Geopolitical Jitters Pressure US Stocks With Disney Weighing on Dow

12:43 PM, Aug 9, 2017 — Stocks fell for a second day on Wednesday as geopolitical tensions between the US and North Korea were ratcheted up, sending the Dow Jones industrial Average lower in its first multi-day decline since in more than two weeks.

A day after President Donald Trump warned of “fire and fury” if North Korea threatens the US, he tweeted that his first order as leader was to renovate and modernize the country’s nuclear arsenal. He added that “hopefully” the US won’t have to use the weapons.

Stocks, especially the Dow, had been on a steady upswung through the quarterly earnings seasons, but swung into loss territory late Tuesday after Trump’s first comments, and stayed there from the opening bell onward Wednesday.

The Dow was dragged lower by Walt Disney (DIS), which dropped 3.8% to lead decliners on the blue-chip measure after reporting mixed fiscal third quarter results and saying it’s ending a distribution deal with Netflix (NFLX) in favor of its own branded streaming service. Netflix slipped 1.8%.

Consumer discretionary was down 0.5% in the steepest loss among on the Standard & Poor’s 500, leading six of the 11 sectors lower. Financials and telecoms were both down 0.3%.

MakeMyTrip (MMYT) fell 3% after the online travel firm reported a wider-than-expected fiscal first quarter adjusted loss on sharply improved revenues that beat forecasts compiled by Capital IQ. Kelly Services (KELYA) added 3.6% after second-quarter earnings rose year-on-year.

In afternoon trading, the Dow and the Nasdaq were both down 0.3% and the S&P 500 fell 0.2%.

Globally, the Nikkei 225 lost 1.3%, the FTSE 100 fell 0.6%, the Hang Seng retreated 0.4% and the Shanghai Composite slipped 0.2%.

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Apple Sales and Earnings Beat Wall Street Estimates; Guidance Hints at New Models This Year

7:18 AM, Aug 2, 2017 — Apple (AAPL) reported fiscal third-quarter sales and earnings that topped analyst forecasts and gave a sales projection for the fourth quarter, which analysts said implies that the tech giant will release at least some of the latest editions of its blockbuster iPhone on schedule this year.

Net income was $8.72 billion, or $1.67 per diluted share in the quarter ended July 1, compared with $7.8 billion, or $1.42 per share a year earlier, the Cupertino, California-based company said on Tuesday after the market closed. The per-share earnings topped the average analyst forecast of $1.57 in a Capital IQ poll.

Revenue rose 7% to $45.4 billion, exceeding the average analyst forecast for $44.9 billion.

The company said it sold 41 million iPhone units in the quarter, 2% more than a year earlier. Sales of iPads jumped 15% to 11.4 million units and it sold 4.3 million Mac computers, up 1% from a year earlier.

Shares of the world’s most valuable company rose to a record in pre-market trading, lifted by the better-than-expected earnings figures.

Apple predicted sales this quarter will be between $49 billion and $52 billion, compared with the average Wall Street analyst forecast for $49.2 billion. Apple’s annual product launch event falls in its fiscal fourth quarter and the sales forecast helped dispel concern about reported production delays of the latest series of iPhone models.

“The firm comfortably topped its forecast and produced stellar numbers for its revenue and profit,” Naeem Aslam, chief market analyst at Think Markets UK, said by e-mail. “The big news was about the production of iPhone 8, the flagship product for the firm will hit the market on time with no issues around production.”

Tim Long, an analyst at BMO Capital Markets, said the revenue guidance “affirms our expectations that the premium iPhone ‘Pro’ will launch and ship alongside the standard ‘S’ refresh in September, though initial volumes are likely to be extremely constrained.”

Chief Executive Tim Cook said on a call with analysts, which was published on the Apple website, that sales of iPhones reached a milestone of 1.2 billion units sold cumulatively since the first model hit the market 10 years ago. He also highlighted the record revenue from services of $7.27 billion in the quarter, a 22% jump from a year earlier.

“iPhone results were impressive, with especially high demand at the high end of our lineup,” Cook said.

Companies: Apple Inc.
Price: 158.65 Price Change: +8.60 Percent Change: +5.73

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Facebook Earnings Beat Expectations as Mobile Advertising Revenue Surges

5:17 AM, Jul 27, 2017 — Facebook (FB) surpassed analysts’ expectations posting sharp growth in sales and earnings in the second quarter of the year as advertising revenue surged against a backdrop of double-digit growth in both daily and monthly users of the social networking site.

The Menlo Park-headquartered company posted total revenue of $9.32 billion in the three months ended June 30, up 45% from the corresponding quarter of the prior year, according to results published by Facebook after markets had closed on Wednesday afternoon. This beat the consensus estimate of analysts polled by Capital IQ for revenue of $9.19 billion.

