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U.S. Stocks Slip, Paring Week’s Gains

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US FINANCIAL MARKET | US ECONOMY & POLITICS
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US FINANCIAL MARKET

U.S. Stocks Slip, Paring Week’s Gains

  • Wall Street pulled back from record levels on Friday, as investors assessed the U.S. employment report that showed jobs growth accelerated in January but included a downward revision to some previous numbers.
  • Nonfarm payrolls increased by 225,000 jobs last month, the Labor Department’s data showed, much higher than 160,000 jobs additions expected by economists polled by Reuters.
  • However, the economy created 514,000 fewer jobs between April 2018 and March 2019 than originally estimated, suggesting job growth could significantly slowdown this year.
  • More than 300 S&P 500 companies have reported fourth-quarter results so far, of which about 70% have topped earnings estimates.
  • Uber Technologies shares gained about 5.7% after the ride-hailing company moved forward by a year its target to achieve a measure of profitability to the fourth quarter of 2020.
  • Take-Two Interactive Software slumped 10.6% after the videogame publisher missed estimates for quarterly adjusted revenue.
  • Among European equities, Nokia and Ericsson were some of the best-performing stocks after Attorney General William Barr floated the idea that the U.S. could take financial interests in either of the companies, to counter the influence of China’s Huawei.

Uber sees profit by end of 2020, ahead of previous target

  • Uber on Thursday moved forward by a year its target to achieve profitability on an adjusted basis to the fourth quarter of 2020, sending its shares up 5% in after-hours trading.
  • Revenue climbed 37% to $4.07 billion, fueled by rapid growth in new business offerings and premium rides to consumers.
  • Gross bookings, a measure of total value of rides before driver costs and other expenses, rose 28% to $18.13 billion from a year earlier, compared with estimates of $18.03 billion.
  • The company said its monthly active users rose to 111 million globally, also in line with estimates of 110.78 million.
  • The net loss for the period widened to $1.1 billion, bringing losses for the full year to $8.5 billion, but came in lower than expected.
  • The company on Thursday said it still expected an adjusted EBITDA loss of $1.25 billion to $1.45 billion for the full year of 2020.

AbbVie leans on new treatments to forecast upbeat 2020 profit

  • AbbVie on Friday forecast 2020 earnings above Wall Street estimates as the drugmaker expects growth to be powered by its new treatments for psoriasis and rheumatoid arthritis at a time when sales of its blockbuster drug Humira slow.
  • Net revenue rose 4.8% to $8.70 billion, marginally higher than average analysts’ estimate of $8.69 billion.
  • Sales of Humira were largely unchanged compared with a year earlier at $4.92 billion. But beat expectations of $4.85 billion.
  • In the fourth quarter, Skyrizi brought in sales of $216 million, topping estimates of $142 million.
  • Rinvoq, which was approved in August, brought in sales of $33 million.
  • AbbVie reported net profit of $2.80 billion, compared with a loss of $1.83 billion a year earlier when it recorded $4.12 billion in impairment charges.
  • The drugmaker expects the two treatments, Skyrizi and Rinvoq, to bring in a combined revenue of about $1.70 billion in 2020.
  • The company forecast 2020 adjusted earnings of between $9.61 and $9.71 per share, ahead of the average analysts’ estimate of $9.48.

T-Mobile beats quarterly estimates as Sprint merger decision looms

  • T-Mobile beat analysts’ estimates for quarterly revenue and profit on Thursday, as the wireless carrier added more mobile phone subscribers to its monthly plans, some of which come bundled with Netflix service.
  • Revenue rose to $11.88 billion from $11.45 billion, edging past analysts’ average estimate of $11.83 billion.
  • T-Mobile added 1 million net new phone subscribers in the fourth quarter, in line with analysts’ estimates.
  • The company posted $751 million of net income in the fourth quarter, up from $640 million a year earlier.
  • T-Mobile said it expects to add between 2.6 million to 3.6 million branded postpaid net additions in 2020, even without the merger with Sprint.

Take-Two drops nearly 10% on quarterly adjusted revenue miss

  • Take-Two Interactive Software fell nearly 10% after the bell on Thursday, as the videogame publisher missed estimates for quarterly adjusted revenue amid competition from big-budget titles from rivals Activision Blizzard and Electronic Arts.
  • On an adjusted basis, Take-Two’s revenue of $888.2 million for the third quarter missed estimates of $922.1 million.
  • Take-Two’s net income fell to $163.6 million, from $179.9 million a year earlier.
  • The company narrowed its full-year forecast range to $2.80 million to $2.85 billion from $2.75 million to $2.85 billion, the midpoint of which is below analysts’ average estimate of $2.85 billion.

