the S&P 500 The index continues to challenge the COVID-19 pandemic. After a weekend that saw nearly 160,000 new cases, the index rose more than 44 points, an increase of 1.4%, at 3:45 pm EDT on July 6. Today’s market gains are broad, with more than two-thirds of the S&P component 500 stocks on the day.
Today’s biggest S&P 500 winner is Freeport-McMoRan Inc. (NYSE: FCX), with a 9.1% share increase after a trade update. Other newsworthy winners include Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), with a 2.3% share increase after the news, the company was buying some assets from Dominion Energy (NYSE: D)and less obvious news that generates big profits from Goldman Sachs (NYSE: GS) and Chipotle Mexican Grill (NYSE: CMG).
Warren Buffett finally pulls the trigger. Image source: The Motley Fool.
Buffett shoots the elephant gun
Months after the 2020 market crash, legendary investor Warren Buffett finally used some of Berkshire’s more than $ 130 billion in cash to obtain an acquisition. Over the weekend, it was announced that Berkshire was purchasing nearly 8,000 miles of natural gas pipelines from utility Dominion energy, along with 900 billion cubic feet of natural gas storage assets and a 25% stake. at the Cove Point LNG export facility.
Berkshire is paying Dominion $ 4 billion and taking on a debt of $ 5.7 billion, valuing the deal at $ 9.7 billion. The assets will become part of Berkshire Hathaway Energy, the wholly-owned subsidiary that will now transport about 18% of the entire volume of interstate natural gas transmission in the U.S.
Berkshire shares were up 2.2% in the deal, a modest gain considering how small this deal is against Berkshire’s massive size. At the other end of the transaction, Dominion Energy investors are clearly not happy, sending shares down 10.5% right now, even though it will substantially reduce the company’s debt profile and allow it to focus on its business. of regulated public services. The key reason for the negativity: Dominion said it would cut its dividend from $ 3.76 a share to $ 2.50 a share once the deal closes. No one likes a pay cut.
Goldman Sachs: the US economy will shrink more than expected
The investment bank already had a rather weak outlook for the US economy, but as more data comes in, the company’s economists believe that the prospects for a deeper recession are higher. In a recent update, chief economist Jan Hatzius pointed to the sharp increase in COVID-19 cases as a likely obstacle to economic recovery.
As a result of increasing pressure from the resurgence of the deadly disease, Goldman Sachs reduced its outlook for the US economy from a contraction of 4.2% to a contraction of 4.6%. There is a possible silver lining: if the country can more broadly adapt to safer practices that many other countries have successfully implemented, such as physical distancing, wearing masks in public, and arresting large groups, economic production could revert to sustainable growth in September.
Shares of Goldman Sachs rose nearly 5% on the day.
Chipotle sets a record high (again)
With the shares rising 6.8%, the Chipotle share price is pushing towards $ 1,128. That’s more than 142% from the 2020 low on March 18, and also a record high for the company. Even in the midst of a terrible period for many restaurants, Chipotle’s shift to digital ordering and scalable business operations has made it a model for how restaurants can survive during this pandemic.
Is $ 1,200 a share the next stop for Chipotle? At least one analyst thinks so.
Coming this week: payroll and business services company Paychex (NASDAQ: PAYX) publishes its fourth quarter fiscal results before listing on Tuesday, and Walgreens Boots Alliance (NASDAQ: AMB) reports earnings Thursday morning.
