Market trend suggests weak start to year’s second half: Ally Invest

Despite an upbeat market forecast for the year’s second half, Ally Invest’s Lindsey Bell has a warning for the next few months.

Bell finds the third quarter is usually the weakest time of the year, up 0.7% on average since 1950.

However, she suggests it’s no reason to get discouraged.

“The fourth quarter is where you usually see the pickup,” the firm’s chief investment strategist told CNBC’s “Trading Nation” on Wednesday.

Her forecast comes with the S&P 500 ending 2021’s first half at all-time highs. So far this year, it’s up more than 14%. Plus, the index is on a five-month win streak.

What could spook the market near term? Bell says headline risks associated with Federal Reserve policy.

“Investors have been skittish. They have gotten a little bit nervous about this topic in general,” said Bell, a CNBC contributor. “What we have seen is that the Fed raising rates has contributed to a peak in the stock market over different periods of time.”

Yet, Bell calls herself “cautiously optimistic” and expects Wall Street to effectively work through potential jitters.

“The peak in the stock market doesn’t typically happen when the Fed begins its rate-tightening process,” she said. “You shouldn’t be too worried about the Fed tightening anytime soon. But they will be coming probably next year or the year after.”

For the next six months, Bell prefers to continue using a barbell approach to investing. She wants equal weights of growth, including Big Tech, and economically sensitive stocks.

Bell predicts earnings per share and GDP growth projections will continue to grow in the second half and support the market. She also sees a world where tech stocks get a strong bid due to a slowing in the economic recovery.

“It could be an area where investors start to turn to put their money simply because growth is expected to peak in the second quarter,” Bell said.

Disclaimer

Amazon says carbon emissions rose 19% in 2020

Amazon vans line up at a distribution center to pick up packages for delivery on Amazon Prime Day in Orlando, Florida.

Paul Hennessy | NurPhoto | Getty Images

Amazon’s carbon emissions climbed 19% last year, even as the Covid-19 pandemic spurred a sharp drop in global emission levels.

In its annual sustainability report issued Wednesday, Amazon said its activities emitted the equivalent of 60.64 million metric tons of carbon dioxide in 2020. That’s up from 2019, when it reported 51.17 million metric tons, an increase of 15% year over year.

Covid-19 has forced many people to stay indoors to avoid exposure to the virus. Last year, that shift in activity brought with it a drop in global greenhouse gas emissions. Global carbon emissions fell roughly 7% year-over-year in 2020, marking the largest decline on record, researchers found last December.

Amazon said its emissions grew in 2020 as a result of the pandemic-fueled growth of its business. The company was one of the biggest beneficiaries of the pandemic, as shoppers relied on the online retailer for everything from face masks and hand sanitizer to groceries and office supplies. Amazon hauled in a record $386 billion in revenue last year.

While absolute emissions grew, Amazon lowered its carbon intensity, which measures emissions per dollar of sales, by 16% in 2020, which is in line with internal targets, the company said.

“This year-over-year carbon intensity comparison reflects our early progress to decarbonize our operations as we also continue to grow as a company,” Amazon said in the report. “Nearly half of our carbon intensity improvement is a result of our investments in renewable energy and operational efficiency enhancements.”

Amazon unveiled its “Climate Pledge” in 2019. As part of the plan, Amazon has committed to be carbon neutral by 2040. Last June, Amazon said it expects to run entirely on clean energy by 2025, which is five years ahead of the goal it initially stated in the Climate Pledge.

Part of Amazon’s climate goals include integrating electric vehicles into its delivery network. It ordered 100,000 electric delivery vehicles from Rivian that it says will be on the road by 2030.

Phylicia Rashad’s comments on Bill Cosby’s release slammed on Twitter

(l-r) Bill Cosby and Phylicia Rashad appear on NBC News’ “Today” show.

Peter Cramer | NBCUniversal | Getty Images

Phylicia Rashad, Bill Cosby’s TV wife and the incoming dean of Howard University’s fine arts college, faced harsh criticism Wednesday after celebrating the controversial comedian’s release from prison.

Earlier in the day, the Pennsylvania Supreme Court overturned Cosby’s conviction as a result of an agreement he had with a prior prosecutor that would have prevented him from being criminally charged in the case. The ruling bars any retrial in the case, court documents say.