‘Call of Duty’ drives Activision’s quarterly beat, overshadows lower forecast

  • Video game publisher Activision Blizzard topped Wall Street estimates for quarterly adjusted revenue on Thursday, riding on the success of its blockbuster title “Call of Duty: Modern Warfare”.
  • Total adjusted revenue came in at $2.71 billion for the fourth quarter, beating the analysts’ average estimate of $2.68 billion.
  • Net income fell to $525 million, from $685 million a year earlier.
  • The company gave a conservative full-year adjusted revenue forecast of $6.73 billion, below estimates of $6.92 billion.

Pinterest beats revenue, user add estimates; shares rise

  • Pinterest beat analysts’ estimates for fourth-quarter revenue on Thursday, as it added more monthly active users and earned higher revenue per user, sending its share up 9% in extended trading.
  • Total revenue surged 46% to $400 million, topping estimate of $371.2 million.
  • Monthly active users jumped 26% to 335 million globally, above expectation of 331.3 million.
  • Pinterest posted on average revenue of $1.22 per user globally in the fourth quarter, beating analysts’ expectation of $1.14.
  • The company reported a net loss of $35.7 million, or 6 cents per share.
  • The company said it expects revenue to reach about $1.52 billion in 2020, ahead of analysts’ projected $1.47 billion.

N.J. Jury Orders J&J to Pay $750 Million in Punitive Damages in Latest Baby Powder Verdict

  • A New Jersey state jury on Thursday ordered Johnson & Johnson to pay $750 million in punitive damages to four people who said their use of the company’s talcum powders caused a rare cancer, the latest legal loss for the health-care giant.
  • The judge presiding over the trial, citing state law, said she planned to reduce the punitive award to $186.5 million, or about five times the $37.3 million in compensatory damages awarded by a separate jury in the first phase of the case last year.
  • The jury voted Thursday that J&J’s conduct caused harm to the plaintiffs, who got mesothelioma, a cancer of the lining of the lungs, and that the conduct was either malicious or in wanton and willful disregard of their rights.
  • The trial was notable because it was the first in which J&J Chief Executive Alex Gorsky testified in a courtroom in litigation over the safety of Johnson’s Baby Powder and another talc-containing powder that J&J used to market, Shower to Shower.

Ford Names New Chief Operating Officer in Leadership Shake-Up

  • Ford said it has appointed strategy chief Jim Farley as its chief operating officer, who will be taking over broader responsibilities from retiring president of automotive Joe Hinrichs.
  • The move comes three days after Ford missed fourth-quarter earnings targets and issued disappointing profit guidance for 2020.
  • Ford cited problematic launches of key models, including a redesigned Explorer sport-utility vehicle, as a factor for weak results in the second half of last year.

 

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US ECONOMY & POLITICS

U.S. Economy Added 225,000 Jobs in January

  • Employers added 225,000 jobs in January and the jobless rate was 3.6%, signs that the U.S. labor market is positioned to fuel economic growth in 2020.
  • Wages increased 3.1% from a year earlier, a touch higher than December’s annual rise of 3%.
  • Economists had forecast job growth of 158,000, an unemployment rate of 3.5% and year-over-year wage growth of 3.0%.
  • The share of Americans working or looking for work ticked up in January to 63.4% from 63.2% 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, increased to 6.9% from 6.7% in December, which was the lowest since the series started in 1994.
  • Data for November and December was revised to show 7,000 more jobs created than previously reported.
  • However, the economy created 514,000 fewer jobs between April 2018 and March 2019 than originally estimated, suggesting job growth could significantly slowdown this year.

Trump’s NASA Budget Will Earmark 12% Boost for Agency in 2021

  • President Trump will propose a 12% boost to NASA’s 2021 budget, with most of the increase aimed at fulfilling his goal of returning U.S. astronauts to the moon’s surface by 2024, according to administration officials.
  • The increase includes nearly $3 billion in new funding to develop human landers, these officials said, with total agency outlays projected to climb to more than $25.2 billion in one of the largest overall spending increases requested for the National Aeronautics and Space Administration since the 1990s.
  • Expected to be highlighted as part of the budget package set for release next week, the numbers indicate Mr. Trump is doubling down on oft-repeated pledges to have industry-government partnerships transport NASA back to the moon by 2024.
  • House Democrats, however, are balking at the administration’s plans for accelerated lunar landings and, a few years later, moon bases. More money and energy, they contend, ought to be directed toward technological advances needed for Mars exploration.

