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Wall St extends record rally on strong jobs report, Pfizer COVID-19 pill cheer

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November 5, 2021

By Devik Jain and Bansari Mayur Kamdar

(Reuters) – Wall Street’s main indexes hit record highs in a broad-based rally on Friday as data showing strong jobs growth in October, coupled with Pfizer’s COVID-19 pill update, boosted sentiment about economic growth.

Ten of the 11 major S&P sectors advanced in early trading, with economy-sensitive energy, financials and industrials gaining more than 1% each.

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The small-cap Russell 2000 index added 1.5%, also scaling a record peak.

The Labor Department’s report showed U.S. employment increased more than expected last month as COVID-19 infections over the summer subsided, offering more evidence that economic activity was regaining momentum early in the fourth quarter.

“Today’s release is affirmation that the economy is on the right footing and there exists a possibility that the Santa Claus rally could be one of the strongest in recent memory,” said Peter Essele, head of portfolio management for Commonwealth Financial Network.

Pfizer Inc jumped 9.3% after the drugmaker’s experimental antiviral pill for COVID-19 cut by 89% the chances of hospitalization or death for adults at risk of developing severe disease.

Shares of Merck slipped 8.6%, dragging the S&P healthcare sector lower.

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Travel stocks rose following Pfizer’s announcement, with the S&P 1500 Airlines index climbing 5.5% and cruise operators Carnival Corp, Royal Caribbean Cruises and Norwegian Cruise rising between 7.2% and 5.8%.

“We couldn’t get more positive news … now this does feel like it’s really the end of the pandemic,” said Thomas Hayes, managing member, Great Hill Capital LLC, New York.

“It’s a quick efficacious solution … if you get diagnosed, you just take the pill and you’re back in action so the market loves it, the travel and leisure sector loves it and we love it.”

Among earnings moves, Expedia jumped 11.0% after the online travel agency posted upbeat third-quarter revenue, while Pinterest Inc climbed 3.9% on an upbeat fourth-quarter revenue forecast.

A stellar third-quarter reporting season, coupled with cheery outlook on earnings growth as well as a central bank in no rush to hike interest rates, has boosted investor appetite for equities, helping them look past worries about inflation, supply chain disruptions and labor shortages.

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Meanwhile, the U.S. House of Representatives is expected to vote on Friday on the social policy and climate-change bill and a bipartisan infrastructure bill.

At 10:00 a.m. ET, the Dow Jones Industrial Average was up 322.01 points, or 0.89%, at 36,446.24, the S&P 500 was up 34.61 points, or 0.74%, at 4,714.67, and the Nasdaq Composite was up 94.83 points, or 0.59%, at 16,035.14.

Boeing Co gained 3.3% after sources told Reuters investors have reached an agreement with current and former company officers to settle a lawsuit over the safety oversight of the 737 MAX.

Peloton Interactive Inc sank 30.8% after it slashed its full-year sales outlook by up to $1 billion.

Advancing issues outnumbered decliners by a 3.12-to-1 ratio on the NYSE and by a 1.81-to-1 ratio on the Nasdaq.

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The S&P index recorded 79 new 52-week highs and no new low, while the Nasdaq recorded 217 new highs and 35 new lows.

(Reporting by Devik Jain and Bansari Mayur Kamdar in Bengaluru; Editing by Maju Samuel)

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Buying the Omicron dip

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November 29, 2021

A look at the day ahead from Danilo Masoni.

Sell first, get answers later. With stocks near lifetime peaks, the Black Friday reaction to the new fast-spreading virus strain Omicron was hardly surprising.

But a weekend later, investors look heavily engaged in buying the dip, as markets take a more balanced view of risks attached to what the WHO called a “variant of concern”.

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After their ninth biggest drop ever on Friday, gains in crude prices topped 5% earlier in Asia and stock futures point to a solid bounce across Europe and America.

A South African doctor said patients with Omicron have “very mild” symptoms and investment houses don’t look to have budged that much. Credit Suisse, for example, made no portfolio changes, staying slight overweight on equities.

