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DAILY MARKET REPORTS

  • U.S. stocks dipped on Friday, as technology shares took a hit from Intel’s disappointing quarterly report, while investors assessed data that showed domestic growth was boosted by temporary factors in the first quarter.
  • The Commerce Department said gross domestic product (GDP) increased at a 3.2% annualized rate, lifted by trade and the largest accumulation of unsold goods since 2015, factors that are likely to reverse in the coming quarters.
  • However, consumer and business spending slowed sharply, and investment in homebuilding contracted for a fifth straight quarter, giving the report a weak tone.
  • Wall Street now expects earnings to be in line with the year-ago quarter, a sharp improvement from the 2.3% fall expected at the start of April.
  • Nearly 78% of the 178 S&P 500 companies that have reported so far have surpassed earnings estimates.
  • Intel slumped 9.4% after it cut its full-year revenue forecast and missed quarterly sales estimate for its key data center business.
  • Amazon.com, rose 0.3% after the e-commerce giant reported quarterly profit that doubled and beat estimates on soaring demand for its cloud and ad services.
  • Offering support to markets was Ford, whose shares surged 8.8% after the automaker posted better-than-expected quarterly earnings largely due to strong pickup truck sales in its core U.S. market.

US FINANCIAL MARKET

Amazon’s Profit More Than Doubles on 17% Rise in Sales

  • Amazon plans to deliver packages to members of its loyalty club Prime in just one day, instead of two days, part of a spending ramp-up that may curb near-term profits and will up the ante for retail rivals such as Walmart.
  • Revenue rose 17% to $59.7 billion.
  • Its biggest and brightest cash cow—the cloud-computing arm called Amazon Web Services (AWS)—continues to churn out profits. Sales rose 41% to $7.7 billion, while operating income jumped 59% to $2.22 billion.
  • Revenue for its “other” category—which is primarily derived from advertising—rose 34% to $2.72 billion in the first quarter after nearly doubling year-over-year in the prior quarter.
  • While revenue growth slowed, profit surged to $3.6 billion in the first quarter, beating analysts’ expectations of $2.4 billion.
  • For the current quarter, Amazon projected revenue of between $59.5 billion and $63.5 billion—or 13%-to-20% growth from a year earlier; analysts project on average $62.4 billion in revenue.
  • The company expects between $2.6 billion and $3.6 billion in operating income for the second quarter, compared with a year-earlier $3 billion and analysts’ consensus estimate of $3.11 billion.

Intel Trims Financial Forecast on Weaker Demand from Cloud, China

  • Chipmaker Intel on Thursday cut its full-year revenue forecast and missed analysts’ estimates for first-quarter sales for the data center business that has driven growth as PC sales declined in recent years, sending its shares down as much as 7.5%.
  • Overall first-quarter revenue was flat compared with the year earlier at $16.06 billion although marginally ahead of estimates.
  • Sales in the data center group unit fell 6.3% to $4.9 billion, hit by weakness in China as customers worked through stockpile of chips purchased last year. Analysts had expected revenue of $5.1 billion.
  • For the first quarter, net income fell to $3.97 billion, from $4.45 billion a year earlier.
  • The chipmaker estimated profit of 89 cents per share on revenue of $15.6 billion for its second quarter that ends in June, compared with analysts’ expectation of $1.01 per share on $16.85 billion.
  • Intel cut its 2019 revenue forecast to $69 billion, from the $71.5 billion it told investors to expect when it last reported earnings.

Ford’s Profit Beats Estimates on Stout Truck, SUV Sales

  • Ford Motor’s first-quarter operating profit rose 12%, as the auto maker shored up overseas losses and notched sharp gains from the strength of its pickup-truck and sport-utility lineup in the U.S.
  • Revenue fell 4% to $40.3 billion, hurt by lower vehicle sales globally.
  • The company’s decision to kill off most of its unprofitable passenger cars in the U.S. market meant that its revenue rose 2% despite a 14% drop in wholesale unit sales.
  • Net income fell 34%, to $1.15 billion, which included $592 million in one-time losses, mostly related to the closure of operations in Europe and South America, the initial phase of a multiyear, $11 billion restructuring to fix its overseas business.

New coffees, delivery push fuel Starbucks quarterly sales, profit view

  • Starbucks raised its full-year profit forecast and beat Wall Street estimates for quarterly same-store sales, as its new Cloud Macchiato, Matcha tea and cold brews in the United States and speedy delivery network in China drew more customers.
  • Total net revenue rose 4.5% to $6.31 billion, but was slightly below the estimate of $6.32 billion.
  • Its new drinks and a refreshed lunch menu focused on improving customer traffic during the lean afternoon hours boosted same-store sales by 4% at established U.S. cafes. Analysts were expecting sales growth of 3.58%.
  • Net income rose to $663.2 million in the second-quarter, from $660.1 million a year earlier.
  • Starbucks also raised its adjusted profit forecast for the year to between $2.75 and $2.79 per share from its previous outlook of between $2.68 and $2.73 per share. Analysts on average were expecting $2.71 per share.

