Weekly Market Update: Stimulus Hopes Drive Wall Street Rally

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Stimulus hopes drive weekly gains for markets

The hopes of a fresh stimulus dictated Wall Street’s moves last week. Traders waited for clarity on whether the stimulus could be cleared in the three weeks left before the Presidential election. While the Congressmen negotiated the size of the deal, Wall Street had its best week since July, thanks to the optimism for another stimulus package.

Dow gained over half a percent or 161 points while the S&P 500 did much better with a 3.8 percent rise. Nasdaq was up 4.6 percent for the week. With polls suggesting Democratic candidate Joe Biden extending his lead over President Trump, markets are beginning to digest the possibility for the same after their first debate.
Energy leadership in the U.S. changing hands

Exxon Mobil has been dethroned as the largest oil company in the U.S., beaten by rival Chevron in market value. It is the first time that it has been pushed to the second position since it’s beginning as Standard Oil over 100 years ago. With oil demand continuing to be weaker than pre-COVID times, Exxon is finding it difficult to generate cash for its capital expenditure, putting its $15 billion a year dividend at risk.

The world’s largest wind and solar energy company, NextEra Energy is now valued at $145.5 billion, superseding Chevron ($142 billion) and Exxon ($141.6 billion). Exxon earned $265 billion in revenue in 2019 while NextEra Energy’s earned  $19 billion in the same year.
IBM to split into two companies by 2022

109-year-old IBM will split into two public companies as it looks to diversify its traditional business to focus on high margin cloud computing. Its IT infrastructure services business, with 4600 customers in 115 countries, will be listed as a separate company by 2021 end. CEO Arvind Krishna called the move a “significant shift” in the company’s business model.

As it spins off the slower-growing business into a separate company, it could be preparing to challenge Amazon and Microsoft in the cloud business. Two years ago, it had spent $34 billion to acquire Red Hat and that could become the bedrock to script Big Blue’s turnaround.
Google must pay French publishers, court says

Google must talk to French media companies to pay for the use of their content, an appeals court confirms. This paves the way for an industry-wide deal in the country. The impact of the French appeals court ruling could be felt in several other countries too since the EU copyright rules make it mandatory for publishers to demand a fee from online platforms for news snippets.

Google has pledged to pay $1 billion to publishers around the world over the next three years. Its vehicle for paying news publishers, Google News Showcase, is to be launched in Germany where it has signed up with several publishers.AMD may buy rival Xilinx for $30 billion

Advanced Micro Devices (AMD) is considering buying rival chipmaker Xilinx Inc, according to reports. The deal, if concluded, could be worth $30 billion, adding to the consolidation being seen in the global semiconductor industry. The shares for AMD have nearly doubled since March as demand for PCs, gaming devices, and other tech devices that use its chips have shot up. It showed up in its Q2 revenue, as it jumped 26 percent to $1.93 billion.

The chips that Xilinx makes are used in data centres, besides defence and automotive industries. Chipmakers are sensing wider use of their products in devices that drive productivity at work and ease of living at homes.