DAILY MARKET REPORTS
- U.S. stocks rose on Friday as moderate jobs growth in September offered some relief from a spate of dismal economic data this week that has rankled markets and fueled concerns that the United States was sliding into a recession.
- The Labor Department’s report showed nonfarm payrolls increased by 136,000 last month and unemployment rate dropped to a 50-year low, but manufacturing payrolls declined for the first time in six months.
- Bets of another interest rate cut by the Federal Reserve have soared this week as U.S. factory activity contracted, private sector hiring cooled and service sector activity fell.
- Traders currently see a 76% chance for the central bank to lower borrowing costs at its policy meeting later this month, from 40% on Monday.
- Hong Kong’s Hang Seng dropped 1.1% after the city’s chief executive said a ban would be implemented on wearing masks at public gatherings, with penalties of up to a year in jail and a fine.
- HP tumbled 8.7% after the PC maker said it would cut up to 16% of its workforce as part of a restructuring plan that would result in an overall charge of $1 billion.
US FINANCIAL MARKET
Costco quarterly sales miss estimates amid fierce competition
- Costco Wholesale reported quarterly revenue below Wall Street estimates on Thursday, as the U.S. hypermarket chain struggled to attract shoppers in the competitive grocery space.
- The company’s total revenue rose about 7% to $47.50 billion but fell short of estimates of $47.57 billion.
- Comparable-store sales, or those recorded at Costco’s e-commerce platform and warehouses open for more than a year, rose 5.1%, excluding the impact of fuel and currency fluctuations.
- Analysts estimated a 5.25% rise.
- Online sales increased 22% in the period.
- Profit during the quarter rose to almost $1.10 billion, from $1.04 billion a year earlier.
HP to Cut Up to 9,000 Jobs in New CEO’s Restructuring Plan
- Incoming HP Chief Executive Enrique Lores is moving quickly to imprint changes on the computer hardware maker with plans to shrink the company’s ranks by as much as 16% in a restructuring plan that also aims to revive lagging printer sales.
- HP Thursday said it could eliminate 7,000 to 9,000 jobs from its roughly 55,000 workforce over the next three years.
- The cuts, once completed, should yield annual savings of about $1 billion, the company said at its annual securities-analyst meeting.
Amazon Clashes with Disney Over Terms for Offering Apps in Fire TV
- Amazon.com and Walt Disney are at loggerheads over terms for carrying the entertainment giant’s apps in Amazon’s Fire TV devices, a dispute that highlights the new power struggles emerging in the streaming economy.
- Amazon is pushing for the right to sell a substantial percentage of the ad space on Disney apps, and Disney has so far resisted, according to people familiar with the situation.
- Some of these people say they are optimistic the companies will reach an agreement.
- If they don’t, Disney apps could be removed from Fire TV, the second-largest distributor of streaming TV apps.
Disney Bans Netflix Ads as Streaming’s Marketing Wars Intensify
- Walt Disney is banning advertising from Netflix across its entertainment TV networks, according to people familiar with the situation, a sign that the marketing wars over streaming-video are escalating as media giants battle each other for subscribers.
- Netflix spent $1.8 billion on advertising last year and will be playing defense against Hollywood’s new entrants.
- Disney, whose properties include ABC and the Disney Channel, earlier this year put out an edict to staffers that it wouldn’t accept ads from any rival streaming services, but later reversed course and found a compromise with nearly every company.
- The exception was Netflix.
- In making its decision, Disney evaluated whether it had a mutual business or advertising relationship with the companies, one of the people said. Netflix doesn’t show ads in its programs.
Barr Presses Facebook on Encryption, Setting Up Clash Over Privacy
- U.S. Attorney General William Barr has asked Facebook to hold off on plans to add encryption throughout its messaging services, citing public safety in a push to force the social-media giant to delay a major strategic shift outlined by Chief Executive Mark Zuckerberg earlier this year.
- Mr. Barr made the request in an open letter signed by his British and Australian counterparts that was published Friday.
- The letter asks the company to delay the encryption plan until it figures out a way to provide government access to the services for investigative purposes.
- Mr. Barr also signed an agreement with the U.K. that would make it quicker for British police to request data from internet companies by circumventing the Justice Department and going to firms directly.
U.S. seeks advertising, sales data on e-cigarette companies
- The U.S. Federal Trade Commission has ordered a half-dozen e-cigarette companies to turn over sales and advertising data, the federal regulator said on Thursday, in the first sign of a likely probe of their marketing practices.
