… Connect with CNBC News Online Get the latest news: http://www.cnbc.com/ Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC Follow CNBC News on Facebook: https://cnb.cx/LikeCNBC Follow CNBC News on Twitter: https://cnb.cx/FollowCNBC Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBChttps://www.cnbc.com/select/best-cred…#CNBC#CNBCTV

Stocks Take a Breather Amid Election Drama

Stocks were flat Friday as investors took a pause after a four-day rally and continued to await election results from key states. However, the three major indices posted strong weekly gains.

The S&P 500 closed out the week higher by more than 7%, as tech stocks and health-care shares advanced strongly. The advance marked the index’s best since mid-April. The Nasdaq outperformed with a weekly gain of about 9%, and the Dow increased by 6.9%.

Better-than-expected jobs data helped to curb Friday’s losses. The Labor Department reported that the economy created 638,000 jobs last month, more than the 580,000 expected, while upwardly revising September’s data to 672,000. Friday’s jobs report also saw upward revisions to the last couple months’ worth of payrolls — a sign that soaring new COVID-19 infections aren’t yet preventing new jobs from being created.

Meanwhile, shares of Square (SQ) surged to a record high on Friday after more than doubling its quarterly sales amid strong demand for its digital financial service transactions during the pandemic, and posting its first quarter in which Bitcoin revenue topped $1 billion. Shares of Uber (UBER) pared losses from the overnight session to close higher after the company reported that gross bookings for its unprofitable food delivery business outpaced those of its core ride-hailing unit for a second straight quarter And shares of Peloton (PTON) ticked down after the company warned of rising supply chain costs and extended delivery delays, offsetting strong third-quarter sales and guidance for the current quarter.

The election remained the key focal point for Wall Street. As of Friday morning and three days after Election Day, several key states including Pennsylvania, Nevada, Georgia and North Carolina had yet to be called in favor of either candidate. Both candidates still have at least one path to victory depending on the outcome of the states still outstanding.

Vice President Joe Biden had 264 electoral votes and President Donald Trump had 214, according to the Associated Press’s tally as of Friday afternoon. Candidates require 270 electoral votes to be named the winner of the election.

  • States called for Trump: Ky., W. Va., S.C., Ala., Miss., Tenn., Okla., Ark., Ind., N.D., S.D., Wyo., La., Neb. (4 of 5 electoral votes), Kan., Mo., Idaho, Utah, Ohio, Iowa, Mont., Fla., Texas
  • States called for Biden: Vt., Va., Conn., Del., Ill., Md., Mass., N.J., R.I., N.Y., N.M., D.C., Colo., N.H., Calif., Ore., Wash., Hawaii, Minn., Ariz., Maine (3 of 4 electoral votes), Wis., Mich.

A win for Biden has been viewed as increasingly likely, given the candidate would need to capture just one more of the outstanding battleground states to take the White House. He said in a press conference Thursday afternoon that he had “no doubt” that when the counting is completed, he and Senator Kamala Harris “will be declared the winners.”

Trump, however, doubled down on his calls to “stop the count,” after his campaign sued in several states to challenge the ballot counting process. A judge in Michigan denied Trump’s effort to suspend the voting tabulation process in that state on Thursday.

Despite some of the uncertainty still surrounding the election, stocks rallied strongly again in the immediate aftermath of Election Day. According to a number of analysts, traders ascribed more importance to the fact that a divided government was set to be the most likely outcome of the elections, in which no single party would control each of the White House, Senate and House of Representatives. Under that scenario, major policy changes would be unlikely to get advanced.

“This machine that is the market seems to have reacted fairly well to the situation that we’re currently in, and that seems to be this perception that we’ll have a divided Washington, which will mean probably no to low regulatory issues for the Big Tech firms, [and] the corporate tax issue will perhaps fall to the wayside,” Sylvia Jablonski, Direxion Managing Director, told Yahoo Finance.

“And perhaps there’s fiscal stimulus that comes in. Whether it’s a smaller number than we hoped for, it’ll probably still come,” she added.

4:03 p.m. ET: S&P 500 posts best week since April as post-election rally powers tech, health-care stocks higher

Here’s where the markets settled at the end of regular trading on Friday.

  • S&P 500 (^GSPC): -0.98 points (-0.03%) to 3,509.47
  • Dow (^DJI): -66.78 points (-0.24%) to 28,323.40
  • Nasdaq (^IXIC): +4.3 points (+0.4%) to 11,895.23

12:58 p.m. ET: Stocks hold lower as session rolls on; election outcome hangs in balance as Biden pulls ahead in key states

The three major indices held lower Friday afternoon, pausing their rally from the past four days.

