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DAILY MARKET REPORTS

  • U.S. stocks edged higher Thursday, a day after the Federal Reserve cut interest rates but didn’t signal that more stimulus was on the way.
  • Stocks wavered after Fed Chairman Jerome Powell disappointed investors Wednesday when he rolled back expectations for future interest-rate cuts.
  • Investors are looking ahead to Friday’s employment report for signs that the U.S. economy remains on solid footing amid concerns over trade tensions and slowing global growth.
  • Economists expect U.S. employers added 165,000 jobs in July while the unemployment rate is projected to tick down to 3.6%.
  • The latest round of U.S.-China trade talks concluded Wednesday without any compromise, though both sides described the talks as constructive. The next round will be held in September.
  • Qualcomm dropped 3.32% after the chipmaker’s quarterly revenue and profit forecast fell short of Wall Street targets.
  • Of the 296 companies in the S&P 500 that have reported second-quarter earnings, 74.7% have beaten Street estimates for profit.

US FINANCIAL MARKET

Qualcomm’s outlook weighed down by Huawei’s smartphone gains in China

  • Qualcomm warned of multiple challenges out of China that are hurting its outlook, including a ban on exports to telecom company Huawei and a sharp drop in smartphone sales.
  • The company reported a 13% slump in adjusted revenue to $4.89 billion for the quarter, missing the $5.09 billion expected.
  • The company’s modem chip shipments fell 22% to 156 million in the third quarter, missing analysts’ estimate of 160.1 million.
  • Net income rose to $2.1 billion, from $1.2 billion in the same period a year earlier.
  • The chip maker cut its fullyear forecast for global smartphone sales by 100 million units to a range of 1.7 billion to 1.8 billion, in large part reflecting weaker demand in China.
  • Qualcomm forecast total fourth-quarter revenue of $4.3 billion to $5.1 billion and profit of 65 cents and 75 cents per share, below estimates of $5.63 billion and $1.08 per share.

Shopify raises full-year revenue forecast, shares rise

  • Shopify raised its full-year revenue forecast and reported a quarterly profit that handily beat Street estimates, as the Canadian e-commerce company’s investments to attract customers to its product offerings paid off.
  • Revenue surged nearly 48% to $362 million in the quarter.
  • Gross merchandise volume, a widely watched figure for the e-commerce industry’s performance, rose 51% to $13.8 billion.
  • The company’s net loss widened to $28.7 million in the second quarter, from about $24.0 million a year earlier.
  • Shopify said it now expects full-year revenues between $1.51 billion and $1.53 billion, up from the previous range of $1.48 billion to $1.50 billion.

Fitbit cuts 2019 revenue view, Versa Lite sales lag; shares tank

  • Wearable device maker Fitbit cut its 2019 revenue forecast on Wednesday, blaming disappointing sales of its newly launched cheapest smartwatch Versa Lite, sending its shares tumbling as much as 16% to a record low.
  • Revenue rose about 5% to $313.6 million, beating analysts’ average estimates of $312 million.
  • Fitbit’s net loss narrowed to $68.5 million in the second quarter, from $118.3 million,  a year earlier.
  • For the third quarter, Fitbit forecast revenue of between $335 and $355 million, below the analysts’ average estimate of $399.4 million, and forecast an adjusted loss of between 9 and 11 cents per share. Analysts were expecting a profit of 2 cents per share.
  • Fitbit lowered its 2019 revenue forecast to between $1.43 billion and $1.48 billion, compared with its prior expectations of $1.52 billion to $1.58 billion.

Cigna posts second-quarter profit beat, raises 2019 earnings forecast

  • Health insurer Cigna raised its forecast for full-year adjusted earnings on Thursday after posting a better-than-expected profit in the second quarter, helped by higher revenue from its pharmacy benefits unit and its commercial health plans.
  • Adjusted revenue nearly tripled to $34.38 billion, beating estimates of $33.19 billion.
  • Adjusted revenue from Cigna’s health services unit, which now includes the Express Scripts pharmacy benefits business, rose to $23.54 billion from $1.11 billion in the year-ago quarter.
  • The company’s net income rose to $1.41 billion in the quarter, from $806 million a year earlier.

MetLife quarterly profit doubles on derivative gains

  • U.S. insurer MetLife on Wednesday reported quarterly profit that doubled from a year ago, boosted by strong derivative gains.
  • Premiums and fees dropped 29% to $12.02 billion, from a year earlier when the insurer inked a deal to provide pension benefits for about 41,000 FedEx retirees and beneficiaries through an annuity.
  • MetLife recorded $724 million in derivative gains in the second quarter, reflecting changes in equity markets and interest rates. In the year-ago quarter, the company had a derivative loss of $59 million.
  • Net income rose to $1.68 billion in the second quarter, from $845 million a year earlier.

