DAILY MARKET REPORTS
- U.S. stocks rebounded Wednesday following their worst two-day stretch in months, lifted by the latest round of corporate earnings.
- Boeing shares added 6.4% after the aerospace giant forecast a higher profit margin and a big rise in cash generated from record jetliner deliveries.
- Trump said he wanted legislation to generate at least $1.5 trillion for infrastructure spending and revisited a campaign promise to lower drug prices.
- An ADP report showing the U.S. private sector added much more jobs in January than expected, 234,000 vs. 185,000.
- The Federal Reserve’s two-day meeting ends on Wednesday and its statement at 2 p.m. ET (1900 GMT) could shed light on the central bank’s economic and interest rate hike outlook.
US FINANCIAL MARKET
Boeing Blows Past Estimates with Help from Tax Cut; Shares Surge
- Boeing jumped the most in six months as earnings surged on deliveries of the 737, the planemaker’s largest source of profit, and an unexpectedly large one-time gain from U.S. tax cuts.
- The world’s largest aerospace company on Wednesday said higher jetliner sales will push operating cash up to $15 billion this year from $13.3 billion.
- Revenue rose 8.9 percent to $25.4 billion, compared with the $24.7 billion analysts expected.
- Profit in the fourth quarter rose $3.13 billion from $1.6 billion a year earlier.
- Sales will climb to between $96 billion and $98 billion this year while deliveries of commercial jetliners rise to between 810 and 815. Boeing delivered 763 jetliners in 2017 and secured net orders for 912 planes.
- Boeing’s commercial airplane division posted an 11.5 percent operating margin, up from 8.3 percent a year earlier.
- The defense unit’s margin advanced slightly to 10 percent.
Health insurer Anthem’s profit, 2018 forecast top estimates
- Anthem said net income rose to $1.23 billion in the fourth quarter.
- The company, which recorded a one-time benefit of $1.1 billion due to the new U.S. tax law.
- The company said enrollment totaled about 40.2 million members at the end of the quarter.
- Total operating revenue rose 4.5 percent to $22.45 billion, reflecting premium rate increases.
Homebuilder D.R. Horton’s profit, revenue beat on higher sales
- Home prices in 20 metropolitan areas rose 6.4 percent in November and consumer confidence rebounded in January.
- D.R. Horton said it expects to sell between 50,500 and 52,500 homes in fiscal 2018.
- Net income fell to $189.3 million in the quarter from $206.9 million a year earlier.
- Revenue rose 14.8 percent to $3.33 billion, beating the estimate of $3.26 billion.
Lilly beats estimates on newer drugs, raises 2018 profit forecast
- Sales of the recently launched diabetes drug Trulicity nearly doubled to $649 million.
- However, the company incurred $1.94 billion in charge in the quarter related to the overhaul of the U.S. tax code.
- The charges pushed Lilly to a net loss of $1.66 billion compared with a year-ago profit of $771.8 million.
- Revenue rose nearly 7 percent to $6.16 billion.
AMD’s earnings top estimates as graphics chip demand rises
- Chipmaker AMD reported fourth-quarter earnings and revenue that handily exceeded Wall Street forecasts, as it sold more graphics processors used in data centers and computers.
- AMD said total revenue rose 33.3 percent to $1.48 billion exceeding analysts’ average estimate of $1.41 billion.
- The company reported net income of $61 million, compared to a loss of $51 million a year earlier.
- Sales in its graphics and computing business, which makes processors for servers and gaming consoles, rose 60 percent year-over-year to $958 million.
Xerox reports fourth-quarter loss
- Printer and copier maker Xerox reported a quarterly loss as tumbling demand for office printing took a toll on its results.
- The company reported a net loss from continuing operations of $196 million in the quarter compared with a profit of $185 million a year earlier.
- Total revenue was nearly flat at $2.75 billion.
Game publisher EA’s sales forecast tops estimates; shares rise
- Net loss was $186 million in the quarter, compared with a loss of $1 million, or break even per share, a year earlier.
- The latest quarter included an income tax related charge of $176 million.
- Revenue for the third quarter was $1.97 billion.
- Sales at EA’s high-margin digital business rose nearly 14 percent to $780 million as more gamers bought their titles online instead of purchasing physical copies from retail stores.
Align Technology Beats Street 4Q forecasts
- Align Technology reported fourth-quarter earnings of $10.3 million. The results beat Wall Street expectations.
- The maker of the Invisalign tooth-straightening system posted revenue of $421.3 million in the period, which also topped Street forecasts.
- For the year, the company reported profit of $231.4 million. Revenue was reported as $1.47 billion.
Eagle Materials posts 3Q profit
- Eagle Materials reported fiscal third-quarter earnings of $101.4 million.
- The maker of gypsum wallboard and cement posted revenue of $359.4 million in the period.
Energizer hikes profit guidance
- Gross margin was flat compared to a year ago at 48.5% of sales.
- Looking ahead, Energizer expects organic sales growth to increase at a low single digit rate.
Raytheon wins $2.3 billion U.S. defense contract
- Raytheon was awarded a $2.3 billion U.S. defense contract for engineering services to support the Patriot anti-missile system through Jan. 31, 2023.
- The contract is for ongoing support of software and to refresh the system for obsolescence.
- It includes support of systems outside the continental United States as well as partner-country systems, the Pentagon said.
Bitcoin is heading for its biggest monthly decline since January 2015
- The bitcoin price could be headed for its worst monthly decline since January 2015.
