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US FINANCIAL MARKET

U.S. Shares Open Higher After China Tariff Relief

  • U.S. stocks rose Thursday after China said it would cut in half tariffs on $75 billion of U.S. imports, signaling it would follow through with parts of a recently signed trade agreement.
  • China’s Finance Ministry said its decision to cut tariffs was meant to help “alleviate economic and trade frictions,” and added that it was hoping to work with the U.S. to ultimately eliminate all increased tariffs.
  • Another boost to stocks: the fact that the latest flurry of corporate earnings have largely beaten analysts’ expectations.
  • More than half of S&P 500 companies have reported results for the fourth quarter, according to FactSet.
  • Analysts project that, by the time the reporting season is over, companies as a whole will have delivered modest earnings growth—showing some stabilization following multiple quarters of falling earnings.

Qualcomm Reports Higher Revenue, Issues Mixed Outlook

  • Chip maker Qualcomm said that the coronavirus outbreak in China poses a potential threat to the mobile phone industry, with a possible impact on manufacturing and sales.
  • Revenue rose 5% to $5.08 billion, beating analysts’ estimates of $4.83 billion.
  • Qualcomm’s licensing arm generated $1.4 billion in sales in the quarter, up 38% from a year ago as Apple resumed royalty payments following their legal settlement.
  • Qualcomm’s chip division’s sales fell 3%.
  • Profit fell 13% to $925 million. Last year included a more than half-billion-dollar tax benefit recorded from U.S. tax law changes.
  • Qualcomm forecast total revenue $4.9 to $5.7 billion for its second quarter, above analysts’ average estimate of $5.08 billion.
  • It forecast revenue for its chip segment of $3.9 billion to $4.5 billion, versus estimates of $3.8 billion.
  • Qualcomm said chip shipments could fall to between 125 and 145 million in the second quarter, from 155 million in the first.
  • Qualcomm left its estimate of the number of 5G mobile handsets that will be sold in 2020 unchanged at between 175 million and 225 million.

IAC misses quarterly revenue estimates

  • IAC/InterActiveCorp reported quarterly revenue just shy of Wall Street estimates on Wednesday, hurt by weakness in the digital media company’s homeservices platform and applications business.
  • The company’s revenue rose about 10% to $1.22 billion, marginally below analysts’ average estimate of $1.23 billion.
  • Revenue at the company’s applications business dropped 23.7% to $116.9 million, missing estimates of $121.9 million.
  • Net income fell to $100.4 million in the fourth quarter, from $191.8 million a year earlier.

Twitter notches first $1 billion quarterly revenue, beating estimates

  • Twitter pulled in $1 billion in quarterly revenue for the first time, beating expectations as efforts to make its platform more user-friendly brought in more people.
  • The company’s quarterly revenue rose 11% from a year earlier to $1.01 billion, also beating the expectation of $996.7 million.
  • Total advertising revenue was $885 million, an increase of 12% year-over-year.
  • Twitter boosted average monetizable daily active users (mDAU) to 152 million in the fourth quarter from 126 million a year earlier, beating the average analyst expectation of 147.5 million.
  • Twitter posted fourth-quarter net income lower than expectations, at $119 million, down from $255 million a year earlier.
  • The company also forecast first-quarter revenue between $825 million and $885 million, largely below the Wall Street estimate of $872.6 million.
  • The company expects first-quarter operating income of between breakeven and $30 million.

Peloton third-quarter revenue forecast lags estimates, shares fall

  • Exercise bike maker Peloton Interactive on Wednesday forecast current-quarter revenue below Wall Street estimates and hinted at slowing sales growth, sending its shares down nearly 8%.
  • Revenue at the exercise-bike company rose to $466.3 million, up 77%. That topped analysts’ consensus by over $40 million.
  • In the second quarter, the company said connected fitness subscribers hit 712,005, up 96%.
  • Peloton reported a net loss of $55.4 million, compared with a $55.1 million loss a year earlier and ahead of expectations.
  • Peloton expects revenue in the current quarter to be between $470 million and $480 million. Analysts’ expected $494 million.
  • Peloton expects between $1.53 billion and $1.55 billion in revenue for the fiscal year. Analysts are expecting $1.49 billion.
  • Peloton said it expects to have between 920,000 and 930,000 connected fitness subscribers for the fiscal year. That is 35,000 more than the company guided for when it reported quarterly results in November.

Coronavirus forces Estee Lauder to trim fiscal 2020 profit forecast

  • Estee Lauder on Thursday cut its profit forecast for fiscal 2020, citing the coronavirus epidemic in China, a key market.
  • Estee Lauder’s quarterly sales of $4.62 billion handily beat expectations of $4.35 billion, driven by strong demand for its skincare brands La Mer and Origin.
  • Net income fell 3% to $557 million, compared to $573 million a year ago.
  • The company now expects adjusted earnings of $5.60 to $5.70 per share, compared with its previous estimate of $5.85 to $5.93. Analysts on average were expecting earnings of $5.94 per share.
  • The company also trimmed the low end of its sales growth forecast to 6% to 8%, compared with its prior range of 7% to 8%.