ADM profit plunges more than 40% on U.S. weather, trade war woes

  • U.S. grains merchant and food processor Archer Daniels Midland reported a 41.3% drop in second-quarter profit and missed expectations, after being battered by the trade war and severe U.S. weather that caused significant supply-chain woes.
  • Revenue dropped 4.5% to $16.3 billion.
  • Beyond the trade war, heavy rains and flooding battered ADM during the quarter with “unfavorable weather impacts” of about $65 million to its operating profits.
  • Its adjusted net earnings for the quarter fell to $340 million, from $579 million a year earlier.

Pickup trucks drive GM second quarter profit beat despite sales drop

  • General Motors posted a better-than-expected net profit on Thursday as high-margin pickup trucks, SUVs and crossovers helped overcome slowing sales in the United States and China, and reiterated its full-year earnings forecast.
  • GM reported second-quarter revenue of $36.1 billion, which came in above analyst estimates of $35.98 billion.
  • GM’s overall U.S. sales fell 1.5% in the second quarter, while GM’s China sales slid 12%, a slight improvement over the 17.5% decline in the first quarter.
  • GM reported second-quarter net income of $2.41 billion, compared with $2.39 billion a year earlier

Verizon beats profit estimates as monthly phone subscribers jump

  • Verizon Communications on Thursday beat second-quarter profit estimates as the largest U.S. mobile carrier added far more net monthly phone subscribers than expected.
  • Total operating revenue fell 0.4% to $32.1 billion and missed expectations of $32.41 billion. Revenue from Verizon’s media unit alone was $1.8 billion, down 2.9% from a year earlier.
  • The company said it added a net 245,000 phone subscribers during the quarter. Analysts additions of 163,000 subscribers.
  • Verizon’s net income fell to $4.07 billion in the second quarter, from $4.25 billion a year earlier.

DuPont cuts sales forecast as China trade war hits home

  • Industrial materials maker DuPont cut its full-year forecast for core sales on Thursday as it reported worse-than-expected revenue for the second quarter, pointing to weak demand in some of the sectors most affected by the U.S.-China trade war.
  • Revenue fell 6.6% to $5.47 billion, below analysts’ estimates of $5.63 billion, according to Refinitiv IBES data.
  • Adjusted for charges, the company reported profit of $725 million in the second quarter, from $695 million a year before.
  • The company, one part of conglomerate DowDupont until a split earlier this year, said it now expects full-year organic sales to be slightly down, compared with its earlier forecast of a 2% to 3% rise.

Cognizant profit beats view; flags future softness in banking

  • Cognizant Technology Solutions beat quarterly profit estimates on Wednesday, bolstered by demand in its financial services unit, but flagged lower spending at some major banking clients in the second half of the year.
  • Revenue rose 3.4% to $4.14 billion, in-line with analysts’ average estimate of $4.14 billion.
  • The consulting and outsourcing services provider reported net income of $509 million in the second quarter, up from $456 million a year earlier.
  • The company expects current-quarter revenue to be between $4.23 billion to $4.27 billion, above estimates of $4.2 billion.

Marathon Petroleum profit beats on higher crude shipments, retail strength

  • U.S. refiner Marathon Petroleum on Thursday beat estimates for quarterly profit, as it transported more crude through its pipelines and benefited from higher sales from its gas stations business.
  • Total revenue and other income rose to $33.69 billion from $22.45 billion.
  • Net income rose to $1.11 billion in the quarter, from $1.06 billion a year earlier.

Apache adjusted quarterly profit plunges on lower prices

  • U.S. oil and gas producer Apache Corp reported a 78.6% fall in second-quarter adjusted profit on Wednesday, hit by lower prices of oil, gas and natural gas liquids (NGL) and higher operating costs.
  • Total adjusted production rose to 395,616 barrels of oil equivalent per day (boe/d) from 389,734 boe/d, boosted by higher output from the Permian basin in the United States and the UK North Sea.
  • Average realized prices for oil are down 8.1% per barrel, while NGLs fell 46.1% per barrel from a year earlier.
  • The company’s adjusted earnings fell to $41 million in the quarter, from $192 million a year earlier.

Occidental Petroleum profit falls on low gas prices, derivative contracts

  • Occidental Petroleum, which is battling over its $38 billion purchase of Anadarko Petroleum, reported a 14% fall in core profit, as higher crude prices and volumes were offset by adjustments to derivatives contracts and lower natural gas prices.
  • Core income fell to $729 million in the second quarter, from $848 million a year earlier.
  • The company also said it has formed a partnership with Colombia’s state-run oil company Ecopetrol to develop its acreage in the Midland basin in the prolific Permian shale field for up to $1.5 billion.