Net income rose by 71% to $3.89 billion over the corresponding time frame and diluted earnings per share rose by 69% to $1.32, up from $0.78 in the prior-year period and surpassing analysts’ expectations for $1.13 per share.

The results were buoyed by a surge in advertising sales which accounts for the lion’s share of Facebook’s revenue. Advertising revenue was worth $9.16 billion, up from $6.24 billion in the prior year period, while payments and other fees, which make up the remainder of total revenue, contracted to $157 million from $197 million in the prior-year period.

Mobile advertising revenue represented approximately 87% of advertising revenue for the second quarter, up from 84% of advertising revenue in the second quarter of 2016.

Daily active users were 1.32 billion on average in June, up 17% year-on-year while monthly active users were 2.01 billion as of June 30, also 17% higher year-on-year.

“We had a good second quarter and first half of the year,” Mark Zuckerberg, Facebook’s chief executive, said. “Our community is now two billion people and we’re focusing on bringing the world closer together.”

Price: 171.10 Price Change: +5.49 Percent Change: +3.32

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Fed Keeps US Interest Rates Unchanged With Balance Sheet Unwinding Seen ‘Relatively Soon’

2:23 PM, Jul 26, 2017 — Benchmark US interest rates were left unchanged as widely expected on Wednesday, while monetary policy makers said they expect to begin unwinding the Federal Reserve’s balance sheet “relatively soon.”

The Federal Open Market Committee kept the target range on the Federal funds rate at 1% to 1.25%. It was raised to that level in June in the second hike of 2017.

“Job gains have been solid, on average, since the beginning of the year, and the unemployment rate has declined,” the FOMC said in a statement released after a two-day meeting Wednesday. “Household spending and business fixed investment have continued to expand.”

Ahead of the decision, the chances of a rate hike stood at just 3.1% on the CME Group’s FedWatch tool, while almost 97% expected the hold. The FOMC has been incrementally raising rates as the economy recovers from the crisis that saw unemployment levels surge to 10% in October 2009. In June, the rate was 4.4%, according to the Bureau of Labor Statistics.

The FOMC reiterated that any more rate hikes will depend on data, saying as it has previously that “with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further.”

Investors were keen to hear anything more on when the Fed will begin unwinding securities holdings. Monetary policy makers have previously said it’s expected to happen by the end of the year and in Wednesday’s statement the FOMC said it “expects to begin implementing its balance sheet normalization program relatively soon, provided that the economy evolves broadly as anticipated.”

Inflation on a 12-month basis is expected to remain somewhat below the Fed’s 2% goal in the near term before stabilize around that level over the medium term. The committee “will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal.”

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Analysts Forecast Year-on-Year Decline in IBM Second Quarter Sales

11:36 AM, Jul 18, 2017 — International Business Machines (IBM) is expected by analysts to report year-on-year declines in adjusted earnings per share (EPS) and revenue for the second quarter when the technology company releases the results after Tuesday’s market close.

For IBM’s second quarter adjusted EPS, the mean estimate of analysts polled by Capital IQ is $2.74, down from $2.95 a year earlier. The analysts’ mean estimate for the quarter’s revenue is $19.46 billion, down from the year-earlier period’s $20.24 billion.

Citing a “de-risked” outlook for the quarter and improved foreign-exchange backdrop, RBC Capital Markets said it expects IBM to report results in line with-to-modestly above the Street’s consensus earnings view. RBC’s estimate for adjusted EPS matches the Street view while its estimate for revenue is $19.3 billion, slightly below analysts’ consensus view.

RBC said it expects the focus to rest on four key factors: Performance of IBM’s “strategic imperatives,” stabilization of gross margins given six consecutive quarters of gross-margin declines, potential for changes and incremental details surrounding the 2017 outlook, and updates on the Watson/artificial intelligence opportunity.

The firm said while it is encouraged by a more favorable June-quarter setup and 2017 EPS guidance that reflects year-on-year pre-tax income growth, “we think investors may await more tangible signs of achieving these targets before getting positive on the name.” RBC thus maintained its investment rating on the stock at sector perform. Its price target on the stock is at $165 per share, which is above the stock’s Monday closing price of $153.01.

RBC’s overall investment summary on IBM is that the company “represents the best mix of technology businesses in the enterprise segment,” but its “top-line growth should remain limited near-term, which could result in the company’s focusing exclusively on share buybacks and margin mix to boost non-GAAP EPS growth.” The firm has been advising that its clients remain on the sidelines “until better signs of positive revenue growth emerge.”

Companies: International Business Machines Corporation
Price: 152.89 Price Change: -0.12 Percent Change: -0.08

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Target - $TGT

Target Raises Second-Quarter Profit Estimate; Forecasts Turnaround in Comparable Sales

10:59 AM, Jul 13, 2017 — US retailer Target (TGT) has adjusted its profit forecast for the second quarter and said it expects growth in comparable sales in the period after traffic and sales trends improved.

