DAILY MARKET REPORTS
- U.S. stocks rallied Thursday after President Trump said he would meet with a key Chinese official for talks Friday.
- Negotiations are set to continue Thursday after the White House signed off on special licenses for some U.S. companies to do business with Chinese telecom giant Huawei.
- Third-quarter reporting season for large companies begins in earnest next week, with S&P 500 firms expected to post a drop-in profits from a year earlier.
- Among individual stocks, shares of Delta Air Lines slid 3.8% after the company’s quarterly results added to concerns about rising carrier costs.
- Bed Bath & Beyond soared 28% after the struggling retailer tapped Target’s Mark Tritton as its next chief executive.
- PG&E tumbled nearly 30% after the judge presiding over its bankruptcy handed shareholders a loss, opening the door to a competition over the best path out of bankruptcy that pits the troubled utility against bondholders led by Elliott Management.
US FINANCIAL MARKET
Delta Hires to Avoid Repeat of Summer Squeeze
- Delta reported Thursday that quarterly earnings beat forecasts, but its costs have been climbing this year as it absorbs increased staff overtime as well as the impact of several storms.
- Revenue rose 5.1% to $12.56 billion, slightly below the average analyst estimate.
- The company reported net profit of $1.5 billion compared with $1.32 billion a year earlier.
- Delta has one of the industry’s strongest balance sheets, but its cost challenge is exacerbated by a $14 billion order book of Airbus SE jetliners. The U.S. plans to slap a 10% tariff beginning Oct. 18 on aircraft made in the European Union.
- Delta, which this year overtook American Airlines Group Inc. as the world’s largest airline by traffic, doesn’t operate the 737 MAX.
U.S. Steel Boosts Revenue Outlook
- The steelmaker said it plans to post revenue between $3.04 billion and $3.08 billion for its current quarter, above the $3.02 billion Wall Street analysts were expecting.
- The company said it was helped by stronger shipments, better than planned manufacturing performance in its flat-rolled steel segment and a gain from recovered claims from the bankruptcy of a supplier.
- The company plans to release its results on Oct. 31.
Fidelity Is Latest to Cut Online Trading Commissions to Zero
- Fidelity Investments eliminated trading commissions on its online brokerage, matching a step some of its biggest rivals unveiled last week.
- Beginning early Thursday, Fidelity stopped charging individual investors commissions on online trades of U.S. stocks, exchange-traded funds (ETFs) and options trades.
- For investment advisers, commissions will be cut to zero on Nov. 4. Fidelity’s online brokerage has 21.8 million accounts.
- Before Thursday’s move, Fidelity charged $4.95 for online stock trades.
- Schwab said last week it would scrap commissions to trade stocks, ETFs and options online. While TD Ameritrade and E*Trade Financial quickly followed suit, Fidelity didn’t.
PG&E Plunges on Fear of Total Wipeout by New Bankruptcy Plan
- PG&E shares plunged as it grappled with a court ruling that threatens to put the fate of the bankrupt power giant in the hands of outsiders and perhaps wipe out the stock.
- The shares dropped as much as 32% Thursday after U.S. Bankruptcy Judge Dennis Montali stripped PG&E the previous day of exclusive control over its recovery process.
- The decision escalates an already-heated battle for control of the largest utility bankruptcy in U.S. history.
- Montali agreed to let bondholders including PIMCO and Elliott Management pitch their own restructuring plan alongside PG&E’s, so they can both come up with ways the utility could deal with an estimated $30 billion in wildfire liabilities.
- Some of PG&E’s bonds jumped to their highest levels in almost two years.
Luxury Shares Jump After LVMH Powers Through Hong Kong Protests, Trade Tensions
- Paris-based LVMH, the world’s biggest luxury company, said revenue for the quarter was €13.3 billion ($14.6 billion), an 11% increase after adjusting for the impact of currency fluctuations and acquisitions.
- Investors had worried that the protests against China’s encroachment on the autonomy of Hong Kong, a magnet for well-heeled shoppers from across Asia, would hurt revenue.
- But at least for LVMH, the company is so large and has so many brands -—including Louis Vuitton, Dior, Fendi and Dom Pérignon—that disruption in one shopping destination had little impact on the overall conglomerate.
Apple, Google Pull Hong Kong Protest Apps After China Uproar
- Apple and Google both removed apps associated with Hong Kong’s antigovernment protests from their digital stores in recent days, thrusting the two Silicon Valley giants into the controversy engulfing U.S. companies related to the unrest.
