DAILY MARKET REPORTS
- The S&P 500 index notched a fresh record high on Wednesday, as gains in Apple’s shares after forecast-beating results powered a rally in technology stocks ahead of the Federal Reserve’s latest policy announcement.
- Shares of the iPhone maker jumped 5.3% after the company said sales in China were steadying and touted how rising demand for its services and accessories helped offset a record drop in iPhone revenue.
- The company also announced plans for a new $75 billion share buyback and bumped up its cash dividend by 5%, putting it on course to reclaim $1 trillion in market capitalization.
- Analysts are now more optimistic on first-quarter earnings growth and expect a 0.5% rise compared with a 2% fall estimated at the beginning of April.
- Of the 305 S&P 500 companies that have reported so far, 76% have topped Wall Street estimates.
- In economic data, ADP’s National Employment Report showed private employers added 275,000 in April, higher than consensus estimate of 180,000 additions.
- However, the Institute for Supply Management’s manufacturing index for April came in softer than economists had expected, another data point signaling a slowdown in factory activity.
US FINANCIAL MARKET
Apple optimistic as iPhone price cuts help in China, watches pull in new buyers
- Apple posted its first back-to-back drop in quarterly sales and profit in more than two years, but the tech titan reported strength beyond its struggling iPhone business and said a sharp downturn in China showed signs of easing.
- For its fiscal second quarter, Apple reported revenue of $58.02 billion, above analysts’ average estimate of $57.37 billion.
- Sales of the iPhone, long the biggest driver of its business, fell 17% to about $31 billion, slightly below estimates of $31.10 billion.
- Apple beat expectations for its wearable business, bringing in sales of $5.13 billion compared with estimates of $4.79 billion.
- The combination of wearables and services accounted for 29% of total revenue in the fiscal second quarter, while the iPhone fell to 54% of sales from its typical level of two-thirds.
- Profit dropped 16% to $11.56 billion for the quarter.
- Apple said it expects revenue between $52.5 billion and $54.5 billion for the current quarter ending in June, above analysts’ average estimate of $51.93 billion.
- Apple announced plans for a new $75 billion share buyback and increased its dividend by 5%.
AMD results beat estimates on data center, server growth
- U.S. chipmaker Advanced Micro Devices beat Wall Street estimates for quarterly revenue and profit on Tuesday, as the company sold more chips used in data centers and servers, sending its shares up 6% in after-hours trading.
- AMD’s first-quarter revenue fell 22.7% to $1.27 billion, but beat analysts’ average estimate of $1.26 billion.
- Despite the revenue decline, AMD’s gross margin improved in the reported quarter to 41% as its datacenter GPU, Ryzen and Epyc processor sales ramped up during the quarter.
- Net income fell to $16 million, from $81 million a year earlier.
- AMD also forecast second-quarter revenue of about $1.52 billion, plus or minus $50 million, in line with analysts expectations.
CVS Gets Boost From Sales of Brand-Name Drugs
- CVS said sales rose across the business as the health-care company saw stronger profits on brand-name drugs.
- Revenue for the quarter rose 35% to $61.6 billion, beating the consensus forecast of $60.4 billion.
- Same-store sales increased 3.8%, beating the FactSet estimate of a 1.2% increase.
- The company reported a first-quarter net income of $1.4 billion, up from a profit of $998 million a year earlier.
- On Wednesday, CVS raised its forecast, saying it expects adjusted earnings per share of $6.75 to $6.90, up from $6.68 to $6.88.
Mondelez Results Boosted by International Sales
- Mondelez leaned on overseas markets to drive its results in its latest quarter, helping to offset weaker demand in North America.
- Overall, Mondelez’s first-quarter sales fell 3.4% from a year earlier to $6.54 billion. Analysts expected $6.55 billion of sales.
- Core, or organic, net revenue, which excludes the impact from acquisitions and currency fluctuations, rose 3.7%, beating analysts’ average estimate of a 2.3%.
- Net earnings fell to $914 million in the quarter, from $1.05 billion a year earlier.
Amgen revenue flat as migraine, cholesterol drugs miss sales expectations
- Amgen reported first-quarter revenue that was unchanged from a year ago as key drugs, including new migraine treatment Aimovig and cholesterol fighter Repatha, face pricing pressure.
- Revenue for the quarter of $5.56 billion showed no growth but was in line with analyst estimates.
- First-quarter sales of Amgen’s kidney drug Sensipar fell 57% to $213 million, below the $353.4 million forecast by analysts.