- Increased scrutiny from regulators and criticism from major businesses and leaders has weighed on the price, which is below $10,000.
- Bitcoin has fallen in four out of five of the Januarys in the period between 2013 and 2017.
US ECONOMY & POLITIC
U.S. Private Sector Added 234,000 Jobs in January
- Firms across the country added 234,000 workers in January.
- The December figure was revised down to 242,000 from 250,000.
- The ADP report is based on private-payroll data in addition to government data.
- The ADP report comes ahead of the monthly jobs report from the U.S. Bureau of Labor Statistics on Friday.
U.S. Employment Costs Rose 0.6% in Fourth Quarter
- The rise in overall costs suggests employers may be feeling pressure to raise wages or boost benefits amid a shrinking supply of available workers.
- Wages and salaries, which account for 70% of total compensation, rose 0.5% from the prior quarter.
- Benefit costs—which include health coverage, retirement benefits and paid leave—advanced 0.5%.
- Private workers saw compensation rise 0.5% in the fourth quarter, a slowdown from the previous quarter.
- Meanwhile, state and local government workers saw compensation pick up in the fourth quarter to a 0.8% increase.
Pending home sales eke out 0.5 percent gain in December as supply shrinks to record low
- Home shoppers signed 0.5 percent more contracts to buy existing homes in December compared with November.
- The supply of homes for sale at the end of December fell to the lowest level since the Realtors began tracking it in 1999.
- Low inventory is the primary driver of rising home prices, which continue to accelerate. Prices are rising fastest on the lower end of the market, where demand is strongest. Millennial demand is also increasing.
Rising interest rates cause a 2.6% pullback in weekly mortgage applications
- Total mortgage application volume fell 2.6 percent last week as rates moved higher, the Mortgage Bankers Association says.
- Volume remains 6.6 percent higher than the same week one year ago.
- Applications to refinance a home loan, which are most sensitive to even the smallest moves in interest rates, fell 3 percent for the week.
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $453,100 or less increased to 4.41 percent, its highest level since March.
Fed expected to keep interest rates steady as Yellen era ends
- The Federal Reserve is expected to leave interest rates unchanged on Wednesday while signaling a gradual tightening of monetary policy later this year as the U.S. economy continues to expand and job gains remain solid.
- The Fed is due to release a statement at the end of its latest two-day policy meeting at 2 p.m. EST. The policy meeting is Fed Chair Janet Yellen’s last as head of the central bank.
Homeownership Rate Rose in 2017 for First Time Since 2004
- The U.S. homeownership rate rose in 2017 for the first time in 13 years, driven by young buyers who overcame rising prices, tight supply and strict lending conditions to purchase their first homes.
- The homeownership rate rose to 64.2% in the fourth quarter of 2017 from 63.7% a year earlier.
- The homeownership rate among households headed by someone under age 35 rose to 36% in the fourth quarter from 34.7% a year earlier.
In State of the Union, Trump Vows Optimism as More Fights Loom
- President Donald Trump, in his first State of the Union address, called for major, bipartisan deals on infrastructure and immigration, while reversing his predecessor’s vow to close the Guantanamo Bay prison facility for suspected terrorists.
- The president lauded the improving economy and rising stock market, but warned about continuing threats from North Korea.
- However, his framing of the immigration debate, with a heavy emphasis on protecting victims of crimes committed by people living in the country illegally, may make reaching a deal with Democrats on the issue harder.
EUROPE & WORLD
Samsung unveils stock split, record profit as chips sizzle
- Samsung announced its first stock split and said it expects demand for semiconductors to remain strong in 2018, as it posted record annual profit driven by a so-called memory chip “super-cycle.”
- Led by a stellar fourth quarter, the company brought home an annual operating profit of 53.7 trillion won ($50.2 billion) in 2017, outstripping the previous record of 36.8 trillion won in 2013.
Japan’s Fujifilm to take over Xerox in $6.1 billion deal, create joint venture
- Fujifilm is set to take over Xerox in a $6.1 billion deal, combining the U.S. company into their existing joint venture to gain scale and cut costs amid declining demand for office printing.
- Fujifilm now owns 75 percent of Fuji Xerox, the joint venture going back more than 50 years ago which sells photocopying products and services in the Asia-Pacific region.
- Fujifilm on Wednesday reported a 29.4 percent drop in operating profit at its document solutions operations, underperforming its imaging and information segments.
Siemens first quarter profit falls on power and gas decline
- Siemens’s quarterly group sales rose 3 percent to 19.82 billion euros.
- Separately, Siemens said U.S. tax reforms resulting in a lowering of the corporate tax rate led to a net positive effect of 437 million euros in the fiscal first quarter.
Ericsson Cuts 10,000 Jobs Amid Costly Turnaround
- Ericsson reported a net loss of 18.9 billion Swedish kronor ($2.4 billion) for the fourth-quarter.
- Revenue declined to 57.2 billion kronor, from 65.2 billion kronor in the same period a year earlier.
- Ericsson said it cut about 17,000 jobs, of both employees and contractors, in 2017 overall.
- “We view 2017 as a very challenging year,” Ericsson Chief Executive Borje Ekholm said.
TODAY in HISTORY
- The first social security check was issued to Ida Fuller for $22.54. (1940)
- The first U.S. earth satellite, Explorer I, was launched. (1958)
- The first McDonald’s opened in Russia. (1990)
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