DAILY MARKET REPORTS
- U.S. stocks rose Friday after January’s nonfarm payrolls report showed employers added more jobs than anticipated and unemployment held near historic lows.
- The strong report, along with a tick up in wages, supported the newfound optimism in the U.S. economy that has washed over the stock market in the new year.
- Fears of an economic slowdown late last year have been eased by stronger-than-expected corporate earnings, a more accommodative Federal Reserve and signals of strength from the labor market.
- Data from the Labor Department showed U.S. nonfarm payroll numbers rose a seasonally adjusted 304,000 in January, the unemployment rate rose to 4.0% and average hourly wages for private-sector workers grew 3.2% from a year earlier.
- Comments from President Trump on Thursday suggested another high-level meeting with Chinese President Xi Jinping was in the cards as trade negotiations continued.
- Amazon.com fell 4.1% after its quarterly sales forecast fell short of Wall Street estimates, overshadowing its record sales and profit during the holiday season.
- Exxon Mobil and Chevron jumped 2.4% after the oil majors reported better-than-expected quarterly profits, boosting the Dow Jones industrial index.
US FINANCIAL MARKET
Amazon sales outlook falls short after record holiday quarter
- Amazon recorded a third straight record profit, but uncertainty in India and a possible uptick in spending threaten to cut short that streak.
- Overall, net sales for the fourth quarter were $72.38 billion and beat analysts’ average estimate of $71.87 billion on the back of a strong holiday season, which includes the major U.S. shopping event Black Friday.
- Amazon Web Services revenue surged 45.3% to $7.43 billion, beating an average estimate of $7.26 billion.
- Ad sales and “other” revenue jumped 95% to $3.4 billion in the fourth quarter.
- Amazon said tens of millions of shoppers signed up for its loyalty club Prime during the season – more than in any prior quarter – helping boost revenue from subscription fees 25% to $4.0 billion.
- Net income jumped 63% to $3 billion for the fourth quarter, ahead of analysts’ estimates.
- Amazon forecast revenue of $56 billion to $60 billion for the current quarter, below consensus of $60.83 billion. On the low end of Amazon’s range, revenue would be up only about 10% from a year earlier.
Exxon Mobil’s profit tops estimates as production rebounds
- Exxon Mobil reported a quarterly profit that topped analysts’ estimates, pushing it shares up nearly 3% in premarket trading as its oil and natural gas output rose slightly on a year-over-year basis.
- Exxon’s oil equivalent production rose to just over 4 million barrels per day, up from 3.9 million bpd in the same period the year prior.
- The company’s fourth-quarter net income fell to $6 billion from $8.38 billion a year ago.
- But earnings excluding the impacts of tax reform and impairments rose to $6.4 billion from $3.73 billion a year ago.
- The company now expects to spend $30 billion this year, up from about $28 billion it had forecast previously.
Chevron’s profit rises on higher oil prices and output
- U.S. oil and natural gas producer Chevron on Friday reported quarterly earnings that topped analysts’ estimates on higher prices and production, sending shares higher in premarket trading.
- Results reflected a 12.5% increase in oil and gas production as net output added 156,000 barrels per day (bpd) from a year earlier to 3.08 million bpd, and prices paid for its crude rose to $59 a barrel in the quarter, from $57 a year earlier.
- Chevron’s cash flow from operations rose nearly 51% to $30.6 billion, reflecting the higher output and expense reduction. Investors have been pushing oil companies to restrain spending and increase returns to shareholders.
- Chevron reported a profit of $3.7 billion compared with $3.11 billion a year earlier.
Honeywell Swings to Profit
- Honeywell International swung to a profit in the fourth quarter as the industrial conglomerate continued to see strong demand in its U.S. defense, warehouse automation and aerospace businesses.
- Overall, net sales fell 10% to $9.73 billion from the year-earlier period, in line with analysts’ estimates.
- The company said the decline was related to the spinoffs.
- Organic sales, which strip out currency moves, acquisitions and divestitures, rose 6%.
- Honeywell posted a profit of $1.72 billion, compared with a loss of $2.51 billion a year earlier despite spending $104 million in the quarter on separation costs.
- For the full-year 2019, Honeywell expects earnings of $7.80 to $8.10 a share excluding items related to the spinoffs.
- It forecasts sales between $36 billion and $36.9 billion and organic sales are projected to grow by 2% to 5%.
