DAILY MARKET REPORTS
- Falling shares of Walgreens Boots Alliance pulled the Dow Jones Industrial Average lower Tuesday after the drugstore chain slashed its profit expectations, rekindling investors’ fears of economic turbulence.
- Walgreens tumbled after the drugstore chain said it faced its most difficult quarter since its 2014 acquisition of Alliance Boots.
- The retailer fell short of analysts’ profit expectations for the latest quarter and warned that challenging economic conditions, including falling generic drug prices, will weigh on earnings throughout the year.
- Investors worry Walgreens could be the beginning of a rough earnings quarter.
- S&P 500 companies are projected to report a 4% profit contraction from a year earlier, the broad index’s first quarter of negative earnings growth since 2016.
- Economic data releases will likely remain in focus this week, with U.S. durable goods orders coming in above expectations and U.S. nonfarm payroll data due Friday.
- European producer-price index numbers, released earlier Tuesday, slightly undershot market expectations.
US FINANCIAL MARKET
Walgreens Cuts Earnings Guidance After Second-Quarter Profit Falls 14%
- Walgreens Boots Alliance cut its earnings expectations for the fiscal year after the drugstore chain said it faced its most difficult quarter since the merger of Alliance Boots and Walgreens.
- Revenue rose 4.6% to $34.53 billion, but was shy of the average estimate of $34.56 billion.
- Same-store pharmacy sales increased 1.9%, while comparable retail sales were down 3.8%.
- The company said its profit fell to 14% to $1.16 billion in the most recent quarter, missing estimates.
- The company reduced its adjusted earnings growth forecast for fiscal 2019 from a range of 7% to 12% growth to roughly flat, at constant currency rates.
Delta Air Lines expects first-quarter profit above Wall Street estimates
- Delta Air Lines said it expects first-quarter profit between $0.85 and $0.95 per share, above estimates of $0.80 per share.
- The airline said it expects operating revenue for the first-quarter to rise about 7%, compared with the 4% to 6% it forecast earlier.
Trade slowed in fourth quarter, WTO says; auto tariffs, Brexit are 2019 risks
- World trade shrank by 0.3% in the fourth quarter of 2018 and is likely to grow by 2.6% this year, slower than 3.0% growth in 2018 and below a previous forecast of 3.7%, the World Trade Organization said on Tuesday.
- In its annual forecast, the WTO said trade had been weighed down by new tariffs and retaliatory measures, weaker economic growth, volatility in financial markets and tighter monetary conditions in developed countries.
- WTO chief economist Robert Koopman said worse may be to come, with an even bigger impact if U.S. President Donald Trump goes ahead with a plan to impose high tariffs on global imports of cars later this year.
- The WTO did not make a specific prediction about the impact of Brexit, but Koopman said in the worst case it would help push global trade growth down to the bottom end of the WTO’s forecast range in 2019, 1.3 to 4.0%.
Toyota, Fiat Chrysler U.S. auto sales fall in March
- Toyota reported a 3.5% fall in U.S. sales in March, hurt by declining demand for its Corolla sedans and Camry vehicles.
- The Japanese carmaker said it sold 214,947 vehicles, compared with 222,787 in March, a year earlier.
- Fiat Chrysler reported a 7.3% fall in U.S. sales in March, hit by a fall in sales across all of its major brands except RAM trucks.
- FCA, the No. 4 automaker in the United States said it sold 200,307 vehicles in March, compared with 216,063, a year earlier.
Amazon Cuts More Prices at Whole Foods
- Amazon is planning to cut prices on hundreds of items at Whole Foods stores this week, as the e-commerce giant seeks to change the chain’s high-cost image amid intense competition among grocers.
- The latest cuts—which are set to drop at Whole Foods stores on Wednesday—are some of the broadest since Amazon bought the grocer for nearly $14 billion in 2017.
- Prices will be reduced by an average of 20%, affecting more than 500 products and include a focus on produce and meat.
Slack Chooses NYSE for Direct Listing
- Slack Technologies has selected the New York Stock Exchange for the direct listing of its shares, the second time a major company has picked the exchange to host its unorthodox initial public offering.
- Slack is still in communication with the Securities and Exchange Commission over details on how the deal will work and isn’t expected to go public until June or July.
- Slack operates an app used for group communication and, as of earlier this year, had more than 10 million daily active users and 85,000 paid customers.
Pentagon Suspends F-35 Fighter Jet Deal With Turkey
- The U.S. is suspending delivery of support equipment and supplies to Turkey for F-35 jet fighters because of Ankara’s pursuit of a Russian antiaircraft system over repeated U.S. objections, the Pentagon announced Monday.
- Turkey received its first Lockheed Martin F-35 plane last June, and for the U.S. defense industry—Turkey’s biggest arms supplier—the announcement could spell a major cutback in sales to a major customer.
- Turkey is one of the largest F-35 export customers, third behind only the United Kingdom and Japan.
- Sales to Turkey potentially are worth more than $8 billion, excluding weapons and follow-on maintenance.
WhatsApp Adds Tip Line to Fight Misinformation in India
- Facebook’s WhatsApp took a step to stop the spread of suspect viral content ahead of India’s national elections, launching a tip line there that enables users to point out dubious information for debunking.
- In a first-of-its-kind effort for the messaging app, WhatsApp said Tuesday that it has partnered with an Indian startup called Proto to create a system in which users can forward suspicious messages they have received to an automated account.
- The account, called Checkpoint, will respond with an indication of whether the information is true, false, misleading, disputed, or “out of scope,” WhatsApp said in a statement.