The 83-year-old comedian was two years into a three-to-10-year prison term for indecent assault against Andrea Constand in 2004. Nationwide, 60 women came forward to accuse the “Cosby Show” star of rape or sexual harassment, with many stating they were drugged during these encounters. Cosby has said his contact with Constand was consensual and he has denied all other allegations of wrongdoing.

“Finally,” Rashad tweeted in capital letters and a string of exclamation marks. “A terrible wrong is being righted — a miscarriage of justice is corrected.”

Rashad, who played Cosby’s wife on two television shows, was recently named dean of Howard University’s reestablished and renamed Chadwick A. Boseman College of Fine Arts. The position makes Rashad a first respondent to issues of sexual assault on campus.

Representatives for Howard University did not immediately respond to CNBC’s request for comment.

Rashad has previously defended Cosby, calling some of the claims of abuse against him “orchestrated.”

Her tweet has raised concerns online from many about how she might handle sexual assault allegations in her role as dean.

Linda Correia, a Washington lawyer who in 2017 sued Howard University on behalf of six then-current students at the university for failing to respond reasonably to their complaints of sexual violence, said of Rashad’s tweet, “Well, I think the miscarriage of justice is for the victims” who testified at Cosby’s trial.

“It’s not surprising that she supported him. She’s always supported him,” said Correia, whose clients settled their lawsuit with Howard last year for undisclosed terms.

She added, “I would say that I think that any statement that is contrary to recognizing the miscarriage of justice for those women who had the courage to come forward is not what student survivors probably want to see right now.”

Didi IPO begins trading on the NYSE

Shares of Didi Chuxing closed up a modest 1% Wednesday afternoon after spiking as much as 28.6% in the Chinese ride-hailing giant’s market debut.

The company’s stock began trading at $16.65 per share, up about 19% from the company’s offering price of $14 per share, bringing its market cap to nearly $80 billion. It closed at $14.14 apiece, with a market cap of about $67.8 billion.

Didi was most recently valued at $62 billion following an August fundraising round, according to PitchBook data. The valuation as of Wednesday’s first trade is more muted than the $100 billion that some had predicted. Still, it ranks among the largest U.S. IPOs over the past decade.

Didi closing in the green bucks the trend of rideshare giants closing below their first trade price. The company’s American counterparts, Uber and Lyft, both closed below the initial trade in their 2019 debuts. Lyft began trading at $87.24 and closed the day at $78.29, while Uber opened at $42 apiece and dipped to $41.57.

Didi’s listing on the New York Stock Exchange comes as demand for ride-hailing services shoots back up in tandem with falling Covid-19 cases and a roll out of vaccines. Uber and Lyft also have both said they’ll be profitable on an adjusted basis by the end of this year, thanks to the recovery.

The offering also represents a financial win for Uber, which owns 12.8% of the shares in Didi after it acquired Uber’s China business. SoftBank’s Vision Fund holds 21.5%. Apple also invested $1 billion in Didi in 2016.

Didi reported a comprehensive loss of $2.54 billion on $21.63 billion in revenue last year, but turned a slight profit of $95 million on revenue of $6.44 billion in the first quarter of 2021. (Some of the company’s profitability in Q1 can be credited to gains on investments of $1.9 billion related to spin-offs and divestments.)

In comparison, Uber lost $6.77 billion on $11.14 billion in revenue last year, and lost $108 million on revenues of $2.90 billion in the first quarter of 2021.

Between 2019 and 2020, Didi’s revenue shrunk almost 10% as the Covid pandemic struck China hard last year. However, prior to the pandemic, revenue grew 11% between 2018 and 2019. Additionally, revenue has bounced back in the first quarter as the pandemic recovery is in full swing, with 107% growth in Q1 from the previous year’s quarter.

Didi, which was founded in 2012, said in its IPO prospectus that it has 493 million annual active riders, and 41 million average daily transactions. It began expanding internationally in 2018, and the company now operates in 14 countries outside of China, with Brazil and Mexico being the largest contributors, according to a Loop research note from earlier this month. Part of the proceeds raised from the IPO will also go to growing its presence in international markets.