Kellogg results beat forecasts on North America demand, shares surge

  • Kellogg beat Wall Street expectations for quarterly sales and profit on Thursday, boosting the food maker’s shares 12% as investments in marketing and product development drove higher demand for snacks and frozen food in North America.
  • Total net sales increased 3% to $3.46 billion, beating the average analyst estimate of $3.41 billion.
  • On an organic basis, excluding acquisitions, divestitures and foreign exchange impact, sales rose 2.3%.
  • Net income tumbled 52% to $286 million due to restructuring and divestment costs and a lower tax rate in the prior-year period.

Pizza Hut rebound bolsters Yum Brands’ profit beat

  • Yum Brands beat analysts’ expectations for quarterly profit and sales on Thursday, as the restaurant chain operator benefited from better-than-expected growth at all its restaurant chains, including Pizza Hut, sending its shares up 4%.
  • Yum’s total revenue fell 4% to $1.31 billion, hurt by the company’s move to refranchise its restaurants which replaces sales with royalty fees. Analysts were expecting total revenue of $1.28 billion.
  • Taco Bell’s same-store sales grew 7%, well above expectations of 3.75% growth; while KFC grew 6%, topping estimates of 3.68%.
  • Pizza Hut, a weak spot for the company in the past few years, grew for the first time in five quarters, posting a better-than-expected 2% rise in same-store sales.
  • Overall, the company’s sales from restaurants open at least a year rose 5%, beating Wall Street expectations.

‘Empires’, ‘Dragons’ drive Zynga’s bookings beat

  • Zynga on Wednesday reported higher-than-expected quarterly bookings on strength of its acquired mobile game titles “Empires & Puzzles” and “Merge Dragons!” and raised its 2019 forecast for revenue and bookings.
  • Mobile revenue, which accounted for 94% of total revenue, rose 49% to $287 million in the quarter.
  • Zynga missed on the average number of daily active users, which came in at 21 million versus estimates of 23.2 million.
  • The company reported a wider net loss of $55.8 million, compared with $911,000 a year ago.
  • It raised full-year bookings forecast to $1.50 billion, from the prior forecast of $1.45 billion.

Freddie net income falls, to pay U.S. $1.8 billion in dividends

  • Freddie Mac’s net income fell in the second quarter from a year-ago due to derivative losses, while it will pay the U.S. Treasury Department $1.8 billion in dividends by September, the mortgage finance agency said on Wednesday.
  • Its income totaled $1.506 billion in the second quarter, down from $2.503 billion in the same quarter in 2018.
  • Losses on its derivatives, which Freddie uses to hedge the risks on the loans and securities it owns and guarantees, reached $2.089 billion in second quarter.
  • A year earlier, its derivatives recorded a gain of $416 million.

Fannie Mae net income falls, seen paying $3.4 billion to U.S. Treasury

  • Fannie Mae’s net income fell in the second quarter from a year-ago due to losses on its derivatives, while it is expected to pay $3.4 billion in dividends to the U.S. Treasury, the No. 1 U.S. mortgage financing agency said on Thursday.
  • Fannie Mae’s net revenues in the second quarter totaled $5.396 billion, down from $5.616 billion a year earlier.
  • Fannie Mae recorded a loss of $754 million on the fair value of its derivatives, compared with a $229 million gain in 2018.
  • The agency posted net income of $3.452 billion, compared with $4.457 billion a year ago.

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US ECONOMY & POLITICS

Fed Cuts Rates by a Quarter Point in Precautionary Move

  • The Federal Reserve moved to cut interest rates by a quarter-percentage point—the first reduction since 2008—in a pre-emptive strike to cushion the economy from a global slowdown and continuing trade tensions.
  • Powell said officials weren’t ruling out additional reductions, but neither did they view Wednesday’s action as “the beginning of a long series of rate cuts,” he said. “You would do that if you saw real economic weakness…. That’s not what we’re seeing.”
  • Instead, he framed the decision to lower the Fed’s benchmark short-term rate to a range between 2% and 2.25% as a “mid-cycle adjustment.”
  • Eight of 10 Fed officials voted in favor of the move, while two officials dissented from the decision in favor of holding rates steady.

U.S. Jobless Claims Increased Last Week

  • Initial jobless claims, a measure of how many workers were laid off across the U.S., increased by 8,000 to a seasonally adjusted 215,000 in the week ended July 27, the Labor Department said Thursday.
  • Economists surveyed by The Wall Street Journal had expected 214,000 new claims.
  • The report also showed so-called continuing claims—those filed by workers unemployed for longer than a week—increased by 22,000 to 1,699,000 in the week ended July 20.