The health-care and information technology sectors outperformed in the S&P 500, while energy and financials lagged. A more than 2% jump in shares of Dow component Johnson & Johnson was offset by declines across most of the other components, as shares of American Express and UnitedHealth Group led the drop.

Here were the main moves in markets, as of 12:58 p.m. ET:

  • S&P 500 (^GSPC): -2.4 points (-0.07%) to 3,508.05
  • Dow (^DJI): -66.86 points (-0.24%) to 28,323.32
  • Nasdaq (^IXIC): -13.36 points (-0.11%) to 11,877.87
  • Crude (CL=F): -$1.55 (-4.00%) to $37.24 a barrel
  • Gold (GC=F): +$5.80 (+0.3%) to $1,952.60 per ounce
  • 10-year Treasury (^TNX): +4.4 bps to yield 0.822%

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10:20 a.m. ET: Here’s what economists are saying about the October jobs report

Many economists underscored the unexpected strength of the October jobs report, with private payroll growth actually accelerating from September. A drop in government employment, largely due to a drop in temporary 2020 Census worker positions, weighed on the headline increase in non-farm payrolls. Still, increasing new COVID-19 cases in the U.S. present a potential downside risk to the labor market heading into the winter months.

Here’s what some economists had to say about the October payrolls report, based on notes and emails sent to Yahoo Finance.

  • “Overall it is a good outcome reaffirming the economy’s strong momentum heading into 4Q. However, we have to remember that there are still 10.1mn fewer people in work than February. Moreover, with daily COVID cases rising above 100k yesterday there is a real threat that what is happening in Europe right now soon heads this side of the Atlantic … Should bars and restaurants be forced to close again those improvements seen in leisure/hospitality employment will swiftly reverse.” – James Knightley, chief international economist for ING
  • “Much of the strength in recent months has likely been due to CARES Act spending, which is now fading. The ongoing surge in COVID cases also cautions against extrapolating from the strength.” – Jim O’Sullivan, chief U.S. macro strategist for TD Securities
  • “We expect the labor market recovery to continue over the remainder of this year, but the decline in unemployment will be very gradual. The lagged effects of fiscal support provided through the CARES act are fading at a time when COVID cases are surging. Without additional support, the resurgence of the pandemic will deal yet another blow to businesses in high-touch service sectors, which are already struggling to recover from the first shock. Some of these firms may never recover, leaving a large number of people out of a job for an extended period.” – Robard Williams, Moody’s Investor Services senior vice president
  • “We expect the goods sector and retailing to continue strengthening, but the outlook for leisure and hospitality is now deteriorating rapidly as COVID infections and hospitalizations soar … If recent trends in the Homebase numbers continue, it would be reasonable to expect November payrolls to fall outright.” – Ian Shepherdson, chief economist for Pantheon Macroeconomics

9:37 a.m. ET: Stocks fall after four-day rally; Election results in focus

Here were the main moves in markets, as of 9:37 a.m. ET:

  • S&P 500 (^GSPC): -15.25 points (0.43%) to 3,495.20
  • Dow (^DJI): -114.89 points (-0.4%) to 28,275.29
  • Nasdaq (^IXIC): -89.02 points (-0.75%) to 11,803.67
  • Crude (CL=F): -$0.76 (-1.96%) to $38.03 a barrel
  • Gold (GC=F): +$7.60 (+0.39%) to $1,954.40 per ounce
  • 10-year Treasury (^TNX): +4.9 bps to yield 0.827%

9:25 a.m. ET: Biden overtakes Trump in Georgia, Pennsylvania with vote counting still under way: AP

Biden has overtaken Trump in the battleground states of Georgia and Pennsylvania based on tabulations so far in these states, according to the Associated Press. Biden would capture enough electoral votes to win the presidency if he were to be declared the winner of either of these states.

Both races, however, are still too early to call given that votes are still being counted. And Biden’s edge remains razor thin in both states: Biden’s lead in Pennsylvania is by just under 6,000 votes, and by just over 1,000 votes in Georgia.

Trump won both Georgia and Pennsylvania during the 2016 presidential election, and he prematurely and falsely declared victory in the latter earlier this week.

8:30 a.m. ET: Jobs data beat expectations; unemployment tumbles

The U.S. labor market continues to show resilience, as October nonfarm payrolls rise by a better-than-expected 638,000 during the month. Even more importantly, the unemployment rate tumbled to 6.9%, an encouraging sign that the economy continues to recover even as new COVID-19 infections soar to new heights.

Futures are pointing to a softer open after a breathtaking rally this week, but the downside is likely to be contained by the stronger jobs data.

