DAILY MARKET REPORTS
- Wall Street climbed more than 1% on Friday following its worst two-day slide in eight months, with technology and other high-growth stocks leading a fight back.
- Wall Street’s two-day slide this week was its worst in eight months, pulling the three major indexes down a little over 5% each, with the Nasdaq narrowly avoiding moving into correction territory.
- Ten of the 11 major S&P sectors were higher, led by the technology sector’s 3.11% jump, with Microsoft and Apple gaining 3%.
- JPMorgan and Wells Fargo reversed earlier gains to tread lower after their quarterly results, while Citigroup was up 1% as its profit topped estimates.
- The bank results launch a quarterly reporting season that will give the clearest picture yet of the impact on profits from President Donald Trump’s trade war with China.
- Earnings at S&P 500 companies are estimated to rise 21.3% in the third quarter, a slowdown from the previous two quarters.
US FINANCIAL MARKET
JPMorgan’s consumer banking strength offsets bond trading weakness
- JPMorgan Chase reported a better-than-expected quarterly profit on Friday as gains from higher interest rates and growth in loans helped the bank offset weakness in bond trading revenue.
- All four of JPMorgan’s four main businesses recorded a rise in revenue, with consumer banking posting the biggest jump, as the lender’s diverse business mix helped it weather the ups and downs of its trading business.
- The bank’s total revenue rose 5.2% to $27.82 billion.
- Net interest income rose 7% to $14.1 billion as the U.S. Federal Reserve raised rates four times since the third quarter last year.
- The bank’s average loans were up 6% in the quarter even as higher rates crimped borrowing in areas such as mortgage loans.
- Net income rose 24.5% to $8.38 billion, ahead of estimates.
Citigroup profit beats on higher bond trading, LatAm growth
- Citigroup reported a better-than-expected quarterly profit on Friday, helped by higher bond trading revenue and strength in its consumer banking business in Mexico.
- Total revenue was slightly lower at $18.39 billion, compared with $18.42 billion a year earlier.
- Bond trading revenue at Citi rose 9%, in sharp contrast to JPMorgan, which reported a 10% drop in bond trading revenue earlier on Friday.
- Investment banking revenue fell 8% to $1.2 billion.
- Net income for the third-largest U.S. bank by assets rose to $4.62 billion in the third quarter, from $4.13 billion a year earlier.
Wells Fargo quarterly profit falls short of estimates
- Wells Fargo posted a quarterly profit that fell short of analysts’ estimates on Friday, as a $13 billion drop in new mortgage borrowing offset the bank’s efforts to cut costs.
- Total revenue rose 0.4% to $22 billion, with only community banking showing growth in revenue.
- Total loans at the fourth largest U.S. bank by assets fell 1% to $942.3 billion, while net interest margin, a measure of how much a bank earns on its investments, rose to 2.94% from 2.86% in the year-ago quarter.
- Net income rose to $5.45 billion in the quarter, from $4.13 billion a year ago. This missed estimates.
PNC Financial reports sluggish loan growth, shares fall
- PNC Financial Services beat analysts’ estimates for quarterly profit on Friday but loan growth at the U.S. regional bank was sluggish, sending its shares down 3.5% in morning trading.
- Revenue increased to $4.4 billion from $4.1 billion a year ago.
- PNC posted a meager 2% rise in total loans in the third quarter, compared with a 4% increase in the second quarter.
- Net interest income rose 2% to $2.4 billion, helped by higher interest rates, which allow banks to charge more on loans.
- PNC’s net income rose 26% to $1.32 billion in the quarter.
GE pushes third-quarter earnings to October 30
- General Electric said on Friday it has pushed back its third-quarter earnings release date to Oct. 30 to allow new Chief Executive Officer Larry Culp complete business reviews and site visits.
- GE was earlier expected to report on Oct. 25.
Jury clears J&J of liability in New Jersey talc cancer case
- A New Jersey jury on Thursday cleared Johnson & Johnson of liability in a case involving a woman who alleged that the company’s talc-based products, including its baby powder, contain asbestos and caused her cancer.