In addition to traditional ride-hailing, Didi is heavily invested in making autonomous taxis a reality. The company recently got approval to test self-driving vehicles in Beijing.

Didi is also facing an antitrust probe into some of the largest Chinese companies. China’s market regulator, the State Administration for Market Regulation, is investigating whether Didi used any competitive practices that unfairly pushed out smaller competitors, Reuters reported. It’s also reportedly looking into the company’s pricing mechanism.

Didi had warned in its IPO prospectus that it met with regulators earlier this year. The ride-hailing company warned they might be subject to penalties, as regulatory bodies might not be satisfied with the inspection results.

“We cannot assure you that the regulatory authorities will be satisfied with our self-inspection results or that we will not be subject to any penalty with respect to any violations of anti-monopoly, anti-unfair competition, pricing, advertisement, privacy protection, food safety, product quality, tax and other related laws and regulations. We expect that these areas will receive greater and continued attention and scrutiny from regulators and the general public going forward,” the company said in its prospectus.

Didi was joined by a slew of other companies going public Wednesday, including biometrics screening company CLEAR, digital ad firm Taboola and cybersecurity company SentinelOne.

Didi, a four-time CNBC Disruptor 50 company, ranked No. 5 on this year’s list.

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Oil prices could skyrocket if OPEC+ fails in pledge to deliver more supply

Saudi Arabia’s Minister of Energy Prince Abdulaziz bin Salman Al-Saud speaks via video link during a virtual emergency meeting of OPEC and non-OPEC countries, following the outbreak of the coronavirus disease (COVID-19), in Riyadh, Saudi Arabia April 9, 2020.

Saudi Press Agency | Reuters

OPEC heads into Thursday’s meeting with Russia and other allies with a better command of world oil prices than it has had in years, analysts said.

OPEC+, the organization of oil-producing countries and its allies, is expected to consider adding between 500,000 and 1 million barrels per day, but analysts said there is some talk it may consider no increase. Reuters reported that an internal OPEC report points out that the market could fall back into an oil glut after the group reverses its 6 million barrels a day of production cuts by April 2022.

The report gave a boost to oil prices Wednesday.

Brent crude futures, the international benchmark, were trading just over $75 a barrel Wednesday. West Texas Intermediate crude futures for August were just under $74 a barrel, around their highest level since the fall of 2018. Oil prices rose Wednesday on a report of lower U.S. inventories.

“This is their most important meeting in over year. They were staring down a grave situation with negative pricing last year, and they came together,” Again Capital partner John Kilduff said. “The plan has been to return 500,000 barrels a month, and I think they’ll stick to that. It’s working for them because prices keep going higher and higher.”

OPEC is expected to consider extending its current production accord beyond the existing April 2022 end date, and analysts widely expect it to return 500,000 barrels to the market in August.

“To me, the interesting story is if they roll over current cuts, how high do [prices] go. It’s being discussed in terms of the potential options,” RBC head of global commodities strategy Helima Croft said. She said the market has already priced in 500,000 barrels a day of additional production, and if it was higher than expected, prices would fall slightly.

Croft said OPEC+ has become more flexible since Covid, and it can quickly adjust when it sees how big factors will affect the market.

For instance, the U.S. and Iran have been discussing a new nuclear accord. If that happens, Iran could return at least 1 million barrels a day to the market. The timing of that is unclear, and that oil would have to be absorbed alongside OPEC’s current production later this year if a deal is struck.

“OPEC used to move like a battle ship. We had these biannual meetings. It was so hard to convene OPEC” during Covid, Croft said. She noted that OPEC operates now more like the U.S. Federal Reserve, with regular policy-setting meetings.

“It means they really have directional control of the market,” she said.

Changes from Covid

The Organization of the Petroleum Exporting Countries, led by Saudi Arabia initiated monthly meetings this year, with the oil market in a state of flux as demand returns. OPEC Secretary General Mohammed Barkindo said Tuesday that OPEC expects demand to rise by 6 million barrels per day this year, with 5 million of that coming back in the second half of the year.

“Now with the monthly meeting structure, they’re more like a speedboat as opposed to a battleship. If the Delta variant is really demand-destructive in key geographies, they can reverse course,” said Croft. “To me this monthly meeting structure has given them flexibility to adjust quickly. And for market participants, everybody has to tune in. They are the story … This is how things have changed from 2015 when they were written off as irrelevant.”

