After standing on the threshold for almost a week, the S&P 500 Index (SNPINDEX:^SPX) is back at an all-time high. The index closed at 3389.78 on Aug. 18, up 7.8 points and surpassing the prior high, reached on Feb. 19. This marks the quickest bear-market recovery in history, with the index regaining all of its losses in 126 trading days.
Leading the index today was Amazon.com Inc (NASDAQ:AMZN), gaining 4% after reports came out late yesterday that it was looking to acquire a minority stake in Rackspace, the cloud services company known for high-quality customer service that often partners with Amazon’s AWS offering. Amazon also just announced plans to invest $1.4 billion in hiring and new office space. In other tech news, Oracle (NYSE:ORCL) is said to be entering the bidding for TikTok’s North American and some other assets.
On the earnings front, retail giants Walmart (NYSE:WMT) and Home Depot (NYSE:HD) released their most recent quarterly results, reporting huge same-store sales growth. In other news, a closer look at Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) filings shows something surprising: Berkshire sold off stocks in 32 different companies in the first half of the year.
Index fully recovered, most stocks still down
Today marks a big statistical and emotional moment, with the S&P 500 Index regaining all of its losses since the February high. However, of the 505 stocks in the index, 284 are still below their prices at the beginning of the year. The influence of the tech giants at the top has buoyed the index. Amazon shares are up 72% year to date, while Apple has gained 56% and Microsoft shares are up 33%. The three combine for more than $5 trillion in market cap, pulling the index higher than smaller laggards pull it down.
Is Oracle a player on TikTok bidding?
According to multiple news outlets, the database giant is supposedly engaged with ByteDance, the owner of TikTok, and is “strongly considering” making an offer to acquire the video-sharing app. Reports are that Oracle may offer as much as $50 billion to buy TikTok’s North America, Australia, and New Zealand businesses.
Whether there’s any merit to the rumors remains to be seen, and there doesn’t seem to be any business reason for this deal to happen. A cynical observer might think that automatically puts Oracle in the lead position. After all, big tech companies — including Oracle — have overpaid before for boneheaded acquisitions that didn’t fit or create value.
Walmart, Home Depot winning the coronavirus lockdown
Millions of Americans were stuck at home in the second quarter, and two of the country’s biggest retailers emerged as huge winners. Walmart reported same-store sales increased a massive 9.3%, with e-commerce sales almost doubling in the period. The mega-retailer, which offers nearly everything under one roof, benefited as a one-stop shop: Transactions fell 14%, but the average ticket increased 27% as people stocked up on items and made the most of every shopping visit.
Home Depot’s sales surged even higher. The home improvement giant reported comps increased 25%, driving earnings per share up 27% as millions of homeowners took advantage of the lockdown to complete home improvement projects.
Berkshire sold stocks in the first half of 2020
Berkshire Hathaway CEO Warren Buffett has long been bullish on American business, and his track record of success over the past half century shows us how rewarding this bullishness can be. However, Berkshire’s actions in the first half of 2020 didn’t exactly line up with Buffett’s usual sentiment.
As my colleague Sean Williams recently reported, Berkshire SEC filings disclosed that the company sold shares in 32 separate companies in the first half of the year. This included completely selling its stake in nine companies, double-digit reductions in another five, and more modest trimming of its stake in another 18.
Did Uncle Warren miss out on the coronavirus crash? In a very real way, yes that seems to have been the case. However, Buffett clearly still sees some opportunity. Another filing disclosed that more recently, Berkshire has bought even more Bank of America (NYSE:BAC) shares. BofA is now Berkshire’s second-biggest holding, worth more than $25 billion, and it controls about 12% of the bank’s shares.
Has Buffett lost his touch? Don’t give up so quickly. Berkshire’s best investments during the Global Financial Crisis happened in 2010, more than a year after stocks reached bottom.
At the open: TSX jumps on strong retail sales data – The Globe and Mail
Canada’s main stock index rose on Friday as data showing a rise in retail sales and an uptick in house prices helped offset fears of prolonged economic recovery as coronavirus cases rise globally.
At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 51.34 points, or 0.32%, at 16,298.06.
Canadian retail sales in July rose by 0.6% and are now higher than they were before the coronavirus pandemic struck, Statistics Canada said on Friday, adding that August sales probably gained 1.1% on the month.
Analysts in a Reuters poll had forecast retail sales would increase by 1.0% from June, when trade jumped by 22.7% as restrictions imposed to fight the outbreak were removed.
“The data continue to suggest that the pace of growth seen in June wasn’t sustained early in the third quarter,” said Royce Mendes of CIBC Economics.
