>>> What to look at today - 13th of January 2021

The dollar extended losses and Treasury yields continued their retreat from a 10-month high as traders weighed the appetite for bonds and the latest comments from Federal Reserve officials on asset purchases. Asian stocks headed toward another record high.
Ten-year Treasury yields fell to just above 1.10% after solid interest in a government auction on Tuesday. Two Fed officials also pushed back against speculation that asset purchases could be tapered soon. The dollar’s decline aided emerging-market currencies.
In Japan, the Nikkei 225 outperformed, reaching a record in dollar terms. Equities also ticked up in South Korea, while Hong Kong was flat. S&P 500 contracts edged higher after the index fluctuated between gains and losses before closing little changed. Oil was on course for its longest winning streak in almost two years.
US After Hours BHC +5.7%, ACLS +5.3%, KBH +3.4% rise on bullish earnings/guidance; URBN falls -10.3% on disappointing comps; PRTY -16.8%, LOCO -3.2% fall on weak guidance

Nikkei +1.04% Hang Seng -0.07% CSI -0.70% Shanghai -0.58% Shenzen -1.35%

Eur$ 1.2211 CNH 6.4467 CNY 6.4551 JPY 103.65 GBP 1.3680 CHF 0.8861 RUB 73.4595 TRY 7.4518 WTI$ 53.78 +1.07%

S&P +0.16% Nasdaq +0.28% EuroStoxx 0.00% FTSE +0.20% Dax +0.03% SMI -0.03%

Macro :
- Goldman Strategists Flag Dollar, Junk Bonds for Risk-Off Hedges
- U.S. Unveils Plan to Counter China’s Rise From India to Taiwan

Keep an eye :
- AMG NA : AMG Advanced in 5-Year Lithium Concentrate Supply Pact
- ASM NA : ASM International Names Paul Verhagen CFO
- BMPS IM : Paschi Stand-Alone Plan Sees 2021 Loss of EU562M: Repubblica
- EN FP : Colas, Parsons Win Canada Metro Contract Worth Around EU1B
- CA FP : Couche-Tard, Carrefour Confirm ‘Friendly’ Talks
- CA FP : Circle K Owner Couche-Tard Said to Explore Purchase of Carrefour
- CA FP : Carrefour Brazil Unit Jumps on Report of Parent’s Potential Deal
- CE2 GY : CropEnergies 9M Operating Profit EU79.4M Vs. EU70.3M Y/y
- DPW GY : Deutsche Post Over-Delivers With Preliminary 2020 Ebit: React
- EDPR PL : EDPR to Build Two Portuguese Wind Farms With EIB Funds
- ENT LN : Enlabs Shareholder Says Has Support to Block Entain’s Bid: DI
- GALP PL : Galp Says Andy Brown to Become CEO as Gomes da Silva Steps Down
- JMT PL : J. Martins 2020 Revenue EU19.29b vs Est. EU19.18b
- NOKIA FH : Nokia, M1 Partner to Deploy Core Software to Drive Singapore 5G
- NOKIA FH : Blackberry Sells 90 Patents to Huawei, Globe and Mail Says
- ORSTED DC : Orsted Unveils Almost $3 Billion in 2020 Ebitda, Beating Outlook
- ORSTED DC : Orsted Says Profit This Year Is Set to Be Weaker Than in 2020
- RNO FP : Renault CEO to Reveal Plan to Dig French Carmaker Out of a Rut
- RNO FP : Renault to Slow South America, Turkey Ops; See Old Models: Point
- RNO FP : Nissan Insider Key to Ghosn’s Downfall Speaks for First Time
- SAN SM : Santander’s ESG Team Makes Debut With Renault, Plug Power Deal
- LIGHT NA : Signify Proposes EU1.35/Shr Extraordinary Div., To Repay Debt
- SOLB BB : Solvay Plans Restructuring, May Cut About 900 Jobs: L’Echo
- SW FP : Sophie Bellon Is Reappointed as Chairwoman of the Board
- TKWY NA : Just Eat Takeaway.com to Study Optimal Listing Venues
- TKWY NA : Just Eat Takeaway Expects 2020 Revenue Growth of More than 50%
- TEF SM : Telefonica Subsidiary Sells Telco Tower Assets: M&A Snapshot
- TEMN SW : Temenos Prelim 4Q Non-IFRS Revenue $277.1M
- UCG IM : *UNICREDIT'S PRIORITY IS TO FIND NEW CEO: BISONI TO SOLE
- WDI GY : Wirecard China Push Fit With Merkel Strategy, Adviser Says

