DAILY MARKET REPORTS
- U.S. stocks rose at the open to cap off a volatile month, propelling major indexes toward their first weekly gain since July.
- Most S&P 500 sectors rose Friday, buoyed by a detente in trade tensions between the U.S. and China a day earlier.
- Investors also got further positive signs that the U.S. economy remains on solid footing after new data showed that consumer spending ramped up in July.
- However, markets are bracing for a new round of U.S. tariffs on some Chinese goods that come into effect on Sunday.
- Ulta Beauty tumbled 27.5% to the bottom of the S&P 500 after the cosmetics company cut its full-year profit forecast.
US FINANCIAL MARKET
Ulta shares plummet as profit and sales miss expectations and company slashes outlook
- Shares of Ulta Beauty tanked more than 25% after the company reported earnings after the bell Thursday that missed analysts’ expectations and slashed its outlook for the fiscal year.
- Its revenue rose 12% to $1.67 billion, compared with $1.49 billion a year earlier, slightly lower than expectations of $1.68 billion.
- Same-store sales were up 6.2% vs. 6.6% rise expected
- The company reported fiscal second quarter net income of $161.3 million compared with $148.3 million a year ago
- The company lowered its earnings forecast to a range of $11.86 to $12.06 per share from a prior range of $12.82 to $13.03 per share. It also cut its revenue growth expectations to between 9% and 12%. Previously, it said it expected low double-digit growth.
Campbell’s profit beats estimate on cost cuts, shares rise
- U.S. food company Campbell Soup reported better-than-expected fourth-quarter profit, benefiting from cost cuts, sending shares up 5% before the bell.
- Net sales rose 2% to $1.78 billion compared to year-ago quarter. Analysts were expecting $1.98 billion in sales.
- Gross margin from continuing operations increased to 34% from 31.4%.
- Campbell said that in the quarter, it cut $45 million in costs under its multiyear cost-savings program.
- However, the company recorded a net loss of $8 million, compared with a profit of $94 million a year earlier.
- For the fiscal year 2020, the company said it expects to earn between $2.50 a share and $2.55 a share on an adjusted basis.
- Campbell said it expects sales to grow between 1% and 3% for the full year.
Dell beats profit estimates on higher desktop sales; shares rise 9%
- Dell Technologies beat Wall Street profit estimates on Thursday, helped by higher demand for desktops, as well as a focus on more profitable contracts within its server unit in China, sending the company’s shares up 9% in extended trading.
- Total revenue rose 2% to $23.37 billion, beating the average analyst estimate of $23.24 billion.
- VMware contributed $2.47 billion in revenue in the second fiscal quarter, up 12% from the same period in the prior year.
- Dell posted net income of $4.51 billion for the second quarter, compared with a loss of $461 million a year earlier.
- The company forecast full-year adjusted earnings per share in a range of $6.95 to $7.40, above analysts’ estimate of $6.42.
Marvell forecasts revenue below estimates on Huawei ban; shares slide
- Marvell Technology forecast third-quarter revenue below Wall Street estimates on Thursday, as a ban on selling components to Chinese telecommunications giant Huawei hurt the U.S. chipmaker.
- Revenue in the quarter fell 1.3% to $656.6 million, but above estimates of $652.1 million.
- Marvell highlighted challenges to business from Huawei and certain large customers, noting that the switch to 5G cellular communications from 4G had cut demand for chips.
- The company reported a net loss of $57.3 million, compared with a profit of $6.8 million a year earlier.
- Marvell expects current-quarter revenue of $660 million, plus or minus 3%, below analysts’ estimates of $697.58 million.
Workday beats second-quarter estimates, raises full-year subscription revenue forecast
- Workday reported better-than-expected quarterly revenue on Thursday, as more customers signed up for its cloud-based financial and human resources software, and the company raised its subscription revenue forecast for 2020.
- Total revenue rose 32% to $887.8 million, also above analysts’ estimates of $872.3 million.
- Subscription revenue in the second quarter jumped 34% to $757.2 million.
- The company’s net loss widened to $120.7 million in the quarter, from $86.2 million a year earlier.
- Workday said it now sees subscription revenue between $3.06 billion and $3.07 billion in fiscal 2020, up from an earlier expectation of $3.05 billion to $3.06 billion.
- The company also forecast third-quarter subscription revenue between $783 million and $785 million. Analysts, on average, were expecting $782.6 million.
China will exempt Tesla cars from purchase tax
- China will exempt Tesla’s electric vehicles from purchase tax, the Ministry of Industry and Information Technology (MIIT) said on its website, sending the company’s shares up more than 4% in early trading.
- China currently levies a 10% purchase tax on the sale of each vehicle.
- The move could reduce the cost of a Tesla car by up to 99,000 yuan ($13,957.82), according to a post on Tesla’s WeChat account.
- Sixteen variants – all the Tesla models sold in the country – are listed on the document issued by MIIT, including Model S, X and 3. No reason was given for the decision to exclude the cars from the tax.