Sales grew in six of the 11 subsectors, with motor vehicles and parts contributing the most. Gas sales also posted gains.
The Nasdaq rose at the open on Friday, shaking off a two-day decline in heavyweight technology stocks, while worries about rising coronavirus cases and a patchy economic recovery weighed on the S&P 500 and Dow.
The Nasdaq Composite gained 63.17 points, or 0.58%, to 10,973.45 at the opening bell. The Dow Jones Industrial Average fell 37.11 points, or 0.13%, at the open to 27,864.87, while the S&P 500 opened higher by just 0.37 points, or flat, at 3,357.38.
Wall Street’s three main indexes bounced earlier this week as investors bet on a loose monetary policy by the Federal Reserve, but gains petered out in the absence of firm details on the central bank’s stimulus plan.
The S&P 500 and the Nasdaq have also come under pressure from investors rotating out of high-flying tech-related stocks and into industrial and transportation firms.
“The market’s in a vacuum right now,” said Thomas Hayes, managing member at Great Hill Capital LLC in New York.
“Anytime you have news or perception that things are going to be delayed or (you have a) slow growth economy, those (technology-related) stocks get bid. You’ll get these technical bounce days when coronavirus cases spike up and money will move back into tech.”
Oil prices were mixed on Friday after Libyan commander Khalifa Haftar said a blockade on Libyan oil exports would be lifted for one month, countering more bullish signals from an OPEC meeting on Thursday.
Brent crude was down 17 cents at $43.13 a barrel by 1321 GMT while U.S. oil futures ticked up 6 cents to $41.03.
The benchmarks were still set for weekly gains after Hurricane Sally cut U.S. production, Saudi Arabia pressed allies to stick to production quotas and banks including Goldman Sachs predicted a supply deficit.
Pre-blockade Libya was producing around 1.2 million bpd, compared with just over 100,000 bpd now. It is unclear how quickly Libya could ramp up production.
Earlier, Goldman Sachs predicted a market deficit of 3 million barrels per day (bpd) by the fourth quarter and reiterated its target for Brent to reach $49 by the end of the year and $65 by the third quarter of 2021.
Swiss bank UBS also pointed to the possibility of undersupply, forecasting Brent would rise to $45 a barrel in the fourth quarter and to $55 by mid-2021.
The Organization of the Petroleum Exporting Countries and other producers, a group known as OPEC+, are cutting output by 7.7 million bpd and stressed at a meeting on Thursday that it would take action against members not complying with the deal.
“We think (OPEC+) will put on hold plans to taper the cut down to 5.8 million bpd … when the entire group convenes again in December,” RBC analysts said.
Saudi Arabia said an earlier meeting was possible if oil prices fell alongside demand because of a second wave of coronavirus cases.
“The market now feels the ground more stable to maintain $40+ price levels,” said Rystad’s Head of Oil Markets Bjornar Tonhaugen.
Suspicious activity found on 48,000 CRA accounts after cyberattacks: treasury board – CBC.ca
The Treasury Board of Canada says it has uncovered suspicious activities on more than 48,000 Canada Revenue Agency accounts following cyberattacks in July and August.
The treasury says the previously announced attacks targeted CRA accounts and GCKey, an online portal through which Canadians access employment insurance and immigration services.
Attackers used a method called credential stuffing, which takes advantage of people who reuse usernames and passwords across multiple platforms that may have been previously hacked.
The treasury says GCKey was not compromised, but it has revoked 9,300 credentials for its system and is contacting those users in hopes of blocking subsequent attacks.
Canadians who receive a revocation message can register for new credentials or make use of the SecureKey Concierge, which lets users sign in to 269 government services through partners, such as major banks.
The treasury says the RCMP’s investigation into the attacks is still ongoing and affected departments have been in contact with the Office of the Privacy Commissioner to provide updates on what personal information has been compromised.
ByteDance plans TikTok IPO if U.S. clears deal: sources – Yahoo Canada Finance
NEW YORK (Reuters) – China’s ByteDance is planning a U.S. initial public offering of TikTok Global, the new company that will operate the popular short video app, should their proposed deal be cleared by the White House, people familiar with the matter said on Thursday.
The filing of an IPO for TikTok Global, in which Oracle Corp <ORCL.N> would also own a stake, would be on a U.S. stock exchange and could come in about a year, the sources said, requesting anonymity because the matter is confidential.
ByteDance and Oracle did not immediately respond to requests for comment.
(Reporting by Stephen Nellis in San Francisco and Echo Wang in New York; Editing by Chris Reese)
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