>>> Europe : Brokers Upgrades & Downgrades - 13th of January 2021

>>> Up
* Ashtead Raised to Buy at HSBC; PT 4,150 pence
* Capgemini Raised to Overweight at JPMorgan; PT 150 euros
* Castellum Raised to Hold at Handelsbanken; PT 200 kronor
* Electrocomponents PT Raised to 1,230 pence at Jefferies
* Electrocomponents Raised to Buy at HSBC; PT 1,000 pence
* Endesa Raised to Overweight at Barclays; PT 27.40 euros
* Fortum Raised to Hold at Deutsche Bank; PT 18 euros
* Fuchs Petrolub PT Raised to 58 euros from 50 euros at Berenberg
* Intertek Raised to Hold at HSBC; PT 5,800 pence
* KAZ Minerals PT Raised to 800 pence at Deutsche Bank
* Medivir Raised to Hold at Handelsbanken; PT 11 kronor
* Nestle Raised to Sector Perform at RBC; PT 98 Swiss francs
* Next Raised to Add at AlphaValue
* Richemont PT Raised to 95 Swiss francs at RBC
* Saint-Gobain Raised to Buy at Citi; PT 50 euros
* Topdanmark AS Raised to Buy at SEB Equities; PT 305 kroner

>>> Down
* Acciona Cut to Equal-Weight at Barclays; PT 121 euros
* ACS Cut to Hold at Grupo Santander; PT 31.50 euros
* Aena Cut to Hold at Grupo Santander; PT 133 euros
* ALD Cut to Neutral at JPMorgan; PT 12.06 euros
* B&O Raised to Hold at ABG; PT 37 kroner
* Dustin Cut to Hold at SEB Equities; PT 80 kronor
* Edenred Cut to Hold at HSBC; PT 49.50 euros
* Elis Cut to Hold at HSBC; PT 14 euros
* Ferrovial Cut to Hold at Grupo Santander; PT 29 euros
* Fraport Cut to Underweight at Grupo Santander; PT 40 euros
* Johnson Service Cut to Sector Perform at RBC; PT 140 pence
* Orsted AS Cut to Sell at ABG; PT 1,080 kroner
* Orsted AS Cut to Hold at SEB Equities; PT 1,300 kroner
* Rio Tinto Cut to Hold at Deutsche Bank; PT 6,000 pence
* Schoeller-Bleckmann Cut to Sell at Baader Helvea; PT 25 euros
* Shop Apotheke Cut to Hold at Jefferies; PT 175 euros
* SMA Solar Cut to Hold at Jefferies; PT 65 euros

>>> Initiation
* Fortnox Rated New Buy at SEB Equities; PT 470 kronor
* Lundin Mining Rated New Buy at Deutsche Bank; PT 91 kronor
* Nordnet Rated New Hold at DNB Markets; PT 140.28 kronor
* Simcorp Rated New Buy at Berenberg; PT 1,075 kroner

>>> Call
* Endesa Upgraded, Renewables Pipeline Not Priced In: Barclays
* Nestle Upgraded at RBC on Improved Defensive Attractions
* Saint-Gobain Set for Higher Growth and Margins, Citi Ups to Buy
* SMA Solar Future is Bright, But Time For Breather: Jefferies

>>> After Hours Summary: BHC +5.7%, ACLS +5.3%, KBH +3.4% rise on bullish earnin

After Hours Summary: BHC +5.7%, ACLS +5.3%, KBH +3.4% rise on bullish earnings/guidance; URBN falls -10.3% on disappointing comps; PRTY -16.8%, LOCO -3.2% fall on weak guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: STIM +15.8%, BHC +5.7%, ACLS +5.3% (guides Q4 above consensus; also announces new $100 mln share repurchase program), KBH +3.4%, CLPT +3.4%, RILY +2.8% (raises guidance for Q4; also announces stok offering)

