Friday Morning Reads
During the March Virus Induced Collapse -->>
- Ghost Town Was Financed by China
- How Strong Is Too Strong?
- All Have Their Own Drawbacks
- People Fear They’ve Got Too Much Cash
- A Collapse That Wiped Out 5 Years of Growth
- Investors Are Getting Nervous
- Coronavirus Real Estate Market
- The Wildest Passive Trade Ever
- What Happens Next?
- Why Is Gold Rising?
Stocks are set to end the week on a high note after four of the biggest tech stocks - Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Facebook (NASDAQ:FB) and Alphabet (GOOG, GOOGL) - reported quarterly results that beat high expectations. Apple easily exceeded estimates on the top and bottom lines, and announced a four-for-one stock split, sending shares past the $400 threshold in after-hours trading. Amazon's sales soared, and operating income nearly doubled compared with the big drop analysts had expected. Facebook posted 11% revenue growth and issued stronger-than-expected sales guidance for the current quarter. Results from Google's parent were a bit murkier, showing the company's first-ever year-over-year decline in advertising revenue, but sales from its cloud-computing segment came in well above expectations.
Big Tech has been Wall Street's mainstay this year, and the latest quarterly results look to accelerate that trend. Amazon and Apple are up 65% and 31%, respectively, in 2020, while Facebook and Alphabet each have gained more than 14% over the period. With all four stocks moving higher in after-hours trading, the tech titans likely will add more than $200 billion to their combined market value.
The Commerce Department said U.S. gross domestic product collapsed at a 32.9% annualized rate in the second quarter, the steepest decline since the government started keeping records in 1947, as COVID-19 crushed consumer and business spending. Meanwhile, in a sign of a faltering jobs market, the number of workers applying for initial unemployment benefits rose for the second straight week, to 1.43 million, after nearly four months of decreases following a late-March peak. The Q2 economic contraction came as states imposed lockdowns in March and April to contain the coronavirus and then lifted restrictions in May and June, allowing growth to resume. Economists expect the third quarter to show growth, but the summer rise in infections likely will temper gains.
Meanwhile, no signs of progress are evident in talks between Republicans and Democrats over a new coronavirus relief bill. The U.S. Senate failed yesterday to advance an effort to extend a $200 per week supplement to unemployment insurance benefits. Senate Republicans and the White House had sought to cut the supplement from $600 through September, after which those collecting unemployment benefits would get 70% of their previous wages when combined with state benefits. While much of the focus has been on the expiration of the additional $600-per-week of unemployment benefits, an eviction moratorium is receiving increasing attention as well.
China’s official manufacturing purchasing managers' index came in better than expected, rising to 51.1 in July from 50.9 in June for its highest reading since March. July marked the fifth consecutive month that the closely watched measure of China's factory activity topped the 50 mark that separates expansion from contraction. Combined with China's official non-manufacturing purchasing managers' index, which indicated a slight deceleration in the service sector, the data suggests China's factories have returned to pre-coronavirus levels but consumer demand remains much weaker, which means inventory is piling up.
China rejects charges that hackers linked to its government targeted Moderna (NASDAQ:MRNA) to steal data related to research on a coronavirus vaccine. Citing an unnamed U.S. security official, Reuters reported yesterday that Chinese hackers targeted the U.S. biotech firm earlier this year. Moderna said it had been in contact with the FBI and was made aware of the suspected "information reconnaissance activities" by a hacking group mentioned in last week's Justice Department indictment, where two Chinese nationals were accused of spying on the U.S., including three unnamed U.S.-based targets involved in medical research to fight COVID-19. The two other unnamed medical research companies mentioned in the Justice Department indictment are described as biotech companies based in California and Maryland - descriptions that could fit Gilead Sciences (NASDAQ:GILD) and Novavax (NASDAQ:NVAX).
Go deeper: J&J (NYSE:JNJ) COVID-19 vaccine candidate shows positive effect in primate study.
While overshadowed by the company's earnings, Amazon.com's (AMZN) tech ambitions got a boost as the FCC approved its $10B plan to put thousands of satellites in the sky to provide high-speed Internet to unserved and underserved areas. The company's Project Kuiper - using 3,200 low Earth orbit satellites - would compete in that area with the Starlink project at SpaceX (SPACE).
Australia will become the first country in the world to force Facebook (FB) and Google (GOOG, GOOGL) to pay publishers for the news content featured on its sites. It will give the companies three months to negotiate fair pay with media businesses there, a move to ensure competition and consumer protection as well as a sustainable media landscape. Other companies are likely to be targeted for similar moves by Australia's government later.
The U.K.'s major economic crimes investigator has charged Airbus' (OTCPK:EADSY) subsidiary GPT Special Project Management and three individuals in connection with a defense contract the country arranged with Saudi Arabia. Airbus says the Serious Fraud Office's investigation related to contractual arrangements that predated its acquisition of the subsidiary. The charges represent a step forward in one of the SFO's most politically sensitive probes, which has been viewed as a potential threat to the U.K.'s relationship with the Saudis.
Go deeper: Airbus works to slow cash burn, puts brakes on production.
Apple (AAPL) +6.3% PM on strong earnings, stock split.
Amazon (AMZN) +5.5% PM on strong Q2 earnings, Q3 guidance.
Alphabet (NASDAQ:GOOG) flat PM after soft ad revenue.
Facebook (FB) +5.9 PM on strong earnings, user growth.
Ford Motor (NYSE:F) +2.5% PM despite seeing weak FY demand.
Gilead Sciences (GILD) -3.6% PM as pandemic disrupts earnings.
US Steel (NYSE:X) flat PM after Q2 loss, upbeat Q3 guidance.
Electronic Arts (NASDAQ:EA) flat PM after Q2 beat, better-than-expected FY guidance.
LTC Properties (NYSE:LTC) -3.2% AH as Q2 rental revenue takes a hit.
Xilinx (NASDAQ:XLNX) -2.7% PM on in-line Q2, outlook.
Stryker (NYSE:SYK) -2.8% AH despite Q2 beat.
Vertex Pharmaceuticals (NASDAQ:VRTX) +1% AH on robust Q2 Trikafta sales.
OPKO Health (NASDAQ:OPK) -6% PM after healthy Q2 earnings.
Atlassian (NASDAQ:TEAM) -7% PM on FQ4 customer weakness, downside EPS forecast.
Exact Sciences (NASDAQ:EXAS) -3% AH on pandemic disrupting Q2 revenue.
Expedia (NASDAQ:EXPE) -6% PM after massive Q2 bookings dip.
Seattle Genetics (NASDAQ:SGEN) -2% AH despite Q2 beat.
Cabot Oil & Gas (NYSE:COG) flat PM after Q2 beat, unchanged guidance.
XPO Logistics (NYSE:XPO) -4% AH on weak Q2 shipping metrics.
Shake Shack (NYSE:SHAK) -4.8% AH on Q2 miss, pulled Q3 guidance.
In Asia, Japan -2.82%. Hong Kong -0.47%. China +0.71%. India -0.26%.
In Europe, at midday, London -0.17%. Paris +0.01%. Frankfurt +0.27%.
Futures at 6:20, Dow +0.13%. S&P +0.19%. Nasdaq +0.84%. Crude +0.45% to $40.05. Gold +1.48% to $1,995.90. Bitcoin +1.83% to $11,161.
Ten-year Treasury Yield -1.3 bps to 0.53%