DNC Head Calls for Iowa Caucus Recanvass, AP Unable to Call Contest

  • Democratic National Committee Chairman Tom Perez called for a recanvass of results of the party’s Iowa caucuses on Thursday while the Associated Press said it was unable to declare a winner, two blows to a state at risk of losing its status as the host of the first presidential nominating contest every four years.
  • Mr. Perez’s public call for an audit of the paper trail from each of more than 1,700 precincts drew renewed attention to the technical glitches and other problems that have delayed the declaration of a winner for three days.
  • Those irregularities, which also factored into the AP’s decision, cast doubt on the final tallies released by the state party late Thursday.
  • The party’s count showed Pete Buttigieg, the 38-year-old former mayor of South Bend, Ind., with a razor-thin edge over Vermont Sen. Bernie Sanders in the share of delegates. But Mr. Sanders was ahead in the popular vote.
  • With 100% of precincts reporting, Mr. Buttigieg’s total for state delegate equivalents, the state and national parties’ preferred metric, was 564, while Mr. Sanders had 562.
  • The two leading candidates were separated by less than a 10th of a percentage point, so even slight counting errors could affect the outcome.

FCC Moves to Free Up Spectrum for Potential Cellphone Service

  • The Federal Communications Commission will pay a group of satellite companies billions of dollars to upend their operations so a valuable swath of the radio spectrum can be used for cellphone service, FCC Chairman Ajit Pai said.
  • The telecom regulator said he plans to propose $3 billion to $5 billion of compensation for reasonable relocation costs and another $9.7 billion of accelerated payments to incumbent operators in the C-Band section of the electromagnetic spectrum.
  • A spokesman for the C-Band Alliance, a trade group representing the major satellite companies, said the consortium was pleased with Mr. Pai’s statement..

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EUROPE & WORLD

Honda raises profit forecast, sticks to Wuhan plant schedule

  • Honda raised its forecast for full-year operating profit by 6% on Friday as a weaker yen increased the value of its overseas sales.
  • The company posted operating income of 166.6 billion yen for the October-December period, compared with 170.1 billion yen a year ago and an average forecast of 149.5 billion yen from nine analysts surveyed.
  • Honda raised its operating income forecast to 730 billion yen ($6.6 billion) for the year to March 31 from a previous estimate of 690 billion yen.
  • Honda raised its estimate slightly for global group auto sales in the current fiscal year by 5,000 units to 4,980,000 vehicles.

SAAB reports fourth-quarter profit fall, strong cashflow

  • Swedish defense company Saab reported a fall in fourth-quarter operating profit on Friday but said cashflow had been strong.
  • The company said operating profit fell to 1.20 billion Swedish crowns ($125 million) from 1.42 billion a year earlier, lower than the 1.34 billion expected on average.
  • Saab had a positive operating cashflow of 3.06 billion Swedish crowns ($318 million), up from 2.77 billion a year earlier.
  • The company reiterated its long-term financial targets for annual organic growth of 5% and an operating margin of 10% per year over a business cycle.

Nokia, Ericsson Shares Rise After U.S. Floats Investment Idea to Counter Huawei

  • Shares in Ericsson AB and Nokia Corp. rose Friday after the Trump administration floated the idea that the U.S. could buy a stake in either of the telecom-equipment manufacturers—a sign that investors at least are taking the gambit seriously.
  • U.S. Attorney General William Barr told an audience in Washington the U.S. and its allies should consider taking a controlling financial interest in the two Nordic companies, as a way of countering the dominance of China’s Huawei in the market for 5G.
  • The suggestion from Mr. Barr represents one of the Trump administration’s most aggressive proposals yet for pushing back against Shenzhen-based Huawei.

Huawei Sues Verizon in U.S. Over Patents

  • Huawei Technologies is suing U.S. carrier Verizon to demand it pay fees for the use of a dozen patents in its networks, escalating a long-simmering dispute between the two telecom giants.
  • Huawei’s lawsuits, filed in two federal district courts in Texas, argue that Verizon should pay the Chinese company for its use of a variety of telecommunications technologies patented by the Shenzhen-based company.
  • Huawei’s move is likely to further inflame tensions between the Chinese company and Washington, which for years has blocked Huawei from selling its products in the U.S. and has been lobbying allies against using its equipment in their 5G network rollouts.

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TODAY in HISTORY

  • The Beatles arrived in the U.S. for the first time. (1964)

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