Big changes in the market also changed OPEC, which had to cut production sharply last year as demand cratered and oil prices collapsed. Of less concern has been pressure from U.S. shale producers, who had previously moved aggressively to add new wells every time prices rose.

In the U.S., the politics of oil has also changed dramatically.

The Biden administration is more focused on climate and renewables. The Trump administration had been set on growing a stronger, less-regulated oil sector, and during that era the U.S. grew to be the world’s largest oil producer.

“They [OPEC members] have the wind at their back,” Croft said.

She said they see the oil majors with ESG mandates, and the new focus of courts and the U.S. government.

Biden leads new approach in the U.S.

The U.S. is currently producing 11 million barrels a day, about 2 million barrels less than the pre-pandemic high. The reduced level also happens to be the estimated amount of the current global production deficit, with the world currently using 2 million barrels more per day than is being produced.

Some U.S. oil producers have been slow to add production. They are hampered by a lack of capital as well as a focus by shareholders on dividends and debt repayment, in addition to a new green focus.

“OPEC+ is trying to follow the market, rather than lead the market,” said Dan Yergin, IHS Markit vice chairman. “I think both the Saudis and the Russians see this in their interests. I think the Russians want to be sure that their aim is not to have the price so high that it brings back another flood of U.S. shale. They’re much more concerned about that than the Saudis are.”

While analysts expect oil to rise above $80 a barrel or even $85 a barrel this year, they figure OPEC+ to try to keep prices from going too high.

OPEC+ is in a balancing act, where if it puts too little oil on the market and prices run, up, U.S. producers will be drawn into more drilling. If it puts too much on the market to keep prices lower, the U.S. may strike a new nuclear deal with Iran that could result in as much as 1.5 million barrels a day back on the market by the end of the year. That could go even higher, depending how much oil Iran takes from storage.

“They’re just starting to get their heads above water with this price,” said Francisco Blanch, head of commodities and derivatives strategy at Bank of America. “My sense is the group wants to preserve these prices. They probably don’t want to push prices much higher right now.”

Prices that rise too much would hit demand in emerging markets. In a country like India, a main buyer of Middle East crude, $75 a barrel oil is already a high price, he said.

“I think OPEC doesn’t necessary want to be in the headlines for having too high an oil price,” said Blanch. “Even if the oil averages somewhere in the low $70s, we’re only going to get back to the budget break evens that the core members of OPEC have, led by Saudi Arabia.”

Price targets

According to an RBC study, Saudi Arabia needs to bring in $77 per barrel to make its budget. Russia needs $72 per barrel, and United Arab Emirates is at $65. The average for all producers to break even is $93 per, but that includes the more than $300 per barrel price required by Venezuela.

Blanch said prices for Brent have averaged $64 per barrel for the year so far, and that average should rise to $68 by year end. “We’re going to be $70 plus for the rest of the year,” he said. Blanch expects next year to be different, with the potential for a spike up to $100.

“There is certainly any number of trap doors under this market,” Again Capital’s Kilduff said. “The OPEC plus history, led by the Saudis, is to overplay their hand, and let prices run to the upside, add too little, too late for an extended period of time until market forces overtake them — like what would be the expected renewal of U.S. shale.”

But there are signs that the U.S. industry could make a comeback soon, and that could have a dampening effect on prices. Blanch expects U.S. production to return to its previous highs of 13 million barrels per day by the end of next year.

U.S. inventories are the most closely watched in the world, and they have been falling sharply in recent weeks, something that could trigger a ramp-up by the U.S. industry. According to the U.S. government, crude U.S. inventories fell nearly 7 million barrels in the past week, similar to the amounts in each of the prior two weeks.

Kilduff said inventories have not been this rapidly depleted in at least seven years.

“That ushered in the real shale onslaught,” he said. “They’re revving up. I’m talking to operators out there. They’re having trouble finding people.”

Court overturns Bill Cosby’s sex assault conviction, bars further prosecution

Actor and comedian Bill Cosby arrives at the Montgomery County Courthouse for sentencing in his sexual assault trial, in Norristown, Pennsylvania, September 24, 2018.