Air Canada removes Boeing’s 737 MAX from schedule until July
- Air Canada said it has removed Boeing’s 737 MAX planes from flight schedules until July 1, citing uncertainty about when the aircraft would be allowed to return to service.
- The carrier said due to Transport Canada’s continued closure of Canadian airspace to the aircraft, it has further adjusted its schedule to May 31.
Shell to quit U.S. refining lobby over climate disagreement
- Royal Dutch Shell on Tuesday became the first major oil and gas company to announce plans to leave a leading U.S. refining lobby due to disagreement on climate policies.
- In its first review of its association with 19 key industry groups, the company said it had found “material misalignment” over climate policy with the American Fuel & Petrochemical Manufacturers (AFPM) and would quit the body in 2020.
- The review is part of Shell’s drive to increase transparency and show investors it is in line with the 2015 Paris climate agreement’s goals to limit global warming by reducing carbon emissions to a net zero by the end of the century.
US ECONOMY & POLITICS
U.S. Durable-Goods Orders Fell 1.6% in February
- Orders for long-lasting factory goods fell in February after three straight months of growth due to a sharp decline in civilian aircraft orders, although the overall drop was smaller than expected.
- Orders for durable goods—products designed to last at least three years, such as computers and machinery—sank 1.6% in February from January to a seasonally adjusted $250.58 billion, the Commerce Department said Tuesday.
- Economists surveyed by The Wall Street Journal had expected a 2.1% decline for the month.
- A closely watched proxy for business investment, new orders for nondefense capital goods excluding aircraft, declined 0.1% in February after rising a revised 0.9% in January, according to Tuesday’s data.
Top House Democrat cites labor, enforcement concerns on new NAFTA
- U.S. House Speaker Nancy Pelosi said on Tuesday lawmakers could not take up the replacement for the North American Free Trade Agreement unless Mexico passes legislation protecting workers’ rights.
- Pelosi also cited concerns over enforcement provisions for the new U.S.-Mexico-Canada Agreement (USMCA).
- The new trade deal has received a cool reception in the Democratic-controlled House of Representatives because of its provisions on labor, biologic drugs and other matters.
- Democratic lawmakers say the deal must ensure workers in Mexico have the right to organize, a step that would require new Mexican labor laws. They believe a major weakness of NAFTA was that it allowed Mexican wages to stagnate.
Trump Sees No Vote on GOP Health Plan Until After 2020 Election
- President Trump said any vote on a Republican health plan would take place after the 2020 election, moving to put off action on legislation amid uncertainty about what a GOP replacement for the Affordable Care Act would look like.
- Mr. Trump has been reaching out to Republican lawmakers to take the lead on crafting a health plan to replace the ACA
- Senate Republicans, meanwhile, want the administration to develop a plan while they remain on politically safer ground, working on popular voter issues such as lowering drug prices and ending surprise medical bills.
- Although some GOP senators began discussions over various health-care bills, they don’t expect to reach a consensus or vote on any major health-care overhaul before the 2020 election, according to lawmakers and aides.
New York’s Congestion-Pricing System Will Serve as Road Test for Other Cities
- New York City is set to become the first big city in the country to put in place a charge on vehicles entering its most congested streets, and it took a booming economy, grinding traffic and a subway crisis to seal the deal.
- Drivers will pay a fee to enter a zone in Manhattan’s business district with the expectation it will reduce gridlock while raising billions of dollars needed to restore the city’s struggling mass transit system.
- The congestion fee will be set by a panel to be established by the state-controlled Metropolitan Transportation Authority, which runs New York’s subway, buses and commuter rail.
EUROPE & WORLD
U.K. Lawmakers Again Fail to Plot Brexit Course
- The House of Commons failed for a second time to find a majority for any alternative to the deal Theresa May negotiated with the European Union, deepening the uncertainty over Brexit less than two weeks before Britain is scheduled to leave the bloc.
- In four votes called in a bid to break the deadlock, two proposals aimed at keeping the U.K. economy close to the EU after Brexit—and one calling for another referendum on any Brexit deal—all gathered more support than they had before.
- A plan for the U.K. to stay in the EU’s customs union failed by just three votes, compared with eight when the same option was put to lawmakers last week.
- Another option to stay in both the EU’s single market and its customs union lost by 21 votes, compared with 95 last week.
- None of the proposals, however, got as many votes as the 286 Mrs. May’s deal did last week as it was rejected for a third time.
Chinese tech giant Tencent plans $5 billion dollar bond sale: sources
- Chinese social media and gaming giant Tencent is planning to raise about $5 billion in U.S. dollar-denominated bonds this week.
- Chinese property developer Evergrande sold $2.8 billion in bonds in January, currently Asia’s biggest issue.
- Tencent last tapped the bond market in January last year, in which it raised $5 billion. It plans to launch on Wednesday.
Indian Shares Hit Record as Foreigners Bet on More Modinomics
- A widely followed Indian stock index advanced to a record Tuesday, extending a rally fueled by foreign cash.
- The S&P BSE Sensex gained 0.5% to end at 39056.65, breaking through its previous closing high, hit in August. Just a month ago, the benchmark stood as one of the region’s worst performers of 2019.
- Investors have become more confident that Prime Minister Narendra Modi’s ruling coalition will retain power in elections that start later this month, according to market participants.
- That has lifted local markets in recent weeks, alongside projections for strong earnings growth, especially in the financial sector.
TODAY in HISTORY
- President Woodrow Wilson asked Congress to declare war against Germany. (1917)
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