Tesla Raises Price of Model 3 in China Ahead of Tariff Jump
- Tesla raised its prices in China ahead of new Chinese tariffs on imported U.S. cars, increasing the pressure on the California electric-vehicle maker to fast-track production at its new Shanghai plant.
- Tesla on Friday increased the price on its website for an imported Model 3 to roughly $50,870 from $49,750.
- The locally built Model 3 will avoid the tariffs and sell significantly cheaper at $45,860—though that is still expensive by market standards.
- The company has said it is on track to start production this year, and achieve production on a large scale in 2020.
Juul’s Marketing Practices Under Investigation by FTC
- The Federal Trade Commission is investigating whether e-cigarette startup Juul Labs used influencers and other marketing to appeal to minors, ratcheting up pressure on a company whose products are blamed for a rise in vaping among teens.
- The probe, which hasn’t previously been disclosed, began before the agency’s antitrust review of a December deal in which tobacco giant Altria invested $12.8 billion to take a 35% stake in Juul, people familiar with the matter said.
- The Food and Drug Administration and several state attorneys general also are investigating Juul’s marketing practices.
- The FDA last October conducted a surprise inspection of Juul’s headquarters and collected documents about its marketing.
Proposed Opioid Deal with Purdue Drawing Pushback from States
- A proposed deal for Purdue Pharma to resolve more than 2,000 lawsuits over its role in the opioid crisis is facing pushback from a vocal group of state attorneys general who say it doesn’t bring in enough cash to satisfy their demands.
- Virtually every state, in addition to thousands of cities and counties across the U.S., sued Purdue, claiming the company’s aggressive promotion of its painkiller OxyContin helped trigger an addiction epidemic.
- Some states, including New York, Connecticut and Massachusetts, have in recent days criticized a proposed settlement with Purdue valued at as much as $12 billion, people familiar with the matter said.
- Among the states’ concerns is the deal’s reliance on future drug sales, how much money will be guaranteed and the Purdue-owning Sackler family’s contribution, these people said.
Allergan to Pay $5 Million to Settle Ohio Opioid Suit
- Allergan agreed to pay $5 million to settle its part of a landmark federal opioid trial slated to begin in Cleveland in October.
- The pharmaceuticals company said it would pay $1.9 million to Summit County, Ohio, and $3.1 million to Cuyahoga County, Ohio, the two plaintiffs whose claims were chosen to serve as bellwethers in sprawling litigation over the opioid epidemic.
- Pharmaceutical company Endo earlier this month reached a $10 million settlement with the counties in the litigation.
U.S. Prosecutors Probe Huawei on New Allegations of Technology Theft
- U.S. prosecutors are looking into additional instances of alleged technology theft by Huawei, according to people familiar with the matter, potentially expanding beyond existing criminal cases against the Chinese telecommunications giant.
- Among the situations being examined are episodes in which Huawei was accused of stealing intellectual property from multiple people and companies over several years, as well as how the company went about recruiting employees from competitors.
- The inquiries, which include a subpoena for documents from Huawei by federal prosecutors, suggest that the government is investigating aspects of Huawei’s business practices that weren’t covered in indictments of Huawei issued earlier this year.
- It couldn’t be determined if new charges are being sought against the company. A Huawei spokesman declined to comment. A Justice Department spokesman also declined to comment.
Senators Want Answers About Listings for Unsafe Merchandise on Amazon.com
- Three U.S. senators wrote a letter to Amazon CEO Jeff Bezos asking him to take action to stop the sale of unsafe items and to ensure accurate warning labels on his company’s giant sales platform.
- The letter, signed by Senate commerce committee members Richard Blumenthal and Ed Markey, along with Bob Menendez, detailed the findings from an article The Wall Street Journal published last week and asked for a response from Mr. Bezos.
- The Journal reported that 4,152 items that had been for sale on Amazon.com had been declared unsafe by federal agencies, banned by Amazon or are deceptively labeled.
US ECONOMY & POLITICS
U.S. Consumer Spending Rose Sharply in July
- Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.6% last month after an unrevised 0.3% gain in June.
- Economists had forecast consumer spending advancing 0.5% last month.
- Incomes in July edged up just 0.1%, with wages and salaries edging up a modest 0.2%.
- The personal saving rate—the difference between after-tax income and spending—was 7.7% in July, down from 8.0% in June and the lowest rate since November.
U.S. Consumer Sentiment Falls Most Since 2012 on Trade Fears
- The University of Michigan’s final sentiment index fell to 89.8 in August from a previously reported 92.1 and 98.4 in July.
- The data follow somewhat mixed consumer sentiment readings.
- The Conference Board’s confidence measure eased in August but posted the best assessment of current conditions since 2000.
Inflation Picks Up Steam
- U.S. inflation rebounded in July on the back of strong consumer spending, the latest sign that price pressures are recovering from a slow start to the year that helped motivate the Federal Reserve to ease borrowing costs.