Brendan McDermid | Reuters

The Pennsylvania Supreme Court on Wednesday overturned Bill Cosby’s sex assault conviction, setting the stage for the release of the 83-year-old comedian later in the day.

The state’s highest court tossed Cosby’s conviction as a result of an agreement he had with a prior prosecutor that would have prevented Cosby from being criminally charged in the case. This new ruling bars any retrial in the case, court documents say.

Cosby is two years into a three-to-10-year prison term.

Cosby was accused of drugging and molesting Andrea Constand, the former Temple University employee whose allegation was the basis of the criminal case, at his estate in 2004. He was charged in 2015 for the alleged attack and arrested just days before the 12-year statute of limitations expired. He was sentenced in 2018.

A written agreement from the previous Montgomery County prosecutor, Bruce Castor, stated that he would not criminally prosecute Cosby in the Constand case. Castor testified that while he was district attorney, he promised not to file criminal charges against the comedian if Cosby would testify in a civil lawsuit that was filed by Constand in 2005. 

Castor had determined that the prosecution would have trouble corroborating forensic evidence without Cosby confessing to the alleged charges.

“Seeking ‘some measure of justice’ for Constand, D.A. Castor decided that the Commonwealth would decline to prosecute Cosby for the incident involving Constand, thereby allowing Cosby to be forced to testify in a subsequent civil action, under penalty of perjury, without the benefit of his Fifth Amendment privilege against self-incrimination,” the court document said.

Cosby testified during four days of depositions by Constand’s attorneys and the civil suit was settled for more than $3 million in 2006. 

Criminal charges that resulted in Cosby’s incarceration were brought in 2015 by Prosecutor Kevin Steele, who succeeded Castor as the county’s district attorney.

The supreme court’s opinion also disagreed with the trial court judge’s decision to let prosecutors call five other accusers in addition to Constand.

Originally, the trial judge had allowed just one other accuser to testify at Cosby’s first trial. However, after the jury deadlocked, the judge then allowed five other accusers to testify at Cosby’s retrial.

This testimony tainted the trial, the Pennsylvania Supreme Court said, even though the lower appeals court had found it appropriate to show a pattern of behavior.

The court ultimately did not address the admissibility of the five additional accusers because it had overturned the ruling based on the agreement with a former prosecutor that prevented Cosby from being criminally charged in the case.

“Having identified a due process violation here, we must ascertain the remedy to which Cosby is entitled,” the court document stated.

— The Associated Press contributed to this report.

Amazon seeks recusal of FTC chair Lina Khan in antitrust probes

Lina Khan, nominee for Commissioner of the Federal Trade Commission (FTC), speaks during a Senate Committee on Commerce, Science, and Transportation confirmation hearing on Capitol Hill in Washington, DC, April 21, 2021.

Saul Loeb | Pool | Reuters

Amazon is pressing for the recusal of FTC Chairwoman Lina Khan from ongoing antitrust probes of the e-commerce giant, citing her past criticisms of the company’s power.

In a 25-page motion filed Wednesday with the FTC, Amazon argued that Khan has made public comments about Amazon and its conduct, including that the company is “guilty of antitrust violations and should be broken up,” suggesting she lacks impartiality in antitrust investigations into Amazon.

Amazon spokesperson Jack Evans told CNBC in a statement that Khan has made her views clear through previous work with anti-monopoly group Open Markets Institute, law journal articles and her involvement in the House Judiciary subcommittee on antitrust’s sweeping probe into big tech companies.

“Amazon should be scrutinized along with all large organizations. However, even large companies have the right to an impartial investigation,” Evans said. “Chair Khan’s body of work and public statements demonstrate that she has prejudged the outcome of matters the FTC may examine during her term and, under established law, preclude her from participating in such matters.”

An FTC spokesperson declined to comment, saying petitions and letters to the FTC are not public.

The move comes as regulators in the U.S. and abroad are probing multiple areas of Amazon’s business. Europe’s top antitrust watchdog brought charges against Amazon last fall and launched another probe into its core retail business. Congress and the FTC are investigating Amazon’s treatment of third-party sellers.

