Wall Street Begins 2021 on a Stimulus Induced High

Markets kicked off 2021 on a strong note, with Wall Street’s main indexes closing the week at a record high on news around stimulus. The week began with Senate runoffs in Georgia being won by Democrats, giving the party control of the chamber and set the stage for more stimulus and public spending to boost the domestic economy.

Following a disappointing jobs report during the week, President-elect Joe Biden on Friday called for stimulus for COVID-19-impacted Americans ‘now,’ boosting sentiment again on Friday to propel markets to record highs. For the week, the Dow (DJI) gained 1.6%, the S&P 500 (GSPC) rose 1.8% and the Nasdaq Composite (IXIC) jumped 2.4%.

However, the week was marred by gloomy images of pro-Trump protestors storming and breaching the U.S. Capitol to protest the election results and disrupt the Congress’ debate to certify Biden’s victory in the election. The police action in response to the riots left around five people dead, while a police officer succumbed to injuries days later.  

In other news, bitcoin stormed to fresh record highs, touching $40,000 for the first time ever.  The cryptocurrency doubled in price within a month, having risen more than 900% since a low in March.

Top Stories This Week

Boeing to pay $2.5 billion to settle probe into 737 MAX crashes

Boeing (BA) will pay over $2.5 billion in fines and compensation as part of its settlement with the U.S. Department of Justice over two plane crashes that killed 346 people. The 737 MAX jetliner was also grounded following the crashes. The settlement consists of a fine of $243.6 million, compensation to airlines of $1.77 billion and a $500 million crash-victim fund. The company also said it will be taking a $743.6 million charge against its fourth-quarter 2020 earnings.

Snap Summary
 The two deadly crashes, the ongoing probe and negative impact of the coronavirus crisis on the aviation sector all weighed down on the stock in 2020. Its value dropped by around 36%. Concerns have grown about the compensation’s impact, but some analysts quoted here said that the $1.77-billion compensation was already covered by accounting provisions and some had already been paid. The remaining burden was relatively small.

Tesla market value crosses $800 billion for the first time

Shares of Tesla (TSLA) continued to build on their meteoric rise from last year, rising as much as 5.6% in the previous trading session, helping the company clock a market capitalization of more than $800 billion for the first time and setting it on course to join the trillion-dollar league. The rally also helped Elon Musk, the company’s chief executive officer pip Amazon’s (AMZN) Jeff Bezos to be the world’s richest man.

Snap Summary
Tesla witnessed a stratospheric rally in 2020, surging a whopping 720%, with frenzied investors scurrying for a pie in Tesla’s successful share story. Confidence in the stock doubled down after it was inducted into the S&P 500 late last month, cementing the already-upbeat year with an icing on top. Moreover, the electric-car maker’s role in the country’s e-vehicles journey also assumes significance under incoming President-elect Joe Biden’s administration. Biden has advocated a greater push towards clean energy and solutions.

AmerisourceBergen to buy Walgreens’ distribution unit for $6.5 billion

AmerisourceBergen Corp (ABC) would buy Walgreens Boots Alliance’s (WBA) distribution business for $6.5 billion to expand in Europe and set itself to compete better in the U.S. healthcare business. Walgreens’ distribution business had generated $20 billion in 2020, about 14% of its total revenue. The deal does not include operations in China, Italy, and Germany. AmerisourceBergen will pay the pharmacy chain $6.27 billion in cash and give 2 million of its common stock at closing of the transaction.

Snap Summary
The deal comes at a time when its retail sales have tanked due to the COVID-19 pandemic. As a result, its shares dropped nearly 30% in 2020. Going forward, the sale will help Walgreens focus more on its core pharmacy unit, which was cheered by investors as its shares rose nearly 10% during the week on the back of the news.

Tiffany reports record holiday sales

Jeweller Tiffany & Co (TIF) posted record sales for the 2020 holiday period, boosted through online shopping by stay-at-home consumers and high purchases by shoppers in China. Its preliminary net sales rose about 2% for Nov. 1 to Dec. 31, from a year ago. E-commerce sales of the company surged more than 80%.

Snap Summary
The holiday season in 2020 witnessed a big boom in online shopping as the coronavirus outbreak kept people at home and encouraged online shopping. The upbeat sales also add to the positive news around the long-drawn acquisition by France’s LVMH that finally came through in 2020. The company will soon be acquired by the French group.