Plus, Merck’s CEO said a COVID-19 vaccine won’t be a “silver bullet” that ends the pandemic, Pinterest delivered a massive earnings beat, and LVMH is acquiring Tiffany at a discount.
Stocks were higher to start Thursday with the Dow gaining 150 points, or 0.6%. The S&P 500 added 1%, while the Nasdaq traded 1.3% higher.
33.1%. The U.S. economy bounced back with a record, albeit temporary, surge of growth in the third quarter as businesses reopened and stimulus cash powered consumer spending. The Commerce Department reported an initial estimate for an annualized quarterly gain of 33.1% following a 31.4% plunge in GDP in the second quarter. “It’s obviously good news that the economy bounced back in the third quarter,” said Eric Winograd, senior economist at Alliance Bernstein. “There’s still a lot of work to do here and the pace of improvement… is going to slow. The stimulus programs that provided much of the economic lift last quarter have expired or are expiring. Fiscal support is diminishing. That is part of the reason that the pace of growth is going to slow from here.” Elsewhere, the Labor Department reported last week’s initial jobless claims came in at 751,000. Continuing claims for the week of October 17 fell to 7.76 million, while the number of Americans on emergency assistance programs rose as many unemployed exhausted regular state benefits.
House Speaker Nancy Pelosi pressed Treasury Secretary Steven Mnuchin in a letter Thursday on a response on continuing coronavirus stimulus roadblocks as negotiations for a deal have stalled in the days before the election. Pelosi said in the letter to Mnuchin that she is “still awaiting” replies from the Trump administration “on multiple items of critical importance” as the COVID-19 pandemic continues to rage around the nation, even as any chance of passing a bill prior to Election Day is nearly impossible with Congress adjourning earlier this week until after the election. Pelosi said she’s waiting on a response for issues including a national testing strategy, state and local government relief, enhanced unemployment insurance, child care, tax credits, liability protections for businesses, and workplace safety standards. “Your responses are critical for our negotiations to continue,” Pelosi wrote in the note. “The President’s words that ‘after the election, we will get the best stimulus package you have ever seen’ only have meaning if we can get Mitch McConnell to take his hand off the pause button and get Senate Republican Chairmen moving toward agreement with their House counterparts.”
As coronavirus cases rise to nearly 8.9 million in the U.S., White House coronavirus advisor Dr. Anthony Fauci said that the nation is “going in the wrong direction” as cases rise in 47 states and infected patients overwhelm hospitals across the country. “If things do not change, if they continue on the course we’re on, there’s going to be a whole lot of pain in this country with regard to additional cases and hospitalizations, and deaths,” Fauci said. Former FDA Commissioner Dr. Scott Gottlieb said that the rise in new cases is unlikely to peak until after Thanksgiving, when “there’s going to be a turning point when the infection levels get high enough in many parts of the country that we start to see a policy reaction and also consumer behavior start to change. The month of December is really spent probably hunkering down a bit more, and hopefully we turn the corner as we get into the new year.” Elsewhere, Merck CEO Kenneth Frazier said that neither a COVID-19 vaccine or treatments for the deadly virus will be a “silver bullet” solution to the pandemic and predicted people will need to continue wearing masks and social distance well into 2021. “I don’t see the therapeutics that we have—or the vaccines that are coming—as a silver bullet,” Frazier said. “I think [it’s] with us for a while, and I would say certainly well into 2021 we’ll still be trying to observe these public health measures.”
On the earnings front, Pinterest shares are up more than 28% this morning after the social media company reported blowout third quarter earnings results. Pinterest posted adjusted earnings per share of $0.13 on revenue of $443 million, compared to expectations for EPS of $0.03 on revenue of $383.5 million, as advertising demand revved up during the quarter. Comcast also reported an earnings beat, reporting earnings of $0.65 per share on revenue of $25.53 billion, versus estimates for earnings of $0.52 per share on revenue of $24.74 billion. In the quarter, Comcast saw a record number of new high-speed internet customers, adding 633,000, and said its NBCUniversal’s Peacock streaming app has nearly 22 million sign-ups. “Peacock has exceeded every internal engagement metric without the benefit of the Olympics or content like The Office (Jan. 2021),” Comcast said in a statement. And Ford shares are up more than 3% after the carmaker reported adjusted earnings per share of $0.65 on revenue of $34.71 billion, while analysts expected results of $0.19 per share on revenue of $33.51 billion. “We executed very well this quarter,” Ford CFO John Lawler said Wednesday during a media briefing. “We saw much higher demand than what we expected.”
And LVMH has agreed to acquire U.S. jeweler Tiffany for a reduced price of $131.50 per share, or around $15.8 billion, representing an overall discount of $425 million for LVMH and ending the legal battle between the two companies. “We are as convinced as ever of the formidable potential of the Tiffany brand and believe that LVMH is the right home for Tiffany and its employees during this exciting next chapter,” said Bernard Arnault, LVMH head. The transaction is expected to close in early 2021, subject to shareholder approval. In other acquisition news, Marvell Technology Group said it has reached a deal to acquire data center component chip maker Inphi for $10 billion. Marvell said it has agreed to pay $66 a share in cash and 2.322 shares of stock for each share of Inphi, valuing the company at $157.83 per share, representing a 57% premium on Inphi’s closing price on Wednesday. “It’s a healthy premium and healthy multiple, but [Inphi] has been growing 40% a year for the last four or five years,” said Marvell CEO Matt Murphy. “Our view is that it’s very reasonable.”
Stocks We’re Watching
Tupperware Corp (NYSE: TUP): Tupperware shares gained as much as 41% yesterday and are up 11% this morning after the food storage company reported a third-quarter earnings beat. Tupperware reported that it saw a sales increase of 14% in the quarter, while adjusted earnings per share rose 233%. “The 21 percent growth in local currency revenue reported today reflects a rapid adoption of digital tools by our sales force to combat the social restrictions surrounding COVID-19, and the increased consumer demand for our innovative and environmentally friendly products, as more consumers cook at home and are concerned with food safety and storage,” said Miguel Fernandez, President and Chief Executive Officer of Tupperware Brands. “The improved performance of both top and bottom line these past two quarters are a positive sign that our Turnaround Plan is working.”