The Minneapolis-based company, which has 1,807 stores, said on Thursday it now expects adjusted and GAAP earnings per share (EPS) to be above the high end of its previously estimated range of $0.95 to $1.15. Analysts in a Capital IQ poll expected adjusted EPS of $1.06 before Thursday’s company statement.

Comparable sales are expected to see a “modest increase” in the quarter from a year earlier on better sales and customer traffic, it said. In May, after it published its first-quarter financial report it said it expected second-quarter same-store sales to decline by a low single digit percentage.

For the second quarter, both GAAP and adjusted EPS are expected to reflect a $0.05 to $0.09 benefit driven by the net tax effect of the company’s global sourcing operations. Also, GAAP EPS is expected to reflect $0.02 to $0.03 of pressure related to “the unfavorable resolution of tax matters,” it said.

Target is modernizing its stores and revamping its line of brands after competition from online retailers, such as Amazon resulted in a slump in comparable sales in the first quarter. In May, it projected a low single-digit decline in sales for the entire year. It reported a 1.3% drop in comparable sales in the first quarter.

In the first quarter, adjusted EPS was $1.21, down from $1.29 a year earlier, but better than the company’s own forecast range of $0.80 to $1.00.

The company plans to report earnings for the second quarter on Aug. 16.

Companies: Target Corporation
Price: 52.60 Price Change: +1.73 Percent Change: +3.41

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Stocks Recoup Sharp Losses in US After Trump Jr. Emails Release

12:53 PM, Jul 11, 2017 — Stocks in the US were recouping sharp losses made earlier in the session but still trading mostly in the red on Tuesday afternoon as investors were jolted by politics once again.

The Dow Jones Industrial Average plunged more than 100 points after Donald Trump Jr. released an email exchange he had last year which showed claims that a Russian government lawyer was offering the Trump presidential campaign damaging information about rival Hillary Clinton. The Nasdaq Composite and the Standard & Poor’s 500 also retreated on the news.

While the markets recouped some of their losses, the reemergence of talk about Russian involvement in the US election has once again jolted investors and led to fears that the intrigue will distract from the Trump administration’s policy plans, which had sent markets to record highs after his election last November.

Investors are also watching the start Wednesday of semiannual testimony by Federal Reserve Chair Janet Yellen to lawmakers, seeking indications about when the Fed will start to unwind purchases of securities made during the financial crisis.

In Snap (SNAP) dropped 7.9% after Morgan Stanley downgraded the shares to equal weight from overweight and slashed its price target to $16 from $28. Michael Kors (KORS) slid 7.5% after it was started with a sell rating at MKM Partners with a $26 price target.

RCI Hospitality Holdings (RICK) gained 2.1% after saying third quarter total club and restaurant sales rose to $36.9 million from $33.1 million a year earlier. Masimo (MASI) rose 1.5% after its shares were initiated at Stifel Nicolaus with a buy rating and a $105 price target, while the average rating is a hold and an $83 target.

In afternoon trading, the S&P 500 was down 0.2% while the Dow and the Nasdaq were little changed.

Globally, the Hang Seng jumped 1.5%, the Nikkei 225 gained 0.5%, the FTSE 100 fell 0.6% and the Shanghai Composite slipped 0.3%.


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Alphabet’s Google Fined $2.72 Billion by European Union for Breaching EU Antitrust Rules

11:48 AM, Jun 27, 2017 — European Union antitrust regulators imposed a 2.42 billion euro ($2.72 billion) fine on Alphabet’s Google, saying the search engine abused its dominant position by favoring its own comparison shopping service over competitors in search results.

Google was given 90 days to end the practice or it could face penalty payments of up to 5% of the average daily worldwide turnover of its parent Alphabet, according to a statement issued on Tuesday by the European Commission, which oversees competition policy for the trading bloc.

“Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors,” Margrethe Vestager, EU commissioner in charge of competition, said. “What Google has done is illegal under EU antitrust rules. It denied other companies the chance to compete on the merits and to innovate. And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation.”

Google said it’s considering appealing against the decision, Reuters reported, citing Kent Walker, Google’s general counsel.

“We respectfully disagree with the conclusions announced today,” Walker said, according to the report. “We will review the Commission’s decision in detail as we consider an appeal, and we look forward to continuing to make our case.”

The commission ordered Google to give equal treatment to rival comparison shopping services and its own service by applying the same processes and methods to position and display rival comparison shopping services in Google’s search results pages as it gives to its own comparison shopping service.

Google has other two ongoing investigations at the commission. The regulator said in earlier preliminary decisions that Google abused its dominance regarding its the Android operating system and AdSense advertizing platform.