Coach owner Tapestry cuts profit forecast on coronavirus hit

  • Coach handbag maker Tapestry cut its annual profit forecast on Thursday, citing an up to $250 million hit to sales from the coronavirus outbreak that has forced it to close a majority of its stores in mainland China.
  • Net sales rose to $1.82 billion in the second quarter, from $1.80 billion a year earlier, marginally beating estimates of $1.81 billion.
  • Net income increased to $298.8 million, compared to $254.8 million a year ago.
  • Tapestry cut its fiscal 2020 earnings forecast to about $2.15 to $2.25 per share, compared with its previous outlook of $2.57.
  • Second-half financial results could be hit by about $200 million to $250 million in sales and 35 cents to 45 cents in earnings per share, Chief Executive Officer Jide Zeitlin said.

Kellogg’s Snacks Help Results, but Cereal Sales Weaken

  • Breakfast cereal maker Kellogg on Thursday reported a 2.8% decline in fourth-quarter sales, hurt by the sale of its Keebler cookie business and other assets to Nutella maker Ferrero.
  • Kellogg said reported net sales fell to $3.22 billion in the quarter from $3.32 billion a year earlier.
  • On a comparable basis, sales rose about 3% from a year earlier in the quarter and more than 1% in the U.S. and Canada, the company’s largest market.
  • The company reported a profit of $145 million for the quarter, compared with a loss of $84 million a year earlier.
  • Kellogg forecast a 1% to 2% increase in comparable sales for 2020.
  • It also said earnings per share, following adjustments, are expected to decline up to 4% in the year, as the absence of divested businesses offsets growth.

Yum Brands misses same-store sales, profit estimates as Pizza Hut battles rivals

  • Yum Brands reported quarterly same-store sales and profit that missed market expectations on Thursday, as sales at its Pizza Hut chain in the United States were hurt by stiff competition.
  • Total revenue rose 8.7% to $1.69 billion, above the estimate of $1.66 billion.
  • Overall, sales at Yum’s restaurants open at least a year climbed 2%, below the Wall Street estimate of 2.26%.
  • Sales grew 4% at established Taco Bell restaurants and 3% at KFC, both beating estimates.
  • Comparable sales at Pizza Hut fell 2% in the fourth quarter, worse than analysts’ expectations for a 0.71% drop.
  • Sales were down 4% in the United States, Yum said.
  • Net income rose to $488 million in the fourth quarter, from $334 million a year earlier.

Tyson Foods quarterly sales miss estimates on lower beef shipments

  • Tyson Foods missed analysts’ estimates for quarterly sales, hurt by lower shipments of beef products due to a fire at its Kansas plant in August.
  • Sales rose 6.1% to $10.82 billion, but fell short of analysts’ estimates of $11.04 billion.
  • The company reported beef sales slipped 2% on weaker volumes. Sales of chicken increased 6%.
  • Net income rose to $557 million in the quarter, from $551 million a year earlier.

More diners, restaurants help GrubHub beat revenue estimates

  • GrubHub topped Wall Street revenue estimates on Wednesday, adding more restaurants to its online food delivery platform and luring more diners as it predicted continued growth for 2020.
  • Revenue rose 19% to $341.3 million, above analysts’ average estimate of $325.3 million.
  • GrubHub said it had 22.6 million active diners in the quarter, above analysts’ average estimate of 22.2 million.
  • GrubHub reported a $4.2 million loss in the fourth quarter of 2019, compared with a $17.6 million profit for the same quarter the prior year.
  • GrubHub forecast full-year 2020 revenue between $1.4 billion and $1.5 billion and said it will generate $100 million of earnings.

GoPro holiday quarter revenue, profit misses estimates, shares slide

  • Wearable device maker GoPro missed quarterly revenue and profit estimates for its all-important holiday quarter, sending shares down 13% in extended trade on Wednesday.
  • Fourth-quarter revenue, which rose 40% to $528.3 million, fell short of analysts’ average estimate of $565.9 million.
  • Net income rose to $95.8 million in the quarter, from $31.7 million a year earlier.

 

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US ECONOMY & POLITICS

China to Cut Tariffs on $75 Billion of U.S. Goods

  • China said it would slash tariffs on $75 billion of U.S. imports in half as part of its efforts to implement a recently signed trade agreement with Washington.
  • Beginning Feb. 14, China will cut tariffs on some U.S. goods to 5% from 10%, while levies on some other items will be reduced to 2.5% from 5%, China’s Ministry of Finance said Thursday.
  • The tariffs were imposed in September and December during a brutal trade fight between the world’s two largest economies.

U.S. productivity rebounds in fourth quarter; labor costs growth slows

  • U.S. worker productivity rebounded in the fourth quarter, keeping labor costs in check.
  • The Labor Department said on Thursday nonfarm productivity, which measures hourly output per worker, increased at a 1.4% annualized rate last quarter.
  • Economists polled by Reuters had forecast productivity rebounding at a 1.6% rate in the fourth quarter.
  • Compared to the fourth quarter of 2018, productivity increased at a 1.8% rate.
  • It accelerated 1.7% in 2019, the strongest since 2010, after increasing 1.3% in 2018.
  • Compared to the fourth quarter of 2018, labor costs grew at a 2.4% rate.

