Finance

U.S. stock index futures were little changed during overnight trading on Thursday, ahead of Friday’s highly anticipated jobs report.Futures contracts tied to the Dow Jones Industrial Average dipped 24 points. S&P 500 futures and Nasdaq 100 futures were flat.Stocks finished Thursday’s session in the green, with the S&P 500 rising 0.6% to close at a new record. The Dow gained 271.58 points, or 0.78%. The Nasdaq Composite also advanced 0.78% for its fourth straight positive session.All eyes are on Friday’s jobs report, which will show how the labor marked fared during July. Economists expect the economy to have added 845,000 jobs last month, according to estimates from Dow Jones. However the broad range of targets — from 350,000 on the low end to 1.2 million at the top — show the uncertainty that’s currently in the market.Brad McMillan, chief investment officer at Commonwealth Financial Network, noted that the monthly readings this year have ranged from 233,000 in January to 850,000 in June. He said a print below 300,000 could be a cause for concern, while a reading between 300,000 and 400,000 would show a “reasonably healthy” economy.Stock picks and investing trends from CNBC Pro:Goldman Sachs raises year-end S&P 500 forecast to highest on Wall Street because of low rates20 strategists predict when stocks will have the next big tumble — and how far they’ll fallForget the U.S. — Europe is now the place to pick out cheap stocks, Bernstein says”A better result would be in line with the average for the second quarter, or around 500,000 to 600,000. This would show that the recovery continues and that while the medical and labor issues are preventing further acceleration, the economy still has enough momentum to keep moving forward at a reasonable rate,” he said.Friday’s report comes after the weekly initial claims number reported on Thursday came in at 385,000, which was in-line with expectations.Wall Street is closely watching Friday’s jobs report given its potential to impact the Federal Reserve’s policy going forward.”While uncertainty over monetary policy is likely to cause further bouts of volatility, we believe the Fed’s move toward tapering is unlikely to prompt a reversal of the equity rally,” noted strategists at UBS.”Labor market slack, well anchored inflation expectations, and risks from the delta COVID-19 variant make interest rate increases before 2023 unlikely,” the firm added.A busy week of earnings continues on Friday with several notable reports, including from Canopy Growth, AMC Networks, Draftkings, Norwegian Cruise Line and Goodyear Tire. Additionally, Berkshire Hathaway is on deck for Saturday morning.Through Thursday afternoon 427 S&P 500 components have posted quarterly results, with 88% topping earnings estimates, according to data from Refinitiv. When it comes to revenue, 87% have exceeded expectations.For the week, the Dow is up 0.4%. The S&P and Nasdaq are up 0.77% and 1.5%, respectively.Become a smarter investor with CNBC Pro. Get stock picks, analyst calls, exclusive interviews and access to CNBC TV. Sign up to start a free trial today More

In this articleDBXSPCEBYNDTRIPVirgin Galactic’s passenger rocket plane VSS Unity, carrying billionaire entrepreneur Richard Branson and his crew, lands after reaching the edge of space above Spaceport America near Truth or Consequences, New Mexico, U.S., July 11, 2021.Joe Skipper | ReutersCheck out the companies making headlines in after-hours trading.Virgin Galactic — Virgin Galactic shares jumped 6% after the company reported quarterly results and said that it will reopen ticket sales. The space company reported an adjusted EBITDA loss of $56 million in the second quarter, slightly above the prior quarter’s $55.9 million loss. Revenue for the second quarter came in at $571,000.TripAdvisor — Shares of the travel company climbed slightly in extended trading as the company beat expectations during the second quarter. TripAdvisor lost seven cents per share excluding items, which was smaller than the expected loss of 11 cents per share, according to estimates from Refinitiv. Revenue came in at $235 million, ahead of the expected $188 million.Beyond Meat — Beyond Meat shares dipped 4% after the company missed earnings estimates during the second quarter. The meat alternative company lost 31 cents per share, which was greater than the 24-cent loss analysts were expecting, according to estimates from Refinitiv. Revenue came in at $149.4 million, which was ahead of the $140.8 million analysts were expecting.Dropbox — The cloud storage company’s stock rose about 4% after Dropbox reported second-quarter earnings. The company earned 40 cents per share during the quarter excluding items, which was ahead of the 33 cents analysts surveyed by Refinitiv were expecting. Revenue came in at $531 million, also ahead of the expected $524 million.Become a smarter investor with CNBC Pro. Get stock picks, analyst calls, exclusive interviews and access to CNBC TV. Sign up to start a free trial today More