- Aimovig sales of $59 million for the quarter were short of the $83.3 million projected by analysts and down from $95 million in the fourth quarter. Repatha sales of $141 million also missed Wall Street estimates of $158.7 million.
- Net income fell 14% to $2 billion as costs for manufacturing and research and development increased.
- For the full year, Amgen said it now expects adjusted earnings per share of $13.25 to $14.30 on revenue of $22 billion to $22.9 billion, compared with previous forecasts of $13.10 to $14.30 per share and revenue of $21.8 billion to $22.9 billion.
Humana profit beats on higher premiums
- Insurer Humana reported a better-than-expected quarterly profit, on higher sales of its government health plans for people older than 65 and the disabled.
- Total revenue rose 13% to $16.12 billion, above estimates of $15.78 billion.
- Sales from the company’s retail unit, which includes its Medicare plans, rose about 16% to $14.01 billion, as it added more members to its individual and group Medicare Advantage plans and on higher premium rates.
- Humana said its net income rose 15.3% to $566 million in the quarter.
- The company raised the lower end of its 2019 adjusted earnings forecast to between $17.25 and $17.50 per share from its prior forecast of between $17 and $17.50 per share.
Yum Brands same-store sales beat on KFC strength
- Yum Brands beat analysts’ estimates for quarterly sales at established outlets, boosted by strong growth at its KFC chain.
- Total revenue fell 8.5% to $1.25 billion, in-line with analysts’ estimates.
- Yum’s global comparable store sales rose 4% in the first quarter, beating analysts’ estimate of a 2.66% increase.
- KFC’s sales at established restaurants rose 5%, well above 2.74% estimated, while Taco Bell’s same-store sales rose 4%, but fell slightly short of the 4.47% estimate.
- Yum’s net income fell about 40% to $262 million in the quarter, partly due to its investments in food delivery service GrubHub.
Estee Lauder raises full-year forecasts, results beats estimates
- Estee Lauder beat expectations for both profit and revenue in the third quarter and raised full-year forecasts, boosted by strong performance in its Asia-Pacific region and luxury skincare.
- Net sales rose 11% to $3.74 billion, breezing past the average analyst estimate of $3.57 billion.
- Sales in Asia grew 25% to $966 million in the quarter as the Jo Malone fragrance maker generated double-digit net sales growth in every major product category and channel.
- Net income rose to $555 million in the quarter, from $372 million a year earlier.
- The company now expects 2019 net sales to increase between 7% and 8%, up from previous guidance of 5% and 6% and expects earnings per share in the range of $5.15 to $5.19, compared with prior expectations of $4.92 to $5.
FireEye results hit Wall Street’s mark, current quarter forecast to fall short
- FireEye posted first-quarter revenue and billings better than expectations, but forecast revenue and profit for the current quarter below analysts’ estimates.
- FireEye’s total revenue rose 5.8% to $210.5 million. Analysts on average had expected revenue of $210.2 million.
- Quarterly revenue from subscription and services rose 2.7% to $169.9 million, above estimates of $164.4 million while billings of $182 million was also better than estimates of $176.9 million.
- The company’s net loss widened to $75.4 million in the first quarter, from $71.8 million a year earlier.
- FireEye forecast second-quarter adjusted profit of between 1 cent and 3 cents per share and revenue in the range of $212 million to $216 million. Analysts on average were expecting a profit of 4 cents per share and revenue of $216 million.
Akamai beats revenue estimates on cyber-security strength
- Akamai Technologies beat analysts’ estimates for first-quarter revenue on Tuesday, powered by demand for its cyber-security services and its traditional business of helping speed up content delivery on the web.
- Revenue rose 5.7% to $706.5 million. Analysts on average expected revenue of $698.3 million.
- Net income rose to $107.1 million in the quarter, from $53.71 million a year earlier.
Shopify raises FY forecast on demand for e-commerce tools; shares surge
- Shopify raised its 2019 earnings forecast and posted a surprise quarterly profit on Tuesday on strong demand for its software that helps retailers sell goods online, sending its shares up 7% to a record high.
- Revenue for the quarter rose to $320.5 million, beating estimates of $309.4 million.
- However, net loss widened to $24.1 million from $15.9 million a year earlier, as costs surged 50% to $216.1 million.
- The company said it now expects full-year adjusted operating income of $20 million to $30 million, above the $10 million to $20 million it forecast earlier.
- Revenue is expected in the range of $1.48 billion to $1.50 billion, also above the $1.46 billion to $1.48 billion it estimated earlier.
Boeing supplier Spirit AeroSystems suspends outlook
- Boeing’s largest supplier Spirit AeroSystems reported strong first-quarter results on Wednesday, while following the planemaker in suspending its full-year outlook in the face of the global grounding of 737 MAX jets.
