Closing Stock Market SummaryThe S&P 500 dropped as much as 3.1% on Friday as investors continued to take profits in the mega-cap/growth/momentum stocks, but a resounding buy-the-dip mindset helped limit the market's decline. The benchmark index briefly returned to its flat line before ending the day lower by 0.8%.
The Nasdaq Composite declined 1.3% after being down 5.1%. The Dow Jones Industrial Average declined 0.6% after being down 2.2%. The Russell 2000 declined 0.6% after being down 2.8%.
Apple (AAPL 120.96, +0.08, +0.1%) was an influential factor in helping lift the major indices off those session lows. AAPL recouped losses after finding itself down 8.3% intraday and down 19.6% from its record high earlier this week. The fast, and steep, downturn presumably presented many traders and investors favorable entry points in the stock and other similar names.
In addition, the rebounding price action in these stocks helped lift sentiment and improve the standings of the S&P 500 financials (+0.8%), industrials (+0.2%), and materials (+0.2%) sectors, which were relative outperformers throughout the day following the August employment report.
Their modest gains, however, were not enough to outweigh the noticeable losses in the communication services (-1.9%), consumer discretionary (-1.4%), and information technology (-1.3%) sectors.
Highlighting the key employment figures, nonfarm payrolls increased by 1.371 million ( consensus 1.400 million), and the unemployment rate was 8.4% (Briefing.com consensus 9.8%), versus 10.2% in July.
While the pace of hiring activity slowed down from the prior three months, it remained on the right path. Some optimism about the growth outlook was manifested in the Treasury market where selling in longer-dated maturities fostered some curve-steepening activity, which was an added boost for bank stocks.
The 2-yr yield increased four basis points to 0.16%, while the 10-yr yield rose ten basis points to 0.72%. The U.S. Dollar Index increased 0.1% to 92.79. WTI crude futures fell 4.0%, or $1.64, to $39.70/bbl. The CBOE Volatility Index fell 8.5% to 30.75, as the rebound in equities tamed hedging interest.
Reviewing the August Employment Situation Report, which better than expected and generally supportive of the recovery trade that favors cyclical/value stocks.
- Nonfarm payrolls increased by 1.371 million (consensus 1.400 million). June nonfarm payrolls revised to 4.781 million from 4.791 million.
- Private sector payrolls increased by 1.027 million (consensus 1.335 million). June private sector payrolls revised to 4.729 million from 4.737 million.
- The unemployment rate was 8.4% (consensus 9.8%), versus 10.2% in July.
- Average hourly earnings increased 0.4% (consensus 0.0%) versus a downwardly revised 0.1% (from +0.2%) in July. The average workweek in August was 34.6 hours (Briefing.com consensus 34.5), versus 34.5 hours in July.
As a reminder, the market will be closed on Monday for Labor Day. The Consumer Credit report for July and the NFIB Small Business Optimism Index for August will be released on Tuesday.
- Nasdaq Composite +26.1% YTD
- S&P 500 +6.1% YTD
- Dow Jones Industrial Average -1.4% YTD
- Russell 2000 -8.0% YTD
Hong Kong third wave: Metropark cluster grows, mass testing scheme uncovers possible transmission as city confirms 12 new Covid-19 case
- Authorities announce a new round of testing at Metropark as infections there climb to four
- The number of confirmed cases uncovered by the mass testing scheme, which seeks to identify the city’s invisible coronavirus carriers, now stands at eight
A new Covid-19 cluster surrounding the Metropark Hotel in Mong Kok grew as the city confirmed 12 new cases on Friday, including two newly detected by Hong Kong’s ongoing mass testing scheme.
Officials revealed that one possible hidden transmission chain was uncovered through the scheme after one member of a symptomless couple who tested positive was found to have had contact with a previous confirmed case.
One-third of the cases in the latest tally were uncovered through the community-wide screening – two on Friday, and another two the previous day – taking the total number of infections confirmed under the scheme to eight so far.
Five of Friday’s cases were imported and two were local transmissions, while the remaining one was a resident of the Metropark, pushing the city’s total confirmed cases to 4,850, with 94 related deaths. Another Metropark resident was also among a handful of people to test preliminary positive on Friday, including some from the citywide testing, pending confirmation.
The new Metropark cases took the total number of infections at the hotel to four.
“So far, residents in three rooms on the same floor are infected and they do not know each other. We are worried there might be a further outbreak,” said Dr Chuang Shuk-kwan, head of the Centre for Health Protection’s communicable disease branch.
All residents of the hotel will be tested, she said, while nine to 10 rooms will be evacuated, and all cleaning staff serving the floor where the infections were identified will be quarantined.
