Two big tech events get started Tuesday—and they might be more important for the stock market than any of the day’s other news.
reveals the iPhone 12 today at an event that can be live-streamed here beginning at 1 p.m. Eastern time.
Apple stock is up 69% this year, and has a market value of more than $2 trillion. An iPhone supercycle is supposed to drive Apple shares even higher.
com’s Prime Day—actually two days—is here. E-commerce has boomed amid the pandemic, and the setup for this holiday shopping season is extraordinary.
Amazon stock has been extraordinary too. Shares are up 86% year to date and the stock now has a market value of about $1.7 trillion.
Tech, particularly big tech, now rules the market. The
has outpaced the
Dow Jones Industrial Average
in 2020, and looks set to do so on Tuesday.
And when Amazon and Apple are doing well, the market usually does well too. Together, they make up about 12% of the market capitalization of the S&P 500, and cover up the fact that 51% of the index constituents are down on the year.
For investors interested in the future of the market, Apple’s launch is must-see TV.
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Johnson & Johnson Pauses Covid-19 Vaccine Trial Due to Unexplained Illness
Consumer and pharma conglomerate
Johnson & Johnson
said Monday that it would pause its Covid-19 vaccine clinical trials due to one participant’s unexplained illness. It added that the case is now being studied by both an independent panel and the company’s own team of physicians.
- J&J last month became the fourth company to sign on to the U.S. government’s “Operation Warp Speed,” aiming at producing 300 million doses of safe and effective vaccines, the first to be delivered by January 2021.
It is also the second major pharmaceutical group to pause its so-called Phase 3 trial, after U.K.-based
last month paused its late-stage trials because a participant became sick. The trials have since resumed in the U.K. but remain on hold in the U.S. pending a regulatory review.
- J&J pointed out in its release that the “study pause” that it decided is different from a “regulatory hold” that can be required by health authorities. It added that so-called serious adverse events are not “uncommon in clinical trials” notably those involving a large number of participants.”
What’s Next: The news is a reminder that the road to a safe vaccine may be bumpier than hoped by some, even though the number of adverse cases so far is not unusual in trials of that size. The public’s perception of a vaccine’s safety will be a key condition of its broad adoption.
Disney Shifts Focus to Streaming
is restructuring its media and entertainment segments to accelerate its evolution from a television and movie theater-driven distribution model to a direct-to-consumer business that would rival
- Its streaming service Disney+ has been the bright spot in the company’s 2020 portfolio as its theme parks remain closed or operating at lower capacity, movie theaters are shut, and advertising revenues at TV networks have slumped.
- Since launching last November, Disney+ had reached 60.5 million subscribers worldwide by August, beating analysts’ and Disney’s own forecasts.
- Disney is creating a new unit that will be focus on commercialization and distribution of Disney movies, TV shows, and sports content. It will be led by Kareem Daniel, a 14-year Disney veteran who most recently served as head of games and publishing in the company’s consumer products business.
- “Our creative teams will concentrate on what they do best—making world-class, franchise-based content—while our newly centralized global distribution team will focus on delivering and monetizing that content in the most optimal way across all platforms,” Disney CEO Bob Chapek said.
NBCUniversal are each undergoing their own streaming-focused reorganizations this year, around HBO Max and Peacock, respectively. Each is trying to be more like Netflix, which doesn’t have legacy distribution models to defend.
Amy Coney Barrett Hearings Continue
Senators fought along party lines during Judge Amy Coney Barrett’s confirmation hearing Monday with Democrats arguing that another conservative judge would endanger the Affordable Care Act and Republicans emphasizing the Supreme Court nominee’s belief in the rule of law.
- If Barrett is confirmed by the end of October, she would be eligible to rule a case set to come before the Supreme Court on Nov. 10 that challenges the constitutionality of the health care act.
