Wall Street indexes scaled all-time highs during the week due to upbeat developments around a coronavirus vaccine from Pfizer (PFE) and Moderna (MRNA) and increasing hopes of a stimulus to bolster its economy after a weak jobs report. The markets also wrapped up November on a positive note, with the S&P 500 (GSPC) gaining almost 11 percent and the Dow Jones Industrial Average (DJI) seeing its biggest monthly gain since 1987. But, surging cases of the novel coronavirus and the resultant hospitalisations and deaths have threatened to weigh on the market’s momentum as it heads into the dull year-end trading period.
Top Stories this Week
Coronavirus cases and deaths surge, hospitalisations hit a new peak
Total cases of the novel coronavirus and the number of deaths stemming from the diseases continued to see a sharp rise through the week in the United States. New hospital admissions surpassed 100,000 during the week.
The country’s death toll neared 280,000, with the state of California witnessing record spikes. The western US state has announced virus-related restrictions and, separately, San Francisco city authorities have imposed the strictest curbs to abate the spread of COVID-19.
While the markets have taken heart from upbeat vaccine news, the rapid spread of the infectious disease has time and again dented the market’s momentum. The restrictions in several states are likely to slow down its economic recovery, which is already evident from the weak jobs report as well as dipping auto sales in November. But, at the same time, the focus is also on US lawmakers as pressure mounts on them to announce a fiscal relief bill to counter the economic damage from the virus.
Vaccine race heats up as Pfizer, Moderna apply for emergency use in EU
Pfizer and its partner BioNTech (BNTX), and Moderna applied for emergency authorisations of their coronavirus vaccine candidates in the European Union earlier this week, amid uncertainty around the timeline of its rollout. Both the companies have already applied for such use in the United States.
Positive developments around the vaccine is likely to raise hopes among investors of other vaccine stocks in the United States. At the same time, they also boost investor sentiment that the economy is likely to recover soon as countries around the world look to approve the candidates and deploy its use as well.
S&P Global to buy IHS Markit in the biggest acquisition in 2020
S&P Global Inc (SPGI) agreed to buy IHS Markit Ltd (INFO) in a whopping $44 billion deal, marking the year’s biggest acquisition.
The deal heats up activity in the financial information services providers’ space. According to this report, companies are racing to be one-stop shops for clients and invest in artificial intelligence and machine learning, and the deal is likely to pressure rivals such as Intercontinental Exchange, FactSet Research Systems, and Moody’s to look for such moves. The agreement also comes on the heels of another major deal last year when London Stock Exchange’s $27-billion deal to buy Refinitiv from Blackstone Group and Thomson Reuters.
Salesforce agrees to acquire Slack Technologies
Cloud computing giant Salesforce.com (CRM) agreed to buy workplace messaging application Slack Technologies (WORK) in a deal valued at $27.7 billion, as the company looks to cash in on more remote working opportunities and build its armor to take on its rival Microsoft (MSFT) and its Teams app.
The deal gives Salesforce.com ammunition to take on other cloud computing giants and offer the workplace messaging services to its huge clientele. For Slack Technologies, which has been struggling to completely cash in on remote working trends as the usage of Microsoft Teams surges, the deal is likely to boost its usage among companies and mitigate any damage caused by its rivals.
Zoom warns of pressure on gross margins in 2021
Zoom Video Communications Inc (ZM) has warned about pressure on its gross margins going into 2021 as it battles high costs to maintain its growth momentum against a rise in free users of its video-conferencing service.
The videoconferencing services provider has witnessed a meteoric rise this year as remote working pushed workplaces and schools to use the platform. However, free users of its service have risen and raised costs for hosting itself on cloud computing services pose a threat to the company’s financials going forward. The vaccine development and a gradual easing of curbs in several countries are likely to impact its user base as well.
Warner Bros to debut movies in theaters, streaming service simultaneously
AT&T’s (T) Warner Bros studio said last week that it will release all its films in 2021 in theaters and on the HBO Max streaming service on the same day, marking a disruptive shift in the way new movies are likely to be handled next year. The company said movies such as Godzilla vs Kong and The Suicide Squad will be available on the streaming service for one month starting on the same day they hit theaters.
The move marks an unprecedented shift in strategy by studios for their films in the upcoming year and boosts the importance of OTT platforms such as HBO Max and Netflix (NFLX), among others. It also paves the way for other major studios to follow suit and therefore impact stocks of theaters such as AMC Entertainment (AMC), Cinemark Holdings (CNK), and National CineMedia (NCMI) — all of which have shed about half their value so far this year.