In this articleEPCWFSLYBKNGThe logo of US cloud computing services provider Fastly is seen on a smartphone screen.Pavlo Gonchar | SOPA Images | LightRocket via Getty ImagesCheck out the companies making headlines in midday trading.Robinhood — Shares of the trading app dropped more than 27% after the newly public company said in a filing that existing shareholders will sell close to 97.9 million shares over time. The commission-free broker said it will not receive any of the proceeds from the stock sale of 97,876,033 shares of its Class A common stock. The stockholders were among those who came to Robinhood’s rescue during the historic trading mania earlier this year.Cigna — The insurance company’s shares fell more than 11% despite a better-than-expected quarterly earnings report. Cigna reported quarterly earnings of $5.24 per share on revenues of $43.11 billion. Analysts expected earnings of $4.96 per share on revenue of $41.26 billion. However, the company noted a headwind of higher medical costs.Fastly — Fastly shares plunged over 10% following its earnings report Wednesday, which showed a loss of 15 cents per share for the second quarter, compared to the 17-cent loss analysts had estimated. The cloud software provider missed on revenue forecasts and said its June network outage will continue to affect results for the rest of the year.Wayfair — The furniture and home goods retailer saw shares jump 10% after reporting earnings. Wayfair topped earnings estimates, reporting $1.89 per share, but missed slightly on revenue, reporting $3.86 billion compared to the estimated $3.94 billion. The company said active customers grew 20% year-over-year to 31.1 million. Nautilus Biotechnology — Shares of Nautilus surged past 10% around 12:20 p.m. EST, after a report that Amazon invested “millions” in the pre-revenue biotechnology company as part of its efforts to grow its healthcare presence. Nautilus went public in June through a special-purpose acquisition company, or SPAC.Etsy — Shares of the e-commerce name tumbled about 9.5% after user growth numbers came up short of estimates. During the second quarter the company earned 68 cents per share, compared to the 63 cents analysts surveyed by Refinitiv were expecting. Revenue came in at $528.9 million, also ahead of the expected $524.7 million.Booking Holdings — Booking Holdings stock jumped 5.8% despite missing Wall Street expectations for quarterly earnings on Wednesday. The company — whose brands include Priceline, Kayak and other travel services — lost an adjusted $2.55 per share for the second quarter, wider than the loss of $2.04 per share analysts anticipated. However, revenue came in above estimates as travel demand jumped.Edgewell Personal Care — The maker of personal care products saw shares rise 4.5% after reporting quarterly earnings. Edgewell reported earnings per share of 89 cents and revenue of $573.7 million, both of which beat Wall Street forecasts, according to Refinitiv. The company also raised its full-year earnings guidance.Roku — The streaming service device company’s shares slid more than 4% after Roku reported weaker-than-expected user growth during the second quarter. The company did, however, beat expectations on both the top and bottom line. Roku earned 52 cents per share on $645 million in revenue. Analysts were expecting 13 cents per share on $618 million in revenue, according to estimates from Refinitiv.Becton Dickinson — Medical tech company Becton Dickinson’s stock fell 4.5% despite reporting second-quarter earnings of $2.74 per share, which beat analysts’ estimates by 30 cents. It also beat on revenue, reporting $4.89 billion versus the forecasted $4.51 billion.Moderna — Moderna shares fell 1.8% before reclaiming some of its losses. The vaccine maker released better-than-expected earnings and revenue as well as positive vaccine protection durability data this week, which indicated protection from Covid, from the Moderna vaccine, lasts well after six months. The company also announced it plans to release a booster vaccine this winter. — CNBC’s Pippa Stevens, Hannah Miao and Yun Li contributed reportingBecome a smarter investor with CNBC Pro. Get stock picks, analyst calls, exclusive interviews and access to CNBC TV. Sign up to start a free trial today More

