DAILY MARKET REPORTS
- U.S. stocks steadied slightly after their worst day in eight months on Thursday as a smaller-than-expected rise in consumer prices suggested inflationary pressures were easing, weakening the case for an aggressive campaign of further interest rate rises.
- The Consumer Price Index (CPI) increased 0.1% last month, Labor Department data showed, as did core CPI, which excludes volatile food and energy components. Both were below economists’ forecasts of a 0.2% climb.
- The main U.S. stock indexes were still slightly lower after opening, but U.S. Treasury yields, whose rise above 3% has been a key factor weakening demand for U.S. stocks, retreated further after the numbers.
- Energy stocks fell 1% as oil prices hit two-week lows after an industry report showed U.S. crude inventories rose more than expected.
- Delta Air Lines rose 4.6% after reporting a third-quarter profit that beat estimates as strong demand for air travel and tight control over costs helped the airline battle rising fuel expenses.
- Walgreens was up 0.4%, reversing premarket losses, after the drugstore chain’s profit soared 88.5% as more people brought prescription medicines and it benefited from its acquisition of Rite Aid stores.
US FINANCIAL MARKET
- Delta Air Lines reported a third-quarter profit that beat analysts’ estimates as strong demand for air travel and tight control over costs helped the airline battle rising fuel expenses.
- With oil prices hovering near their four-year highs, Delta and its peers such as American Airlines and Southwest Airlines, are facing a surge in fuel costs that is weighing on profit even as demand for air travel remains strong.
- Total operating revenue rose to $11.95 billion from $11.06 billion.
- The carrier’s net income rose to $1.31 billion in the quarter, from $1.16 billion a year earlier.
Walgreens revenue misses estimates on weak international demand
- Walgreens Boots Alliance came up short of analysts’ estimates for quarterly revenue on Thursday, as sales of beauty products and prescription drugs fell at its UK-based Boots chain, dragging shares lower.
- Revenue rose 10.9% to $33.44 billion, but was below analysts’ estimates of $33.78 billion.
- Benefiting from the extra stores it acquired from Rite Aid, sales at its U.S. pharmacies rose 16.7% in the fourth quarter, after the company filled 279.8 million prescriptions.
- Same-store sales at its pharmacies rose 1.3%, beating analysts’ expectations for a 0.57% rise.
- That helped net income rise to $1.51 billion, from $802 million a year earlier.
Apple gets critical iPhone technology in $600 million Dialog deal
- Apple is buying the power-management technology at the heart of its iPhones in a $600 million deal with Dialog Semiconductor that also secures the German-listed company’s role as a supplier to the U.S. tech giant.
- The agreement to acquire patents and people from the Anglo-German chip designer is not only unusual, but also the largest of its kind by Apple, whose last sizeable acquisition was the $350 million purchase of Face ID creator PrimeSense in 2013.
- Under the deal, Apple is buying patents, a 300-strong engineering team, most of whom already worked on chips for Apple devices, and Dialog offices in Britain, Italy and Germany.
- Dialog said that Apple increasingly viewed main power management integrated circuits (PMICs), which are central to the operation of its devices, as a strategic element that it wanted to control directly.
Walmart to invest $250 million in joint venture with content firm Eko
- Walmart has signed a joint venture with Eko, a developer of interactive video content, to attract shoppers and boost customer engagement, and will invest $250 million in the venture as well as a funding round.
- With the venture, called W*E Interactive Ventures, Walmart and Eko will develop interactive content spanning toy catalogs to cooking shows.
- The move broadens Walmart’s entertainment offerings, which include its video-on-demand service Vudu and recently launched ebooks platform called Walmart ebooks.
Bayer lifted by likely new trial in $250 million weedkiller case
- The prospect of a fresh trial that could overturn $250 million damages against Bayer’s Monsanto unit lifted the German company’s shares, after an August ruling that it failed to warn users of the alleged cancer risks of its weedkillers.
- The original verdict wiped 10% off the value of the company and marked the first such decision against Monsanto and its glyphosate-containing weedkillers Roundup and Ranger Pro.
- Bayer, which bought Monsanto this year for $63 billion, faces more than 8,000 similar lawsuits in the United States.
- The litigation has cast a pall over the stock, with Bayer shares still trading some 16% below the level prior to the original verdict.
Bezos’ Blue Origin and others get $2.3 billion in U.S. Air Force rocket contracts
- The U.S. Air Force on Wednesday said that it had awarded a total $2.3 billion in contracts to develop rocket launch systems for national security missions.
- The awards go to Amazon.com billionaire Jeff Bezos’ Blue Origin; United Launch Services, part of the United Launch Alliance (ULA) joint venture between Boeing and Lockheed Martin; and Northrop Grumman Innovation Systems.
- The three contracts are part of a Department of Defense initiative to assure constant military access to space and curb reliance on foreign-made rocket engines, like ULA’s flagship Atlas V rocket that uses Russian-made RD-180 boosters.
- Blue Origin’s and Northrop’s prototype vehicles for military launches are expected to be ready to fly by late 2024 and ULA’s Vulcan rocket development should be completed by March 2025.
OPEC says oil market well supplied, wary of 2019 surplus
- OPEC sees the oil market as well supplied and is wary of creating a glut next year, the group’s secretary-general said on Thursday, suggesting producers are in no rush to expand a June agreement that raises output.