The Metropark Hotel has 430 modestly priced rooms that some guests rent for extended periods. The hotel’s restaurant recorded a cluster of six infections in July.
The new cluster was first discovered on Wednesday, when two residents who did not know each other tested positive, one of whom was an 87-year-old man who was only found to have the virus after his death.
Meanwhile, the two new cases identified on Friday via the Beijing-backed mass testing scheme, which began on Tuesday, included a 67-year-old retired woman living with her family in Jordan.
“She did not undergo many activities, but will sometimes go to a market in Yau Ma Tei,” Chuang said.
The woman had suffered a fever between August 18 and 22, and diarrhoea on August 22, but her symptoms later subsided and she recovered without seeking medical help. The woman then went in for the universal testing when it began on September 1.
The other invisible carrier detected under the testing programme was a housewife living in Fanling. Chuang said she had a fever on Wednesday after giving her sample on Tuesday.
The patient’s husband, who worked as a security guard in the Transport City Building in Tai Wai, also tested preliminary positive and was admitted to hospital.
Chuang said the husband had an interaction with a previously confirmed patient who was a tenant in his building in August. The tenant was confirmed to be infected this Tuesday.
“They did not wear masks as they talked for more than 10 minutes,” Chuang said. “This could be a possible route of transmission, and we would distribute saliva bottles to the whole building.”
Friday’s tally came after six residents were found to be infected during the first batch of 128,000 people tested under the programme on Thursday.
Of those, four had previously recovered from Covid-19 and were discharged from hospital last month, but still carried traces of the coronavirus in their system.
The government said that by Friday morning, around 80,000 more samples had been tested, bringing the total number of tested samples to around 208,000.
Friday’s five imported cases involved returnees from Pakistan, Indonesia and the Philippines, according to Chuang.
Gapping down
In reaction to earnings/guidance:
- DOCU -7.2% (also names new CFO), AOUT -1.5%, OXM -1.1%, AVGO -0.9%
Other news:
- RICK -6.5% (negative catalyst unclear, but co increased dividend)
- TSLA -5.6% (follows 9% drop on Thurs)
- RLAY -3.9% (doses first patient in clinical trial of RLY-4008)
- YUMC -3.1% (prices 41,910,700 common shares at ~$53.16/share)
- LGIH -2.2% (reports August closings declined 1% to 669 closings)
- SMH -2% (chip stocks weak on Bloomberg report that China is planning to develop its domestic chip industry to counter US restrictions)
- JWN -1.5% (S&P downgrades To 'BB+' From 'BBB-')
- TEF -1.5% (AMX and TEF terminate deal to purchase Telefonica Moviles El Salvador)
- MTCH -1.4% (DOJ closes investigation)
- QDEL -1.2% (Pac-12 Conference announces deal with QDEL for daily COVID testing, according to website)
- AMX -0.9% (AMX and TEF terminate deal to purchase Telefonica Moviles El Salvador)
Analyst comments:
- W -5.4% (downgraded to Neutral from Buy at BofA Securities)
- MOMO -2.2% (downgraded to Neutral from Buy at Citigroup; downgraded to Equal-Weight from Overweight at Morgan Stanley)
- LULU -2.1% (downgraded to Neutral from Buy at Citigroup)
Gapping up
In reaction to earnings/guidance:
- DOMO +6.1%, NX +5.5%, COO +3.1%, SWBI +2.1%, MDLA +1.3% (also to acquire Stella Connect)
Other news:
- IMAB +21.6% (I-MAB and AbbVie (ABBV) confirm global strategic partnership for differentiated immuno-oncology therapy; I-Mab to receive upfront payment of $180 million)
- LMPX +15.6% (acquires two dealerships)
- PLM +15.2% (receives favorable ruling in proper procedures case)
- OBSV +6.3% (announces $20 mln equity offering)
- OSUR +4.8% (ORAcollect RNA collection device included in FDA's EUA granted to MiraDx)
- NBIX +4.7% (to present new data from its movement disorder programs)
- PLUG +4.2% (DE Shaw discloses 5% stake)
- PBI +4% (announces pricing adjustments ahead of 2020 peak season)
- VICI +2.5% (CZR and VICI sell Harrah's Louisiana Downs)
- CALA +2.5% (CALA opts out of co-development agreement with INCY)
- WPP +1.3% (acquires French customer experience consultancy company Velvet Consulting)
- GRUB +1.2% (Just Eat Takeaway.com receives all regulatory approvals required in respect of its proposed acquisition of Grubhub)
Analyst comments:
- MIK +3.5% (upgraded to Outperform from Neutral at Credit Suisse)
- AZUL +1.4% (upgraded to Outperform from Mkt Perform at Raymond James)
*LANCET PUBLISHES PEER-REVIEWED RESULTS OF RUSSIA VACCINE TRIAL
*EARLY RUSSIA VACCINE TRIAL FOUND NO ADVERSE EFFECTS: LANCET
Summary
Background
We developed a heterologous COVID-19 vaccine consisting of two components, a recombinant adenovirus type 26 (rAd26) vector and a recombinant adenovirus type 5 (rAd5) vector, both carrying the gene for severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) spike glycoprotein (rAd26-S and rAd5-S). We aimed to assess the safety and immunogenicity of two formulations (frozen and lyophilised) of this vaccine.
