Daily Market Brief: August 5, 2020

A daily summary of news, analysis and data shaping the market.
Market Brief
Wednesday, August 5, 2020
The rally rolls along. U.S. stocks ended at or near records Wednesday, with the S&P 500 finishing within a stone’s throw of its February all-time high and the Nasdaq Composite notching its 31st record high of 2020. Hope of further stimulus from the U.S. government to help out-of-work Americans contributed to the upbeat trade on Wall Street. Still, some of the data have come in weaker than expected, setting the stage for a pivotal Friday jobs report.

The Dow Jones Industrial Average closed up about 373 points, or 1.4%, at 27,201, representing its highest closing level since June 8. The S&P 500 finished 0.6% higher at around 3,328, putting the broad-market benchmark 1.71% off its Feb. 19 record high at 3,386.15, while the Nasdaq Composite Index closed up 0.5% to 10,992, marking another record finish.

DJIA 27,201.52 373.05
S&P 500 3,327.77 21.26
NASDAQ 10,998.40 57.23
US 10-Year Note 0.55 0.04
Dollar Index 92.89 -0.49
Crude Oil 42.15 0.45
Gold 2,051.60 30.60
Global Dow 3,001.56 29.77
Powered by Dow Jones Research, FactSet, Eurostat, SIX Financial Information.
Nikola’s First Quarterly Report Disappoints
Nikola, the start-up alternative-fuel truck maker, reported its first quarter as a publicly traded entity late Tuesday, and it didn’t go well.

Shares were down around 10% in early Wednesday trading. Earnings weren’t what vexed investors. Nikola doesn’t sell trucks yet, and its spending on future capacity is just ramping up. Instead, investors were disappointed that they didn’t hear more about corporate partnerships and new customers.

Wall Street is, essentially, standing pat of the stock. Analysts who liked the stock before earnings still do. Analysts who were more cautious still are.

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Square Revenue Jumps, Company Beats Earnings Estimate
Late Tuesday, Square said that it released its second-quarter earnings a day ahead of schedule because its quarterly financial information had been accessed externally.

The company topped consensus estimates for earnings and revenue rose by 64%, according to results it posted on its website late Tuesday. Square said that it had seen a July recovery in the gross amount of cash its retailer clients were moving across its payment networks.

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Analysts Say Novavax’s Covid-19 Vaccine Might Be the Best.
A day after Novavax released information on the first human trial of its Covid-19 vaccine, analysts are saying that the data looks extraordinarily promising.

In a note Wednesday morning, Cantor Fitzgerald analyst Charles Duncan said Novavax’s Covid-19 vaccine appeared to be “more-than-viable, dare we say ‘class-leading.’” J.P. Morgan analyst Eric Joseph said it’s “not too far a stretch to conclude” that the neutralizing antibody activity of the vaccine “looks best-in-class.”

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Disney Earnings Come in Better Than Feared
Walt Disney’s diversified entertainment and media portfolio hit a major snag in the latest quarter, as the coronavirus pandemic impacted practically every business that Disney operates in around the globe.

Tuesday evening, the company reported a 147% tumble in its fiscal third- quarter profit. Management estimated that Covid-19 took a nearly $3 billion bite out of Disney’s operating income in the period. Big gains in its streaming segment didn’t make up for losses elsewhere.

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SpaceX Took a First Small Step to Mars. That’s Great News for Space Investors.
SpaceX is back in the news, creating hope for aspiring astronauts with a test of part of its Starship system, meant to eventually take crews to the moon, to Mars, and beyond.

The trial liftoff and landing also has the potential to fuel investors’ dreams of finding the next big thing. Space investing and the “low-earth-orbit economy” are still in the early stages of development.

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Oil Stocks are Surprising Winners as Investors Look Past a Rough Quarter
Oil companies are reporting their worst earnings results in years, but their stocks are on the rise. In fact, the energy sector is up 4% on the week, better than any other sector in the market.

It is a sign that investors have moved on from the disastrous second quarter and are starting to pick winners for the future. Among the companies winning strong reviews for their earnings reports are shale-oil drillers Devon Energy, Pioneer Natural Resources, and Diamondback Energy.

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Bank Stocks Aren’t Leading the Charge This Time. Here’s Why.
Bank investors can’t be blamed for feeling frustrated.

While the broader market has recovered from its March lows—with several stocks notching fresh highs—bank stocks have only slightly trimmed their losses. Even more perplexing, banks and financial stocks are bucking the historical trend of being market leaders following a downturn.

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ADP Jobs Report Is a Stark Warning on the Economic Recovery That the Stock Market Is Ignoring
Hiring slowed markedly in July as a renewed spike in coronavirus cases prompted some states and companies to roll back reopenings, data released on Wednesday shows. It is the latest sign that the U.S. economic recovery is at risk of reversing.

Payroll provider ADP said companies added 167,000 jobs in July, far short of the 1.2 million economists polled by FactSet expected. That follows bigger gains in June and May, when employers added a total of 7.6 million jobs.

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Beyond Meat Earnings Easily Topped Expectations
Beyond Meat reported earnings that, once again, blew past Wall Street’s expectations. Sales growth at the alternative protein maker remained strong even as the pandemic shakes up the mix of sales between groceries and restaurants.

Beyond recorded $113 million in second-quarter sales and a per-share loss of 2 cents. Wall Street was looking for $99 million in sales and a similar small loss.

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Kodak Has People Talking Again
Wall Street was shocked to learn Eastman Kodak was awarded a $765 million loan to make generic-drug ingredients—often called active pharmaceutical ingredients.

News sent the stock all over the place. Now investors have to figure out what the new business—to be called Kodak Pharmaceuticals—is worth. It isn’t an easy job.

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