Companies trading higher in after hours in reaction to news: MTRX +27.6% (signs deal with GTLS for hydrogen systems), DMTK +11.4% (announces inclusion of genomic patch testing in national guidelines), ALLY +6.5% (authorizes $1.6 bln stock repurchase program), REGN +2.7% (announces sale of additional COVID-19 antibody cocktail doses to US govt), FTI +1.1% (new CFO), NKLA +1% (secures "innovative" electric rate schedule in Arizona), BB +0.9% (sells 90 patents to Huawei, according to Globe and Mail), KTOS +0.6% (awarded contract by Elekta), IVZ +0.3% (reports Dec AUM data), SSTK +0.3% (increases dividend), X +0.3% (local ambient air pollution concentrations fell sharply), WBA +0.3% (makes majority investment in iA, a supplier of pharmacy automation software), ABBV +0.2% (enters into option to acquire Cypris Medical), BEN +0.2% (reports Dec AUM data), HOG +0.1% (to reveal 2021-2025 strategic plan)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: PRTY -16.8%, LOCO -3.2%

Companies trading lower in after hours in reaction to news: PRVB -10.5% (stock offering), URBN -10.3% (reports disappointing Nov-Dec retail comps), MARA -9.9% (files for $300 mln mixed securities shelf offering), AFMD -7.9% (stock offering), RPAY -5.7% (stock offering and convertible notes offering), VNT -2.9% (VNT commences offering of shares by former parent FTV), MRUS -2.3% (announces collaborations in Japan and the Netherlands to raise awareness of eNRGy clinical trial), AMWL -2.1% (stock offering), BA -0.3% (awarded $1.7 bln Air Force contract), V -0.2% (will terminate merger with Plaid), PFE -0.2% (investigates post-vaccine death, according to Bloomberg), T -0.2% (NII Holdings settles with AT&T), APAM -0.1% (reports Dec AUM data), AB -0.1% (reports Dec AUM data)

WSJ : ArcLight-Backed SPAC Connects With E-Bus Maker Proterra

ArcLight-Backed SPAC Connects With E-Bus Maker Proterra
The private-equity firm’s blank-check company has agreed to combine with the electric vehicle maker at a $1.6 billion valuation

A blank-check company backed by energy investment firm ArcLight Capital Partners agreed to acquire and take public electric vehicle company Proterra Inc. in a deal that gives it an enterprise value of about $1.6 billion.

ArcLight Clean Transition Corp. , the special-purpose acquisition company, will use $278 million raised through an initial public offering in September as well as $415 million being raised in a private investment in public securities transaction to help finance the deal, regulatory filings show. The deal is expected to close in the first half of the year.

Shares of the blank-check company, which priced its IPO at $10 a share and closed Monday at $12.19 each, more than doubled on Tuesday on news of the deal, closing at $25.20.

Blank-check companies invert the usual model of publicly traded businesses, raising money from investors first and then hunting down an operating company to acquire and take public. In this case, ArcLight is latching on to a wildly popular market.

Investors have chased after electric vehicle makers over the past year. Shares of auto maker Tesla Inc., which tumbled to as little as $72.24 in mid-March, soared in subsequent months, closing 2020 at $705.67 and elevating founder Elon Musk in the ranks of the world’s richest people. Tesla’s stock has climbed since then to close at $849.44 on Tuesday.

The ArcLight-based SPAC looked at a number of potential targets before choosing Proterra, and was attracted by the company’s proven products and significant revenue, two factors that differentiate the company from most of its competitors, according to people familiar with the matter.

“It is a company that has been selling products for 10 years and accumulated a [real] world mileage and developed their products to a level that others are dreaming to get to today,” one of the people said.