In this articleWFCWells Fargo signage on May 5th, 2021 in New York City.Bill Tompkins | Michael Ochs Archives | Getty ImagesWells Fargo has pushed back plans for employees to return to corporate offices by a month in response to the rise in U.S. coronavirus cases.The bank is now aiming to kick off the first phase of its plan on Oct. 4, from a previous Sept. 7 target, according to a memo Thursday from Chief Operating Officer Scott Powell. The move applies to employees who are currently working remotely, not those who are already working on site, Powell said.Wells Fargo, the fourth biggest U.S. bank by assets, is joining a growing list of corporations that are pushing back return dates or mandating that employees be vaccinated or wear masks amid a nationwide surge driven by the more contagious delta variant.Last week, Citigroup said that even vaccinated employees would need to wear masks at corporate offices. Tech giants, including Facebook and Alphabet, now mandate that employees who wish to return to offices be vaccinated. Giant asset manager BlackRock also said Thursday that it is pushing office return plans back by a month to October, according to Bloomberg, which earlier reported the Wells Fargo news.The bank also encouraged, but did not require, employees to get vaccinated and said that almost 90% of its workforce had responded to an internal vaccine questionnaire, according to the memo obtained by CNBC. The bank declined to comment beyond the memo.”We will continue to monitor the situation and make further adjustments if required,” Powell told employees. “Please take care of yourselves and your families.”This story is developing. Please check back for updates.Become a smarter investor with CNBC Pro. Get stock picks, analyst calls, exclusive interviews and access to CNBC TV. Sign up to start a free trial today. More

“IF YOU WANT to see how the free market really works this is the place to come,” said Milton Friedman in “Free to Choose”, his 1980s TV series. He was sitting on a cross-harbour ferry in Hong Kong. The city, he said, was an “almost laboratory experiment in what happens when government…leaves people free to pursue their own objectives”.This week the same city began another experiment: not merely leaving people free to pursue their own objectives, but giving them free money to pursue their own purchases. On August 1st Hong Kongers received the first instalment of the government’s consumption voucher, an effort to revive the city’s hard-hit retail industry. The amounts are generous (HK$5,000 or $640) and the distribution is slick. The money is added to a person’s Octopus card (widely used in shops and on public transport) or paid into e-payment apps, such as Alipay. Shops are now vying for their customers’ unearned dollars. The Mira hotel, where Edward Snowden revealed America’s secrets to the world, is offering 75% off a romantic “staycay”. Unlike ordinary cash handouts, these e-vouchers must be spent within a few months. Otherwise they will “expire”.So will Hong Kongers use it or lose it? Similar experiments have had mixed results. After South Korea provided perishable vouchers in May 2020, only 36% of households said they had raised their retail spending (and some of them cut spending of other kinds). After Taiwan distributed physical vouchers in 2009, most people spent them on things they would have bought anyway, according to Kamhon Kan of Academia Sinica in Taipei and his co-authors. Only about a quarter used them for unplanned purchases, making them no more effective than America’s more conventional tax rebates in 2008.These shortcomings would not surprise proponents of the “permanent-income hypothesis”, who argue that households will try to smooth their consumption over time, spending a fraction of their estimated lifetime wealth. In these models, windfall gains are largely squirrelled away. Hong Kongers cannot set aside their voucher money without losing it. But the windfall nonetheless lets them save more of their ordinary money because they do not have to spend it on the stuff they are buying with their vouchers.The originator of the permanent-income hypothesis was none other than Milton Friedman. If Hong Kong’s new experiment is to work as well as the government hopes, one of his most cherished cities will have to overcome one of his most celebrated theories.This article appeared in the Finance & economics section of the print edition under the headline “Temporary income hypothesis” More

