Early Look

Friday, November 27, 2020

Stocks are looking higher on this holiday shortened week, looking to close out a month of historic gains in some cases, with the Dow Jones Industrials, Russell 2000, Dow Transport Index and Nasdaq Composite each touching all-time highs at some point this week. In Washington, President Donald Trump said Thursday that he will leave the White House if the Electoral College formalizes President-Elect Joe Biden’s victory, even as he insisted such a decision would be a “mistake.” A month of upbeat vaccination news on the Covid-19 front has offset surging cases, deaths and hospitalizations, as investors look to future growth and a recovery for the economy. Retailers have received a big boost in recent weeks heading into the busiest shopping days of the year (Black Friday and Cyber Monday) as the National Retail Federation said online holiday retail sales are seen rising 20%-30% and Black Friday sales forecast to rise 3.6% to 5.2% YoY. U.S. stock markets close early today (1:00 PM ET) after being closed yesterday for Thanksgiving Day. Bond markets will close at 2:00 PM ET, while metals and U.S. crude oil will settle at 12:30 p.m. and 1:30 PM respectively.

China stocks rose on Friday to post weekly gains, as upbeat profits from industrial firms pointed to a continued recovery. Japan’s Nikkei stock average ended at its highest since April 1991, rising the fourth session in a row, buoyed by hopes of economic recovery and strong corporate earnings and is up about 16% on the month. The Nikkei Index rose 107 points to 26,644 Friday, the Shanghai Index rose 38 points to 3,408 and the Hang Seng Index rose 75 points to 26,894. In Europe, the German DAX is up about 35 points to 13,320, while the FTSE 100 is down about -15 points to 6,350.

Market Closing Prices Yesterday

·     The S&P 500 Index slipped-5.76 points, or 0.16%, to 3,629.65

·     The Dow Jones Industrial Average fell -173.77 points, or 0.58%, to 29,872.47

·     The Nasdaq Composite gained 57.62 points, or 0.48%, to 12,094.40

·     The Russell 2000 Index declined -8.51 points, or 0.46% to 1,845.02

Economic Calendar for Today

·     None

World News

·     Bitcoin prices plunged as much as 15% a night, or nearly $3,000, to as low as $16,300 just a day after nearing all time record highs shy of $20K seen last in 2017. Other cryptos were hammered as well with Ethereum, Bitcoin Cash, Ripple and Litecoin all sliding

·     Profits at Chinese industrial firms surged 28.2% year-on-year in October to 642.91 billion-yuan ($97.79 billion), National Bureau of Statistics (NBS) data showed on Friday, after rising 10.1% in September versus the previous year, the biggest monthly profit growth since Jan-Feb 2017

·     The Supreme Court blocked New York from imposing strict limits on attendance at religious services to combat Covid-19, with new Justice Amy Coney Barrett casting the pivotal vote to depart from past cases that deferred to state authorities on public-health measures.

·     The European Union and UK said on Friday there were still substantial differences over a Brexit trade deal as the EU chief negotiator prepared to travel to London in a last-ditch attempt to avoid a tumultuous finale to the five-year Brexit crisis.

Sector News Breakdown

Consumer

·     Ascena Retail Group (ASNAQ) announced that it has entered into an asset purchase agreement with Premium Apparel, an affiliate of Sycamore Partners, to sell Ascena’s Ann Taylor, LOFT, Lane Bryant and Lou & Grey brands. Premium Apparel will acquire the brand assets for a purchase price of $540M

·     The Aaron’s Company (AAN) will replace Geospace (GEOS) in the S&P SmallCap 600 effective prior to the opening of trading on Wednesday, December 2

Energy, Industrials and Materials

·     Oil prices were mixed on Friday but both benchmarks are up about 7% over the week after encouraging news on potential COVID-19 vaccines. OPEC+ are leaning towards delaying next year’s planned increase in oil output, said sources on Wednesday according to Reuters. OPEC+ was planning to raise output by 2 million barrels per day (bpd) in January

·     Elbit Systems (ESLT) announced that it was awarded a contract to supply the E-LynX Software Defined Radio solution for the combat battalion level of the Spanish Army

Financials

·     U.S. arm of Spanish lender Banco Bilbao Vizcaya Argentaria SA (BBVA) and Banco de Sabadell (BNDSF) in talks to halt their potential merger agreement after failing to agree on financial terms. Previously, both banks had announced a potential merger transaction between the two entities

Healthcare

·     AstraZeneca (AZN) is facing tricky questions about its success rate that some experts say could hinder its chances of getting speedy U.S. and EU regulatory approval. Several scientists have raised doubts about the robustness of results showing the shot was 90% effective in a sub-group of trial participants who, by error initially, received a half dose followed by a full dose.

·     The European Commission (EC) has granted approval of the label extension for Vertex Pharmaceuticals’ (VRTX) Symkevi (tezacaftor/ivacaftor) with Kalydeco (ivacaftor), to include the treatment of cystic fibrosis (CF) in patients ages 6 years and older with one F508del mutation and one of 14 residual function mutations

Technology, Media & Telecom

·     Alibaba Group (BABA) and Tencent (TCEHY) each have held separate talks with Baidu (BIDU) to acquire a controlling stake in video streaming service iQIYI (IQ), source Reuters. But the discussions have stalled with little hope of resuming soon as BABA and Tencent balk at a valuation of around $20B demanded by Baidu https://bit.ly/3mcLt2J

·     Walt Disney (DIS) will lay off 32,000 workers – primarily at its theme parks business – marking an increase from the 28,000 it announced in September

·     Britain is set to impose a new competition regime next year to prevent Google (GOOG) and Facebook (FB) using their supremacy to push out smaller firms and disadvantage consumers – Reuters.

·     Concentrix (CNXC) will be added to the S&P MidCap 400 effective prior to the open of trading on Tuesday, December 1. Concentrix will take the place of AMC Networks (AMCX), which will replace R.R. Donnelley & Sons (RRD) in the S&P SmallCap 600 effective prior