Perhaps more telling is that retail traders poured north of $2 billion into U.S. stocks on Friday, setting the second biggest daily inflow on record, per Vanda Research data.

Of course there are uncertainties and that will likely make for volatile days heading into the Christmas shopping season.

Understanding the level of severity of the variant “will take days to several weeks”, said WHO. And vaccine maker BioNTech needs up to two weeks to figure out whether the shot it makes with Pfizer needs to be reworked.

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So while Omicron has spread from Australia to the Netherlands and governments ban travel and mull lockdowns, markets may also gamble on central bankers turning more patient in their path towards rates normalisation.

Lots of speakers from the Federal Reserve and the European Central Bank are lined up for today. On Sunday, speaking about risks to the recovery, ECB’s Lagarde said: “We now know our enemy and what measures to take.”

Key developments that should provide more direction to markets on Monday:

* ECB speakers: Governor Lagarde, ECB board members AndreaEnria, Isabel Schnabel, Pentti Hakkarainen; ECB Vice PresidentLuis de Guindos * Euro zone consumer sentiment/inflation expectations * German preliminary CPI/HICP * Fed speakers: Chairman Jerome Powell, New York PresidentJohn Williams, Governor Bowman * Emerging markets: Kenya central bank meets; Turkey tradebalance and bank NPL ratios (This story refiles to fix chart)

(Reporting by Danilo Masoni; Editing by Saikat Chatterjee)

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UK regulator set to block Meta’s Giphy deal – FT

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November 29, 2021

(Reuters) -The UK competition regulator is expected to block Meta Platforms’ acquisition of online GIF platform Giphy in the coming days, the Financial Times reported https://www.ft.com/content/662c8e3f-4909-4bec-9131-c0237bb4897d on Monday.

The Competition and Markets Authority is set to reverse the deal in what would be the first time the watchdog has reversed a Big Tech acquisition, the report said, citing individuals close to the matter.

Meta Platforms and the regulator did not respond to requests for comment from Reuters sent outside working hours.

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The regulator had in October fined the U.S. social media giant Facebook, now Meta, 50.5 million pound ($67.35 million) for breaching an order that was imposed during an investigation into its purchase of the GIF platform, Giphy.

Facebook bought Giphy, a website for making and sharing animated images, or GIFs, in May last year to integrate it with its photo-sharing app, Instagram. The deal was then pegged at $400 million by Axios.

($1 = 0.7499 pounds)

(Reporting by Sneha Bhowmik in Bengaluru; Editing by Uttaresh.V)

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Evergrande shares fall after chairman cuts stake; Fantasia suspends trading

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November 29, 2021

HONG KONG (Reuters) – Shares in China Evergrande Group fell as much as 4.8% on Monday morning, after its chairman trimmed his stake in the cash-strapped property developer to raise about $344 million.

The group’s electric vehicle unit, China Evergrande New Energy Vehicle Group Ltd, also dropped more than 5% after it said the company was still exploring ways to pump capital into the unit with different investors.

Evergrande has been scrambling to raise capital as it grapples with more than $300 billion in liabilities and Chinese authorities have told its chairman, Hui Ka Yan, to use some of his personal wealth to help pay bondholders, sources have said.

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Evergrande failed to pay coupons totalling $82.5 million due on Nov. 6 and investors are on tenterhooks to see if it can meet its obligations before a 30-day grace period ends on Dec 6.

The developer disclosed late on Friday that Hui had sold 1.2 billion shares in the company at an average price of HK$2.23 each, lowering his stake in the Shenzhen-based real estate developer to 67.9% from 77%.

Once China’s top-selling developer, Evergrand’e troubles have hit the broader Chinese property sector with a string of debt defaults and credit rating downgrades of its peers in the last couple of months.

Fantasia Holdings suspended trading in company shares on Monday pending release of information. On Thursday, the developer said a winding-up petition was filed against a unit related to an outstanding loan.

(Reporting by Sumeet Chatterjee; Editing by Stephen Coates)

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