Merck quarterly profit beats estimates on Keytruda strength
- U.S. drugmaker Merck’s quarterly profit edged past Wall Street estimates on Friday, as its blockbuster cancer drug Keytruda brought in over $2 billion for the first time in a quarter.
- Revenue rose 5.4% to $11 billion and was roughly in-line with analysts’ estimates of $10.99 billion.
- Sales of Keytruda, the most important drug in Merck’s portfolio, rose 66% to $2.15 billion in fourth quarter, compared with analysts’ average estimate of $2.12 billion.
- Sales in diabetes drugs Januvia and Janumet fell 4% to $1.47 billion in the quarter, and that in cholesterol-lowering drugs Zetia and Vytorin fell 52% to $245 million.
- Merck swung to a profit of $1.8 billion in the fourth quarter compared to a loss of $1.05 billion in the same period a year ago.
Edwards Lifesciences beats on revenue but forecast lags estimates
- U.S. medical device maker Edwards Lifesciences narrowly topped Wall Street estimates for quarterly revenue on Thursday as it sold more heart monitors, but its outlook for March quarter earnings fell below analysts’ forecasts.
- Edwards’ net sales overall climbed 10% to $977.7 million in the fourth quarter, versus an expected $976 million.
- Its net income reached $7 million, compared with a loss of $2.8 million a year earlier.
- The company projected March quarter sales of between $950 million and $1.01 billion, and adjusted earnings of between $1.15 and $1.25 per share. Analysts were expecting revenue of $997.2 million and earnings of $1.30 per share.
KKR Reports Fourth-Quarter Loss
- KKR reported a loss in the fourth quarter, mirroring results from its peers earlier this week.
- KKR reported negative revenue of $178.1 million compared with $1.02 billion in revenue for the comparable quarter a year prior.
- The firm reported a total investment loss of $798.1 million compared with investment income for the fourth quarter a year prior of $274.1 million.
- KKR, which converted from a partnership to a corporation last year, reported a fourth-quarter loss of $384.6 million compared with a profit for the comparable quarter a year before of $174.7 million.
Symantec beats earnings estimates, CFO to step down
- Antivirus software maker Symantec shares rose in extended trade on Thursday after beating profit and revenue estimates in the December quarter and raising guidance on strong enterprise and consumer businesses.
- Revenue inched up to $1.21 billion in the quarter, above analysts’ average estimate of $1.18 billion.
- Symantec’s profit fell to $65 million in the quarter, compared with a profit of $1.34 billion a year earlier.
- Symantec raised its guidance for the current quarter, projecting March quarter adjusted earnings between 37 cents and 41 cents per share. Analysts were expecting 38 cents.
Facebook Removes Accounts of Fake-News Group in Indonesia
- Facebook removed hundreds of accounts, groups and pages linked to an online syndicate that has been accused of spreading fake news and hate speech in Indonesia, less than three months before a presidential election in the world’s third-largest democracy.
- Facebook’s head of cybersecurity policy said in a statement that the company had removed more than 1,500 Facebook accounts, groups and pages, as well as 208 Instagram accounts, that were linked to the Saracen Group, an online syndicate in Indonesia.
- Indonesia, preparing for nationwide elections April 9, has struggled in recent years to counter fake news and hate speech spread via social media.
US ECONOMY & POLITICS
Economy Notches 100th Straight Month of Increased Employment
- Tested in January by a 35-day government shutdown, market volatility and uncertainty about global growth, the U.S. labor market passed with high marks, notching its 100th straight month of increased employment and sustaining robust wage growth.
- Nonfarm payrolls increased a seasonally adjusted 304,000 in January, the highest number in 11 months.
- The unemployment rate rose to 4.0% last month from 3.9% in December.
- Economists had expected 170,000 new jobs in January and a 3.9% unemployment rate.
- Revised figures show employers added 222,000 jobs in December and 196,000 jobs in November, a net downward revision of 70,000.
- Average hourly earnings rose three cents, or 0.1% in January after accelerating 0.4% in December.
- That lowered the annual increase in wages to 3.2% from 3.3% in December.
- A broader measure of unemployment (U6), which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, jumped to an 11-month high of 8.1% from 7.6% in January, boosted by the government shutdown.
U.S. Factory Activity Picked Up in January
- Growth picked up for U.S. manufacturers in January, a sign strong factory-sector demand and output overrode uncertainty surrounding the partial government shutdown in the first month of the year.
