The US stock market was led higher by the tech companies last week. The four tech giants Amazon, Alphabet, Apple and Facebook all reported better-than-expected earnings results.
Stock Market & Financial News
On Monday, US stocks rose slightly when tech companies’ stocks outperformed. The Dow rose 86 points at midday, or 0.3%. Nasdaq Composite rose 0.8% higher. Apple and Amazon rose 1.4% and 1%, respectively. The rising price of gold also bolstered the optimism in the financial market. Spot gold traded at $1,930.91, the highest value since September 2011. Moderna shares jumped 6%, after it received $472 million from the US government for vaccine funding. The results from Moderna’s vaccine trial would be released as soon as October.
On Wednesday, stocks rose slightly higher ahead of the antitrust hearing. Apple and Google rose around 1%. The Federal Reserve decided to keep interest rates unchanged and pledged to maintain its bond purchases and the array of lending and liquidity programs also associated with the virus response.
On Thursday, the Commerce Department said that in the second quarter of 2020, the US GDP fell at a 32.9% annual rate, compared to a 9.5% drop a year ago. This was the worst change in GDP growth rate since 1947. The decline reflected a steep decrease in consumer and business spending from lockdowns. Consumer spending fell at a 34.6% annual rate, and business spending fell at a 27% annual rate.
Tech Giants Antitrust Hearing
On Wednesday, the CEO’s of Amazon, Apple, Facebook, and Google, have an antitrust hearing, where they will address allegations of anti-competitive behavior. The House Judiciary Committee will make their statements first. The hearing will begin with the Democratic chair of the subcommittee, Rep. David Cicilline from Rhode Island, followed by the Republican chair, Rep. Jim Sensenbrenner of Wisconsin. Then the senior members of the full House Judiciary Committee, Reps. Jerrold Nadler (D., N.Y.), and Jim Jordan (R., Ohio). (Continue writing on Thursday)
Jeff Bezos, the CEO of Amazon, was first to answer during the hearing. He was asked about the evidence that Amazon meets with new startups and uses the data from these meetings to create new products. Amazon was accused of using Vocalife’s technology as part of the Amazon Echo.
Tim Cook, the CEO of Apple, was questioned about Apple playing favorites with developers who give large players with more negotiating power a competitive advantage. Specifically, Congressman Hank Johnson asked Tim Cook about Apple negotiating deals to take a lower cut of its sales from the App Store from powerful developers like Amazon, and allowing China’s Baidu to get app approval more easily. Cook said that Apple treats all of its developers equally.
Mark Zuckerberg, CEO of Facebook, was questioned about his acquisition of Instagram in 2012. The evidence was that Zuckerberg exchanged emails with then-CFO David Debersman, both agreed that it would help “neutralize a potential competitor.” Zuckerberg argued that there was no guarantee at that time that Instagram would become a problem for Facebook.
Sundar Pichai, CEO of Alphabet, was asked to address Google’s worldwide influence, and its influence in China. Pichai explained that Google does license products from other companies. He was also asked about biases in Gmail, where many candidates’ emails to their supporters go spam. Pichai said Google was committed to neutrality.
COVID-19 Relief Bill
Republicans have finalized their latest piece of coronavirus relief legislation. The bill will be worth $1 trillion. It is expected that there will be another round of $1,200 stimulus checks for Americans and financial support for businesses. For now, the $600 per week will be cut to $200 per week. Federal unemployment insurance will be a 70% wage replacement for workers, instead of $600 per week. So far the Congress and the White House have not reached a final deal.
Economic News This Week
The Institute of Supply Management (ISM) is expected to report expansions in both manufacturing and service sectors as the reopening of the economy continues. The Labor Department will release the unemployment rate, which is likely to be 10.5% according to FactSet.
Corporate Earnings News This Week
BP and Disney will report Q2 earnings results this week.