- Democrats also attacked Republicans for moving ahead with Barrett’s nomination so close to an election after the GOP blocked former President Barack Obama’s nominee to replace Justice Antonin Scalia from receiving a hearing.
- “This is probably not about persuading each other unless something really dramatic happens,” Judiciary Committee Chairman Sen. Lindsey Graham (R., S.C.) said at one point during the first of four days of hearings. “All the Republicans will vote yes, all the Democrats will vote no.”
- Barrett echoed comments made by Republican senators throughout the hearing, saying that “the policy decisions and value judgments of government must be made by the political branches elected by and accountable to the people. The public should not expect courts to do so and courts should not try.”
What’s Next: The hearings will continue this week with three more days of hearings. Sen. Graham has said that Republicans are aiming to confirm Judge Barrett to the Supreme Court in a full Senate vote the week before the Nov. 3 election.
Investors Size Up a Possible Biden Win
With polls showing Joe Biden holding a solid lead over President Donald Trump both nationally and in battleground states, investors and analysts are analyzing what a possible Biden win, along with the potential for Democrats to take control of the Senate, would mean for markets.
- An increase in corporate tax, which Biden has proposed, could cut profits of S&P 500 companies by 9%. That, along with increased government spending, could weaken the dollar, Goldman Sachs strategists say, but an improving economy might offset those losses.
- A Biden win and a “blue wave” in Congress would be good for the economy, Goldman chief economist Jan Hatzius said, because it “would likely mean greater fiscal stimulus, more cyclical upside, less trade policy risk and a weaker [U.S. dollar].”
- In the energy sector, renewable energy shares could benefit, The Wall Street Journal reports, since Biden has proposed a $2 trillion package to reduce climate change. Oil-and-gas companies could face further challenges due to increased regulation and his proposed ban on oil and gas projects on federal lands.
- The benefits of a Biden win are difficult to parse for industries like consumer goods, which benefited significantly from the Trump administration’s 2017 tax cuts that Biden has said he would repeal. But a broader fiscal stimulus and removal of tariffs, which Biden supports, could help the industry, the Journal noted.
What’s Next: Polls were shown to be unreliable in 2016, but Biden’s lead has been consistent. He is now further ahead in polling than any challenger since 1936.
Facebook Says It Will Ban Content That Denies the Holocaust
Mark Zuckerberg said in a blog post Monday that
would start removing posts that deny the Holocaust, amid growing scrutiny of tech companies’ outsized influence by lawmakers.
- “I’ve struggled with the tension between standing for free expression and the harm caused by minimizing or denying the horror of the Holocaust,” Zuckerberg wrote, noting that data showing rising anti-Semitic violence was crucial in his decision.
- In recent days, the company has also said it was banning far-right QAnon conspiracy groups. It will also ban political ads after polls close on Nov. 3.
- The moves come less than two weeks after the Senate Commerce Committee voted to authorize subpoenas of tech leaders to testify on privacy and content moderation issues.
- Last week, the House Antitrust Subcommittee released a 449-page report accusing Facebook and other tech giants of unfairly crushing the competition.
What’s Next: Increased bipartisan scrutiny of Facebook and other tech firms in Washington means that the company’s voluntary moves will be closely watched by lawmakers who are eyeing additional regulations, and possibly antitrust charges, directed at some or all of them.
Congratulations to the winners of our September virtual stock exchange challenge!
Players built a portfolio by investing $100,000 in virtual money over a month and competed against other members of The Barron’s Daily newsletter. You can see the winning portfolios here and read an edited interview with one of the top three participants below.
Patrick Vasquez: “I really enjoyed participating in this game. I used this as a practice guide for how I would build my real portfolio if I had such funding. Can’t wait for the next one.”
Are you ready to compete? October’s game started on Oct. 1. It’s not too late to participate. Join the challenge and pick your stocks here.
—Newsletter edited by Stacy Ozol, Anita Hamilton, Mary Romano, Matt Bemer, Ben Levisohn