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STOCKS CALM AFTER DOW RECORD

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STOCKS CALM AFTER DOW RECORD

  • Major U.S. indexes down slightly ahead of the Thanksgiving holiday.
  • The moves come after the blue chip index, S&P 500, Nasdaq and Russell 2000 all closed at record highs for a second day in a row.
  • The rally was spurred by a recent uptick in corporate earnings, a jump in oil prices and hopes that the election of Donald Trump would lead to higher growth and inflation.
  • Later Wednesday, the Federal Reserve will release minutes from its November meeting, when it decided to keep rates on hold.
  • U.K. Treasury chief Philip Hammond said he would aim to close the budget deficit as soon as possible, but not by 2020, and set out plans for infrastructure spending to support the economy.
  • Investors also continued to keep an eye on the price of oil ahead of a meeting of the OPEC next week.
  • U.S. crude fell 0.6% to $47.74 a barrel, after hitting its highest settle level in nearly a month on hopes for an agreement to cap production.

US FINANCIAL MARKET

Government Bond Selloff Resumes

  • Treasuries helped by strong U.S. economic data and a report suggesting a boost to ECB lending of bond holdings.
  • In recent trading, the yield on the 10-year Treasury note was 2.388% compared with 2.319% on Tuesday, according to Tradeweb.
  • The 10-year German bund yield rose to 0.290% from 0.231%.
  • The 10-year U.K. bond yield climbed to 1.475% from 1.391%.
  • Yields rise when bond prices fall.

HP Inc. Posts Revenue Increase as PC Business Rebounds

  • A rebound in the company’s personal computer business outweighed pressures facing its printing operations.
  • HP’s net income declined 63%, however, in part due to costs of one-time payments to company retirees.
  • HP reported net income for the fourth period of $492 million compared with profit in the year-earlier period of $1.32 billion.
  • Revenue rose to $12.51 billion from $12.27 billion.

Deere earnings beat estimates but outlook downbeat

  • Deere cut costs and raised prices to compensate for sluggish demand for its agricultural and construction equipment.
  • The outlook “tells you that the global farm recession will continue,” Argus Research analyst Bill Selesky said.
  • “The farm economy will not get better until you see farmer income levels rising, which have not for some years.”
  • Net income attributable to Deere fell to $285.3 million in the fourth quarter from $351.2 million.
  • Revenue fell 3 percent to $6.52 billion, beating analysts’ estimates of $5.38 billion.

EU regulators set to clear Microsoft’s LinkedIn deal

  • EU antitrust regulators are set to give conditional clearance to Microsoft’s $26 billion takeover of professional social network LinkedIn.
  • The deal, Microsoft’s largest ever acquisition, will allow the company to add a suite of sales, marketing and recruiting services to its core business products as it gears up for next-generation computing.

Eli Lilly Alzheimer’s Drug Fails Trial

  • Drugmaker’s shares plunge as study shows solanezumab didn’t significantly help Alzheimer’s disease patients.
  • Lilly and other companies have developed drugs that try to stop the buildup of a sticky protein in the brain known as beta amyloid—believed by many to be the primary culprit in the disease.
  • Current treatments for the fatal disease can alleviate symptoms but don’t slow the condition’s underlying progression.
  • Lilly said Wednesday it would record a fourth-quarter charge of about $150 million in connection with the study failure.

Amazon’s Holiday Deliveries Face Disruption From Pilot Strike

  • ABX’s legal filing said that the Tuesday action caused the cancellation of 26 flights and stranded more than 1.25 million pounds of cargo for its other major customer, Deutsche Post AG’s DHL.
  • The pilots are employed by Air Transport Services, which alongside Atlas Air Worldwide, was hired by Amazon to fly its packages in 40 dedicated jets by the end of 2018.
  • About 16 will be in operation by the end of the year, according to the companies.
  • The increased demand is upsetting pilots as they try to agree on new labor contracts with management.

Facebook builds censorship tool to attain China re-entry: NYT

  • Facebook has quietly developed a censorship tool that could persuade China to allow the world’s biggest social media network to re-enter the world’s second largest economy after a seven-year ban.
  • Facebook would instead offer the software to enable a third party to monitor popular stories and topics that gain visibility as users share them across the network, according to the Times.
  • Facebook developed the software, which suppresses posts from appearing in people’s news feeds in specific geographies.
  • China, which has the world’s largest population of internet users, banned the website following the Urumqi riots in July 2009 in an effort to stem the flow of information about ethnic unrest which left 140 people dead.

