The Stock Market Is Slipping. Why Strong Earnings Aren’t Enough.

That’s a lot like what’s been happening all quarter long. About 80% of companies in the S&P have beaten estimates by an average of 27%. Earnings are up 60% from last year’s first quarter. Nothing wrong with that.

Investors have greeted the news by selling stocks. The average price move for S&P 500 companies in response to quarterly earnings is a drop of 0.1%.

That can happen. The market cares about earnings but it’s always forward-looking. Today’s earnings are yesterday’s stock moves.

Now investors are entering May, a notoriously weak time for stocks. One reason for the “sell in May dynamic” is that investors feel like they have a read on the current year: 2021 will be fine. But they don’t know how 2022 will shape up. That’s what the impatient market wants to know.

What have you done for me lately?

—Al Root

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Apple, Epic Games Trial Begins in Antitrust Case

Fortnite videogame maker Epic Games opened up its arguments against Apple, alleging that through the iOS mobile operating system and App Store, the tech giant violates antitrust laws.

• Epic’s legal team painted the iOS mobile operating system as a “walled garden” meant to “lock users in and prevent users from switching away from the Apple ecosystem,” The Wall Street Journal reported.
• Apple attorney Karen Dunn argued that Apple’s practices to limit iPhone app downloads to the App Store and handle all in-app transactions helps ensure privacy, security and quality for consumers.
• Epic Games CEO Tim Sweeney also testified, arguing that through the 30% fees for transactions handled via the App Store, Apple makes more in profits from apps made by others than the developers themselves.
• In August, Epic updated mobile versions of the hugely popular Fortnite in an attempt to bypass 30% fees imposed by Apple’s App Store and Alphabet’s Google Play platforms. Fortnite was removed from the platforms that day. Epic responded with antitrust lawsuits.

What’s Next: The trial is set to resume today at 11:30 a.m. EDT. Wedbush analyst Dan Ives said he expects Apple to be successful in defending its App Store, with a ruling likely coming within the next three weeks.

—Connor Smith

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Bill and Melinda Gates Announce Divorce After 27 Years

Bill Gates, 65, one of the world’s richest men and the founder and former CEO of Microsoft, is splitting from his wife and co-philanthropist, Melinda, 56, after 27 years and three children, and they announced it on Twitter late Monday afternoon.

• The couple said they would continue to work together on their $50 billion Bill and Melinda Gates Foundation, one of the world’s biggest philanthropic funds supporting efforts to promote education and health and eradicate poverty.
• “We continue to share a belief in that mission and will continue our work together at the foundation, but we no longer believe we can grow together as a couple in this next phase of our lives,” the tweet said.
• In the 2019 Netflix documentary “Inside Bill’s Brain,” Melinda recalled finding a whiteboard on which Bill had weighed “the pros and cons of getting married.” Warren Buffett had told him that when picking people to associate with, “the most important person by far in that respect is your spouse.”
• Gates has an estimated $130 billion net worth. He ranks fourth on The Forbes Billionaires list, behind Jeff Bezos ($177 billion), Elon Musk ($157 billion), and Bernard Arnault & Family ($150 billion), and ahead of Mark Zuckerberg ($97 billion).
• The announcement comes two years after former Amazon CEO and founder Jeff Bezos split from his wife, MacKenzie. In the divorce, MacKenzie Bezos gave up interest in the Washington Post and Blue Origin and 75% of her Amazon shares. MacKenzie Scott remarried last month.

What’s Next: The couple co-founded the foundation in 2000. Bill Gates owns 1.37% of Microsoft, the software firm he founded in 1975. The shares are worth about $26 billion, according to FactSet.

—Janet H. Cho and Liz Moyer

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In About-Face, Biden Lifts Refugee Cap to 62,500

President Joe Biden said Monday that he would raise the U.S.’s refugee admission cap to 62,500 this fiscal year, yielding to critics who had denounced his previous decision to keep the ceiling unchanged at the Trump administration’s 15,000 level.

• The 15,000 number “did not reflect America’s values as a nation that welcomes and supports refugees,” Biden said in a statement.
• The U.S. Refugee Admissions Program “embodies our commitment to protect the most vulnerable. It’s a statement about who we are, and who we want to be,” the president later tweeted.
• In an executive order two weeks ago, Biden had removed many of the restrictions imposed by the previous administration on which applicants could qualify for the refugee program, but his decision to leave the cap unchanged had drawn the ire of civic organizations and some Democratic lawmakers.
• Biden had promised during the presidential campaign to raise the refugee ceiling and ramp up the program, before changing his mind in light of the rising number of migrants crossing the U.S. border with Mexico.

What’s Next: The fiscal year is well advanced, and Biden acknowledges that the 62,500 number will be hard to reach before Sept. 30.

—Pierre Briançon

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Fully Vaccinated Tourists Can Visit Europe This Summer

Fully vaccinated travelers will be allowed to visit 27 European Union nations this summer under a travel proposal the European Commission released Monday. If approved, the policy would allow visitors from countries with low infection rates and proof of vaccination.

