Private Payroll Growth Disappointed In February As Labor Market Recovery Remains “Sluggish”

Plus, Las Vegas sands is exiting its namesake city, Michaels is going private, and Rocket Companies shares are dropping after surging yesterday.

Stocks were … at the open on Wednesday with the Dow dropping 38 points, or 0.1%. The S&P 500 slid nearly 0.2% lower, while the Nasdaq also dipped 0.2%.

Private payroll growth disappointed in February. ADP reported this morning that companies added just 117,000 jobs for the month, while economists had forecast a reading of 225,000. “The labor market continues to post a sluggish recovery across the board,” said Nela Richardson, chief economist at ADP. “We’re seeing large-sized companies increasingly feeling the effects of COVID-19, while job growth in the goods producing sector pauses.” Trade, transportation and utilities led sectors added 48,000 positions during the month, while education and health services added 35,000, and professional and business services gained 22,000. While hospitality added 26,000, the battered sector is down 3.8 million positions from where it stood a year ago, just before the worst of the COVID-19 crisis hit. “With the pandemic still in the driver’s seat, the service sector remains well below its pre-pandemic levels; however, this sector is one that will likely benefit the most over time with reopenings and increased consumer confidence,” Richardson added.

President Joe Biden said late Tuesday that the U.S. will have enough coronavirus vaccine doses for all American adults by the end of May, two months earlier than previously expected. “We should all be encouraged by this news,” Biden said. “The more people that get vaccinated, the faster we’re going to overcome this virus.” Pfizer and Moderna have said they’ll deliver doses for 200 million Americans by the end of May, while Johnson & Johnson—with production help from Merck—is expected to deliver “at or near” 100 million doses in the same time frame. Biden hesitated to say when things will be back to “normal,” but did say that his “hope is by this time next year we’re going to be back to normal.” Still, he cautioned that with new COVID variants spreading across the U.S., “this fight is far from over. Things may get worse again.” 

Las Vegas Sands is exiting its namesake city. The casino operator is selling its Las Vegas properties—including the Venetian, Palazzo, and the Sands Expo Convention Center—for $6.25 billion, with Vici Properties paying $4 billion for the real estate and Apollo Global Management buying the operations for $2.25 billion. “This company is focused on growth, and we see meaningful opportunities on a variety of fronts,” said LVS Chairman and CEO Robert Goldstein in a statement. “Asia remains the backbone of this company and our developments in Macao and Singapore are the center of our attention.” Las Vegas Sands’ Asia properties accounted for roughly 90% of its revenue last year with significant investments planned to expand in both Macao and Singapore. 

Michaels shares are up nearly 23% this morning after the arts and crafts retailer announced it has agreed to be bought by private equity firm Apollo Global Management in a deal valued at $5 billion. Apollo will acquire all outstanding Michaels stock for $22 per share, taking the company private in a deal that was unanimously approved by the company’s Board. “Our Michaels strategy and the work that we have done in the past year have led to phenomenal business results, strengthened our core business and positioned Michaels for long-term sustainable growth,” Michaels CEO Ashley Buchanan said in a press release. “We are excited to enter into this new chapter together with Apollo, who shares our strategic vision for Michaels as an omnichannel retailer that offers a one-stop-shop experience for the entire Michaels community. As a private company, we will have financial flexibility to invest in, expand, and improve our retail and digital platforms.”

And shares of Rocket Companies are down more than 20% today after surging as much as 77% yesterday in a surprise rally on no apparent news. Rocket is one of the most heavily shorted names by hedge funds, with nearly 40% of its available shares sold short, which may have made it attractive to the Reddit trading crowd. “In light of the sharp rise in share prices, we believe fundamental investors should take profits,” said JPMorgan equity strategist Richard Shane in reaction to the surge in the stock. “While similar high velocity, high volatility events have created sustained speculative opportunities, we believe core, long-term investors will be able to rebuild positions at lower price levels.”

Stocks We’re Watching

Kopin Corporation (NASDAQ: KOPN): Kopin shares gained as much as 29% yesterday after the developer and manufacturer of high-resolution micro-displays and sub-systems posted solid fourth quarter and year-end 2020 results. “We are delighted to have finished 2020 with very strong results in both our top and bottom lines, with revenue growth of 36% year-over-year and increased efficiency in our operations,” CEO Dr. John C. C. Fan said in a statement. “Our fourth quarter 2020 revenue growth was particularly strong, growing 60% from a year ago, our strongest quarterly year-over-year growth since the fourth quarter of 2017. We also made great progress in streamlining our cost structure along with increasing our product yields and production efficiencies, resulting in a net income of $1.3 million for the fourth quarter of 2020. We are very proud of this achievement, and though we acknowledge it was due to the convergence of many favorable factors, it is undeniable that we are on the right track with momentum continuing into the current year.”


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