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US ECONOMY & POLITICS

U.S. Consumer Sentiment Rose Amid Trump’s Election

  • The University of Michigan indicator climbed to 93.8 this month from a preliminary November reading of 91.6 and a final October reading of 87.2.
  • The post-election rise in optimism was widespread across different regions of the country, income and age groups.

Mortgage Applications Soar 13% as Buyers Act Before Rates Rise

  • Mortgage rates have gained about half a percentage point since Donald Trump was elected president.
  • Refinancing applications, though, went the other way, dropping 3% from the previous week.
  • Counted together, total mortgage applications rose 3% in the week, reversing course from a decline the previous week.
  • The latest increase in purchase-mortgage demand was driven by borrowers seeking large mortgages.
  • Rising interest rates over the long run will make more-expensive homes less affordable for many borrowers, which in turn could affect the rate at which home values have been appreciating in many markets.

U.S. New-Home Sales Fall in October

  • Purchases of new single-family homes drop 1.9% to 563,000 from September.
  • New-home sales had hit a multiyear high in July at a pace of 622,000, but have stayed below the 600,000 mark since then.
  • Overall, steady job gains and historically low mortgage rates have supported the housing market throughout 2016.
  • Sales of existing homes, which account for the bulk of purchases, rose 2.0% in October from the prior month to the highest pace since early 2007.
  • The median price of new homes sold in October was $304,500, up from $298,700 a year earlier.

U.S. Oil Supplies Dip, Fuel Supplies Rise

  • Weekly EIA data on U.S. oil inventories shows a 1.3 million barrel decline in crude oil stockpiles and a 2.3 million barrel rise in gasoline supplies.
  • The data also shows U.S. oil production sticking to an elevated 8.7 million barrels per day, a bearish sign that U.S. producers have eagerly ramped up activity.
  • That could mean oversupply will remain the name of the game.

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EUROPE & WORLD

U.K. Shifts Policy on Spending

  • Treasury chief announces billions in extra spending to boost economy likely to be slowed by Brexit.
  • He also announced a series of small measures aimed at boosting the incomes of working families.
  • Hammond said economic growth will be slower over the next few years than predicted before the referendum and government borrowing more than £100 billion ($124 billion) higher than planned.
  • Growth will slow to 1.4% in 2017 from 2.1% this year, according to the U.K.’s Office for Budget Responsibility, before gradually picking up again in 2018 and beyond.

Mexican Economy Picked Up Pace in the Third Quarter

  • Second-quarter GDP revised to a 0.1% expansion from a previously reported contraction.
  • Mexico’s economic growth accelerated in the third quarter, with growth in services continuing to offset weakness in industrial production.
  • Services rose 1.4% from the second quarter, with private consumption supported by low inflation and employment and credit growth.
  • Industrial production barely grew, however, as a sluggish U.S. manufacturing sector weighed on demand for Mexican factory exports, oil and gas production continued to decline, and government budget cuts limited construction.

Iran and Iraq Stumbling Blocks to OPEC Production Cut

  • OPEC members say working to bridge differences.
  • Talks aimed at nailing down terms ahead of a formal Nov. 30 meeting made progress by outlining cuts of as much as 4.5% for most countries, and by providing specific targets to each country.
  • But Iran and Iraq—the cartel’s second- and third-largest producers—then told other members they were reluctant to go along with a cut of that size.

China to Issue Nationwide Smoking Ban in Public Places

  • China has more than 300 million smokers and is the world’s largest producer and consumer of tobacco products, according to the World Health Organization.
  • At least 20 cities, including Beijing and Shanghai, have public no-smoking rules.
  • On Nov.11, Shanghai adopted a new law to prohibit smoking in all public areas and workplaces after months of intense debate.
  • The law goes into effect in March.

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TODAY in HISTORY

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The first jukebox was installed at the Palais Royal Saloon in San Francisco (1889)

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First issue of Life magazine hit the newsstands. The cover photograph, by Margaret Bourke-White, featured the Fort Peck Dam (1936)

U.S. wartime food rationing, of meat, butter, and other foods, ended (1945)

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People’s Republic of China was seated at the UN Security Council (1971)

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