Burlingame, Calif.-based Proterra is in a related but decidedly different market, as it produces electric buses and battery assemblies for use in commercial vehicles and charging systems rather than for passenger cars. The company expects to use the roughly $648 million in SPAC deal proceeds to fund research and development as well as to expand its battery production capacity, the filings show.

Even though Proterra is best known as an electric-vehicle maker, the SPAC executive team also was attracted to the fact the company also produces a range of other products, from batteries and powertrains to charging systems and software, according to the people. They added that the SPAC saw particular commercial potential in expanding Proterra’s charging-system business, which includes not only charging equipment but systems that help fleet owners manage the charging needs of their vehicles.

Proterra has an order backlog totaling $750 million and expected 2020 revenue of about $193 million. The company also expects revenue to rise to $439 million in 2022 and about $2.57 billion in 2025, according to the filings. The company estimates the size of the global market for commercial vehicles at about $225 billion.

ArcLight founder Daniel R. Revers leads the SPAC as chairman. Some of the expected PIPE investors include ArcLight funds, as well as Proterra strategic partners Daimler Trucks and Constellation, and existing investors Franklin Templeton Investments, Broadscale, 40 North and G2VP, the filings indicate.

New investors backing the company through the PIPE transaction include venture capitalist Chamath Palihapitiya and Fidelity Management & Research Co., as well as funds and accounts managed by BlackRock Inc. and Neuberger Berman Group.

FT : Spacs: full throttle

FT : Spacs: full throttle

We’ve talked a lot in DD about special purpose acquisition companies and how the boom in blank-cheque listings is upending the traditional initial public offering process. 

Private companies usually slog for years preparing for the moment they have the chance to win over investors through a carefully prepared roadshow before taking their shares public through an IPO in which the price is determined by supply and demand. 

But Spacs have completely disrupted that routine, particularly for early-stage companies. In some cases, businesses with no revenue (or even functioning products) are finding that all they need to become a publicly traded company is to find a Spac willing to merge with them.


And unlike traditional IPOs, where executives are forced to lay low for fear of getting on the wrong side of regulators, Spacs allow these companies to use what some bankers are calling “regulatory arbitrage”. 

The trend has been most apparent in the auto tech sector, where institutional and retail investors eager to find the next Tesla have ploughed in cash. Executives are keen to tap that enthusiasm and ascribe their own companies’ valuations to Tesla’s success. Cue the hype. 

An analysis by DD’s Ortenca Aliaj, Sujeet Indap and Miles Kruppa found that the nine auto tech groups that listed via a Spac last year have a combined market value approaching $60bn. Between them, they expect just $139m in revenues for 2020 — a fraction of the valuations. 

That success is partially due to the fact that they can woo investors with future projections that to some may seem like a pipe dream. Among the auto tech companies that have gone public this year, few have sold a single product. Some are still in the process of developing a product and inevitably yet to find out whether it’s successful or not.


For example, the nine companies Ortenca, Sujeet and Miles looked at are projecting $26bn in revenue by 2024. That’s a big jump from 2020’s revenues ($139m as stated above). 

The ability for a company to tell its own story makes a big difference. 

Fisker, an electric car company that went public via an Apollo-backed Spac and has a $4bn valuation, currently has no revenue. But its presentation shows that the start-up expects to go from zero to $10bn in annual revenue in the next three years. That’s with its Fisker Ocean vehicle still two years away from production. 

By comparison, Tesla made about $2bn in annual revenue in the three years after it went public in 2010. Though if Elon Musk could’ve disclosed projections for future earnings, DD has a feeling he might’ve had bigger numbers in mind. 

FT : Canada’s Couche-Tard in takeover talks with Carrefour of France

Canada’s Couche-Tard in takeover talks with Carrefour of France
Supermarket groups confirm early-stage discussions are under way on potential $50bn tie-up

Canadian convenience store group Alimentation Couche-Tard has approached France’s Carrefour about a takeover in a deal that would combine two retail groups jointly worth more than $50bn.

The talks were at an early stage, the companies said on Tuesday night in separate statements. Couche-Tard had made the approach fairly recently, said one person briefed about the matter, while a second said Carrefour needed time to study the idea.

