Stimulus Deal Failure Would ‘Set US Recovery Back Six Months’ Warns Morgan Stanley

Morgan Stanley (MS) has cautioned that a failure by Republican and Democrat lawmakers to agree on a new round of fiscal stimulus would set back the US economic recovery from the pandemic by six months. Amid a strong start to the week on Wall Street on Monday, the bank said without a breakthrough, the US economy will not get back to pre-pandemic levels until Q4 2021, Bloomberg reported.

Elsewhere, there was a flurry of corporate news to start the week. Amazon hit headlines after announcing that it is hiring 100,000 new employees in $15 an hour jobs, plus sign up bonuses, to support its warehouse and delivery operations across the US and Canada. Fiat Chrysler (FCA) and Peugeot owner PSA (PEUGF)  announced a change to the terms of their merger deal to retain cash, resulting in a substantial cut to Fiat Chrysler’s dividend. Lastly, Oracle’s (ORCL) deal with TikTok owner ByteDance to rework its US operations made progress, with the Treasury Department saying it will review the agreement, according to The WSJ. The deal still faces a substantial hurdle in terms of potential opposition from President Trump, given that the deal may leave the firm under Chinese ownership.

IPO fever is also back, with two of the biggest listings since Uber (UBER) last year taking place this week. Snowflake, the cloud software business, is expected to raise $2.2bn, while Unity, a video game software company, will raise $950m. Sumo Logic, another data software platform, expects to raise $281m.

Meanwhile, overnight in Asia markets were mute, with Hong Kong’s Hang Seng up marginally by 0.2% and Japan’s Nikkei down 0.5%. Gold also climbed back towards the $2,000 mark, reaching $1,968 this morning (GLD).

Tesla, Micron both jump after Goldman Sachs notes

In the S&P 500 the real estate and information technology sectors led a bounceback on Monday after last week’s sell-off, with the index as a whole closing the day 1.3% higher. Retailer Kohl’s (KSS) led the index with a 9.6% gain, although the stock still remains more than 50% down year-to-date. In the Nasdaq Composite, which posted the best day at +1.9%, Tesla (TSLA), Micron (MU) and Nvidia (NVDA) were among the names that helped the index higher. Tesla jumped 12.6% and continued rising in after-hours trading amid the broader tech rebound, and a note from Goldman Sachs (GS) to clients that highlighted a surge in weekly downloads of the company’s app. Micron also gained 6.4% after Goldman Sachs upgraded its rating on the company’s stock to a buy and gave the firm’s shares a $58 price target - versus their previous $45 level. At the bottom of the pile on Monday was Citigroup (C), which fell 5.6% after announcing that it is resuming job cuts in order to reduce costs.

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