Senate Acquits Trump on Both Impeachment Articles

  • The Republican-led Senate acquitted President Trump of charges stemming from his efforts to press Ukraine to announce investigations that would benefit him politically, bringing to a close a bruising four-month battle fought almost entirely along party lines.
  • Given the GOP’s 53-47 majority in the Senate and the Constitution’s requirement that two-thirds of the Senate is required to convict, Mr. Trump’s chance of acquittal was always strong.
  • Mr. Trump now becomes the first president to run for re-election after having been impeached.
  • Mr. Trump was denied a unanimous not guilty verdict from Republican senators when Mitt Romney of Utah voted to convict on the first article of impeachment.

Bernie Sanders Raised $25 Million in January

  • Bernie Sanders raised $25 million in January for his campaign for president, bringing his total fundraising to more than $121 million since he entered the race last February, his campaign said.
  • January was the campaign’s best fundraising month, with more than 1.3 million donations from more than 648,000 people.
  • Of those, more than 219,000 people were new donors.
  • The January haul makes Mr. Sanders the first Democratic candidate this cycle to bring in more than $100 million in contributions from supporters.
  • More than 63% of the $95.9 million Mr. Sanders raised last year came from contributors who have given less than $200 to his campaign overall.
  • The Sanders campaign said it would increase staffing and spend $5.5 million in TV and digital advertisements in Arkansas, Colorado, Massachusetts, Minnesota, North Carolina, South Carolina, Tennessee and Utah, and add to investments already made in California and Texas.

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EUROPE & WORLD

Toyota lifts profit outlook, mulls alternatives to China-made parts amid virus outbreak

  • Toyota nudged up its annual operating profit forecast by 4.2% on favorable currency rates and better-than-expected sales, but added the impact of the new coronavirus was hard to gauge and had not yet been factored in.
  • Sales in Asia tumbled 12.5% with demand slow in Indonesia and Thailand, while sales in North America slipped 1.8%.
  • Third-quarter profit declined 3.2% to 654.4 billion yen as the yen trended higher than expected during the period and due to softer vehicle sales, though the result was slightly higher than market expectations.
  • Toyota expects to sell 10.73 million vehicles this year, slightly higher than a previous forecast for 10.7 million.
  • Japan’s biggest automaker said it now expects operating profit for the year to end-March to climb to 2.5 trillion yen ($22.7 billion), up from 2.47 trillion yen a year earlier and in line with market estimates.
  • Toyota has said it plans to resume production on Feb. 10 although this could change if the situation worsens.

ArcelorMittal forecast of steel pick-up, debt drop lifts shares

  • ArcelorMittal, the world’s largest steelmaker, forecast increased demand and a drop in its debt levels this year after earnings beat forecasts at the end of 2019, lifting its shares.
  • The company said fourth-quarter core profit (EBITDA), the figure most watched by the market, was $925 million, compared with the average forecast of $858 million in a company poll.
  • Net debt fell to $9.3 billion at the end of 2019, the lowest level since the company was formed in 2006.
  • ArcelorMittal said global steel consumption would grow in 2020 by 1-2% after an expansion of 1.1% in 2019.
  • In the United States, steel consumption would be up to 1% higher than in 2019, when it dropped 1.7%, while in Europe, consumption would grow by between 1% and 2% after a 4.3% slump last year, although the automotive sector would remain weak.

5G Picks Up but Nokia Sees Stagnant Growth in Telecom-Gear Sales

  • Nokia reported a rise in fourth-quarter profit but warned of flat demand for telecom equipment and rising competition for 5G deals in the year ahead.
  • Group sales were flat at 6.9 billion euros as declines in China and North America were balanced by growth in Asia-Pacific, a region where Nokia flagged new challenges.
  • Sales in the Greater China region dropped by 25% in the fourth quarter to 469 million euros.
  • For the fourth quarter, Nokia reported an 11% rise in net profit to €821 million ($903.1 million).
  • Nokia also repeated its forecast for 2020 underlying earnings per share of between 0.20 and 0.30 euros, compared to 0.22 euros in 2019.

Fiat Chrysler’s Profit Rises as North American Business Booms

  • Fiat Chrysler Automobiles reported an increase in fourth-quarter profit as its North American business boomed, offsetting weakness in its markets in the rest of the world and as it faces a tough year for new vehicle sales in the U.S.
  • Revenue inched up 1% to €29.64 billion.
  • Adjusted operating profit rose 16% to €2.12 billion ($2.34 billion) in the October to December period.
  • The company’s net profit rose 35% in the quarter to €1.58 billion.
  • Fiat Chrysler confirmed its full-year guidance for operating profit at more than €7 billion.

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TODAY in HISTORY

  • The Spanish-American War ended when a peace treaty between Spain and the United States was signed. (1899)

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