The market was down this week as the big tech names struggled...
- Earnings Update: Just over 20% of the S&P 500 has now reported. Per FactSet, more than 76% have exceeded consensus earnings expectations, better than the 72% five-year average. In aggregate, companies are reporting earnings 11%+ above expectations, well ahead of the five-year average positive surprise rate of 4.7%. In addition, companies remain hesitant to provide formal guidance for 2020 given all the uncertainty surrounding the coronavirus.
- Stimulus Debate Continues: Republicans likely to begin releasing details on their coronavirus relief proposal today. The total price tag is expected to be around $1 Trillion, well below the $3 Trillion package passed by Democrats. Republicans still seem to be undecided on a number of issues, including enhanced unemployment benefits and a second round of stimulus checks. Treasury Secretary Mnuchin says GOP plan for unemployment extension will be based on ’70% wage replacement’ and also said that the Payroll Tax Cut will not be included in the base GOP bill. The current proposal does not include any additional funding for state and local governments, but does provide $105 million for schools and $25 billion for testing and contract tracing.
- Jobless Claims Jump: Weekly initial jobless claims came in at 1.4 million vs. the consensus projection by Briefing.com of 1.3 million. The continuing jobless claims came in at 16.2 million for the week. The jump in initial claims ends a 15-week run of consecutive declines, though continuing claims are down for a 7th straight week. Numbers have levelled off somewhat, but claims data remains historically elevated and longer-term economic damage continues to accumulate. The federally funded enhanced unemployment insurance benefit ($600/week) is set to end this week.
- Vaccine: During a Q&A session with The Washington Post yesterday, Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said that a coronavirus vaccine will likely not be widely available to the American public until several months into 2021.
- Big Tech Struggled: Facebook, Amazon, Apple, Microsoft and Google, which make up 22% of the S&P 500 fell yesterday based on earnings, jobless claims and other worries. Apple fell 4.55%, Amazon was down 3.66%, Google dropped 3.07%, Facebook fell 3.03% and Microsoft was down 4.35%. The S&P 500 as a whole ended the day down just 1.09%
Good News From Around the World
- Researchers from University of California at San Diego are reporting a new method today in Nature Communications that could allow them to detect cancer years before symptoms arise. By using a blood test, the international team was able to diagnose cancer long before symptoms appeared in nearly all the people it tested who went on to develop cancer. The researchers tested blood samples from 191 participants who eventually developed cancer, paired with the same number of matching healthy individuals. They were able to detect cancer up to four years before symptoms appeared with roughly 90 percent accuracy and a 5 percent false-positive rate.
- An aerosol-based protein inhalant has been shown in trials to reduce the risk of death from SARS-CoV-2 and reduce the chance of developing serious symptoms by 79% compared to patients given a placebo. The new drug called SNG001 is an inhalant of the naturally-occurring protein called interferon beta, and arose out of research conducted at the University of Southampton. The British biotech firm Synairgen, co-founded by three of the university’s professors, tested the treatment on 100 hospitalized COVID-19 patients (and 120 who were at home) in a randomized controlled trial spanning a period from March to May.