If completed the deal would push Couche-Tard further into Europe and Latin America, and diversify its convenience store business by adding Carrefour’s portfolio of large-format supermarkets in suburban areas, as well as smaller urban stores. 

The Canadian group, which has a market value of $37bn, has long grown through acquisitions and was among the bidders last year for Speedway, the petrol station group owned by Marathon Petroleum that was eventually acquired by Japanese rival Seven & i Holdings for $21bn. 

In 2019, it sought to buy Caltex Australia in a $5.8bn deal that would have seen the company gain a foothold in a third continent but Couche-Tard walked away last April as the coronavirus pandemic took hold. 

Couche-Tard, based in suburban Montreal, has a network of more than 9,200 convenience stores across North America through several brands, including Circle K, employing about 109,000 people. The group has a smaller presence in Europe, where it has fewer than 3,000 stores in its network. In addition to convenience stores, it also owns petrol stations often located on site.

Carrefour is France’s largest supermarket chain with some 2,000 supermarkets and more than 700 large-format hypermarkets in Europe; it also has a presence in Brazil and Argentina. Alexandre Bompard, chief executive, has been on a cost-cutting drive in recent years, allowing him to make significant investments in developing ecommerce, which has boomed during the pandemic. It has a market value of €12.5bn and net debt of €15.8bn. 

The deal would see Couche-Tard follow a similar path to that taken by the owners of the highly acquisitive UK petrol stations business EG Group. They last year agreed a £6.8bn deal to buy the British supermarket chain Asda from Walmart in a deal that will not merge the two businesses but could lead to Asda opening convenience stores at EG Group petrol station sites. 

Couche-Tard’s approach to Carrefour was first reported by Bloomberg News. 

FT : WhatsApp fights back as users flee to Signal and Telegram

WhatsApp fights back as users flee to Signal and Telegram
Facebook-owned messaging app says people have misinterpreted changes to its privacy policies

Facebook is scrambling to deal with a sudden competitive threat to its messaging platform WhatsApp after a change to its terms of service sparked privacy concerns and prompted users to turn to rivals such as Signal and Telegram in droves.

The encrypted messaging app, which has more than 2bn users globally, and several of its senior executives spent Tuesday trying to clarify forthcoming privacy policy changes covering the data that can be shared between WhatsApp and its parent now that it is deepening its push into ecommerce.

Signal was downloaded 8.8m times worldwide in the week after the WhatsApp changes were first announced on January 4, versus 246,000 times the week before, according to data from Sensor Tower.

The app also got a boost when Elon Musk, the chief executive of Tesla, tweeted “Use Signal” on January 7. 

By contrast, WhatsApp recorded 9.7m downloads in the week after the announcement, compared with 11.3m before, a 14 per cent decrease, Sensor Tower said.

Telegram, a popular messaging app among cryptocurrency traders, also benefited from the WhatsApp concerns. It reached 11.9m downloads the week after the January 4 change from 6.5m the week before, Sensor Tower said. In a message sent to all its users on Tuesday, Telegram said that it had now surpassed 500m active users. 

Some users interpreted WhatsApp’s new policies as suggesting that sensitive user data will be shared with its parent company for the first time, even including the content of messages, prompting outrage on social media — and a forceful correction from the company.

WhatsApp said in a statement posted late on Monday that the policy update, which comes into force on February 8, “does not affect the privacy of your messages with friends or family in any way”, adding that it wanted to address “rumours going around”. 

While neither app will be allowed to access any messages, WhatsApp’s privacy policies have since 2016 allowed it to share certain other user data with its parent company. 

According to the latest update, Facebook and WhatsApp will now also be able to share certain payments and transactions data in order to boost advertising, as the company pushes further into ecommerce with the development of digital storefront features such as Facebook Shops. 

The changes also outline how merchants communicating with customers via WhatsApp can choose to store those chats in Facebook-hosted servers, and use that data to inform their advertising on Facebook. 

Several top company executives took to Twitter on Tuesday to publicly defend the changes, including Adam Mosseri, chief executive of Instagram, which is also owned by Facebook. “There is a lot of misinformation about the WhatsApp ToS [terms of service] right now,” he said.

