Stocks wobbly as virus cases increase
NEW YORK — Wall Street’s losses mounted for the second straight day Tuesday as momentum slows on worries about rising virus counts and Washington’s inability to deliver more aid to the economy.
The S&P 500 fell 0.3 percent after spending much of the day swinging between small gains and losses. Most of the stocks in the index fell, particularly banks, oil producers and other companies whose profits tend to track the strength of the economy. Those losses outweighed gains in technology stocks and companies that rely on consumer spending. Traders also welcomed news that AMD has agreed to buy fellow chipmaker Xilinx for $35 billion.
The market’s latest pullback, which follows the S&P 500’s worst day in a month, cuts further into what had been a solid rebound this month after heavy selling in September snapped a five-month winning streak. Just two weeks ago, the index was holding on to 4.4 percent gain for the month. It’s now on track for a gain of just 0.8 percent.
“Even though we had a really nice runup for a few months, we had been concerned there would be some volatility coming in pre-election, and it’s just a function of the huge uncertainty level,” said Lisa Erickson, head of the Traditional Investment Group at U.S Bank Wealth Management.
Caution continues to hang over markets. Coronavirus counts keep climbing at a troubling rate across much of the United States and Europe. The worry is that could lead to the return of lockdowns, which could further choke off the improvements the economy showed during the summer.
US home prices rise 5.2% in Aug.
WASHINGTON — U.S. home prices posted a robust gain in August — another sign that the American housing market remains strong despite economic fallout from the coronavirus pandemic.
The S&P CoreLogic Case-Shiller index of prices in 19 major cities, released Tuesday, showed that home prices climbed 5.2 percent in August from a year earlier, accelerating from a 4.1 percent gain in July and stronger than economists had expected.
Phoenix, Seattle and San Diego posted the biggest gains. All 19 of the normal 20 cities in the index recorded price increases. S&P is temporarily excluding prices from the Detroit area index because of delays related to the pandemic at the local recording office.
Helped by rock-bottom mortgage rates, the U.S. housing market has been a source of strength as the U.S. economy climbs back from an April-June freefall caused by the pandemic and the measures taken to contain it.
“The supply of for-sale homes, already extremely tight, has only become more constrained in recent months, and historically low mortgage rates continue to encourage many buyers to enter the market,” Matthew Speakman, economist at the real estate firm Zillow, said. “This heightened competition for the few homes on the market has placed consistent, firm pressure on home prices for months now, and there are few signs that this will relent any time soon.”
Yet another streaming service unveiled
NEW YORK — Yet another service provider is jumping into the TV streaming wars.
This time it’s T-Mobile and its TVision service with live news, entertainment and sports channels, starting at $10 a month. It launches for T-Mobile postpaid subscribers Nov. 1 and all customers next year.
T-Mobile says it’s aiming to offer a simpler and and cheaper service for people dissatisfied with cable. But it’s entering a crowded field of competing streaming services that are also aiming to do just that. And most have found it difficult to sustain low prices over time.
Consumers felt less confident in Oct.
SILVER SPRING, Md. — U.S. consumer confidence dipped slightly in October as a new wave of coronavirus cases began across the country.
The Conference Board reported Tuesday that its consumer confidence index fell to a reading of 100.9, from 101.8 in September.
Consumer spending accounts for 70 percent of economic activity in the U.S., so a decline in confidence gets a lot of attention from economists, especially as the U.S. heads into the crucial holiday shopping season.
Consumer confidence tumbled to 85.7 in April as large swaths of the country went into lockdown to check infections. It had consistently been well above 100 in the months before that, with the index hitting 132.6 in February before the severity of COVID-19 infections became clear.
Another big M&A deal in the chip industry
SAN JOSE, Calif. — Advanced Micro Devices is buying Xilinx for $35 billion in an all-stock deal that will combine the two Silicon Valley chip makers and accelerate an already rapid-fire pace of mergers and buyouts in the industry.
The deal announced Tuesday puts AMD in a place it wants to be; competing more fiercely with Intel at a time when a global pandemic is driving demand for technology ever higher.
More Zoom meetings, more orders online, and more upgrades for companies trying to meet new demands of millions staying at home has led to a seemingly insatiable appetite for computer chips.
