US FINANCIAL MARKET
U.S. Stocks Climb on Optimism About U.S.-China Trade Deal
- Major U.S. stock indexes extended their relief rally Thursday, on pace to close at fresh records, as signs of geopolitical calm pulled investors back into risky assets.
- China said its top trade negotiator, Vice Premier Liu He, will travel to Washington next week to sign a phase-one accord, in the first official confirmation by Beijing on the signing of the agreement.
- Investors also took comfort in signs that the U.S. and Iran seem to be backing away from a near-term conflict, after President Trump signaled that no new U.S. military strikes would follow an Iranian missile barrage on Iraqi bases housing American and allied military forces.
- Technology stocks led the market higher, especially companies that have significant exposure to China.
- Apple gained support from data showing iPhone sales jumped more than 18% in China in December.
- Meanwhile, shares of some retailers slumped after reporting weak sales during the key holiday-shopping period.
- Kohl’s dropped nearly 9% after the department store said sales fell in the holiday season from a year earlier, and that it expects profit to be at the lower end of its guidance for fiscal 2019.
- Shares of Gap, Macy’s, Nordstrom and other retailers all followed Kohl’s lower.
Bed Bath & Beyond Swings to Quarterly Loss
- Bed Bath & Beyond withdrew its forecast for fiscal 2019 just two months after new Chief Executive Officer Mark Tritton took charge and said it expects the current quarter to remain pressured.
- The company’s shares fell as much 25% in extended trading, after the home furnishing retailer also reported a surprise third-quarter loss and lower-than-expected sales.
- Net sales were $2.76 billion for the quarter, down 9% from a year earlier and missing analysts’ estimates of $2.85 billion.
- Same-store sales decreased by 8.3%, marking its 11th consecutive quarter of declines.
- The company recorded a net loss of $38.6 million for the fiscal third quarter, down from a net profit of $24.4 million in the same quarter last year. Analysts had expected a profit.
- The home-goods retailer withdrew its fiscal 2019 guidance and said that it would unveil a new strategic plan soon.
J.C. Penney, Kohl’s Post Lower Holiday Sales
- J.C. Penney, Kohl’s and Victoria’s Secret parent L Brands all reported lower sales in the critical months of November and December.
- All three companies entered the holiday season on weak footing, with falling sales as they lost orders to Amazon as well as traditional rivals such as T.J. Maxx and Target.
- J.C. Penney’s comparable-store sales fell 7.5% during the nine-week stretch that ended Jan. 4.
- Excluding appliances and furniture, categories it exited last year, comparable sales fell 5.3% in the period.
- The retailer maintained its financial targets for the fiscal year, which includes January.
- Kohl’s said its comparable sales for November and December slipped 0.2%, citing weakness in its women’s apparel business.
- It also warned that profits would be at the low end of its prior target range.
- L Brands said comparable sales, which include sales from company-owned stores in North America open at least a year and digital sales, fell 3% for the nine weeks ended Jan. 4.
- The company said it now expects fourth-quarter earnings of $1.85 a share. It had previously guided for earnings of $2.00 a share.
- Warehouse club operator Costco Wholesale reported comparable sales jumped 9% in the five weeks ended Jan. 5.
Apple’s iPhone sales in China up 18% in December: government data
- Sales of Apple’s iPhone in China in December jumped more than 18% year on year, government data showed on Thursday.
- Apple shipped roughly 3.2 million phones in China in December, data from the China Academy of Information and Communications Technology and Reuters calculations showed.
- That was up from 2.7 million a year earlier.
Boeing Jet Was on Fire Before Crash, Iran Says; Investigators Consider Hostile Act
- The Ukraine International Airlines flight that crashed after takeoff from Tehran was on fire before it hit the ground, Iran’s aviation regulator said, as the cause of the crash remained unclear and Ukrainian authorities considered the possibility that the plane was hit by a projectile or an explosion.
- The Boeing 737-800 single-aisle jet ascended to 8,000 feet before disappearing from radar and crashing, killing all 176 people on board, said Ali Abedzadeh, head of Iran’s Civil Aviation Organization, according to the state news agency.
- The cause of Wednesday’s crash was unclear, and authorities in Iran and Ukraine pointed to different possible scenarios.