U.S. Manufacturing Slipped in July

  • U.S. factory activity lost momentum in July, as a weak global economy and concerns over trade tensions caused further deterioration in the manufacturing sector.
  • The Institute for Supply Management said Thursday its manufacturing index fell to 51.2 in July from 51.7 in June.
  • July marked the fourth straight month of slowing expansion in the index.

China buys U.S. soybeans for first time since June

  • The U.S. Department of Agriculture on Thursday confirmed private sales to China of 68,000 tonnes of soybeans for the 2019/20 marketing year, the first such purchase by a private buyer since the trade war between the world’s two largest economies broke out more than a year ago.
  • It was the first new soybean purchase by China since a 544,000-tonne sale was announced in late June, and the first since Beijing offered to exempt five private crushers in the country from 25% import tariffs on U.S. beans arriving by the end of the year.
  • Although just a fraction of the 87 million tonnes of soybeans the world’s top buyer is expected to import over the 2019/20 (Sept/Aug) season, the purchase was significant.

U.S., Japan Edge Closer to Limited Trade Pact

  • The U.S. and Japan are working to hammer out a limited trade pact that would pave the way for more U.S. farm exports to Japan, while dropping the threat of U.S. tariffs on Japanese cars.
  • Such an accord with Japan would give President Trump a modest win amid diminished expectations for a landmark deal with China and uncertainty over congressional ratification of the administration’s updated deal with Mexico and Canada.
  • U.S. Trade Representative Robert Lighthizer is set to meet Japanese Economic Revitalization Minister Toshimitsu Motegi in Washington on Thursday as the negotiations shift into high gear this week. One of the options is hammering out a deal that wouldn’t need ratification in Congress, according to people familiar with the talks.

Trump to Sign Medicare Order as Part of Attack on Democrats’ Health-Care Message

  • President Trump is preparing to sign an executive order next week on Medicare and moving ahead with allowing some drug imports from Canada, part of the administration’s effort to engineer a response to Democratic proposals that candidates say would expand health coverage to all Americans.
  • The executive order would aim to strengthen Medicare for 44 million Americans and portray the president as defending it against Democrats who want to expand it nationwide under their Medicare for All strategy, a White House official said.
  • The administration on Wednesday also said it would allow the imports of some drugs from Canada, backing an idea most Democratic candidates have also said they support.
  • More executive orders, including one on drug prices, are possible, according to a person familiar with the plans.

Biden, Harris Weather Attacks in Combative Debate

  • Former Vice President Joe Biden and Sen. Kamala Harris took the brunt of the attacks during a raucous and rapid-fire Democratic presidential primary debate that featured confrontations over health care, immigration, criminal justice, racial issues and how best to confront President Trump.
  • Unlike the previous night when the moderate candidates teamed up to attack the top progressives in the race, Wednesday’s debate was more along the lines of every candidate for themselves.
  • Mr. Biden faced repeated attacks over his record serving under former President Obama.
  • Ms. Harris, who is polling among the top candidates, also was criticized by many of the candidates on stage. “The people who suffered under your reign as prosecutor, you owe them an apology,” Rep. Tulsi Gabbard of Hawaii said.
  • Andrew Yang, an entrepreneur whose campaign focuses his proposal for a universal basic income, was one of the only candidates who didn’t go after someone on the stage. “We need to do the opposite of what we’re doing right now, and the opposite of Donald Trump is an Asian man who likes math” Mr. Yang said.

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EUROPE & WORLD

Steel Giant ArcelorMittal Swings to Loss

  • ArcelorMittal, the world’s largest steelmaker, swung to a loss in the second quarter and said it plans to shed about $2 billion in assets, as the beleaguered industry suffers a fall in demand in Europe and the U.S.
  • Sales totaled $19.28 billion, down from $20 billion a year earlier, the company said.
  • ArcelorMittal recorded a net loss for the quarter of $447 million, compared with a profit of $1.87 billion a year earlier, as it booked $900 million in impairments, it said.
  • ArcelorMittal expects global steel demand in 2019 to grow between 0.5% and 1.5%, a half-percentage-point fall in its forecast.