Uber Outlines First-Quarter Results After Cutting Valuation Target

  • Uber Technologies moved its target valuation lower, setting a range of about $80.5 billion to $91.5 billion for its initial public offering, and gave hungry investors a look at its first-quarter financials.
  • The ride-hailing giant set a price range for its stock of between $44 and $50 apiece in a filing Friday morning, the first time it has revealed the expected price for its stock publicly.
  • Total revenue ranged from $3.04 billion to $3.1 billion, growth of roughly 20% from the year-earlier quarter and less than 5% from the prior quarter.
  • Ride-sharing gross bookings ranged from $11.28 billion to $11.45 billion, growth of roughly 20% from a year earlier.
  • The first-quarter net loss ranged from $1 billion to $1.11 billion, compared with a loss of $890 million in the fourth quarter.
  • The filing also said PayPal would make a roughly $500 million investment in Uber.

American Lowers Outlook on Flight Groundings, Higher Fuel Prices

  • American Airlines said the grounding of its Boeing 737 MAX jets and higher fuel prices will weigh on its profits this year, the latest carrier to report a financial hit following two deadly crashes of the jetliner.
  • Revenue per available seat mile, a closely watched industry metric, rose 0.5% from a year ago, while total operating revenue increased 1.8% to $10.58 billion. Analysts expected revenue of $10.6 billion.
  • In the latest period, American reported a profit of $185 million, up from $159 million a year earlier.
  • Shares in American fell 3.6% in premarket trading on Friday after American said it expects earnings of $4 to $5 a share this year, down from the $5.50 to $7.50 it had previously forecast.

T-Mobile U.S. profit beats estimates as it signs up more customers

  • T-Mobile first-quarter revenue and profit jumped from a year earlier, beating Wall Street’s estimates, as competitive pricing lured new subscribers to its monthly cellphone plans.
  • Revenue rose nearly 6% to $11.08 billion, in line with estimates.
  • The company said it added a net 656,000 phone subscribers in the first quarter, up from 617,000 additions a year earlier and substantially more than the 612,000 new subscribers analysts had expected.
  • Net income surged to $908 million in the quarter, from $671 million a year earlier.

Chevron profits down 27% but still top estimates

  • Chevron said on Friday first-quarter profits slid 27% from a year earlier due to lower crude oil prices and weaker margins in its refining and chemicals businesses, but the No. 2 U.S. oil and natural gas producer still topped forecasts.
  • Revenue fell nearly 7% to $35.2 billion from $37.64 billion a year ago.
  • Chevron’s daily production of oil and gas rose to 3.04 billion of barrels, from 2.85 billions of barrels in the year-ago period, but the price for each barrel of U.S. crude oil and natural gas liquids fell to $48 from $56 a year earlier.
  • The lower prices and weakness in refining impact dropped net income to $2.65 billion, from $3.64 billion a year earlier.

Exxon Mobil’s first-quarter profit misses estimates on lower oil, gas prices

  • Exxon Mobil reported on Friday a 49% fall in first-quarter profit that missed forecasts due to lower oil and gas prices and weakness across its businesses that outweighed modest production gains.
  • Total revenues fell to $63.6 billion from $68.2 billion in the same period a year ago.
  • Cash flow from operations of $8.3 billion was offset by capital spending and dividend payments of $10.4 billion.
  • First-quarter profit fell to $2.35 billion from $4.65 billion a year ago.

Mattel signals end to Toys ‘R’ Us woes as Barbie boosts sales

  • Mattel beat Wall Street estimates for quarterly revenue on Thursday, as a more diverse range of Barbie dolls and new toys based on franchises such as the “Jurassic World” powered sales in the United States.
  • The company posted a smaller-than-expected 2.7% decline in total sales to $689.2 million, buoyed by a surprise rise in sales in North America. Analysts had expected a near 13% drop.
  • Mattel lost $183.7 million in the quarter, lower than the $311.3 million it lost in the same period a year ago.

Severe Weather Weighs on Archer Daniels Midland

  • Severe weather in the U.S. Farm Belt hampered Archer Daniels Midland’s first-quarter results, as the company reported weaker profit due to flooding and cold temperatures in the region.
  • Sales fell 1% in the quarter ended March 31 to $15.3 billion. Analysts expected $15.57 billion in sales, according to FactSet.
  • Overall, ADM reported a profit of $233 million, down from $393 million a year earlier.
  • The company said the weather conditions lowered its operating profit by $60 million, the high end of its previous estimate.