- Iran’s minister of roads and urban development, Mohammad Eslami, said the plane suffered a technical fault. “Rumors about the incident being a terrorist attack, explosion or shooting at the plane…are not true,” he said.
- But Ukrainian investigators were considering a number of possible versions of events. Those include a strike by an antiaircraft missile, a collision with a drone, an engine explosion or a blast inside the aircraft as a result of a terrorist attack, said Oleksiy Danilov, the head of Ukraine’s National Security and Defense Council, in a Facebook post.
- A U.S. official familiar with the matter said Wednesday that data transmitted via satellite indicated that everything was normal on the jetliner until the sudden loss of data and the fatal dive.
Verizon to Drop Cable Bundles and Ease Changes to TV Packages
- Verizon is eliminating traditional cable bundles and the handcuffs that often came with them, making it easier for households to switch video packages in the hopes they won’t cut the cord entirely.
- The telecommunications company will allow Fios customers to select their home internet speeds and television packages separately, at preset rates.
- Rather than locking customers into one- or two-year contracts, customers will be able to change either service monthly, if they wish.
- Under the new pricing plans, Verizon will sell three tiers of internet speeds, ranging from $55 to $80 a month, including router costs. Customers can also bring their own router and save $15 on the two lower-speed plans.
Walmart opened 134 stores in Mexico in 2019, biggest expansion in six years
- Walmart last year launched its biggest expansion in Mexico since 2013, opening 134 new stores in its top foreign market and boosting its presence by nearly 5%, the retailer said Wednesday.
- Walmart now runs 3,407 stores in Mexico, where it has more locations than in any other country outside the United States, its Mexican unit, Walmart de Mexico, said in a monthly report.
- Last year’s new openings were the highest since 2013, when Walmart opened 214 stores across Mexico.
- Sales at Walmart stores open for more than a year in Mexico rose 2.6% in December compared with the same month in 2018, while total sales in the country rose 4.1%.
Facebook to Keep Targeted Political Ads but Will Give Users More Control
- In a break with other tech companies, Facebook said it wouldn’t limit how political ads are targeted to potential voters, but would instead give users tools to see fewer of those ads on its platforms.
- The move by Facebook, which says a private company shouldn’t decide how campaigns are able to reach potential voters, is at odds with how other tech firms are approaching political ads leading up to the 2020 election.
- The social-media giant also announced changes it says will boost transparency about how political ads are shared.
US ECONOMY & POLITICS
U.S. weekly jobless claims fall, but labor market momentum waning
- New applications for U.S. jobless benefits fell more than expected last week, but the labor market appears to be cooling, with the number of Americans on unemployment rolls surging to more than a 1-1/2-year high at the end of 2019.
- Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 214,000 for the week ended Jan. 4, the Labor Department said on Thursday.
- Economists polled by Reuters had forecast claims would fall to 220,000 in the latest week.
- The number of people receiving benefits after an initial week of aid vaulted 75,000 to 1.80 million for the week ended Dec. 28, the highest level since April 2018.
China to Send Chief Trade Negotiator to U.S. to Sign Phase-One Deal
- Chinese President Xi Jinping’s chief trade negotiator will travel to Washington early next week to sign a phase-one trade deal with the U.S., China’s Commerce Ministry said Thursday, the first official confirmation by Beijing on the signing of an agreement that could help ease bilateral tensions.
- The Chinese delegation, to be led by Vice Premier Liu He, will visit Washington from Monday to Wednesday, Commerce Ministry spokesman Gao Feng said at a weekly briefing.
- Washington and Beijing said on Dec. 13 that the two sides had reached a first-stage deal, under which China would greatly increase its purchases of U.S. farm goods and other products, further open its financial sector, pledge not to devalue the Chinese yuan to help the country’s exporters and better protect American intellectual property.
- In exchange, the Trump administration canceled new tariffs on roughly $156 billion in Chinese imports that were set to take effect Dec. 15.
- It also agreed to cut in half the existing 15% tariff rate on roughly $120 billion of goods that had been imposed on Sept. 1.
U.S. and Iran Back Away from Open Conflict
- President Trump moved Wednesday to de-escalate hostilities with Iran, signaling no new U.S. military strikes following an Iranian missile barrage on Iraqi bases housing American and allied military forces that resulted in no casualties.