- Apple removed from its App Store a crowdsourced map service that allows Hong Kong protesters to track police activity, one day after the Chinese Communist Party-run People’s Daily newspaper lashed out at the iPhone maker, calling the app “toxic software.”
- Google removed from its Google Play store a mobile game that allowed players to role-play as a Hong Kong protester.
E-Commerce Driving Bigger Demand for Smaller Warehouses, CBRE Says
- Rents for U.S. warehouses of between 70,000 and 120,000 square feet rose by more than 33.7% over the past five years.
- Availability for such spaces plunged to 7.4% from 11.3% during that same period, the biggest drop of any segment in the broader warehouse market.
- By contrast the cost to lease bigger industrial spaces of more than 250,000 square feet—including the big-box warehouses that have traditionally anchored retail and industrial distribution networks—grew by 15.6%, CBRE found.
- Overall industrial rents rose by 23.9% between the second quarter of 2014 and the second quarter of 2019.
Self-Driving Truck Startup Einride Raises $25 Million in New Funding Round
- Autonomous electric delivery truck startup Einride raised $25 million in a Series A investment round it said would help expand the Sweden-based business into the U.S.
- Einride last year partnered with logistics company DB Schenker to start operating the Einride vehicle in a recurring industrial operation, the company said. Earlier this year, the company operated an autonomous electric truck on a short route on a public road in Sweden between a shipping terminal and a warehouse.
US ECONOMY & POLITICS
U.S. Consumer Prices Unchanged in September
- Decline in energy and used vehicle prices holds down broader inflationary pressures.
- The consumer-price index (CPI), which measures what Americans pay for everything from lawn care to bus fares, was unchanged in September after rising a seasonally adjusted 0.1% in August.
- Excluding the volatile food and energy categories, so-called core prices rose 0.1% in August.
- In the 12 months through September, overall prices rose 1.7%, while core prices were up 2.4% on the year.
EUROPE & WORLD
U.S.-China Trade Talks Begin; Trump to Meet with China’s Top Envoy Friday
- The U.S. president said, ‘Big day of negotiations with China. They want to make a deal, but do I?’
- Senior U.S. and Chinese officials squared off in trade talks Thursday at a pivotal moment in the countries’ relationship with President Trump planning to meet with the head of the Chinese negotiating team, Chinese Vice Premier Liu He, when the talks are scheduled to conclude Friday.
- The two sides meet with higher tariffs looming Tuesday if negotiators fail to break a five-month stalemate.
- The already-complicated talks also are muddied by other issues, ranging from China’s repression of its Muslim minorities to the possible impeachment of President Trump. occur as the U.S. takes.
China to Ask U.S. to End Sanctions on Its Biggest Shipping Company
- China plans to ask the U.S. to lift sanctions on its biggest shipping company at high-level trade negotiations in Washington this week, people familiar with the matter said.
- The U.S. decision to impose sanctions on Chinese shipowners including COSCO Shipping Energy Transportation Co. prompted a bidding war as charterers scrambled to replace vessels owned by targeted companies.
- It sent costs for ships with oil-carry capacities ranging from 650,000 to 2 million barrels to a 2019-high, while supertanker day rates for the Middle East to China route surged to its highest in probably 11 years.
Europe Says It’s Ready for a Trade War If Pressured by the U.S.
- France’s finance minister said he doesn’t want the European Union to become the latest front in the global trade war, but that the bloc would hit the U.S. with sanctions if a settlement isn’t reached in a long-running dispute over aircraft aid.
- “We are all aware of the dramatic consequences of this trade war between China and the U.S. on the level of growth,’’ minister Bruno Le Maire told reporters in Luxembourg on Thursday. “Do we really want to add a trade war between the U.S. and Europe to the Chinese and American trade war?’’
- The World Trade Organization gave the U.S. the go-ahead as soon as this month to impose tariffs on about $7.5 billion of European exports annually in retaliation for illegal government aid to Airbus.
TODAY in HISTORY
- The U. Naval Academy opened in Annapolis, Md. 1845
- The tuxedo dinner jacket made its debut at a ball in Tuxedo Park, N.Y. 1886
- Sun Yat-sen’s revolutionaries overthrew the Manchu dynasty in China. 1911
- Chiang Kai-shek took the oath of office as president of China. 1943
- Fiji gained its independence from Great Britain. 1970
- Vice President Spiro Agnew resigned after being charged with tax evasion. 1973
- California representative Nancy Pelosi became minority whip. 2001
- The US Congress gave President Bush authorization to use military force against Iraq. 2002
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