Grubhub profit better than expected, shares soar

  • Grubhub’s reported a first-quarter profit on Thursday that topped Wall Street’s view after the restaurant delivery service ramped up spending to woo restaurant partners and encourage customers to order more often and spend more.
  • Revenue jumped 39% to $323.8 million during the quarter, topping analysts’ estimate of $323 million.
  • Active diners grew 28% to 19.3 million during the quarter, bolstered by partner Taco Bell’s national campaign promoting delivery from the fast-food chain.
  • Grubhub’s first-quarter net income fell 78% to $6.9 million, but beat the average estimate.

Slack posts $141 million annual loss as it files to go public

  • Slack Technologies, operator of the popular workplace instant-messaging app, reported an annual loss of $140.7 million, the company said on Friday ahead of its planned public market debut.
  • Slack’s revenue jumped 82% to $400.6 million and its loss narrowed to $140.7 million from $181 million a year earlier.
  • Slack’s daily active users exceeded 10 million, with its paid users at about 88,000, the company’s regulatory filing showed.
  • The company is hoping for a valuation of more than $10 billion in the listing.

U.S. opens criminal probe into Ford emissions certification

  • Ford Motor said on Friday the U.S. Justice Department has opened a criminal investigation into the automaker’s emissions certification process in the United States, the latest company to come under scrutiny by U.S. officials.
  • Ford voluntarily disclosed the issue to the U.S. Environmental Protection Agency and the California Air Resources Board in February and hired outside experts to investigate its vehicle fuel economy and testing procedures after employees raised concerns.
  • Ford said at that time it did not know whether it would have to correct data provided to regulators or consumers.

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US ECONOMY & POLITICS

U.S. Economy Grew at 3.2% Rate in First Quarter

  • The U.S. economy roared back in the first quarter, growing at a rapid pace despite multiple headwinds, suggesting the current expansion has more room to run amid its 10th year.
  • Gross domestic product—the value of all goods and services produced in the U.S., adjusted for inflation—rose at a 3.2% annual rate from January through March, the strongest rate of growth for the first quarter in four years.
  • Helping drive growth were a rise in exports, a decline in imports and higher inventory investment that helped offset weaker growth in consumer spending and business investment, the Commerce Department said Friday.
  • Consumer spending, however, which makes up two-thirds of economic activity, rose at a mere 1.2% rate in the first quarter, down from a strong 2.5% in the fourth quarter of 2018.
  • Net exports—exports minus imports—added 1.03 percentage points to the quarter’s 3.2% GDP growth rate.
  • Nonresidential fixed investment—which reflects business spending on software, research and development, equipment and structures—rose at a 2.7% rate, pulling back from 5.4% in the fourth quarter.
  • The housing sector was a headwind for growth in early 2019 as residential investment fell at a 2.8% annual pace, marking the fifth straight quarter of decline.
  • Overall government expenditures were up at a 2.4% annual rate in the first quarter.
  • While federal government spending was flat, state and local outlays rose at a 3.9% annual rate.

U.S. Consumer Sentiment Softened in April

  • Consumers’ outlook for the U.S. economy softened slightly in April even though it remained historically high.
  • The University of Michigan said its final index of U.S. consumer sentiment was 97.2 this month, down from 98.4 in March.
  • Economists had expected a final reading of 97.

Trump’s Offshore Oil-Drilling Plan Sidelined Indefinitely

  • The Trump administration’s proposal to vastly expand offshore oil and gas drilling has been sidelined indefinitely as the Interior Department grapples with a recent court decision that blocks Arctic drilling, according to Interior Secretary David Bernhardt.
  • The ruling by a federal judge in Alaska last month may force Interior Department officials to wait until the case goes through potentially lengthy appeals before they can make a final decision on what offshore areas to open up for the oil and gas industry, Mr. Bernhardt said.

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EUROPE & WORLD

China’s Xi Jinping Pledges Fresh Support for Liberalizing Economy

  • With talks aimed at resolving the U.S.-China trade dispute entering a critical stage, President Xi Jinping pledged fresh backing for the liberalization of his country’s economy in ways the Trump administration has demanded.
  • Speaking on Friday at a Beijing forum for his signature infrastructure-construction program, the Belt and Road Initiative, Mr. Xi said China would increase imports, cut production overcapacity, protect intellectual property, expand imports, hold its currency stable and allow foreign companies to operate in more sectors.
  • He said China’s government would eliminate “unjustified” market-distorting policies, including industrial subsidies.
  • Chinese officials including Mr. Xi have made many of the pledges before, and U.S. officials say one challenge they face in completing a trade deal is setting a mechanism to hold Beijing to its promises.