BMW’s Profits Hit by Electric Vehicle and Emissions Costs

  • BMW, the German luxury car maker, said its second-quarter net earnings tumbled 29%, hit by exchange rate fluctuations and manufacturing costs for electric vehicles.
  • Revenues rose 2.9% to €25.7 billion.
  • BMW’s net profit in the three months to the end of June fell to €1.45 billion ($1.6 billion) from €2.05 billion the year before.
  • BMW said earnings reflected €1.4 billion in costs associated with stepping up manufacturing of electric and hybrid vehicles, higher production costs, unfavorable exchange rates, and pressure on pricing due to “fierce competition” in many markets.

Hugo Boss pares outlook due to tough U.S. market

  • Hugo Boss expects full-year sales and earnings to come in at the lower end of its forecasts due to challenges in the U.S. market, despite strong sales growth in China, the German fashion house said on Thursday.
  • However, Hugo Boss said quarterly sales fell 3% in the Americas, which it blamed on the easing of the positive effects of tax reform, weaker business with tourists and a highly promotional market.
  • Overall, second-quarter operating profit rose 3% to 76 million euros ($83.97 million) on sales up a currency-adjusted 2% to 675 million euros – shy of average analyst forecasts for 79 million and 677 million.

Siemens Shares Drop on Gloomy Outlook

  • German industrial giant Siemens on Thursday said a weakening global economic environment was hurting its key industrial businesses as it reported a decline in quarterly profit, sending its shares more than 5% lower.
  • Overall, Siemens’s orders increased 8% to €24.51 billion, driven notably by strong orders at its train-making and signaling business. Revenue rose 4% to €21.28 billion.
  • Net profit for the third quarter fell to €1.03 billion ($1.13 billion) from €1.11 billion a year earlier, as global economic challenges hurt its industrial units, which sell a wider range of automation and machinery-controlling systems around the world.
  • Chief Financial Officer Ralf Thomas said Siemens expected lackluster demand in the car and machinery-making industries to last another three or four quarters as companies are holding back on large investments.

Vale Posts Net Loss; Sets Aside More Funds for Dam Collapse

  • Brazilian mining giant Vale posted a net loss in the second quarter after it set aside additional funds—more than $1 billion—related to a deadly accident at a tailings dam that claimed 270 lives in January.
  • Net operating revenue rose to $9.2 billion, from $8.6 billion in the year-earlier period.
  • Vale’s said it lost $133 million in the quarter, compared with net income of $76 million in the same period a year earlier.
  • Vale said it provisioned an additional $1.37 billion in the quarter related to the dam accident in the small, rural town of Brumadinho in January—after provisioning $4.5 billion in the first quarter.

LNG prices push Shell profit to 30-month low, shares slump

  • Royal Dutch Shell’s profit plunged in the second quarter, with lower oil and gas prices and weaker refining margins outweighing a rise in production.
  • Shell’s production rose 4% to 3.58 million barrels a day compared with a year earlier.
  • Brent crude—the global benchmark—traded around 7% lower in the second quarter compared with the previous year and European and Asian gas prices were down sharply.
  • Shell said its quarterly profit on a current cost-of-supplies basis—a number similar to the net income that U.S. oil companies report—was $3.03 billion, down from $5.23 billion a year earlier.

Bombardier posts loss, lowers 2019 profit forecast as rail woes persist

  • Bombardier lowered its full-year core earnings and free cash flow forecasts, and reported a quarterly loss, as the Canadian plane and train maker wrestles with challenges in its important rail division.
  • EBIT rose to $371 million for the quarter, helped by proceeds from the sale of the company’s Q400 turboprop program.
  • Net loss was $36 million, compared with a profit of $70 million a year earlier. Analysts expected a loss of $30 million.
  • Free cash flow guidance for the year was lowered to negative $500 million from a range of breakeven to negative $250 million.
  • The company reduced its adjusted core earnings forecast for the full year to a range of $1.20 billion to $1.30 billion, from $1.50 billion to $1.65 billion that it had expected earlier.

Infineon confirms reduced guidance, says Cypress deal on track

  • German chipmaker Infineon expects to meet its lowered guidance for the year it said on Thursday after posting third-quarter sales and profit in line with market expectations.
  • Revenue of 2.015 billion euros was 2% up on the prior quarter, meeting market expectations.
  • Operating profit of 283 million euros was down from the prior period, but also in line.
  • In the fiscal fourth quarter, revenue is forecast to grow by 1%, with a segment margin of 14.5%.
  • Munich-based Infineon, which in June agreed to buy Silicon Valley-based Cypress Semiconductor for $10 billion, confirmed the deal was on track to close either toward the end of this calendar year or in early 2020.

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TODAY in HISTORY

  • Adolf Hitler presided over the opening of the Berlin Olympic Games. (1936)
  • MTV made its debut at 12:01 AM. The first video shown was Video Killed the Radio Star by the Buggles. (1981)

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