Plus, U.S. sales of previously owned homes surged the most on record in July, Deere delivered an earnings beat, and Tesla shares surged past $2,000.
Stocks were higher to start Friday with the Dow adding 51 points, or 0.2%. The S&P 500 traded 0.1% higher, while the Nasdaq gained 0.3%.
Home sales surged. U.S. sales of previously owned homes surged by 24.7%, the most on record, in July as lower mortgage rates continued to power a residential real estate market that’s proving a key source of strength for the economic recovery. The increase in sales came as supply of existing homes plummeted 21.1%, with just 1.5 million homes for sale at the end of July. “The new listings are running a little higher than one year ago but all those new listings are being grabbed by the buyers and taken off the market,” said Lawrence Yun, chief economist for the National Association of Realtors. And data from IHS Markit showed U.S. manufacturing activity hit its highest level in 19 months in August, while services reached their highest level in 17 months. “Client demand picked up among both manufacturers and service providers,” said IHS Markit economist Sian Jones in a statement.
Pfizer and BioNTech said their jointly-developed COVID-19 vaccine candidate is on track to be submitted for regulatory review as early as October. The two companies also released additional data from an early-stage study of BNT162b2, saying the vaccine was well tolerated with mild to moderate fever in fewer than 20% of participants and showed it induced similar immune responses than prior data on another candidate. “The data and our discussions with physicians, support our view that PFE and BNTX could have the first-in-class, as well as best-in-class, vaccine to treat COVID-19,” said Cantor Fitzgerald analyst Louise Chen in a note. In a press release, Pfizer Senior Vice President and Head of Vaccine Research & Development, Kathrin U. Jansen, Ph.D., said, “The totality of the clinical and preclinical data informed Pfizer and BioNTech’s decision to select BNT162b2 as the lead candidate to advance into pivotal trials. We are proud to share our findings with the scientific community as we continue our work to deliver a safe and effective vaccine to combat this devastating virus. We are especially pleased to offer these early data showing our vaccine candidate’s promising safety and immunogenicity profile from the U.S. trial and we look forward to sharing T cell immune response data from the German trial in the near future.”
A California appeals court extended the length of time Uber and Lyft will have to comply with an order requiring them to reclassify drivers for their ride share services as employees. As a result, both companies said they would continue operating in the state during the stay even after Lyft said yesterday it would be suspending service. “We are glad that the Court of Appeals recognized the important questions raised in this case, and that access to these critical services won’t be cut off while we continue to advocate for drivers’ ability to work with the freedom they want,” an Uber spokesperson said in a statement. Uber had not announced a decision to suspend service prior to the order.
Deere shares are up more than 5% this morning after the agricultural equipment manufacturer reported better-than-expected earnings. Deere reported earnings per share of $2.57 from $8.9 billion in sales, while analysts were expecting earnings of $1.30 per share from $7 billion in sales. “Deere has been really stable in their farming segment, and this year, we’ve seen a rise in gardening due to the pandemic that’s really been likened to the victory gardens of World War II,” said Danielle Shay, director of options at Simpler Trading. While MKM Partners’ JC O’Hara said, “It’s our opinion that Deere will continue to outperform. This outperformance by Deere is noting new.”
And Tesla shares are up this morning following the stock’s rise past $2,000 per share yesterday. The automaker’s stock is up more than 32% in the last month, and more than 378% so far this year. Today marks the day of “record” for Tesla’s 5-for-1 stock split, with split-adjusted trading set to begin August 31. Once the split goes into effect on that date, current Tesla investors will get five shares for each one they own, cutting the price of the stock by a fifth to around $400 a share. “Tesla is already richly valued with its P/E standing at over 200x, based on consensus projected 2020 earnings, meaning that the company will have to execute very well to simply justify its current valuation, let alone drive further stock price gains,” analysts at Trefis said. “On the other hand, Apple’s P/E stood at 14x during its most recent split while Google’s P/E stood at 25x during its first (and only) split.”
Stocks We’re Watching
Synopsys Inc (NASDAQ: SNPS): Synopsys shares got a boost yesterday after the company reported fiscal third quarter earnings. Synopsys reported revenue of $964.1 million, compared to revenue of $853 million in the same quarter last year. “Synopsys again executed very well in the third quarter, delivering record revenue, non-GAAP earnings per share and operating cash flow. We saw double-digit revenue growth across all product groups and strength in all geographies. Our intense, multi-year innovation push is driving increased momentum in product successes and production adoptions,” said Aart de Geus, chairman and co-CEO of Synopsys. “Even as the world navigates through the pandemic and economic challenges, global design activity and customer engagements are flourishing. Due to our very strong fiscal third quarter, confidence in our outlook and resilient business model, we are raising 2020 revenue, operating margin, non-GAAP earnings-per-share and operating cash flow targets.”