- The Fed’s preferred inflation measure, the personal-consumption-expenditures (PCE) price index, rose a seasonally adjusted 0.21% in July from the prior month and 1.38% from July 2018, the Commerce Department said Friday.
- A gauge that excludes volatile prices for food and energy (core PCE price index) rose 0.18% in July from June and 1.58% from a year earlier.
- The reading was in line with forecasts, which expected the core index to rise 0.2% on the month and 1.6% on the year.
Trump Administration Close to Expanding Overtime Pay
- The Trump administration is moving to expand the number of Americans eligible for overtime pay under a rule the Labor Department is set to complete in the coming weeks.
- The rule, which could be completed as early as next month, would increase the annual salary threshold that generally determines who qualifies for time-and-a-half overtime pay, people familiar with the matter said.
- The federal overtime rule would raise the salary threshold to around $36,000, these people said, higher than the current $23,660 figure, which hasn’t been changed since 2004.
- The Labor Department previously estimated some 1.3 million individuals would become eligible for overtime pay under its March proposal, which would have set the threshold at $35,308.
Trump Announces Creation of U.S. Space Command
- President Trump announced the creation of U.S. Space Command on Thursday, saying it will be a “different ballgame” for those who wish to challenge the U.S. in space.
- The announcement establishes an 11th U.S. combatant command, which will draw forces from across the military branches much like U.S. Central Command overseeing the Middle East or U.S. Special Operations Command overseeing special operations forces.
- The new “SpaceCom,” created at Mr. Trump’s behest, is designed to defend U.S. interests in space, in what Mr. Trump and others have called “the next warfighting domain.
EUROPE & WORLD
Brexit: PM Johnson faces mounting legal, political, diplomatic challenges
- Prime Minister Boris Johnson’s Brexit plan was facing mounting legal, political and diplomatic challenges on Friday as Ireland accused Britain of being unreasonable and former British leader John Major sought to stop the suspension of parliament.
- The ultimate outcome of Britain’s tortuous three-year Brexit crisis remains unclear with options ranging from a frantic departure without an exit deal or a last-minute agreement to an election or referendum that could cancel the whole endeavor.
- Johnson’s bid to get the insurance policy for the Irish border changed were bluntly dismissed by Dublin which said London was being totally unreasonable.
- German Foreign Minister Heiko Maas said Britain should make concrete proposals as soon as possible but that the EU could not imagine reopening the Withdrawal Agreement that Johnson’s predecessor Theresa May agreed with Brussels in November.
China’s yuan on course for worst month since 1994
- China’s yuan drifted lower on Friday, set for its worst month since the country’s currency reform in 1994, due to trade tensions with the United States and a slowdown in the domestic economy.
- At the end of domestic trading, onshore spot yuan finished at 7.1452 per dollar as of 0830 GMT, 22 pips weaker than the previous late session close of 7.1430.
- If the spot yuan finishes the late night trade at the domestic closing price, it would have lost 3.7% to the dollar in August, booking itself the biggest monthly decline since China unified official and market exchange rates in 1994.
India’s Economic Growth Slows to Six-Year Low
- India’s economic growth slowed to a six-year low last quarter as its metastasizing debt problems choked government, corporate and consumer spending.
- The gross domestic product growth at Asia’s third-largest economy slipped to a weaker-than-expected 5.0% in the three months through June compared with a year earlier, the government said Friday.
- That is well below the 5.6% or so most economists had predicted and its worst performance since the quarter through Dec. 2012.
Arrest of Hong Kong Activists, Rally Ban Set Stage for More Clashes
- The arrest of opposition activists and the ban of a mass rally planned for Saturday set the stage for an escalation of conflict between antigovernment protesters and police this weekend.
- As the city enters its 13th weekend of unrest and authorities crack down on public assemblies and dissenting voices, the political deadlock has no end in sight, with no concessions from local authorities to protester demands.
- In a series of swoops Friday, police arrested at least six opposition figures, including Joshua Wong and Agnes Chow, former student leaders of 2014 street protests who are among the best-known faces of the pro-democracy movement.
- On Friday morning, an appeals tribunal upheld a police ban on a mass rally planned for Saturday.
- The event was officially canceled, but users on Telegram, a messaging app popular among protesters, said they would gather on Saturday even though any assembly would be unlawful.
Japan to Beef Up Military with Money for Aircraft Carrier, U.S. Jet Fighters
- Japan plans to start converting a destroyer next year into its first post-World War II aircraft carrier and make its first payment for Lockheed Martin F-35B jet fighters that can take off from the ship.
- The Defense Ministry on Friday included those steps in its budget request for the fiscal year starting April 2020, which calls for increasing defense spending for an eighth successive year to a new high.
- The aircraft carrier and F-35B jet fighters are intended to beef up Japan’s ability to defend its southern island chain and project power further from its shores.
TODAY in HISTORY
- The Second Battle of Bull Run took place during the Civil War. (1862)
- The two-year siege of Leningrad during World War II began. (1941)
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