- OPEC separately updated its oil supply and demand forecasts on Thursday, cutting demand estimates for next year due to economic challenges such as trade disputes and volatile emerging markets, and pointing to excess supply.
- In the report released on Thursday, OPEC cut the estimate for demand in 2019 for its own crude to 31.8 million bpd because of weaker demand and rising supplies outside the group.
- Should OPEC keep pumping at September’s rate, the report points to an excess supply of almost 1 million bpd in 2019 – although this is before any sizeable reduction takes place in Iranian output.
Lockheed’s Troubled F-35 Grounded by Pentagon After First Crash
- The U.S. Defense Department has temporarily suspended flight operations of Lockheed Martin’s F-35 after its first crash prompted inspections of the fighter jet fleet.
- The suspension by the Pentagon is to allow “a fleet-wide inspection of a fuel tube within the engine on all F-35 aircraft,” the Defense Department said in a statement Thursday. The F-35 is the costliest U.S. weapons system.
- More than 320 F-35s are already operating from 15 bases worldwide, although the Pentagon and Lockheed continue to wrestle with resolving more than 900 deficiencies, including flaws in the plane’s complex software.
US ECONOMY & POLITIC
- The number of Americans filing for unemployment benefits unexpectedly rose last week but remained near a 49-year low, and the increase appeared unlikely to dislodge the view that the U.S. labor market remains strong.
- Initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 214,000 for the week ended Oct. 6.
- Economists had forecast claims slipping to 206,000 in the latest week from 207,000 a week earlier.
- The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 2,500 to 209,500 last week.
U.S. inflation slows in September
- U.S. consumer prices rose less than expected in September, held back by a slower increase in rent and falling energy prices.
- The Consumer Price Index increased 0.1% last month after rising 0.2% in August, the Labor Department said. In the 12 months through September, the CPI increased 2.3%, slowing from August’s 2.7% advance.
- Excluding the volatile food and energy components, the CPI edged up 0.1% for the second straight month. The so-called core index had increased 0.2% in May, June and July.
- Economists had forecast both overall and core CPI climbing 0.2% in September.
IMF chief defends Powell after Trump slams ‘crazy’ Fed
- The head of the International Monetary Fund on Thursday defended Federal Reserve Chairman Jerome Powell one day after U.S. President Donald Trump criticized the American central bank, which has been raising U.S. interest rates, as “crazy.”
- Trump made the comment in response to Wall Street’s sell-off after the S&P 500 and the Dow marked their worst losses in eight months.
- The slump triggered a surge of global selling that sent European stocks to a more than an 18-month low on Thursday and knocked down Asian shares.
- “Actually it’s a correction that we’ve been waiting for a long time, but I really disagree with what the Fed is doing,” Trump told reporters on Wednesday.
EUROPE & WORLD
(Jess Macy Yu0)
- Taiwan’s Foxconn, a key Apple supplier, reported a 30% jump in September revenue on Thursday, boosting expectations for solid product sales for the American tech giant even as U.S.-China trade war escalates.
- Foxconn, formally known as Hon Hai Precision Industry, said in a stock exchange filing that revenue rose 30% to T$584.93 billion ($18.8 billion) in September, extending a streak of double-digit growth since May.
- The strong monthly result, its second best ever, brings Foxconn’s both nine-month and third-quarter revenues to record highs, a company official told reporters.
- Caught in the middle of the intensifying trade dispute, the world’s largest contract electronics manufacturer warned in June that the spat between China and the United States was the biggest challenge it was facing.
BMW to buy control of China venture in ‘new era’ for foreign carmakers
- Germany’s BMW will pay 3.6 billion euros ($4.2 billion) to take control of its main joint venture in China, the first such move by a global carmaker as Beijing starts to relax ownership rules for the world’s biggest auto market.
- The luxury carmaker said on Thursday it would increase its stake in its venture with Brilliance China Automotive Holdings to 75% from 50%, with the deal closing in 2022 when rules capping foreign ownership for all auto ventures are lifted.
- The move will likely spur BMW to shift more production to China, helping to protect profits amid a trade war between Washington and Beijing that has raised the cost of BMW importing cars manufactured at its U.S. plant in South Carolina.
- BMW is one of the biggest exporters of vehicles from the United States to China, putting it firmly in the crosshairs of the trade war.
US intelligence intercepts reportedly show Saudi crown prince ordered detention of journalist Khashoggi
- U.S. intelligence intercepts show Saudi Arabian Crown Prince Salman ordered that Jamal Khashoggi, a missing columnist, be enticed to return from the United States to Saudi Arabia so that he could be detained, the Washington Post reported Wednesday.
- The newspaper, citing U.S. officials it described as familiar with the intelligence, said the information provides additional evidence of alleged official Saudi involvement in Khashoggi’s disappearance after he entered the country’s consulate in Istanbul.
- The Washington Post report also said the intelligence suggesting Saudi Arabia planned to detain Khashoggi in the country has led to speculation among officials and analysts that his disappearance in Istanbul was perhaps a substitute plan that went awry.
- Khashoggi, a journalist and critic of the Saudi royal family, was last seen entering the consulate on Oct. 2. Turkish officials have claimed he was murdered and dismembered by a team of Saudi agents working under royal orders.
TODAY in HISTORY
- A letter from Albert Einstein was delivered to President Roosevelt concerning the possibility of atomic weapons. (1939)
- Space shuttle Challenger astronaut, Kathryn Sullivan, became the first American woman to walk in space. (1984)
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