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What's happening: The latest reading of the composite Purchasing Managers' Index for Europe from IHS Markit, which tracks the manufacturing and services sectors, came in at 50.1 for September, a three-month low.
While manufacturing activity shot up, the services sector began contracting again as concerns about Covid-19 cases intensified.
Chris Williamson, chief business economist at IHS Markit, said the data indicates that the recovery "stalled" this month, and warned of "a two-speed economy," with manufacturing and services heading in opposite directions.
Other economists also expressed concern. The data, they said, clearly showed the impact of the rise in infections and fresh government restrictions.
"Alarm bells should be going off about the pace of the recovery at the moment as the number of new Covid-19 cases has been flaring up again," Bert Colijn of ING said in a note to clients. "While new measures against the virus have remained local and mild compared to March, it looks as though the economy is already feeling the effects of the increase in cases."
Oxford Economics analyst Rosie Colthorpe said the clear weakness in the services sector points to "a slowing recovery following the initial sharp bounce back."
"This supports our view that the consumer recovery is set to plateau, or even go into reverse, as rising virus cases, mounting job losses and uncertainty about the months ahead curtail spending," she said in a research note.
Coming up: UK data showed that the rate of expansion eased from August. PMI data for the United States, due later Wednesday, is also expected to show that growth in the services sector fell back slightly in September.
Tesla is coming for Volkswagen. Can it succeed?
CEO Elon Musk outlined ambitious plans for Tesla's (TSLA) future at the company's highly-anticipated Battery Day event.
The highlight: Musk promised that a $25,000 Tesla would be available in about three years due to tech advances that would halve the cost of batteries. This would be much cheaper than any car Tesla's made so far, my CNN Business colleague Peter Valdes-Dapena reports.
Just as significant was Musk's pledge to make 20 million vehicles a year, greater than all passenger vehicles sold in the United States last year. Volkswagen Group, the world's largest carmaker, sold 11 million vehicles worldwide in 2019.
Producing cars on that scale would certainly help justify Tesla's standing as the most valuable automaker on the planet. Right now, the company is worth $395 billion even though it churns out a small fraction of the vehicles of competitors Toyota and Volkswagen, which unveils its ID.4 electric SUV on Wednesday.
But investors — which helped drive up the stock price in anticipation of the event — had hoped for a faster timeline on cheaper batteries. Shares are down nearly 6% in premarket trading after dropping a similar amount on Tuesday.
"The stock's vertical move over the past year sets the stage for investors to expect immediate results," Gene Munster of Loup Ventures told clients. "What they got instead was a [three]-year plan."
Remember: Musk has a history of sometimes under-delivering on promises, or even not delivering at all. Years ago, Tesla promised a $35,000 electric car, the Tesla Model 3, but it was only available at that price for a short time, and initially ran into major production problems.
Soaring digital sales power Nike higher
Foot traffic at Nike (NKE) stores still hasn't recovered from the pandemic, but a boom in online sales is driving the company's stock to new highs.
The athletic wear company reported revenue for its most recent quarter on Tuesday that beat Wall Street's expectations. One key driver: an 82% rise in digital sales, my CNN Business colleague Clare Duffy reports.
"Nike is recovering faster based on accelerating brand momentum and digital growth, as well as our relentless focus on normalizing marketplace supply and demand," CFO Matt Friend said in a statement.
Friend told analysts that demand on the Nike app jumped 150% during the quarter.
Big picture: The retail brands with a strong online presence, like Nike and Walmart, are faring far better than those that hadn't made big investments before the pandemic hit. This could exacerbate the industry divide between the haves and have-nots as bankruptcies pile up.
Investor insight: Nike's stock, which has gained 15% this year, is up nearly 13% in premarket trading and could kick off the day at an all-time record.
The latest reading of the Purchasing Managers' Index for the United States posts at 9:45 a.m. ET.
Also today: Federal Reserve Chair Jerome Powell continues his testimony before Congress at 10 a.m. ET.
Coming tomorrow: How many Americans filed first-time claims for unemployment benefits last week?
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