- Total revenue rose 13.4% to $1.97 billion, beating estimates of $1.93 billion.
- Spirit, which makes fuselage, structural engine components and wing parts for the MAX, did a deal with Boeing last month to stick to its current parts delivery schedules for now, and its profits in the first quarter were up 30%.
- Spirit said with the uncertainty around MAX production it could not stand by its previous full-year outlook which had factored production for MAX jets rising to 57 units per month in June.
Carlyle’s Profit Rises; Private-Equity Funds Appreciate 5%
- Carlyle Group posted a stronger profit in the latest quarter as the private-equity firm recorded gains in investment income and fees, but profits that could be returned to shareholders fell as the relative recentness of its investments meant fewer fees related to gains on asset sales.
- Carlyle’s assets under management rose 10% to $221.5 billion.
- Carlyle reported net income in the first quarter of $142.9 million, compared with $39.7 million a year earlier.
McGraw-Hill to Merge With Rival Textbook Publisher
- McGraw-Hill and Cengage plan to merge in a deal that would create the second-largest provider of college textbooks and other higher-education materials in the country.
- The closely held companies are billing the all-stock deal as a rare merger of equals, which would set them up to better compete as the rise of digital books and course materials pressures their businesses.
- The deal, should it pass muster with regulators, would create a new company with roughly $3.16 billion in annual revenue, McGraw-Hill and Cengage’s chief executives said in an interview Tuesday.
Hulu achieves rapid growth, hits 26.8 million paid subscribers
- Hulu said it has 26.8 million paid subscribers, a milestone that suggested rapid growth in the first four months of the year.
- Overall, Hulu reported total customers reached 28 million, including 1.3 million promotional accounts.
- The new paid customer figure implies the digital video service controlled by Walt Disney and co-owned by Comcast added close to 4 million new paying customers in the first four months of the year, based on previous disclosures by Disney.
- By comparison, rival Netflix Inc added 5.7 million paid U.S. subscribers for all of 2018.
U.S. environment agency says glyphosate weed killer is not a carcinogen
- The U.S. Environmental Protection Agency (EPA) said on Tuesday that glyphosate, a chemical in many popular weed killers, is not a carcinogen, contradicting decisions by U.S. juries that found it caused cancer in people.
- The EPA’s announcement reaffirms its earlier findings about the safety of glyphosate, the key ingredient in Bayer’s Roundup.
- The EPA did previously find ecological risks from the chemical and has proposed new measures to protect the environment from glyphosate use by farmers and to reduce the problem of weeds becoming resistant to it.
US ECONOMY & POLITICS
U.S. Private Sector Surpasses Expectations, Adding 275,000 Jobs in April
- The U.S. private sector added 275,000 jobs in April, according to the ADP National Employment Report released Wednesday, a far greater number than analysts expected.
- Economists surveyed by The Wall Street Journal expected the private sector to gain 177,000 jobs.
- The April additions to private payrolls were up from a seasonally-adjusted 151,000 jobs added in March, according to payroll processor Automatic Data Processing Inc. and forecasting firm Moody’s Analytics.
U.S. Factory Activity Slows in April
- American factory activity slowed in April amid concerns over trade tensions and delays at the U.S.-Mexico border.
- The Institute for Supply Management said its manufacturing index fell to 52.8 in April from 55.3 the previous month.
- Economists surveyed by The Wall Street Journal had expected a reading of 55 in April.
U.S. construction spending unexpectedly falls in March
- U.S. construction spending unexpectedly fell in March after three straight monthly gains, pulled down by declines in both private and public construction projects.
- Construction spending decreased 0.9%, and dropped 0.8% on a year-on-year basis in March.
- Economists had forecast construction spending edging up 0.1% in March. Construction spending
- Data for February was revised to show construction outlays rising 0.7 instead of increasing 1.0% as previously reported.
- Construction spending data for January was also revised lower to account for additional projects identified as eligible for inclusion in the series.
U.S. mortgage applications fall to six-week low: MBA
- U.S. mortgage applications fell to their lowest levels in six weeks even as home borrowing costs turned cheaper as a result of lower bond yields, the Mortgage Bankers Association said on Wednesday.
- The Washington-based group’s seasonally adjusted index on mortgage activity to buy a home and to refinance one declined 4.3% to 407.2 in week ended April 26, which was the lowest reading since 390.0 in the week of March 15.
