Markets Jump on First Trading Day After Biden Victory: Live Business Updates

Laveta Brigham

Here’s what you need to know: Stocks rose last week, and continued surging on Monday, as investors became convinced that President-elect Biden will govern alongside a Republican-held Senate. Credit…Erin Schaff/The New York Times Stocks on Wall Street were set to open about 1 percent higher on Monday, following strong gains […]

Here’s what you need to know:

Credit…Erin Schaff/The New York Times
Credit…Kevin Mohatt/Reuters

The third-quarter earnings season is nearly over, and so far the results have been better than expected, by a wide margin. About 80 percent of companies in the S&P 500 stock index that have reported third-quarter earnings so far have exceeded analysts’ expectations, The New York Times’s Peter Eavis and Niraj Chokshi report.

That’s well over the norm. Typically, just shy of two-thirds of companies beat analysts’ quarterly forecasts.

Here are the highlights of Peter and Niraj’s takeaway from the earnings season.

As the pandemic forced people to stay home and do more things online, some successful companies were perfectly positioned to take advantage of the change.

Consider Amazon. Its profits in the first nine months were up $5.8 billion compared with a year earlier. They allowed the company to spend 120 percent more during the period on things like warehouses, technology and other capital investments. That spending — $25.3 billion — could make it harder for all but Amazon’s biggest competitors to keep up with its growth.

When the pandemic hit, many executives understandably feared that their companies were facing an existential crisis. But a surprising number of those have excelled in part because many Americans who did not lose jobs but were also not spending on travel and entertainment found themselves with more disposable income.

General Motors, Ford Motor and other automakers reported big profits.

For some large restaurant chains, drive-through customers, as well as delivery and takeout orders helped them grow. On Thursday, Papa John’s, whose stock is up 32 percent this year, reported surging sales, profits and cash flow and announced a new stock buyback program.

Hertz sought bankruptcy protection in May. And its biggest competitor, the Avis Budget Group, ran up large losses — $639 million in the first six months of the year. But Avis turned a modest $45 million profit in the third quarter.

The company’s comeback was made possible by cost-cutting and a decision to sell 75,000 vehicles in the United States to take advantage of strong demand for used cars. (Nationally, spending on used light trucks, including sport utility vehicles, was up nearly 19 percent in the third quarter from a year earlier.)

Passenger airlines are among the biggest losers of the pandemic, and they have few options to improve their prospects. Delta, United Airlines and American Airlines worked quickly to cut costs and got $50 billion in the March federal stimulus package.

In the third quarter, American lost $2.4 billion and United lost $1.8 billion. For all three, revenue fell more than 70 percent from the same three months last year.

Credit…Jeenah Moon for The New York Times

For Wall Street, the 2020 election was fraught with risk and uncertainty.

Early on, candidates who promised to rein in the excesses of corporate America and tax the superrich, as part of their pledges to close the country’s wealth gap, were in contention to be the Democratic nominee for president.

More recently, the concern shifted to the potential for civil unrest, or an election with no clear outcome, both factors that would result in the kind of uncertain environment that investors and chief executives both loathe.

In the end, though, big companies and wealthy investors seem to have landed in a sweet spot: a more predictable White House under Joseph R. Biden Jr., now the president-elect, paired with a Republican-led Senate that can ward off higher taxes or other policy changes investors find unappealing. (At least for now, that is. Control of the Senate is a matter that won’t be settled until January after Georgia holds two runoff elections.)

“Financial markets don’t want risk or sudden changes,” said Charles Phillips, a longtime software executive who is raising a technology-investment fund and a supporter of Mr. Biden. “So the fact that he’s levelheaded and collaborative, and the fact that most likely we may have a Republican Senate — if that happens, it’ll limit what he can do,” he said.

Markets bolted upward last week as the national vote count appeared to point to that result. Over the weekend, after the race was called for Mr. Biden, some analysts said to expect more gains over the peaceful completion of the voting process, and to watch for an uptick in shares of companies Mr. Biden’s policy agenda is likely to benefit — including green-energy companies, producers of virus-testing materials and laboratories, and those in the infrastructure space.

Mr. Biden did win substantial financial backing from finance-industry donors, (about $74 million, according to figures compiled by the Center for Responsive Politics, which overshadowed Mr. Trump’s support from those donors by a factor of four to one), and some expressed their excitement for their candidate.

“President-elect Biden offers enormous experience, a steady hand and an unparalleled ability to overcome obstacles,” said Jon Gray, the president of the giant investment firm Blackstone Group.

Other reactions from across Wall Street after the election was called were more measured.

Ken Griffin, the billionaire founder of Citadel, said he was “relieved there is no social unrest,” David Solomon, the C.E.O of Goldman Sachs, and George Wallace, who runs Neuberger Berman, both pointed to the challenges Mr. Biden faces with the country in a pandemic and an economic crisis. Bill Ackman, who runs the hedge fund Pershing Square Capital Management, meanwhile, called on President Trump to “concede graciously and call for unity from all who have supported you.”

Credit…Koji Sasahara/Associated Press

Over the past year, SoftBank, the Japanese conglomerate headed by maverick billionaire Masayoshi Son, has come back from the brink of disaster.

SoftBank said on Monday that the trend had continued through the end of the summer, extending a recovery that followed one of the worst losses in Japan’s corporate history.

The company on Monday reported 562 billion yen, or $5.4 billion, in profit for the three months that ended in September. The jump from a big loss a year ago was largely driven by broad growth in global tech stocks as the coronavirus pushes consumers to spend more of their lives online.

Last year, a disastrous investment in the office space company WeWork cast doubt on Mr. Son’s investment strategy. Earlier this year, the coronavirus pandemic cratered Softbank’s high-profile bets on companies like Uber and Oyo, which were hit hard by lockdowns across the world.

But a broad market recovery has pushed up the value of some stocks held by Softbank’s Vision Fund, the world’s largest tech investment vehicle. The company said the fund’s original investment of $75 billion in 83 companies had grown to $76.4 billion by the end of September.

Around half of the fund’s growth, however, came from increased valuations in its unlisted companies. SoftBank has frequently come under criticism by analysts for a lack of transparency in how it values its investments in the these privately held companies.

The market volatility was not all good news for SoftBank. The company also recorded $1.27 billion in losses from risky bets on derivatives. The moves, which were widely reported in September, have raised additional concerns about Mr. Son’s investment acumen.

In an earnings conference Monday evening, Mr. Son brushed off criticism about his management, dismissing the losses as short-term setbacks that distracted from his long-term vision for the company’s success.

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