- The Institute for Supply Management’s manufacturing purchasing managers index rose to 56.6 in January from 54.3 in December. Readings above 50 indicate expansion whereas readings below that level denote contraction.
- Economists surveyed by The Wall Street Journal had expected the index to slip slightly to 54.0.
Trump Gives Upbeat Assessment of Trade Talks with China
- The U.S. and China moved closer to settling their trade dispute, with President Trump saying he expects to meet again with Chinese President Xi Jinping to resolve the conflict that has rattled the global economy.
- Mr. Trump’s upbeat assessment came as he met Thursday with Vice Premier Liu He of China in the Oval Office following two days of high-level talks between the two sides.
- At the meeting, Mr. Liu said China would buy 5 million tons of U.S. soybeans daily, a number Mr. Trump repeated, adding it would “make our farmers very happy.”
- The administration later clarified that China has agreed to buy an additional 5 million metric tons of soybeans—but not daily, and no time frame was specified.
- At one point, the president said he might be willing to accept a limited agreement by the deadline and extend the talks to get a more comprehensive deal.
U.S. to Suspend Obligations Under 1987 Nuclear Treaty with Russia
- The U.S. will suspend its obligations under a Cold War-era arms control treaty with Russia and said it would begin withdrawing from the pact, after talks to compel Russia to destroy missiles and launchers the U.S. maintains breach the agreement failed.
- Signed by President Ronald Reagan and Soviet leader Mikhail Gorbachev, the pact was hailed as a landmark treaty signaling the end of the Cold War.
- The 1987 treaty bans U.S. and Russian land-based missiles that can fly between 300 and 3,400 miles.
- Friday’s announcement from the Trump administration follows revelations that Russia has expanded its deployment of its Novator 9M729 missile, which Russia insists is fully compliant with the treaty.
- On Saturday, the U.S. will trigger its formal withdrawal process, which will last six months. Russia has the option of reversing course during that period if it accepts U.S. demands to destroy those missiles and their launchers.
Sen. Cory Booker of New Jersey Launches Presidential Campaign
- New Jersey Sen. Cory Booker entered the race for the Democratic presidential nomination on Friday, seeking to offer a message of unity in a growing field of Democrats seeking to counter President Trump.
- The African-American senator is the fourth Senate Democrat to launch a presidential campaign, joining Elizabeth Warren of Massachusetts, Kamala Harris of California and Kirsten Gillibrand of New York.
- Potential rivals such as Vermont Sen. Bernie Sanders, former Vice President Joe Biden and former Rep. Beto O’Rourke are considering entering the wide-open field.
EUROPE & WORLD
Sony’s profit disappoints as weaker games biz overshadows record result
- Japan’s Sony reported lower-than-expected profit on Friday as its previously thriving gaming business sagged, though a one-off gain related to its acquisition of EMI nevertheless pushed the quarterly result to a record high.
- Revenue amounted to $21.3 billion, slightly below the $23.6 billion expected.
- Revenue at company’s pictures division, increased by 6% in dollar terms to $2.45 billion (JPY276 billion), with improved profits of $102 million, up from $92 million in the same period last year (JPY11.6 billion, compared with JPY10.5 billion).
- Profit in the gaming business fell 14% as the popularity of exclusive titles such as “Marvel’s Spider-Man” failed to offset shrinking PS4 console sales.
- Sony said total operating profit rose 7.5% to 376.99 billion yen ($3.46 billion), missing the 383.67 billion yen average.
- Still, Sony maintained its annual profit forecast of 870 billion yen, exceeding an all-time high marked just last year.
Vale in Talks on Payments to Brazil’s Dam Disaster Victims
- Brazilian mining giant Vale SA hopes to sign a deal with the state of Minas Gerais soon so it can start paying damages to the victims of the collapse last week of a tailings dam owned by the company.
- The dam, which burst on Jan. 25, has claimed at least 110 lives, with 238 more missing and feared dead, civil-defense authorities said Thursday.
- Vale plans to give financial aid to families affected by the disaster.
- The company said it would make a donation of 100,000 reais ($27,500) to the families of people who are dead or missing following the dam’s collapse.
TODAY in HISTORY
- The Supreme Court of the United States convened for the first time, in New York City. (1790)
- The space shuttle Columbia disintegrated as it tried to reenter the Earth’s atmosphere after a sixteen-day mission in space. All seven members of the crew were lost. (2003)
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