Hey, Big Sellers!

U.S. markets rally on vaccine news and renewed stimulus hopes.

Read in Browser   The Market Sum | Insight after the bell By Caleb Silver, Editor in Chief Wednesday's Headlines 1. US markets rise on vaccine and stimulus news 2. Tesla reports another quarterly profit 3. U.S. abruptly closes China consulate in Houston, TX 4. Where did volatility go? 5. Insiders are selling  Markets Closed Dow 27,005.84 +165.44 (+0.62%) S&P 3,276.02 +18.72 (+0.57%) Nasdaq 10,706.13 +25.76 (+0.24%) VIX 24.42 −0.42 (-1.69%) Bitcoin $9,368.81 −$7.14 (-0.08%) US 10-Yr Yield 0.595 −0.0120 (-1.98%)     Image courtesy Stockbyte/Getty   Markets Today Healthcare and industrial stocks rallied again today on the heels of news that the U.S. government will be funding Pfizer and BioNTech up to $2 billion to mass produce a vaccine when it is ready. There was also some movement on the next round of stimulus in the U.S., as lawmakers debate the size of the next package and who gets what. There is talk of extending the additional $600 weekly unemployment checks through the rest of the year, but it may be cut down to $500.   Volatility, which was the overriding theme in March and April, is on summer vacation. That doesn't mean it won't come back at a moment's notice, but it has been rather quiet as the stock market has churned higher. As the market has powered higher, corporate executives have been heavy sellers of their own stock.    Microsoft and Tesla delivered strong earnings reports, and apart from airlines, corporate results are not as bad as many feared at this point in report card season.   P.S. If you really don't want to wear a mask, try this approach:     Headlines: Tesla reported its first full year of profitability on a GAAP basis, which means it can now be considered for inclusion in the S&P 500 index. Automotive revenue declined by 4% year-over-year for Tesla from $5.38 billion to $5.18 billion, despite the company adding a new crossover SUV to its lineup, the Model Y, and opening a new plant in Shanghai in the past year. The company committed to delivering 500,000 vehicles in 2021. Microsoft's revenue grew 13% on an annualized basis in the quarter, which ended on June 30, according to its earnings release. Revenue went up 15% in the prior quarter. The company's earnings fell slightly due to a shift in Microsoft's retail strategy. On June 26, Microsoft said it would close its physical stores, resulting in a one-time charge of $450 million, or 5 cents per share, before taxes. Chipotle reported higher-than-expected adjusted earnings per share. Revenue and same store sales fell, but it was by less than analysts predicted it would. The in-store sales decline was partially offset by a 216% increase in digital sales. Nike announced a number of leadership changes, as well as job cuts, in an effort to focus on its digital business and selling more directly to customers. The company said the changes it is making will lead to a "net loss of jobs across the company," which will result in pretax, one-time employee termination costs of roughly $200 million to $250 million. As of May 31, 2019, Nike had approximately 76,700 employees worldwide, according to its annual report.  The U.S. ordered the immediate closure of China's consulate in Houston, a dramatic escalation in the tensions between the two countries. The news came hours after police and firefighters descended on the building in Houston following reports that papers were being burned outside in open containers, according to local media. Beijing condemned the move as outrageous and unprecedented. Washington's demand, issued Tuesday, marked "a political provocation unilaterally launched by the U.S.," Chinese Foreign Ministry spokesman Wang Wenbin said Wednesday. Slack filed a complaint against Microsoft with the European Commission alleging anticompetitive behavior, the company said on Wednesday. Slack alleges in the complaint that Microsoft abused its market dominance to eliminate competition for its Teams work communication product by tying it to its popular Office productivity suite. Slack claims that move meant millions were forced to install the app without the ability to remove it. Slack runs a service that competes directly with Microsoft Teams. The United States will pay $1.95 billion for Pfizer to produce and deliver 100 million doses of its COVID-19 vaccine candidate in the U.S. if it proves safe and effective in humans, the government announced Wednesday. Under the agreement, the U.S. can acquire an additional 500 million doses. The vaccine is being jointly developed by German biotech firm BioNTech and U.S.-based Pfizer.  