Additionally, the FTC is reviewing Amazon’s proposed acquisition of movie studio MGM, The Wall Street Journal reported this month. On Wednesday, Democratic Senator Elizabeth Warren wrote a letter to the FTC urging it to carry out a “broad and meticulous review” of the MGM deal, arguing it could have anticompetitive effects in the streaming industry and potentially harm small businesses and workers.

Earlier this month, Khan was sworn in as chair of the FTC. The surprise move came just hours after she was confirmed by the Senate to serve as a commissioner.

During her confirmation hearing before the Senate, Khan told Sen. Mike Lee, R-Utah, she has no financial conflicts that would make her subject to recusal under ethics laws. She said she would follow the evidence where it leads.

Khan made her first big splash in antitrust circles with her 2017 Yale Law Journal article, “Amazon’s Antitrust Paradox.” The article, which she wrote while still a law student, argued that the popular antitrust framework focused on consumer welfare, was inadequate to assess digital giants like Amazon.

The consumer welfare standard often looks at whether prices go up or down for consumers, but Khan advocated for a more expansive view of antitrust enforcement that could take into account Amazon’s role as a platform on which its own rivals rely. She said it was also necessary to understand why a high-growth platform might engage in predatory pricing.

It’s not uncommon for companies or advocate groups to challenge commissioners’ involvement in certain cases based on their perceived biases.

In the late 1970s, then-FTC Chairman Michael Pertschuk was ordered by a federal court to remove himself from an rulemaking inquiry into TV advertising aimed at kids because of his past criticism of such ad practices. But an appeals court later overturned that ruling.

Still, Pertschuk ultimately chose to withdraw from the matter because he said it was becoming a distraction from the inquiry itself.

Gap’s Yeezy line to bring $1 billion in sales in year one: Wells Fargo

The first item from rapper Kanye West’s Yeezy Gap line is a $200, blue puffer jacket.

Source: Gap Inc.

Gap’s upcoming Yeezy line with rapper Kanye West could bring in nearly $1 billion in incremental sales next year, according to an analysis by Wells Fargo.

“Now that this catalyst is here, the majority of questions we are fielding regarding Gap is around how powerful this partnership with Yeezy could be — which is why we thought it would be helpful to put numbers behind the initiative,” Wells Fargo analyst Ike Boruchow wrote in a note to clients on Wednesday.

Earlier this month, Gap released its first product from the highly anticipated line, giving shoppers a taste of what’s to come. The $200 bright blue nylon puffer jacket was only on sale for a limited time. Now, the coats are being floated on resale sites for more than $1,000, and the items haven’t even shipped yet. It’s unclear exactly when more Yeezy/Gap merchandise will drop, but a fuller line-up is expected to come later this year.

To quantify what the partnership could mean for Gap, last week Wells Fargo surveyed 530 Gap shoppers and 470 non-Gap customers to determine their interest in the Yeezy line. It completed the survey in a partnership with the data firm Guidepoint. Participants needed to know who Kanye West is, Wells Fargo said.

Among the Gap customers, 64% indicated they planned to buy items from the collaboration. On average, they expected to spend an incremental $178 on Yeezy products in the first year of the line’s debut. Of the people who currently don’t shop at Gap, 23% said they intended to buy the merchandise and expected to shell out an incremental $126 at Gap.

Within the group of people who don’t currently shop at Gap but plan to buy Yeezy products, 75% said they expect they’ll purchase other Gap products while shopping. This suggests that the tie-up has the power to drive new customers to Gap, Boruchow said.

Wells Fargo estimated that the Yeezy line could drive up to $990 million in sales for Gap in fiscal 2022, and boost earnings by roughly 50 cents per share. By fiscal 2026, the partnership could add about $1.50 per share to earnings, Wells Fargo said.

One reason is that the analysts expect the Yeezy merchandise to have a margin rate of about 50%, which is high for apparel, given that most of it should be sold at full price.

“This does not account for new customers or higher Gap spend among existing customers due to the ‘brand halo’ that Yeezy may bestow on the Gap brand and broader assortment — similar to what Yeezy did for Adidas beginning in 2015,” Boruchow added in his note.

It’s now been a little more than a year since Gap’s tie-up with West was officially announced. With the deal, Gap hopes to build momentum to draw in new customers or entice long-time customers to return to its stores more frequently.

