Plus, the NYSE reversed course on their decision to not delist three Chinese telecoms, bitcoin rose to another new all-time high, and UnitedHealth is buying Change Healthcare.
Stocks moved higher to start Wednesday with the Dow adding 364 points, or 1.2%. The S&P 500 gained 0.6%, while the Nasdaq rose 0.3%.
Democrats’ hopes of securing control of the U.S. Senate got a boost overnight after news broke that Rev. Raphael Warnock won a Georgia Senate runoff against Republican Sen. Kelly Loeffler. In the other Senate runoff election, Democrat Jon Ossoff is leading Republican Sen. David Perdue with 98% of the expected vote counted, though the race remains too close to call at the time of writing. If Ossoff is declared the winner, the Senate would be split 50-50 between Republicans and the Democrats, with Vice President-elect Kamala Harris casting tie-breaking votes. Also today: a joint session of Congress is set to confirm Joe Biden as the next president of the United States this afternoon. The process is scheduled to begin at 1 p.m. ET, with Vice President Mike Pence presiding as the states’ certifications of their election results are unsealed in alphabetical order. A dozen Republican Senators and dozens of GOP House members are expected to object to certifying electors from several battleground states where President-elect Joe Biden won, but will do little to change the final outcome.
Just kidding: Round 2. The NYSE said it will delist three Chinese telecom giants after all, its second reversal in two days, following new guidance from the Treasury Department. The decision is based on “new specific guidance received on Jan. 5, 2021, that the Department of Treasury’s Office of Foreign Assets Control provided to the NYSE,” the exchange said in a statement. “The issuers have a right to a review of this determination.” Treasury Secretary Steven Mnuchin also called NYSE Group President Stacey Cunningham yesterday to express his displease with the exchange’s decision to not delist China Mobile Ltd., China Telecom Corp., and China Unicom Hong Kong Ltd. “It’s odd for the NYSE to get this so wrong,” said Bloomberg Intelligence analyst Larry Tabb. “Their marketing and public relations team has historically been one of the best. It’s bad enough to do a 180 on this within a week, but to go 360 degrees on such a major move so quickly means that they either got this terribly wrong, or there was significant outside pressure driving these decisions.”
As the U.S. surpasses 21 million COVID-19 cases and 357,000 deaths from the virus, experts are sounding the alarm about a new strain of the deadly virus that has emerged in South Africa. Like the variant recently discovered in the U.K., the South African variant is proving to be far more transmissible. Former FDA Commissioner Dr. Scott Gottlieb warned that vaccinating Americans against the coronavirus is more critical than ever, especially as the new South African variant appears to inhibit antibody drugs. “The South Africa variant is very concerning right now because it does appear that it may obviate some of our medical countermeasures, particularly the antibody drugs,” Gottlieb said. “Right now that strain does appear to be prevalent in South American and Brazil, the two parts of the world, right now, that are in their summer, but also experiencing a very dense epidemic, and that’s concerning. The new variant has mutated a part of the spike protein that our antibodies bind to, to try to clear the virus itself, so this is concerning. Now, the vaccine can become a backstop against these variants really getting more of a foothold here in the United States, but we need to quicken the pace of vaccination.”
Bitcoin hit another all-time high of $35,751 early today, before retreating to the price as of this writing of $34,594.93. Bill Miller of Miller Value Partners LLC said the surge in attention for bitcoin that has been spurred by its frenzied rally higher could unlock further gains for the cryptocurrency by encouraging corporate treasurers to use the digital coin for diversification. “If inflation picks up, or even if it doesn’t, and more companies decide to diversify some small portion of their cash balances into bitcoin instead of cash, than the current relative trickle into bitcoin would become a torrent,” Miller said. “Warren Buffett famously called bitcoin ‘rat poison.’ He may well be right. Bitcoin could be rat poison, and the rat could be cash.”
And Change Healthcare shares are up more than 31% today after UnitedHealth Group said it will pay approximately $8 billion in cash to acquire the company. UnitedHealth subsidiary OptumInsight will merge with Change Healthcare when the deal closes, which is expected in the second half of the year. “We believe CHNG fits very nicely within OptumInsight,” said Cantor Fitzgerald analyst Steven Halper in a note out early Wednesday. “Change will add key technologies to optimize health-care delivery/workflow while minimizing wasted costs.” UnitedHealth will pay $25.75 per share in cash for Change’s roughly 317 million fully diluted shares outstanding, marking a 41.2% premium over the stock’s Tuesday close of $18.24.
Stocks We’re Watching
RealNetworks Inc (NASDAQ: RNWK): RealNetworks shares are up 3% this morning after the company reported that its sale of Rhapsody International, which does business under the name Napster, to MelodyVR Group PLC is complete. “We are very pleased with the completion of the sale of Napster to MelodyVR,” said Rob Glaser, Chairman and CEO of RealNetworks. “The proceeds of the sale strengthen Real’s balance sheet and enable us to focus even more deeply on our primary growth initiatives which consist of two machine learning-based businesses, SAFR and Kontxt, and our GameHouse casual games business.”