The Japanese government upgraded its assessment of the economy in July for a second month, saying conditions are picking up even as they remain severe amid reopening from coronavirus shutdowns. In its monthly report released Wednesday, the Cabinet Office said it saw improvement in 6 out of 14 economic categories, including consumer spending, exports, production and public investment. Boeing's 737 MAX isn't likely to resume widespread passenger flights until early next year—nearly two months beyond previous expectations—due to another regulatory delay, according to U.S. government and industry officials, as reported by the WSJ. Fiat Chrysler and Waymo have agreed on an exclusive deal to develop self-driving commercial vehicles, which could be the first widespread utilization of autonomous technology. Waymo, a unit of Alphabet, will work with the Fiat-Chrysler to integrate its autonomous driving system, which it calls the "Waymo Driver," into the Ram ProMaster full-size van from Fiat Chrysler.     chart courtesy YCharts   Where Did Volatility Go? While the stock market was grinding higher, volatility was cooling off. We've had a few days with some flare-ups, but the general trend has been mellow. In fact, 15 of the past 18 weeks have seen a decline in the VIX, which is a record.   Typically, low volatility occurs when markets are rising, which makes sense. Intense selling begets more selling, which adds to volatility as options traders try to make future bets on the direction of the market. It's not always that way, and 2020 has presented us with a few examples.   The VIX, or CBOE Volatility Index, looks at expectations of future volatility, also known as implied volatility. Times of greater uncertainty (more expected future volatility) result in higher VIX values, while less anxious times correspond with lower values.   Translation: Traders are not expecting a lot of future volatility. That doesn't mean they don't expect the market to fall—a lot of them do, judging by the amount of short positions option traders have taken against the S&P 500. It just means that future moves in the index—higher or lower—are expected to be be orderly.     Corporate Insiders Are on a Selling Spree You know who is selling stock? Corporate executives, according to new data from The Washington Service. They went from being big buyers of their company's shares when markets caved in February and March, to selling like it's their job.   The run up in stocks, particularly tech stocks, might be influencing their decision to take some money off the table. It's also the middle of the year when a lot of corporate insiders normally sell off pieces of their holdings as part of a pre-established sale plan.    But one thing is for certain, most investors, whether they are insiders or individuals like us, rarely sell when we think stocks are still going up.     Chart courtesy Visual Capitalist   Delinquency Spikes We hate to see this, but we knew it was coming. Delinquency rates for all kinds of real estate in the U.S. are rising to record highs, especially for single-family homes and retail establishments. The numbers far surpass the peak in 2012 when Americans were still trying to crawl their way out of the Great Financial Crisis.   Stimulus checks and the extra unemployment benefits kept those delinquencies at bay in the first two months of the crisis, but they have skyrocketed since.    Now we know why banks have been adding billions of dollars to their loan-loss reserves. More News: Top Industrial Stocks for August 2020 Advanced Micro Devices Earnings: What to Look For Top Communications Stocks for August 2020 SPONSORED BY INVESCO The Complete Guide to ETFs ETFs are becoming increasingly popular and soaring to new heights among investors. Invesco's insights can help you determine if these investment vehicles are right for you. LEARN MORE  > (chart courtesy YCHARTS)     Shares of HCA Healthcare are up by 12% following Q2 earnings results that beat analyst expectations. Home construction company NVR's stock price rose by over 10.5% amid a 13% increase in new orders.     Shares of FirstEnergy are down by nearly 21% as a result of an ongoing $60 million bribery scandal. Northern Trust's stock price fell by over 5% after the financial services company released its Q2 earnings, which showed a decrease from the same period last year. Word of the Day Special Purpose Acquisition Company (SPAC) A special purpose acquisition company (SPAC) is a company with no commercial operations that is formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing company. Also known as "blank check companies," SPACs have been around for decades. In recent years, they've gone mainstream, attracting big-name underwriters and investors and raising a record amount of IPO money in 2019.     photo courtesy NHPR.org   Today in History July 22, 1946: The Bretton Woods Agreement is signed in Mount Washington, N.H., pegging major foreign currencies to the U.S. dollar, fixing the gold price at $35 per ounce, and laying the groundwork for the International Monetary Fund and the World Bank. How can we improve the Market Sum? 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