AMD and Xilinx is a huge tie-up in a season of massive buyouts for the semiconductor industry. Just last month, Nvidia said it would buy Arm Holdings for up to $40 billion and set up an artificial intelligence research center in Cambridge, England, where Arm is headquartered.
In July, Maxim Integrated Products was snapped up by Analog Devices for more than $20 billion.
Pfizer tops 3Q earnings projections
NEW YORK — Drugmaker Pfizer saw its third-quarter profit plunge 71 percent, mainly due to an $8.1 billion gain a year earlier from selling its consumer health care business to a GlaxoSmithKline joint venture, but it managed to top Wall Street expectations.
Excluding one-time items, adjusted income came to $4.1 billion, or 72 cents per share, beating projections by 2 cents, according to a survey by Zacks Investment Research. Revenue totaled $12.1 billion, down 4 percent from the year-ago quarter.
Meanwhile, the company on Tuesday said disruptions from the coronavirus pandemic reduced medicine sales in the U.S. and China by about $500 million. Still, Pfizer raised and narrowed its profit forecasts slightly for all of 2020.
Pfizer, one of the leaders in the race to develop a vaccine against COVID-19, said the final-stage trial of its vaccine candidate has now enrolled nearly all of the planned 44,000 participants worldwide. Nearly 36,000 had received the second shot of the two-dose vaccine as of Monday. The company could seek approval for emergency use from U.S. regulators in late November.
Pfizer already has contracts with the United States, the European Union and about 10 countries to supply hundreds of millions of doses of the vaccine next year, assuming it wins approval.
Strong drug, vaccine sales propel Merck
NEW YORK — Drugmaker Merck & Co., bouncing back from a $1.6 billion hit from the coronavirus pandemic in the second quarter, boosted its third-quarter profit by 55 percent and blew past Wall Street expectations. The strong result was due to sales slightly higher than a year ago, plus restrained spending and a one-time gain.
The maker of cancer blockbuster Keytruda reported net income of $2.94 billion, or $1.16 per share, up from $1.9 billion, or 74 cents per share, a year earlier. Adjusted earnings came to $1.74 per share, a whopping 30 cents more than analysts expected. Merck reported revenue of $12.55 billion, also easily beating analyst projections for $12.26 billion.
The company on Tuesday said it’s making progress on three efforts to combat the coronavirus pandemic: two different vaccines and an antiviral drug. Merck entered the race to fight COVID-19 later than other top drugmakers, but is focusing on creating medicines that are easier to administer and based on proven technologies.
“This was a good quarter for Merck, and we think the company is executing well,” Edward Jones analyst Ashtyn Evans wrote to investors, adding she’s “encouraged by the improving trends and volumes, although an increase in COVID cases across the U.S. could impact future results.”
Sales of prescription drugs totaled $11.32 billion, up 2 percent.
Cat muscles through pandemic slump
CHICAGO — Caterpillar’s sales fell 23 percent in the third quarter as the pandemic throttled demand for construction equipment and a trade war with China continues to create headwinds.
The company still managed to top Wall Street expectations, despite rising COVID-19 infections that hamper almost all sectors, including construction.
Revenue declined to $9.88 billion from the same quarter a year ago as dealers decreased inventories in all regions during the quarter, except for the Asia/Pacific region. Still, Caterpillar managed to beat the $9.67 billion analysts polled by Zacks Investment Research forecast.
For the three months ended Sept. 30, Caterpillar Inc. earned $668 million, down more than 50 percent but it easily beat Wall Street’s expectations.
BP earnings skid amid falling demand
LONDON — BP plc says third-quarter earnings plunged 96 percent as the COVID-19 pandemic reduced energy prices and demand.
The London-based oil company said Tuesday that profits, excluding one-time items and changes in the value of inventories, dropped to $86 million.
BP is facing the twin challenges of reducing costs to adjust to an era of lower oil prices as the company tries to shift its focus toward renewable energy amid pressure to reduce greenhouse gas emissions that contribute to global warming. BP has pledged to eliminate or offset all of its carbon emissions by 2050.
Brent crude, the benchmark for international oil prices, averaged $42.94 a barrel in the third quarter, down nearly 31 percent from the same period last year. Demand for aviation fuel fell about 60 percent from a year earlier as airlines grounded flights, BP said. Demand for retail fuels fell 7 percent.