WHEN GARY GENSLER took over as the head of America’s Securities and Exchange Commission (SEC) in April, he might have seemed pretty crypto-friendly. Only months before he had taught a course on cryptocurrencies at the Massachusetts Institute of Technology; he has said that the innovation associated with bitcoin will be a “catalyst for change” in finance. Yet, speaking at the Aspen Security Forum on August 3rd, he probably dashed the hopes of crypto buffs. He signalled that he would seek tougher policing of the crypto-sphere, which he described as “rife with fraud, scams and abuse”.Mr Gensler offered the most fleshed-out vision yet for how the SEC might regulate cryptocurrencies. These tokens, he said, were not a means of exchange but “highly speculative stores of value”. That in itself was not a problem—investors should be left to gamble should they wish to. But punters often could not access “rigorous, balanced and complete information”, meaning a lot of them could be hurt.That calls for greater investor protections, which fall into three broad buckets. The first relates to what the SEC already does. The regulator claims jurisdiction over the crypto assets that it defines as securities; issuers of these must provide disclosures and abide by other rules. The SEC‘s definition uses a number of criteria, including the “Howey Test”, which asks whether investors have a stake in a common enterprise and are led to expect profits from the efforts of a third party. Bitcoin and ether, the two biggest cryptocurrencies, do not meet this criterion (they are commodities, under American law). But Mr Gensler thinks that, among the 1,600 tokens with at least $1m in market capitalisation, a fair few probably count as securities—and do not follow the rules. These, he said, may include stablecoins, virtual monies pegged to conventional money, some of which may represent a stake in a crypto platform. Mr Gensler asked Congress for more staff to police them.The second bucket covers work in progress: areas where Mr Gensler’s team is considering how to treat new products being brought to market. For months the SEC has sat on applications for bitcoin ETFs and related products, filed by big Wall Street names like Goldman Sachs and Fidelity. Mr Gensler hinted that, in order to be approved, these may have to comply with the stricter laws governing mutual funds. The strictures could prove too costly and rigid for firms hoping to list vehicles. (Mr Gensler did signal openness to narrower ETFs focused on bitcoin futures that trade on the Chicago Mercantile Exchange.)The last bucket comprises new powers that the SEC will seek from Congress so as to prevent transactions and products “falling between regulatory cracks”. Mr Gensler is chiefly concerned with platforms engaged in crypto trading or lending as well as in decentralised finance (DeFi), where smart contracts replicate financial transactions without a trusted intermediary. Some of these, he said, may host tokens that should be regulated as securities; others could be riddled with scams.Mr Gensler is not the first to toughen up on crypto, though his attack is perhaps the most comprehensive. Other officials have focused mainly on stablecoins, which back their issuance with heaps of conventional assets. Jerome Powell, the chairman of the Federal Reserve, has hinted that these should be regulated as money-market funds or even banks. Janet Yellen, America’s treasury secretary, has urged the quick adoption of rules. The sheriff may be out in front, but the cavalry is not far behind. ■This article appeared in the Finance & economics section of the print edition under the headline “Here comes the sheriff” More

A COMMITTEE OF eight prominent economists made it official on July 19th. The covid-19 recession, America’s deepest since the Depression, was also its shortest, spanning just March and April 2020. That tests the very definition of a recession, which the National Bureau of Economic Research describes as “a significant decline in economic activity that is spread across the economy and lasts more than a few months”. A recession it was judged nonetheless, given its breadth and extraordinary depth. The plunge in output in the second quarter of 2020 was more than three times the second-largest quarterly drop in America’s post-war history.The rebound in GDP, thankfully, has been comparably dramatic. The 33.8% annualised rate of growth notched in the third quarter of 2020 was about twice as fast as the second-best quarterly performance in the post-war era. As the Bureau of Economic Analysis reported on July 29th, output overtook its pre-pandemic level in the second quarter of this year. Though unique in some ways, this unfolding