Democrats, Trump Agree to Aim for $2 Trillion Infrastructure Package
- Democratic congressional leaders said President Trump agreed to aim for a $2 trillion infrastructure package in a White House meeting on Tuesday, though the two sides didn’t discuss how it would be paid for, and Capitol Hill Republicans are unlikely to go along.
- In unusually positive comments about negotiations with the president, Pelosi and Schumer (D., N.Y.) said that the meeting was productive, and that they had agreed to return in three weeks to hear Trump’s ideas about how to pay for an infrastructure bill.
- Republican lawmakers—who control the Senate—are unlikely to support a $2 trillion infrastructure bill.
- They have warned that a major new federal infrastructure program would increase the federal deficit and deepen local governments’ reliance on the federal government.
China, U.S. hold ‘productive’ trade talks in Beijing
- China and the United States held “productive” trade talks in Beijing on Wednesday and will continue discussions in Washington next week, U.S. Treasury Secretary Steven Mnuchin said, as the two try to end their trade war.
- Mnuchin, along with U.S. Trade Representative Robert Lighthizer, held a day of discussions, before Chinese Vice Premier Liu He goes to Washington next week for another round of talks in what could be the end game for negotiations.
- China’s official Xinhua news agency, in a brief report, simply noted that the latest talks had taken place and that the next rounds of talks would take place in Washington next week as planned.
U.S. may lose borrowing authority in second half of 2019 -Treasury
- The U.S. government will have to stop borrowing money between July and December if Washington doesn’t agree to raise a legal restriction on public debt, the Treasury Department said on Wednesday.
- Hitting that so-called “debt ceiling” could trigger a U.S. default on its debt and an immediate recession, a risk that has become a regular facet of U.S. politics over the last decade.
- The current debt limit was set in March. Treasury has been able to continue borrowing from investors by using accounting measures such as limiting government payments to public sector retirement funds.
EUROPE & WORLD
Venezuela Crisis: Violence Erupts as Guaidó Calls for Uprising
- Thousands of Venezuelans clashed in the streets with pro-government forces following an audacious call by opposition leader Juan Guaidó to join him and a small group of military officers in overthrowing President Nicolás Maduro’s government.
- The violence ensued after Mr. Guaidó, flanked by a small group of rebellious National Guard troops outside a Caracas military base, called on the public to help end a punishing economic and political crisis under Mr. Maduro.
- Mr. Guaidó, in a video released Tuesday night on social media, said the day’s events proved that Mr. Maduro was weak. He called for continued protests Wednesday.
French police fire tear gas at protesters in Paris May Day rally
- French police fired tear gas to push back masked demonstrators in central Paris on Wednesday as thousands of people used an annual May Day rally to protest against President Emmanuel Macron’s policies.
- Labor unions and so-called “yellow vest” protesters were on the streets across France, days after Macron outlined a response to months of street protests that included tax cuts worth around 5 billion euros ($5.6 billion).
- The “yellow vest” protests, named after motorists’ high-visibility jackets, began in November over fuel tax increases but have evolved into a sometimes violent revolt against politicians and a government seen as out of touch.
Julian Assange, WikiLeaks Founder, Sentenced to 50 Weeks in Jail
- A British judge sentenced Julian Assange to 50 weeks in jail for skipping bail in 2012 while awaiting extradition to Sweden on sexual assault accusations, a blow to the WikiLeaks founder ahead of a hearing on whether he should be sent to the U.S. to face trial over the leak of classified documents almost a decade ago.
- In April, Mr. Assange was indicted in federal court on a computer-hacking conspiracy charge in connection with what prosecutors described as “one of the largest compromises of classified information in the history of the United States.”
- A British court is due on Thursday to consider a U.S. request to extradite Mr. Assange for trial, the first step in what lawyers say could be a yearslong legal wrangle over his future.
TODAY in HISTORY
- Orson Welles’s Citizen Kane, considered by many the greatest film ever made, premiered in New York. (1941)
- President Bush made a speech aboard an aircraft carrier proclaiming “major combat operations in Iraq have ended.” (2003)
This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S&P 500, are unmanaged and may not be invested into directly. Sources: Reuters, Bloomberg, the Wall Street Journal.
Content posted by third parties on this site is screened in order to protect clients’ privacy and comply with regulatory requirements. Content containing sensitive personal information, inappropriate language, information about specific investments, misleading information, information about other companies or websites, or information related to litigation will be removed. Content posted by third-parties on this site remains the responsibility of the party posting the content and is not adopted or endorsed by Pence Wealth Management or LPL Financial. Any opinions or statements posted by third parties are their own and may not be representative of the experience of others and are not indicative of future performance or success. Third party content on this site does not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy or completeness.