- The announcement comes the same day the U.S. Centers for Disease Control and Prevention said the number of confirmed and probable cases of lung illnesses associated with vaping had reached 1,080 in the United States.
- The CDC also said on Thursday that 18 people have died due to the lung illnesses.
- The FTC order was sent to JUUL Labs, RJ Reynolds Vapor Company, Fontem US, Logic Technology Development, Nu Mark and NJOY, the FTC said in a statement.
Hedge Fund Darsana Slashes Juul’s Valuation by More Than a Third
- Hedge fund Darsana Capital Partners recently wrote down its investment in Juul Labs by more than a third and now holds it at a price that values the e-cigarette company at $24 billion, said people familiar with the matter.
- The New York firm is one of a number of hedge funds that rode Juul to big gains last year on the back of a December deal by tobacco company Altria Group that instantly made Juul one of the most valuable startups in the U.S.
- Juul doubled to a $38 billion valuation in the span of six months last year.
Fed Expected to Give Large Banks a Break on Postcrisis Rules
- The Federal Reserve is expected next week to complete some of the most significant changes to bank rules since President Trump took office, setting up a new way of deciding which large banks are hit with its toughest regulations.
- The Fed announced Thursday it would vote Oct. 10 on a measure to ease liquidity and capital rules for large U.S. banks, signing off on a plan that may lower regulatory costs for regional U.S. lenders under the $700 billion asset line.
- Under a proposal released a year ago, the Fed would divide large U.S. banks into four categories based on their size and other risk factors.
- Regional lenders would be either entirely free from certain capital and liquidity requirements or see those requirements reduced.
US ECONOMY & POLITICS
U.S. Economy Added 136,000 Jobs in September
- U.S. employers added jobs at a steady pace last month, and the unemployment rate hit a 50-year low, signaling the labor market continues to provide opportunities for Americans in search of work despite a broader economic slowdown.
- The U.S. economy added 136,000 jobs in September, the Labor Department reported Friday.
- Economists forecast an unemployment rate of 3.7% in September and job growth of 145,000.
- The jobless rate dropped to 3.5% in September from 3.7% in August, marking the lowest jobless rate since December 1969, when it also logged in at 3.5%. The average workweek was unchanged at 34.4 hours.
- Payrolls for August and July were revised up by a combined 45,000.
- Average hourly earnings were little changed from the prior month, missing estimates for a gain, while the 2.9% annual wage gain fell below all estimates.
- A broader measure of unemployment and underemployment—which includes those too discouraged to look for work, plus Americans stuck in part-time jobs but who want to work full-time fell to 6.9% in September from 7.2% in August.
- The so-called U-6 rate is now at the lowest level since 2000.
- The drop in the unemployment rate, though, was for positive reasons, as it did not reflect a corresponding decline in the labor force participation rate, which held steady at 63.2%.
Trade Gap Widened in August
- The trade deficit in goods and services increased 1.6% from a month earlier to a seasonally adjusted $54.9 billion in August, the Commerce Department said Friday.
- The goods-trade gap with China shrank to a seasonally adjusted $28.9 billion from $29.6 billion a month earlier.
- Exports to China increased to $10 billion while imports declined slightly to $38.9 billion.
- So far this year, the U.S. merchandise deficit with China has narrowed to a seasonally adjusted $238.4 billion from $270.1 billion in the same eight months of 2018.
- Overall exports increased 0.2% to $207.9 billion, driven by a 3.4% increase in exports of capital goods, particularly fuel oil.
- Imports rose 0.5% to $262.8 billion.
Trump Administration Used Potential Meeting to Pressure Ukraine on Biden, Texts Indicate
- The Trump administration sought to use a potential meeting between the president and his Ukrainian counterpart as leverage to press Kyiv to investigate Joe Biden, newly released text messages indicated, as President Trump called on China to also investigate his political rival.
- The president’s efforts to persuade Ukraine in a July phone call to investigate Mr. Biden have already set off an impeachment inquiry by House Democrats, who are looking at whether the president abused the power of his office for political gain.
- Text messages released by House committees revealed that Trump administration officials sought to use a White House meeting between Mr. Trump and his Ukrainian counterpart as leverage to press the Ukrainian government to pursue an investigation into Mr. Biden and other matters.