Methods
We did two open, non-randomised phase 1/2 studies at two hospitals in Russia. We enrolled healthy adult volunteers (men and women) aged 18–60 years to both studies. In phase 1 of each study, we administered intramuscularly on day 0 either one dose of rAd26-S or one dose of rAd5-S and assessed the safety of the two components for 28 days. In phase 2 of the study, which began no earlier than 5 days after phase 1 vaccination, we administered intramuscularly a prime-boost vaccination, with rAd26-S given on day 0 and rAd5-S on day 21. Primary outcome measures were antigen-specific humoral immunity (SARS-CoV-2-specific antibodies measured by ELISA on days 0, 14, 21, 28, and 42) and safety (number of participants with adverse events monitored throughout the study). Secondary outcome measures were antigen-specific cellular immunity (T-cell responses and interferon-γ concentration) and change in neutralising antibodies (detected with a SARS-CoV-2 neutralisation assay). These trials are registered with ClinicalTrials.gov, NCT04436471 and NCT04437875.
Findings
Between June 18 and Aug 3, 2020, we enrolled 76 participants to the two studies (38 in each study). In each study, nine volunteers received rAd26-S in phase 1, nine received rAd5-S in phase 1, and 20 received rAd26-S and rAd5-S in phase 2. Both vaccine formulations were safe and well tolerated. The most common adverse events were pain at injection site (44 [58%]), hyperthermia (38 [50%]), headache (32 [42%]), asthenia (21 [28%]), and muscle and joint pain (18 [24%]). Most adverse events were mild and no serious adverse events were detected. All participants produced antibodies to SARS-CoV-2 glycoprotein. At day 42, receptor binding domain-specific IgG titres were 14 703 with the frozen formulation and 11 143 with the lyophilised formulation, and neutralising antibodies were 49·25 with the frozen formulation and 45·95 with the lyophilised formulation, with a seroconversion rate of 100%. Cell-mediated responses were detected in all participants at day 28, with median cell proliferation of 2·5% CD4+ and 1·3% CD8+ with the frozen formulation, and a median cell proliferation of 1·3% CD4+ and 1·1% CD8+ with the lyophilised formulation.
Interpretation
The heterologous rAd26 and rAd5 vector-based COVID-19 vaccine has a good safety profile and induced strong humoral and cellular immune responses in participants. Further investigation is needed of the effectiveness of this vaccine for prevention of COVID-19.
Funding
Ministry of Health of the Russian Federation.
Early premarket gappers
- Gapping up:
- PLM +28.3%, LMPX +13.7%, DOMO +8%, OBSV +6.7%, PLUG +5.5%, PBI +4%, NX +3.4%, COO +3.3%, OXM +2.9%, OSUR +2.5%, CALA +2.5%, YNDX +1.4%, WPP +1.3%, PFE +1.1%, VICI +1%, MESO +0.8%, LUV +0.7%, GRUB +0.7%, KMB +0.6%, HONE +0.6%
- Gapping down:
- DOCU -8.2%, RICK -6.5%, MDLA -4%, RLAY -3.9%, LGIH -3.4%, QDEL -2.6%, HA -2%, TSLA -1.8%, MTCH -1.7%, SWBI -1.7%, TEF -1.5%, AOUT -1.5%, AMX -0.9%, SQNS -0.8%, NBIX -0.7%, AVGO -0.7%, SMH -0.5%
Biden Policy Priorities
What Does Biden Mean for U.S.-China Relations?
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Issue: Under President Trump, U.S.-China relations have deteriorated to lows not seen since the early 1970s. China has taken on the United States in nearly every area of the bilateral relationship, including: trade, technology, human rights, and China’s militarization of the South China Sea. This conflict will continue under Biden, who will also face the challenge of responding to bipartisan bills from Congress that would de-list Chinese companies from U.S. exchanges, prevent investment funds from investing retiree savings in China, in addition to addressing China’s treatment of Uyghurs, the people of Hong Kong and the national security threat posed by telecommunications firm Huawei.
See attached pdf