Gap shares were up less than 1% Wednesday morning. The stock has rallied more than 64% year to date. Gap has a market cap of $12.6 billion.

Private payrolls rise 692,000 in June, easily topping expectations

Private payrolls growth increased at a faster rate than expected in June thanks to a burst in hiring for the hospitality sector, ADP reported Wednesday.

The gain of 692,000 was well above the 550,000 Dow Jones estimate though it fell short of May’s 886,000. In one bit of bad news for the jobs market, the May count was revised down sharply from the initially reported 978,000, though that still left it as the best month since September 2020.

From an industry standpoint, the biggest hiring gain came from the 332,000 pickup in leisure and hospitality. The sector, which includes bars, restaurants, hotels and other related businesses, took the hardest hit from the Covid-19 pandemic but has shown strong gains during the economic reopening.

Education and health services also indicated strong gains, increasing by 123,000, while trade, transportation and utilities rose by 62,000 and professional and business services saw 53,000 hires.

On the goods-producing side, construction payrolls increased by 47,000 while manufacturing was up 19,000.

Overall, services provided the bulk of the job gains with 624,000, while goods producers added 68,000.

ADP’s chief economist, Nela Richardson, called the job gains “robust” with about 3 million hires this year, though that still leaves about 7 million who were working before the pandemic hit without jobs.

“Service providers, the hardest hit sector, continue to do the heavy lifting, with leisure and hospitality posting the strongest gain as businesses begin to reopen to full capacity across the country,” Richardson said.

Job gains again were evenly spread across industries by size. Companies with more than 500 workers added 240,000, while firms with 50-499 workers contributed 236,000 and small firms increased by 215,000, according to ADP, which compiles the report with Moody’s Analytics.

The ADP report serves as a walk-up to the more closely watched nonfarm payrolls count that the Labor Department will release Friday.

Economist surveyed by Dow Jones expect a total payroll increase of 706,000, compared with May’s 559,000. The unemployment rate is projected to drop to 5.6% from 5.8%. However, the ADP and Labor Department counts often vary widely.

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Yum Brands franchisee Ampex Brands buys Au Bon Pain

The entrance to Au Bon Pain at the MBK Center.

Jeff Greenberg | Universal Images Group | Getty Images

The franchisee has now become the franchisor.

Ampex Brands, which operates more than 400 Pizza Hut, KFC, Taco Bell, Long John Silver’s and 7-Eleven locations in the U.S., announced Wednesday that it bought the bakery-cafe chain Au Bon Pain.

“Our [quick-service restaurant] brands performed extraordinarily well throughout the pandemic as guests moved to drive-thru,” Ampex CEO Tabbassum Mumtaz said in a statement. “That performance allowed us to diversify and jump on a great opportunity to reposition a legacy brand. The bakery café category will rebound, and Au Bon Pain is well-positioned to grow.”

The acquisition was finalized on Tuesday. Financial terms of the deal were not disclosed, but Ampex gains control of Au Bon Pain’s 171 locations, which will increase the company’s revenue by about 10% annually. It has also received franchising rights for an additional 131 restaurants.

As Ampex looks to revive Au Bon Pain’s business and expand its footprint, it has hired a number of experienced restaurant executives to lead the transformation. Ericka Garza, the new brand president, most recently served as senior franchise growth leader for Yum Brands’ Pizza Hut.

Ampex bought the bakery-cafe chain from ABP Corp., which is a subsidiary of Panera Bread. The sandwich chain bought Au Bon Pain in 2017, shortly after JAB Holding took Panera private. The deal was a reunion for the two. Restaurant entrepreneur Ron Schaich merged his cookie store with Au Bon Pain in the 1980s and then bought the Saint Louis Bread Company — now known as Panera Bread — the following decade. He sold off Au Bon Pain shortly before the new millennium.

Under JAB’s ownership, many Au Bon Pain locations were converted into Panera restaurants, shrinking its footprint from roughly 300 locations to 171.

JAB is spinning off other parts of its portfolio as well. Doughnut maker Krispy Kreme has filed to go public again, seeking to raise as much as $640 million through an initial public offering. JAB took the company private in 2016. New York Times’ Dealbook recently reported that JAB completed an $800 million refinancing deal for Panera Bread recently, clearing the way for the sandwich chain to return to the public market.