The Week Ahead on Wall Street
Today, the February Markit manufacturing PMI, the February ISM Manufacturing Index, and January construction spending will be released. Construction spending climbed by 1% in January.
Tomorrow, February motor vehicle sales will be released. Automobile sales have been strong recently. General Motors (GM) reported that Q4 of 2020 was its best quarter by retail sales since 2007.
On Wednesday, the February Markit services PMI, the February ISM Services Index, and the February ADP employment report will be released. This monthly data report from the company that handles payroll for about one fifth of US private employment, showed that there was job growth between December and January. In fact, private firms added 174,000 jobs in January—well above Dow Jones estimates of 50,000.
On Thursday, look for January factory orders and initial jobless claims. First time jobless claims were 730,000 last week—a significant decline from the previous week.
On Friday, the January trade deficit, January consumer credit, February nonfarm payrolls, February average hourly earnings, and the February unemployment rate are released. The unemployment rate was 6.3% in January with nonfarm payrolls increasing by 49,000, which was slightly below economist expectations of 50,000.
Today, look for an earnings report from Zoom Video Communications (ZM). The company, which has come to be a part of so many people’s lives during the pandemic, has seen its share price climb by almost 300% over the past 12 months. Though companies like Facebook (FB) and Slack (WORK) have created competing video conferencing services, Zoom has remained the go-to for many. Investors are now beginning to think about what role the company will play in a post-pandemic world.
Tomorrow, Target (TGT) will hand in its report card. The retailer has gained significant market share over the course of the pandemic by expanding its ecommerce operations, offering curbside pickup, and other initiatives. As the company begins to think about more people returning to shopping in-person, last week it announced plans to add more mini Apple (AAPL) stores in some Target locations.
On Wednesday, Snowflake (SNOW), the data warehousing solutions provider, will report earnings. The company had a massive IPO in September of 2020. Analysts expect it to stay the dominant data cloud firm for some time. Over the next year, it may not become profitable but it is likely to see substantial growth.
On Thursday, look for an earnings report from Kroger (KR). Like many grocers, the company has seen growth during the pandemic as more people cook and eat at home. Kroger is also working on distributing COVID-19 vaccines through its pharmacies. It recently launched a system for tracking appointments and vaccine supplies which can process over 250,000 requests.
Big Lots (BIG), the Ohio-based discount retailer, will report earnings on Friday. During the pandemic, consumers have been looking to save money and have been sprucing up their houses as they are spending more time at home. Both these trends have given Big Lots a boost.
The Week Ahead at SoFi
March is upon us, and so are these upcoming events. Join us for another segment of Your Next Dollar, and a webinar for self-care—live on LinkedIn, Twitter, and Zoom.
$1.9 Trillion COVID Relief Bill Heads to the Senate
The House Passes Sixth Round of Pandemic-Related Federal Aid
On Saturday, the House passed the $1.9 trillion COVID-19 relief package. The bill will now work its way through the Senate. Supporters of the package hope it can reach President Biden’s desk by March 14 when certain unemployment aid is set to expire.
If it becomes law, this will be the sixth round of aid from the federal government during the pandemic. Last week, the 50 millionth COVID-19 vaccination shot was delivered in the US. The country also hit a more sobering benchmark days ago: The death toll in the US from the virus is now above 500,000.
What Is Included in the Bill
The relief package includes:
• An extension of the supplemental $400 per week in unemployment insurance.
• $1,400 direct payments to eligible Americans, plus additional payments for each dependent.
• $20 billion for COVID-19 vaccination rollout and $50 billion for COVID-19 testing.
• $350 billion in relief for state, local, and tribal governments.
• $170 billion to help K-12 schools and higher education institutions.
• An increase in the federal minimum wage to $15 an hour by 2025, but this portion is unlikely to be included in the Senate's version of the bill because it “violates the chamber's rules for legislation that can pass with a simple majority.”
What Happens Next?
Despite the complications with the federal minimum wage portion, the rest of the bill has support among Democrats and is expected to become law, with some possible changes in the Senate. All eyes will now be on the Senate as they move to vote on the bill before the existing unemployment benefits expire on March 14. Pending any changes made to the bill in the Senate, it may need to go back to the House to be passed again.
Checking in on Airbnb
Airbnb Outperforms Hotels
Last week, Airbnb (ABNB) reported results for the fourth quarter—its first report after its IPO. The home-share platform has performed much better than other sectors of the travel industry over the past year.
Airbnb shared that revenue was down 22% year over year, which is not ideal, but much better than Marriott (MAR) and Hilton (HLT), which have seen year-over-year revenue drop by an average of 61%. Travel booking platforms, like Expedia (EXPE) and Booking Holdings (BKNG) have also seen year-over-year revenue tumble.
Long-Term Bookings Climb
Airbnb has seen long-term bookings climb as the pandemic drags on and people are seeking out new places to work and social distance at home. The company’s leadership expects that business will get a boost as more people become vaccinated and feel comfortable traveling.
There is pent up demand for travel, and many people will likely feel that staying in an Airbnb is safer than staying in a crowded hotel. Some analysts believe that the pandemic will have a permanent impact on the balance in market share between hotels and home-share services.
International Demand Likely to Stay Slow for Some Time
The company still faces a bumpy road to full recovery despite Airbnb’s recent victories. International travel for leisure is still almost nonexistent. This will likely be the case until more people are vaccinated, government restrictions on travel are lifted, and people feel more comfortably flying again.
Though domestic Airbnb rentals in remote locations have been popular this year, the majority of the company’s offerings are outside the US in urban areas. The past year has been eventful for Airbnb, and the coming months will likely bring more twists and turns.