- J&J is facing some 10,600 liability lawsuits across the United States over its talc products, most involving claims that they caused ovarian cancer, and that the company knew of and concealed risks associated with the products.
- In April, J&J lost the first trial over such allegations when a jury in New Jersey awarded $117 million to a man suffering from mesothelioma and his wife.
Abbvie settles Humira patent disputes with Novartis unit
- Abbvie said on Thursday it settled all patent disputes with Novartis AG, granting it a non-exclusive license to manufacture and sell a copycat version of blockbuster drug, Humira.
- Abbvie did not disclose details regarding the royalties it will receive from Novartis generics unit as part of the agreement.
- Humira is the world’s best-selling prescription medicine and has long buoyed AbbVie’s business, raking in $5.19 billion in second-quarter sales.
Lockheed, Rheinmetall to make joint bid to supply German navy helicopters
- U.S. weapons maker Lockheed Martin and German peer Rheinmetall said they will make a joint bid to supply the German navy with MH-60R Seahawk helicopters built by Lockheed’s Sikorsky unit.
- The two firms are also cooperating on a bid to supply new heavy-lift helicopters to the German air force, as announced in February, for a contract that could be worth around 4 billion euros ($4.6 billion).
- Europe’s Airbus is also likely to bid for the contract with its NH90 Sea Lion multi-role naval helicopter, as is AgustaWestland, part of Italy’s Leonardo Finmeccanica, which built the current fleet of helicopters.
U.S. senators asks Google to explain delay in disclosing vulnerability
- Three influential Republican U.S. senators on Thursday asked Alphabet’s Google unit to explain why it delayed disclosing vulnerabilities with its Google+ social network.
- Google said this week it would shut down the consumer version of Google+ and tighten its data sharing policies after revealing that the private profile data of at least 500,000 users may have been exposed to hundreds of external developers.
- The three Republicans asked Google to turn over a memo that said that a factor in not disclosing the issue earlier was that it would draw “immediate regulatory interest” and “almost (guarantee)” that Pichai would have to testify before Congress.
Walmart to pay $65 million to settle lawsuit over seating for cashiers
- Walmart has agreed to pay $65 million to nearly 100,000 current and former cashiers in California who accused the retailer of violating state law by refusing to provide them with seating while they worked.
- Walmart denied any wrongdoing in the nine-year-old case, which was scheduled to go to trial later this year.
- The lawsuit was one of the first brought under a California regulation that requires seating for employees “when the nature of the work reasonably permits.”
IEA Cuts Oil Demand Forecasts but Sees Prices Staying High
- The International Energy Agency cut forecasts for oil demand this year and next because of growing threats to global economic growth, yet warned that dwindling spare oil supplies will keep prices high.
- The IEA cut its estimate for global oil-demand growth for both 2018 and 2019 by about 110,000 barrels a day to 1.3 million and 1.4 million barrels a day respectively.
- Both global demand and supply are close to hitting 100 million barrels a day for the first time.
US ECONOMY & POLITIC
U.S. import prices increase 0.5% on jump in fuel
- U.S. import prices jumped faster than expected in September amid resurgent energy prices but prices excluding fuels were unchanged.
- Import prices rose 0.5% last month, the largest increase since May and followed a revised 0.4% decrease in August.
- Economists had forecast import prices rising 0.2% in September.
- In the 12 months through September, import prices rose 3.5%.
U.S.-China trade talks must cover currency, U.S. Treasury chief says
- U.S. Treasury Secretary Steven Mnuchin said on Friday that he told China’s central bank chief that currency issues need to be part of any further U.S.-China trade talks and expressed his concerns about the yuan’s recent weakness.
- Mnuchin’s comments come ahead of next week’s release of a hotly anticipated Treasury report on currency manipulation, the first since a significant weakening of yuan began this spring as trade tensions between the economies escalated.
- Mnuchin would not discuss the findings of the currency report and declined comment on media reports that Treasury staff had recommended that China not be labeled a currency manipulator.
U.S. business group says Trump China tariffs cost $1.4 billion/month
- A coalition of U.S. business groups fighting President Trump’s trade tariffs has launched an advertisement aimed at telling voters ahead of the midterm elections that the measures are costing American businesses and consumers $1.4 billion a month.