Still, Jason Kint, chief executive of Digital Content Next, a US trade association for online publishers, noted that Facebook had initially promised that WhatsApp would not be required to share any data with its parent company when it was acquired in 2014. 

“The announcement regarding further use of WhatsApp data in the Facebook mother ship reeked of a classic ‘bait and switch’ in which users were made promises around protecting their data only to once again have the promise broken,” he said, adding that regulators in the US and Europe were “are all filing lawsuits for Facebook’s repeated abuse of consumer data to lock in its market dominance”.

Signal was co-founded by WhatsApp co-founder Brian Acton after he left the company following disagreements over user privacy and its lack of independence from its parent company.

The sudden jump in users at Signal and Telegram has raised questions about whether the smaller apps are prepared to scale. Last week Signal said it was “continuing to shatter traffic records and add capacity” after experiencing some problems with the creation of groups on its services and delays in sending verification codes to users.

FT : UniCredit sounds out Orcel and Thiam as chief executive hunt narrows

UniCredit sounds out Orcel and Thiam as chief executive hunt narrows
Italian lender assembles a shortlist to replace Jean Pierre Mustier

UniCredit has approached some of Europe’s top available bankers including Andrea Orcel, Tidjane Thiam and Martin Blessing as it looks to appoint a new chief executive after a dispute over the Italian lender’s future.

The board has been sounding out candidates and will make a decision within the next four weeks, according to people familiar with the process. They face a tight timetable after the incumbent, Jean Pierre Mustier, resigned last month in a disagreement over strategy.

Mr Orcel, the former head of UBS’s investment bank, is one of the frontrunners. However, in order to win approval from regulators he would likely first have to disentangle himself from a €112m lawsuit against Santander, said two people familiar with the process. The controversial Italian dealmaker is suing the Spanish bank after it withdrew its offer for him to be CEO in a dispute over pay and profile.

Former Credit Suisse chief executive Mr Thiam — who the Financial Times reported this week is preparing to launch a $250m special purpose acquisition company — has not decided whether to pursue the role despite being one of the board’s preferred candidates, the people said.

UniCredit declined to comment. Mr Thiam, Mr Orcel and Mr Blessing could not immediately be reached for comment.

Mr Mustier fell out with the board after insisting on prioritising wider European expansion, whereas non-executives insisted he double down on Italy. 

The Frenchman also initially resisted the government’s demands that UniCredit buy struggling, state-owned peer Monte dei Paschi di Siena. Mr Mustier announced on December 1 he would step down by April’s annual general meeting.

Mr Blessing — the former Commerzbank chief executive who ran UBS’s wealth management unit until 2019 — is in talks, as well as ex-Bank of America dealmaker Diego De Giorgi, said the people familiar with the situation.

Internally, co-CEO of commercial banking Niccolò Ubertalli is viewed as a strong contender. Mediobanca’s chief Alberto Nagel, whose company is advising Monte dei Paschi, has also been approached.

Marina Natale, the chief executive of Italian publicly-backed asset manager AMCO and UniCredit’s former chief financial officer; Matteo del Fante, who runs Poste Italiane, have also been contacted about the role.

Incoming chairman Pier Carlo Padoan — the former finance minister who oversaw the bailout of Monte dei Paschi — is the key figure in the search, which is being assisted by headhunter Spencer Stuart.

The bank’s appointments committee convened on Tuesday to discuss the fewer than 10 candidates under consideration and would report to the main board on Wednesday with a shortlist, one of the people said. The board aims to make a final decision by February 10.

The next CEO will also have a tough task charting a strategic course between the desires of the Italian government and the demands of UniCredit’s international investors, who are already unhappy with the way Mr Mustier’s exit was handled. 

Shareholders have been pressing the board to choose a candidate with global and commercial banking experience, as well as a focus on strategic transformation. Given UniCredit is Italy’s only globally systemic financial institution, experience of working with the ECB is also viewed as an important attribute. 