recovery resembles past recoveries in other important respects. It may prove similar enough to help economists gain a better understanding of what policy can achieve in the face of hardship.Recent American recoveries have tended to be “jobless”, meaning that labour markets have taken far longer to regain lost ground than has overall production. During the seven recessions from 1948 to 1980, it took an average of about five quarters for GDP to surpass its previous peak. Employment took only a little longer to recover: six quarters on average. From the 1980s onwards, however, the recovery in employment began to lag behind that in output. Across the four downturns preceding the covid-19 crisis, GDP regained its peak in just six quarters, on average. But employment did not pass its previous high for a full 15 quarters.It is not quite right, of course, to call today’s recovery jobless. About 22m jobs were lost between February and April 2020, and 15.6m have since been added back. (Payroll figures for the month of July were due to be released on August 6th, after The Economist went to press.) Still, hiring is once again lagging behind GDP. Though output reached a new high in the second quarter, employment remained more than 4% below its pre-pandemic level. Moreover, the resulting jump in the level of output per worker over the course of this recovery looks remarkably similar to that which followed the global financial crisis (see chart). At present, America is producing more output than it managed just a year and a half ago, with roughly 7m fewer workers.This would seem to suggest that productivity has leapt across the economy. It may well have done. The pandemic has forced many firms to experiment with new technologies and working patterns and favoured some business models over others. The effect on output per worker in some sectors has been dramatic: labour productivity in retail trade jumped by nearly 8% in 2020, for example. The surge in output per worker also reflects the changing mix of the workforce. Employment in the leisure and hospitality industries, where productivity tends to be low, remains about 13% below the pre-pandemic level, compared to a 4% shortfall in the higher-productivity manufacturing sector.That productivity-boosting restructuring might accompany a period of economic stress is hardly surprising. In work published in 2012, for instance, Nir Jaimovich of the University of Zurich and Henry Siu of the University of British Columbia analysed the destruction of “routine” jobs—work that follows simple procedures and is thus highly susceptible to automation or outsourcing—and found its incidence to be concentrated around recessions. Furthermore, the researchers noted, the destruction of routine work in recessions seems to account for much of the joblessness of economic recoveries since the mid-1980s. But output per worker eventually stagnated over these plodding recoveries, perhaps because low-wage service-sector work only slowly expanded to absorb the lingering pool of unemployed labour.The present recovery might reveal whether a more forceful policy response can yield a different outcome. By contrast with past recoveries, this one has been positively blistering, thanks to a burst of deficit spending rivalled only by that during the second world war. Over the first four quarters of the recovery, output rose by just over 12%. Rapid growth is expected to continue; the IMF, for instance, projects that GDP will rise by an impressive 7% in 2021 as a whole, and by a further 5% in 2022.Push itHow might the future path of jobs and productivity evolve as a result? One scenario is that, powered by stimulus, the economic expansion remains rapid, but that early gains in productivity fail to be preserved. Consumer demand would shift back towards labour-intensive services, leading to frantic hiring. The result would be a jobs-rich recovery, but a productivity-poor one. Were the economy to grow as projected by the IMF and output per worker to fall back to pre-pandemic levels, then employment would rise towards 166m by the end of 2022, compared with 146m today. That would mean there were some 14m more jobs than in February 2020, when the unemployment rate stood at 3.5%.Another possibility looms, however. Perhaps growth in expanding, high-productivity industries, which can afford to pay higher wages, will continue, leaving fewer people willing to fill low-productivity, low-wage service-sector jobs. Where past jobless recoveries might have encouraged the creation of more low-wage services jobs, a faster expansion today might break the link, perhaps forcing employers in these industries to automate instead. America would enjoy a jobs-rich recovery while also emerging from the pandemic structurally changed, with a permanent increase in its level of productivity.Wishful thinking, perhaps. But whatever the outcome, America’s spending will have purchased a faster recovery and new information about how best to ease the pain of a recession. And it might just have gained a productivity boost. ■This article appeared in the Finance & economics section of the print edition under the headline “Something ventured” More