- The group says that in Michigan, a state with several competitive elections this fall, tariff costs tripled in August from a year earlier, while they more than doubled in places like Texas, Illinois and West Virginia.
- Nationally, there was a 45% uptick in August compared with the previous August – and the organization cautions not all of the tariffs have gone into effect.
EUROPE & WORLD
China auto sales post biggest drop in 7 years as growth engine stalls
- China’s car sales fell the most in nearly seven years in September, stoking concerns the world’s biggest auto market could contract for the first time in decades this year amid cooling economic growth and a biting trade war.
- Vehicle sales slumped by 11.6% to 2.39 million units last month, the third straight decline.
- The slide in September auto sales follows a 3.8% fall in August and a 4.0% drop in July. Vehicle sales increased 4.8% in June.
- China’s top auto industry body said its already meager forecast for full-year growth would be missed, though the market should avoid a sales decline.
Tencent Music delays $2 billion U.S. IPO due to weak markets: sources
- Tencent Music Entertainment has delayed its planned U.S. initial public offering (IPO) until at least November as the owner of China’s most popular music apps prefers to wait for global stock markets to stabilize, three sources said.
- The music arm of tech giant Tencent is expected to raise at least $2 billion and was originally planning to launch its offering as soon as next week, the sources said.
- The company owns streaming apps QQ Music, Kugou and Kuwo as well as karaoke app WeSing, and claims more than 800 million monthly active users.
SoftBank picks Nomura, Goldman, three others to lead mobile unit’s IPO: source
- SoftBank Group has chosen five investment banks, including units of Nomura Holdings and Goldman Sachs, as lead underwriters for the mammoth initial public offering of its mobile-phone unit.
- Bloomberg News reported that the Japanese investment and technology firm aims to sell around 3 trillion yen ($27 billion) of shares, listing on the Tokyo Stock Exchange in December.
- An IPO of that scale would be the biggest ever, topping the $25 billion worth of shares sold by China’s Alibaba in New York in 2014, and the $22 billion raised by Agricultural Bank of China in Hong Kong in 2010.
Canada to impose steel safeguards after U.S. tariffs
- Canada will impose new quotas and tariffs on imports of seven categories of steel, the federal government said on Thursday, fresh measures to head off a potential rise in imports as overseas steelmakers shut out of the United States seek new customers.
- A tariff of 25% will apply starting Oct. 25, 2018 to imports “in cases where the level of imports from trading partners exceeds historical norms,” the government statement said.
- The products covered include heavy plate, concrete reinforcing bar, energy tubular products, hot-rolled sheet, pre-painted steel, among others.
Mexico to protect steel exporters from Canadian measures: statement
- Mexico laments trade protections announced earlier in the day by Canada covering some steel products and will take action to protect its own exporters in the short term, according to a statement from Mexico’s economy ministry on Thursday.
BMW says trade war could hit 2019 results by up to 500 million euros
- German carmaker BMW expects a hit to earnings of up to half a billion euros ($579 million) next year if tariffs between the United States and China remain in place.
- Tariffs between the United States and China have knocked exports of sport-utility vehicles from its U.S. plant in Spartanburg, South Carolina, to China, resulting in a hit to earnings of just below 300 million euros.
- “If the tariffs remain in 2019, it could have a full-year impact of half a billion euros,” Chief Financial Officer Nicolas Peter added.
Cannabis producer Aphria profit surges on strong demand, investment gains
- Cannabis producer Aphria posted a 41% rise in quarterly profit on Friday, boosted by strong demand and gains from its investments in medical marijuana companies Liberty Health Sciences and Hiku Brands.
- Aphria is in talks to sell a stake in the company to Marlboro maker Altria, the Globe and Mail reported earlier this week, citing multiple sources.
- The company said its revenue more than doubled to C$13.29 million, helped by higher wholesale orders.
- Aphria’s net income rose to C$21.2 million for the quarter, from C$15.0 million a year earlier.
TODAY in HISTORY
- The Soviets launched Voskhod I, the first space capsule to carry three people into orbit. (1964)
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