One top-10 shareholder in UniCredit said Mr Orcel was their preferred candidate as he “ticks most of the boxes”, adding: “Any CEO coming into that situation needs to know their way around global regulators.”

Mr Orcel has a close relationship with UniCredit, having orchestrated the €21bn merger between Credito Italiano and UniCredito in 1998 that formed the group. UniCredit also moved as a client to UBS with Mr Orcel when he switched from Merrill Lynch in 2012.

However, the board would prefer someone with commercial lending experience, not just investment banking. Bank union leader Lando Sileoni, secretary-general of FABI, told the FT: “We want a non-aggressive Italian who will not close branches and announce thousands of redundancies after the MPS deal.”

Another obstacle for the board is the relatively low level of pay they can offer. Mr Mustier earned €1.2m in 2019 at UniCredit, far less than European peers such as recently departed UBS CEO Sergio Ermotti, who was paid SFr13.8m (€13m), and Carlo Messina, chief executive of fierce local rival Intesa Sanpaolo, who is paid €4.3m.

In order to attract suitable candidates, UniCredit is considering offering significantly more than Mr Mustier’s final salary. The Frenchman took a pay cut last April to show solidarity during the first lockdown in Italy, leaving his fixed pay at €900,000.

Still, if favoured candidate Mr Orcel were to take the job he would potentially forfeit millions in deferred pay still owed to him by UBS by joining a rival.

>>> US Close Dow +0.19% S&P +0.04% Nasdaq +0.28% Russell +1.77%

Closing Stock Market Summary

The S&P 500 finished little changed on Tuesday, as gains in cyclical stocks helped offset losses in growth stocks and health care names. The Russell 2000 (+1.7%) extended its hot start to the year and closed at a fresh record high, while the Dow Jones Industrial Average (+0.2%) and Nasdaq Composite (+0.3%) posted smaller gains. 

Investors remained committed to the so-called recovery trade, which meant that small-caps, cyclical stocks, oil prices ($53.20/bbl, +1.01, +1.9%), and longer-dated Treasury yields were up on expectations for improved economic growth. Hopes that the vaccine rollout in the U.S. could soon speed up was cited as a positive factor. 

The energy sector (+3.5%) set the winning pace with a 3.5% gain in a continuation of its recent outperformance. The materials (+1.4%), consumer discretionary (+1.3%), financials (+1.1%), and industrials (+1.0%) sectors advanced at least 1.0%. In addition, advancing issues outpaced declining issues by healthy margins at the NYSE and Nasdaq. 

The downside was that growth stocks were pressured by the continued rise in long-term interest rates since their high valuations have been largely supported by extremely low rates. The 10-yr yield peaked at 1.18% amid increased selling interest, but it finished one basis point higher at 1.14% after a $38 billion 10-yr note government auction was met with strong demand. 

The S&P 500 information technology sector (-0.4%), which is home to many growth stocks, pared losses as Treasury yields started to come off session highs. The communication services (-1.5%) and health care (-1.1%) sectors closed near session lows.

Separately, the financial and energy sectors received additional support from positive-minded analyst recommendations in stocks like Wells Fargo (WFC 33.94, +0.70, +2.1%), Charles Schwab (SCHW 61.20, +0.95, +1.6%), Chevron (CVX 93.34, +1.74, +1.9%), and Occidental Petroleum (OXY 22.62, +2.54, +12.7%). 

The 2-yr yield decreased one basis point to 0.14%. The U.S. Dollar Index fell 0.5% to 90.04 amid relative strength in the euro and British pound. 

Reviewing Tuesday's economic data:

  • Job openings decreased slightly to 6.527 million in November from 6.652 million in October.
  • The NFIB Small Business Optimism Index decreased to 95.9 in December from 101.4 in November.

Looking ahead, investors will receive the Consumer Price Index for December, the Treasury Budget for December, the Fed's Beige Book for January, and the weekly MBA Mortgage Applications Index on Wednesday.

  • Russell 2000 +7.8% YTD
  • Dow Jones Industrial Average +1.5% YTD
  • Nasdaq Composite +1.4% YTD
  • S&P 500 +1.2% YTD