- The messages indicate that U.S. officials coordinated with aides to the Ukrainian president and Rudy Giuliani, Mr. Trump’s private lawyer, on a draft statement in which Kyiv would announce an investigation into Mr. Biden and the 2016 U.S. election—at the same time as announcing a visit by the Ukrainian president to the White House.
Supreme Court Agrees to Review Louisiana Abortion Restrictions
- The Supreme Court agreed to review Louisiana abortion restrictions that require doctors to hold hospital admitting privileges near where the procedure is provided, a case that will test recent abortion precedent and reveal the thinking of the court’s newest members on an inflammatory issue.
- The case was one of three new matters the justices added to their docket Friday ahead of the start of their new term that begins next week.
- The case marks the first time the Supreme Court will consider the issue of abortion rights since the addition of two Trump appointees, Justices Neil Gorsuch and Brett Kavanaugh.
- President Trump had pledged to nominate justices who would overturn Roe v. Wade, the landmark case that established a constitutional right to abortion. Both men have said they have made no such commitment.
EUROPE & WORLD
EU Pledges Restraint as U.S. Moves to Add Tariffs
- The European Union signaled it wouldn’t immediately retaliate against new U.S. tariffs, seeking to avoid a broader trade war as Washington moves to punish the bloc over Airbus SE subsidies the World Trade Organization ruled illegal.
- European officials signaled their inclination to temporarily accept U.S. duties of 10% on commercial jetliners and 25% on agricultural and other goods.
- Previously, the European Commission—the EU’s executive and trade authority—had suggested revoking old WTO settlements to rapidly retaliate against $4 billion of U.S. exports.
India Slashes Interest Rate, Growth Forecast as Slump Stretches On
- India’s central bank cut its key lending rate to a nine-year low and slashed the country’s growth forecast as Asia’s third-largest economy struggles with a surprising slump in demand.
- The Reserve Bank of India lowered its rate to 5.15% from 5.40% on Friday, its fifth-rate reduction in a row.
- It also significantly cut its economic growth prediction for the year ending March 31, 2020, to 6.1% from 6.9%.
- Caps on New Delhi’s spending, debt-laden companies, thrifty consumers and growing trade tensions globally helped slow India’s gross-domestic-product growth to 5.0% in the June quarter, a six-year low, catching even the central bank by surprise.
Ukraine to Review Investigations into Firm Linked to Biden’s Son
- Ukraine’s prosecutor general’s office said Friday it is reviewing past investigations into the owner of a gas company linked to former U.S. Vice President Joe Biden’s son, raising the possibility of restarting probes amid pressure from President Trump.
- Ukraine’s top prosecutor, Ruslan Ryaboshapka, said the review of the Burisma probes is part of a wider audit of investigations that were closed or dismissed by his predecessors.
- If cases involving Burisma are reopened, it could keep public attention focused on Mr. Trump’s allegations of corruption against the Bidens during the U.S. presidential campaign.
Hong Kong Imposes Ban with Jail Time for Wearing Masks at Protests
- Chief Executive Carrie Lam opened the door Friday to more extreme measures to quell protests, using emergency powers to impose an antimask law—a move that triggered a fresh wave of demonstrations and also risks giving the opposition movement renewed momentum.
- The city’s leader invoked the British colonial-era law for the first time in 52 years, saying it was designed as a deterrent to social unrest that posed a serious public danger.
- The ban on people wearing masks at public gatherings and unlawful assemblies would be punishable by as much as one year in prison.
- Many protesters have worn masks during the past four months to avoid being identified, with some also wanting to protect themselves from tear gas fired by riot police amid increasingly widespread and violent clashes.
Hong Kong Protesters Find Fresh Targets: ‘What I Taste From Starbucks Is…Shame’
- At a recent rally in Hong Kong, protesters smashed the glass front of a Starbucks cafe, dragged some of its chairs into the street and lounged around in them as they watched the demonstration unfold.
- Across the city, Starbucks Corp. cafes have been spray painted with profanity and plastered over with posters. Protesters have called for a boycott.
- The Seattle coffee chain has become a flashpoint for antigovernment activists in Hong Kong.
TODAY in HISTORY
- The International Herald Tribune was published for the first time. 1887
- The Soviet Union launched the first artificial satellite, Sputnik, into orbit around the earth, ushering in the Space Age and Space Race. 1957
- The German parliament met for the first time since the reunification of Germany. 1990
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