Sony flags disappointing profit, scraps targets as gaming slows

  • Sony warned of a sharper-than-expected drop in its annual profit and scrapped some longer-term targets, in a sign a slowdown in its gaming business as its PlayStation 4 console nears the end of its life was beginning to hurt.
  • Sony withdrew its earnings goals for individual businesses for the year to March 2021, including an estimated profit range of 130 billion-170 billion yen for gaming, citing “significant changes to the operating environment.”
  • For the financial year to March 2020, Sony expects costs for developing the new console to push its gaming profits down to 280 billion yen from 311 billion yen a year earlier. PS4 sales are forecast to drop 10% to 16 million units.
  • The Japanese firm forecast profit for the year through March 2020 at 810 billion yen ($7.25 billion), down 9.4% from 894.2 billion yen a year earlier and below an average forecast of 834.49 billion yen.

Deutsche Bank Cuts Revenue Target a Day After Merger Talks Fail

  • Deutsche Bank disclosed a disappointing revenue outlook Friday, sending its stock lower and highlighting the difficult road ahead a day after merger talks with Commerzbank AG failed.
  • Revenue declined 9% overall, to €6.35 billion.
  • Investment-bank revenues fell 13%, with sales and trading revenues down 18% in equities and 19% in fixed income.
  • First-quarter net income was €201 million euros ($224 million), a 67% increase from a year ago and better than consensus analysts’ expectations.
  • On a conference call with analysts, executives were hammered with questions about their strategic alternatives, the likely timing, what kind of deal might appeal to them if Commerzbank didn’t, and whether Deutsche Bank can rule out having to raise capital.
  • The answer was mostly no answer.

Deutsche Bank Cuts Revenue Target a Day After Merger Talks Fail

  • Deutsche Bank disclosed a disappointing revenue outlook Friday, sending its stock lower and highlighting the difficult road ahead a day after merger talks with Commerzbank AG failed.
  • Revenue declined 9% overall, to €6.35 billion.
  • Investment-bank revenues fell 13%, with sales and trading revenues down 18% in equities and 19% in fixed income.
  • First-quarter net income was €201 million euros ($224 million), a 67% increase from a year ago and better than consensus analysts’ expectations.
  • On a conference call with analysts, executives were hammered with questions about their strategic alternatives, the likely timing, what kind of deal might appeal to them if Commerzbank didn’t, and whether Deutsche Bank can rule out having to raise capital.
  • The answer was mostly no answer.

Total profits hit by volatile oil prices despite record output

  • French energy major Total said its net profit for the first three months of the year fell 4% to $2.8 billion compared with a year ago due to volatile oil prices and debt costs, despite record oil and gas output.
  • The adjusted net profit was nevertheless slightly above average analysts’ forecast of $2.7 billion, while Total also raised its dividend.
  • Natural gas prices slumped in Europe by 11%, and in Asia by 30%, Total said.

Puma enjoys ‘best ever’ quarter as it ramps up stocks

  • German sportswear group Puma said it managed to avoid supply chain problems that have crimped sales growth at local rival Adidas by increasing inventories, as it posted a record quarter of sales and earnings on Friday.
  • Puma’s first-quarter sales rose a currency-adjusted 15.3% to 1.32 billion euros ($1.47 billion), versus an analyst consensus for 1.3 billion, as it saw strong demand for its chunky RS-X sneakers and clothing for women.
  • Operating profit came in at 143 million euros versus a consensus forecast of 139 million.
  • Revenues and operating Puma Chief Executive Bjorn Gulden said profit were the highest Puma has “ever achieved” in a quarter, but held off raising the company’s guidance.

Argentine President’s Prospects Dim with Those of His Country’s Economy

  • Argentina’s assets took a beating Thursday amid President Mauricio Macri’s continuing struggle to tame rising prices and revive a shrinking economy, raising prospects that his left-wing predecessor could make a comeback in this year’s presidential election.
  • Mr. Macri, announced new price controls last week to try to get Argentina’s inflation under control, which has risen to a 12-month pace of almost 55% in March from 25% at the start of 2018.
  • Argentina is now the world’s second-riskiest borrower after crisis-hit Venezuela as indicated by credit default swaps, which are derivatives that pay holders when a borrower defaults on a debt payment.

With Mainstream Parties Struggling, Europe’s Nationalists Band Together

  • Far-right politicians from around Europe held a rally in a historic square here Thursday, addressing a modest crowd of a few hundred, but proclaiming a continent-sized ambition: to remake the European Union.
  • Ahead of next month’s elections to the European Parliament, nationalists are reaching across borders to try to build an alliance they hope can reshape that legislature.
  • Opinion polls suggest far-right parties could become the third-biggest force in the new parliament, behind the center-right and center-left parties that dominate Europe’s political establishment.

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TODAY in HISTORY

  • John Wilkes Booth, Lincoln’s assassin, was surrounded by federal troops in a barn in Virginia. He was shot and killed, either by the soldiers or by his own hand. (1865)
  • The worst nuclear power plant accident in history occurred at Chernobyl, near Kiev, U.S.S.R. (1986)

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