7:20 a.m. ET Friday: Stocks point to a lower open after four straight days of gains

Here were the main moves in markets, as of 7:20 a.m. ET Friday:

  • S&P 500 futures (ES=F): 3,484.5, down 20.25 points or 0.58%
  • Dow futures (YM=F): 28,179.00, down 118 points or 0.42%
  • Nasdaq futures (NQ=F): 11,983.00, down 93.5 points or 0.77%
  • Crude (CL=F): -$1.18 (-3.04%) to $37.61 a barrel
  • Gold (GC=F): +$9.40 (+0.48%) to $1,956.20 per ounce
  • 10-year Treasury (^TNX): -0.3 bps to yield 0.775%

6:19 p.m. ET Thursday: Stock futures flat after rally

Here were the main moves in markets, as of 6:19 p.m. ET Wednesday

  • S&P 500 futures (ES=F): 3,506.00, up 1.25 points or 0.04%
  • Dow futures (YM=F): 28,308.00, up 11 points or 0.04%
  • Nasdaq futures (NQ=F): 12,071.5, down 5 points or 0.04%

By: Emily McCormick

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CNBC

The outcome of the 2020 election between Joe Biden and Donald Trump will likely have a major impact on the equity market. Although the economy has historically performed better under a Democratic president, that doesn’t always necessarily reflect on market performance. However, which party controls the White House can still be an important element for those looking to earn big in the market.

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Stock Market Sell-Off: Dow Falls Over 600 Points As Tech Shares Plunge Again

The market moved sharply lower on Tuesday—and the Nasdaq hit correction territory—as the widespread sell-off in tech stocks continued, following the sector’s worst drop since March last week.

The Dow Jones Industrial Average was down 2.3%, over 600 points, on Tuesday, while the S&P 500 fell 2.8% and the tech-heavy Nasdaq Composite lost 4.1%.

The Nasdaq officially entered correction territory, falling 10% in just the last three days of trading.

The tech sell-off continued on Tuesday, dragging the market lower as investors once again rotated out of hot Nasdaq stocks: Shares of Facebook, Amazon, Netflix and Google-parent Alphabet fell more than 3%, while Apple dropped over 6%.

Semiconductor and chip stocks—including Nvidia, Micron and Advanced Micro Devices—plunged after the U.S. Department of Defense over the weekend floated the idea of blacklisting China’s largest chipmaker, SMIC.

Shares of Tesla tanked 21%—the stock’s largest one-day drop in history—after the S&P Dow Jones Indices decided not to add it to the S&P 500 index last Friday, instead choosing Etsy, Teradyne and Catalent.

Electric truck maker and Tesla rival Nikola, meanwhile, surged by up to 53% on Tuesday after General Motors announced an 11% stake—worth $2 billion—in the company.

SoftBank’s stock also fell 7% after it was identified that the investment juggernaut had bought billions of dollars in call options in Big Tech names including Tesla, Amazon, Microsoft and Netflix, potentially driving up valuations.

Crucial quote

With tech stocks leading the market higher in recent months, the ongoing sell-off is just a correction, says Mark Haefele, chief investment officer at UBS Global Wealth Management, in a recent note. “The sector is expensive, but not in a bubble,” he said, adding that a correction “need not signal the end of the rally.” While the U.S. tech sector has climbed to surging valuations, they are still “well below levels seen at the height of the dotcom bubble of the late 1990s levels, when the index forward P/E rose above 70x.”

Key background

Tuesday’s losses follow a big reversal in major tech stocks last week. On Friday, stocks snapped a five-week winning streak, with the tech sector suffering its worst week since March 20. The Dow plunged by up to 600 points before paring back losses late in the afternoon. That followed a sharp sell-off on Wall Street on Thursday: The market posted its worst day since June as stocks retreated from record highs and tech shares plunged.

The Dow slid 2.8%—more than 800 points, while the S&P fell 3.5% and the Nasdaq dropped 5%. Shares of Big Tech companies, which have been instrumental in leading the market’s rebound over the past few months, dragged the market lower on Thursday and Friday. Before last week’s sell-off, stocks had made a strong start to September, despite it being a historically bad month for markets.

Further reading

Stock Market Sell-Off: Dow Falls 150 Points Despite Late Rally (Forbes)

Stock Market Sell-Off: Dow Plunges 800 Points, S&P 500 Falls 3.5% (Forbes)

JPMorgan Investigating Employees For Misuse Of Coronavirus Stimulus Funds (Forbes)

Virgin Galactic Stock Could Surge By More Than 50% This Year, Says UBS (Forbes) Follow me on Twitter or LinkedIn

Sergei Klebnikov

Sergei Klebnikov

I am a New York—based reporter for Forbes covering breaking news, with a focus on financial topics. Previously, I wrote about investing for Money Magazine and was an intern at Forbes in 2015 and 2016. I graduated from the University of St Andrews in 2018, majoring in International Relations and Modern History. Follow me on Twitter @skleb1234 or email me at sklebnikov@forbes.com

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