Companies: Alphabet Inc.
Price: 941.81 Price Change: -10.46 Percent Change: -1.10

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Oil Prices Slump to 10-Month Low as US Domestic Production Rises, Traders Digest Saudi Royal Reshuffle

2:09 PM, Jun 21, 2017 — Oil futures prices were trading at levels last seen almost a year ago in recent trade after US government data showed an increase in domestic production of petroleum last week although overall US stockpiles of crude oil were lower for the second week in a row.

West Texas Intermediate (WTI) crude oil, the main US benchmark, was trading 2.9% lower at $42.27 per barrel recently, while Brent crude, the international gauge, was 3.1% lower at $44.59 per barrel. The last time Brent crude traded lower than this was in August 2016 while WTI crude last traded lower than its present level in July last year.

US domestic production of petroleum rose by 20,000 barrels per day to 9.35 million barrels per day in the week ended June 16, according to the Energy Information Administration’s (EIA) weekly oil report, published on Wednesday. The EIA’s data also showed that US inventories of crude oil declined by 2.5 million barrels to 509.1 million barrels last week. The drop surpassed the 1.7 million barrel weekly decline registered the previous week but was a lesser drop than the 2.7 million barrel drop which had been projected by the American Petroleum Institute (API) on Tuesday.

Total motor gasoline inventories fell by 0.6 million barrels, having increased by 2.1 million barrels a week earlier. Distillate fuel inventories rose by 1.1 million barrels having risen by 0.3 million barrels in the prior week, and propane/propylene inventories increased by 1.8 million barrels, having expanded by 2.4 million barrels a week earlier. Commercial petroleum inventories decreased by 1.9 million barrels, compared to a jump of 6.8 million barrels a week earlier.

Also feeding into trading sentiment was news of a change in positions for two of Saudi Arabia’s most senior officials. Home to one of the world’s largest reserves of oil and a key member of the Organisation of Petroleum Exporting Countries (OPEC), any changes to key government roles in Saudia Arabia stand to have potential implications on oil policy and, by extension, the price of oil.

Multiple news agencies reported on Wednesday that Saudi Arabia’s King had opted to promote his son, Mohammed bin Salman, to the role of crown prince, replacing Mohammed bin Nayef, his cousin, who was also removed from his post as interior minister. The Financial Times newspaper credited Mohammed bin Salman as having been the “driving force” behind Saudi Arabia’s plan to overhaul its oil-dependent economy, including the planned partial privatization of Saudi Aramco.

OPEC members collectively generate around one third of the world’s oil supplies and last month the bloc agreed to extend a curb on oil output for another nine months in an effort to ease the global glut in supply which had eroded prices severely in 2016 and the latter half of 2015.

Price: 6.49 Price Change: -0.04 Percent Change: -0.61

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Stocks Mostly Weaken as Amazon’s Whole Foods Buy Weighs on Retailers

12:46 PM, Jun 16, 2017 — Stocks in the US were mixed to lower on the last trading day of the week, as economic data weighed and consumer names retreated after Amazon.com’s (AMZN) move to purchase food retailer Whole Foods Market (WFM) sparked competition worries.

Consumer staples dropped 1.3% in the steepest decline on the Standard & Poor’s 500, with the food and staples retailing sub-group retreating 4.7%. Kroger (KR) plunged 11%, extending Thursday’s losses to hit the lowest in more than three years.

Supervalu (SVU) dropped 13% and Sprouts Farmers Market (SFM) fell about 5%. Whole Foods Market surged 27% and Amazon gained 2.9% after the $13.7 billion transaction was announced.

Economic releases also dampened sentiment. Housing starts declined 5.5% in May to a seasonally-adjusted annual rate of 1.092 million, missing expectations for an increase of 4.3%. April was revised downward to 1.156 million from 1.172 million. Permits were also lower in May, down 4.9% to a SAAR of 1.168 million, missing expectations for a modest gain of 1.6% to 1.249 million. Action Economics called the numbers “disastrous”.

In company news, Booz Allen Hamilton (BAH) plunged 19% after saying late Thursday that the US Department of Justice is conducting a civil and criminal investigation of its unit, Booz Allen Hamilton Inc, relating to certain elements of cost accounting and indirect cost charging practices with the government.

Lithia Motors (LAD) fell 8.2% after it was downgraded at Bank of America Merrill Lynch to underperform from neutral. Gener8 Maritime (GNRT) jumped 9.5% after Dow Jones said the company is in early talks to be bought by Frontline (FRO).

In afternoon trading, the Nasdaq Composite fell 0.2%, the S&P 500 slipped 0.1% and the Dow Jones Industrial Average was up 0.1%.

Globally, the FTSE 100 and the Nikkei 225 each rose 0.6%, the Hang Seng added 0.2% and the Shanghai Composite slipped 0.3%.

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