• People are eligible to travel at least 14 days after their last dose of BioNTech / Pfizer, AstraZeneca /Oxford University, Johnson & Johnson, or Moderna vaccines. Children traveling with adults would need proof of a negative Covid-19 test before departure and could be tested again on arrival.
• The EU is creating a “Digital Green Certificate” to help governments more easily verify a completed vaccination, a negative test, or Covid recovery. Certificates will be in digital or paper form, include a QR code for authenticity, and contain limited personal data.
• Canada is also considering a vaccine passport for travelers, perhaps as an upgrade to its ArriveCAN app for visitors to report their contact information, quarantine and travel plans, and symptoms. In one poll, 78% of Canadians said vaccine passports should be required of all inbound travelers.
• Nearly 1.63 million people passed through U.S. airport checkpoints on Sunday, the highest total this year and 10 times the number of travelers on May 2 last year, according to Transportation Security Administration figures.

What’s Next: The Big Apple is also back. New York will end most of its capacity restrictions for restaurants, bars, gyms, hair salons, barbershops, stores, theaters, and offices starting May 19, Gov. Andrew Cuomo announced Monday, tweeting: “NY is coming back!” Subways will resume 24-hour service on May 17.

—Janet H. Cho

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Pfizer’s Quarter Shows How Successful Its Drug Focus Has Been

Pfizer has spent years streamlining its business to focus on buying and developing new drugs, including the mRNA Covid-19 vaccine it says will contribute $15 billion in sales this year. Its first-quarter earnings showed how successful that strategy has been. Pfizer’s shares are up 8.1% this year.

• Pfizer is donating $70 million worth of steroids, anticoagulants, and antibiotics to India, where coronavirus cases topped 401,000 on Saturday. It is also seeking expedited approval from India’s government to use its vaccine in the country, CEO Alberta Bourla said on LinkedIn.
• Pfizer’s success has spurred counterfeit versions of its Covid vaccine in Poland and Mexico, where people were duped into paying $1,000 per shot, the company said last month.
• Moderna, which reports earnings on Thursday, announced Monday it will supply up to 500 million Covid-19 vaccine doses to an international alliance of 92 lower- and middle-income countries, including 34 million doses by the fourth quarter of 2021.
• As of Monday, 105.5 million Americans are fully vaccinated, including 40% of adults and 70% of those 65 and older, said the Centers for Disease Control and Prevention. Of 246.8 million doses administered, 53% were Pfizer-BioNTech’s vaccine, while 47% were Moderna’s.

What’s Next: The Food and Drug Administration is set to authorize Pfizer and BioNTech’s vaccine for use in adolescents aged 12 through 15 by early next week, the New York Times reported. Late stage trials showed the vaccine was at least as effective in that age group as in adults.

—Janet H. Cho

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What the Next 100 Years Hold, According to Barron’s Experts

The outlook for industries, investing behaviors, and currencies over the next 100 years was at the center of debate during a special Barron’s Roundtable event on Monday. The discussion, part of coverage marking the 100th anniversary of Barron’s first issue, comes as investors seek to make sense of the ways the pandemic has transformed the world.

• The event featured Karen Karniol-Tambour, co-chief investment officer for sustainability at Bridgewater Associates; Tom Slater, head of U.S. equities and portfolio manager of the U.S. equity and long term global growth funds at Baillie Gifford; and Jerry Yang, founding partner of AME Cloud Ventures and co-founder of Yahoo.
• The panelists were optimistic about the ways technological advancements will transform industries such as healthcare. “You have the ability to use tools—like artificial intelligence, like big data—to really lead to dramatic improvements in outcomes for [healthcare] patients,” Slater said.
• The world of money could continue to experience a shift. Yang highlighted the use of cryptocurrencies in keeping transactions private and nonfungible tokens used for authentication of digital assets. “There is value associated with those coins,” he said, adding that he has invested in a basket of all cryptocurrencies “just in case.”
• Investing could also see a greater shift toward sustainable and socially responsible strategies, said Karniol-Tambour. “You’re really getting a lot of investor enthusiasm and willingness to allocate capital for the purpose of accelerating technologies in ways that make a difference on environmental or social issues.”

What’s Next: An edited version of the conversation, which also touched on China, space exploration, and autonomous vehicles, as well as stock picks and companies to watch, will be published at the end of this week.

—Shaina Mishkin

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Congrats to the winners of the April virtual stock exchange game! Be sure to join this month’s Barron’s Daily virtual stock exchange challenge and show us your stuff.

Each month, we’ll start a new challenge and invite newsletter readers—you!—to build a portfolio using virtual money and compete against the Barron’s and MarketWatch community.

Everyone will start with the same amount and can trade as often or as little as they choose. We’ll track the leaders and, at the end of the challenge, the winner whose portfolio has the most value will be announced in The Barron’s Daily newsletter.

Are you ready to compete? Join the challenge and pick your stocks here.

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—Newsletter edited by Stacy Ozol, Mary Romano, Liz Moyer, Matt Bemer, Ben Levisohn