- While the president signaled an ease in tensions that had been building toward military confrontation, he nonetheless maintained a stern tone in his nearly 10-minute speech.
- He vowed to maintain efforts to prevent Iran from obtaining nuclear weapons and said new sanctions would be imposed against Iran.
- Broadly, however, the president’s comments were seen as signaling a calmer period, a course also reflected in comments from Iranian leaders in the wake of Wednesday’s limited attacks.
Pelosi Faces New Call to Send Impeachment Articles to Senate
- A top House Democrat said Speaker Nancy Pelosi should send the articles of impeachment against President Trump to the Senate, despite the lack of guarantees of new witnesses and evidence sought by Democrats.
- House Armed Services Chairman Adam Smith (D., Wash.), said Thursday that “it is time” to transmit the articles so the Senate trial can begin.
- Mr. Smith is the first Democrat in House leadership to break ranks with Mrs. Pelosi, who has kept a tight hold on her caucus.
- A number of Senate Democrats have said Mrs. Pelosi should send over articles, saying the party had little to gain from further delay.
- Mr. McConnell has said he has enough support from Senate Republicans to move forward on impeachment with no bipartisan agreement on how a trial would be structured.
Trump to Announce Update to National Environmental Policy Act, Officials Say
- President Trump is expected to announce an update to a federal environmental policy act that has come under fire from business groups as needlessly delaying infrastructure projects.
- The president is planning to make the announcement regarding the National Environmental Policy Act at 11 a.m.
- The officials described the update as significant, with one calling it a deregulatory effort “designed to streamline and shorten review times.”
- The White House action was earlier reported by the Washington Post, which said the proposal would no longer require federal environmental review of projects that don’t have significant federal government funding or involvement.
EUROPE & WORLD
Chinese Inflation at Eight-Year High Poses a Policy Dilemma
- Devastation in China’s pork industry pushed consumer-price inflation to an eight-year high in 2019, complicating decisions for policy makers looking to boost a cooling economy.
- Consumer prices were up 2.9% from a year earlier, the National Bureau of Statistics said Thursday—relatively benign by global standards, but a challenge for the world’s second-largest economy.
- Though there are few signs of unrest over surging pork prices—up 97% in December from a year earlier—China’s leaders appear to be taking no chances, given the simultaneous slowing growth.
- For the year, the inflation rate nearly touched the 3% threshold set by Beijing.
China’s Car-Sales Slump Extends into Another Year
- Chinese car sales dropped for a second consecutive year in 2019 but likely bottomed out, an industry group said.
- The number of passenger vehicles sold in the largest auto market slipped to 20.7 million, down 7.4% from 2018, according to data by the China Passenger Car Association, a trade organization of large foreign and domestic car makers and dealers.
- That exceeded the 5.8% drop in 2018.
- December was the 18th down month out of the past 19, the group said, with sales off 3.4% from a year earlier.
- In 2020, the CPCA expects a 1% rebound for the overall auto market.
- Others are less optimistic—the state-backed China Association of Automobile Manufacturers sees a fall of least 2%.
U.S. lawmaker seeks ban on intelligence sharing with countries that use Huawei
- U.S. Senator Tom Cotton on Wednesday introduced a bill that would prevent the United States from sharing intelligence with countries that allow Chinese telecoms giant Huawei Technologies to operate 5G network technology within their borders, according to a copy of the bill seen by Reuters.
- The bill’s unveiling comes just days before the United Kingdom is slated to decide whether to upgrade its telecoms network with Huawei equipment.
- Cotton, a vocal critic of Huawei, proposed a little-noticed provision in a defense bill signed into law last month that directs intelligence agencies to consider the use of telecoms and cybersecurity infrastructure “provided by adversaries of the United States, particularly China and Russia,” when entering intelligence-sharing agreements with foreign countries.
TODAY in HISTORY
- The Russian Revolution of 1905 was sparked by troops firing on petitioners to Czar Nicholas in St. Petersburg. (1905)
- Anti-American rioting broke out in the Panama Canal (1965)
- Surveyor 7, the last of America’s unmanned lunar probes, landed on the Moon. (1968)
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