Check out the companies making headlines before the bell:Moderna (MRNA) – Moderna shares fell 2.4% in the premarket, despite reporting better-than-expected earnings and revenue and saying its Covid-19 vaccine is 93% effective after 6 months. Moderna earned $6.46 per share for its latest quarter, beating the $5.96 consensus estimate.Cigna (CI) – The insurance company beat estimates by 28 cents with adjusted quarterly earnings of $5.24 per share, with revenue also beating estimates. It did note a negative impact of higher medical costs, and the stock fell 3.7% in premarket trading.Penn National (PENN) – Penn is buying digital media and sports betting company Score Media (SCR) for $2 billion in cash and stock, sending Score shares soaring by 72.4% in premarket trading. Separately, the gaming company reported a quarterly profit of $1.17 per share, beating the 92 cent consensus estimate, and its stock gained 2.7% in the premarket.Robinhood (HOOD) – The trading platform company’s stock fell 11.3% in premarket trading after it announced it would sell up to 97.9 million shares over time. The shares will come from various selling stockholders, and the company won’t receive any proceeds from the sale. Robinhood had surged more than 50% in Wednesday’s trading.Wayfair (W) – The home furnishings seller’s shares leaped 8.7% in the premarket after its quarterly profit of $1.89 per share came in well above the consensus estimate of $1.15. The company also said its $3.9 billion in revenue during the quarter is well above pre-pandemic run rates.Regeneron (REGN) – The drug company’s stock added 3.3% in premarket trading after beating top and bottom-line estimates by a wide margin. Results were boosted by demand for its COVID-19 antibody cocktail.Roku (ROKU) – Roku shares stumbled 8.8% in premarket trading after the video streaming device maker reported weaker-than-expected user growth. Roku did report better-than-expected earnings for its latest quarter, with a profit of 52 cents per share compared with a 13 cents consensus estimate. Revenue exceeded Wall Street forecasts as well.Fastly (FSLY) – Fastly lost 14 cents per share for the second quarter, 2 cents less than analysts had predicted. However, the cloud software company’s revenue missed forecasts, and it said a widespread network outage in June will continue to impact results for the rest of the year. Shares tumbled 21.8% in the premarket.Uber (UBER) – Uber reported a surprise profit of 58 cents per share, compared with consensus forecasts of a 51 cents per share loss. The ride-hailing company’s revenue beat estimates as well, but the stock is under pressure with Uber’s quarterly profit largely coming from its investments. Uber shares lost 4.5% in premarket action.Electronic Arts (EA) – Electronic Arts beat estimates by 12 cents with adjusted quarterly earnings of 79 cents per share, and the videogame maker’s revenue also topped analyst forecasts. EA also gave an upbeat current-quarter forecast, on strength in franchises like “FIFA 2021”. The stock jumped 3.4% in premarket trading.Booking Holdings (BKNG) – Booking Holdings lost an adjusted $2.55 per share for the second quarter, wider than the loss of $2.04 that Wall Street had been anticipating. However, revenue was above estimates and nearly tripled for the parent of Priceline, Kayak and other travel services, as travel demand jumped amid increasing vaccinations and an easing of restrictions. The stock added 3.1% in the premarket.Etsy (ETSY) – Etsy came in 5 cents above estimates with quarterly earnings of 68 cents per share, and the online crafts marketplace operator also saw revenue come in above analyst forecasts. However, the stock is under pressure after user growth figures fell short of expectations, and its stock suffered a 12.5% drop in premarket trading.Lemonade (LMND) – Lemonade shares lost 8.8% in the premarket after the insurance company reported a sales decline and quarterly losses that more than doubled from a year earlier. However, Lemonade did issue a better than expected full-year revenue forecast. More