DAILY MARKET REPORTS
- U.S. stocks rose on Tuesday, helped by a rebound in technology stocks after a volatile few sessions on Wall Street, amid optimism over the U.S.-China trade dispute and some upbeat earnings reports.
- The trade-sensitive industrial sector rose 1.20% after President Donald Trump said he believed “a great deal” on trade can be struck with China, though he warned new tariffs were ready if a deal was not possible.
- Tariffs and rising costs have been among the factors that have led to a slew of disappointing forecasts from major industrials, chipmakers and other sectors, adding worries about slowing corporate growth to fears of faltering global growth.
- Although healthy S&P 500 results have pushed up third-quarter profit growth estimates to 25.3% from 21.8% in the past 11 days, concerns remain about the extent of a slowdown in earnings growth next year.
- General Electric shares tumbled 5% after the company slashed its dividend to just 1 cent and reported a $22.8 billion loss due to its troubled power division.
- Under Armour surged 20.8% after beating quarterly estimates and raising its full-year profit forecast on higher overseas sales and lower expenses.
- Coca-Cola shares climbed 1.4% after beating quarterly sales estimates as more consumers reached for new versions of its sugar-free sodas and sparkling waters. PepsiCo inched up 0.5%.
US FINANCIAL MARKET
- General Electric slashed its quarterly dividend to just 1 cent per share and said it would split its power unit into two businesses as new Chief Executive Larry Culp took his first steps to revive the struggling conglomerate.
- Revenue declined 4% to $29.6 billion, and GE said it would significantly miss its full-year cash flow target of about $6 billion.
- It also said the SEC had expanded its probe of GE’s accounting to include a large write-down of goodwill from GE’s power division, which the DoJ is also investigating.
- GE reported a $22.8 billion loss for the third quarter on Tuesday, largely due to the write-down in the $23 billion goodwill value of its GE Power business. The power business also lost $631 million in the quarter.
- The struggle at power, where orders fell 18% and revenue fell 33% in the quarter, mirrors a global decline in demand for new fossil-fuel plants caused in part by falling costs of solar and wind power.
- GE bet heavily on fossil fuels with its 2015 power acquisition, its largest ever, just as the market turned.
Higher consumer spending spurs Mastercard’s profit beat
- Mastercard joined bigger rival Visa in reporting stronger-than-expected earnings for the third quarter, as it benefited from more Americans swiping their credit cards for everything from gasoline to groceries.
- The company’s net revenue jumped 14.7% to $3.90 billion.
- Mastercard’s gross dollar volume, which refers to the dollar value of transactions processed, rose 9% to $1.47 trillion.
- The company processed 23.12 billion transactions worldwide in the quarter, up 19.2%.
- Its customers had issued 2.5 billion Mastercard and Maestro-branded cards.
- Net income climbed to a record $1.90 billion in the quarter, from $1.43 billion a year earlier.
Under Armour results beat quarterly estimates, lifts profit outlook
- Under Armour raised its full-year profit forecast after reporting third-quarter results that topped Wall Street estimates, as the sportswear maker benefited from higher overseas sales and lower expenses.
- Net revenue rose 2.4% to $1.44 billion, edging past analysts’ average estimate of $1.42 billion.
- Net profit rose to $75.3 million in the quarter, from $54.2 million a year earlier
- The company raised its full-year adjusted earnings per share guidance to between 19 cents and 22 cents from a prior guidance of 16 to 19 cents.
Botox sales power Allergan’s profit beat, forecast raise
- Allergan reported a higher-than-expected quarterly profit and lifted its full-year adjusted earnings forecast on Tuesday as strong sales of wrinkle injection Botox allayed some concerns around growing competition for the popular treatment.
- Net revenue fell 3% to $3.91 billion, hurt by increased competition for its Alzheimer’s therapy Namenda and Estrace cream, but edged past analysts’ estimates of $3.89 billion.
- Botox sales jumped 13.6% to $879.7 million in the quarter.
- Analysts had expected sales of $847.4 million.
- The company posted a net loss of $37.9 million in the third quarter, compared with a loss of $4.03 billion a year ago, which included a one-time charge.
Pfizer cuts revenue forecast as supply snags, dollar strength weigh
- Pfizer cut the top end of its yearly sales forecast, blaming a stronger dollar and lower revenue from its sterile-injections business, sending shares of the largest U.S. drugmaker down 3%.
- Overall revenue inched up nearly 1% to $13.30 billion, missing expected revenue of $13.53 billion.
- Net income rose 45% to $4.11 billion in the quarter, helped partly by a lower tax rate.
- Pfizer now expects full-year revenue of between $53 billion and $53.7 billion, compared with an earlier forecast of $53 billion to $55 billion, and updated its 2018 adjusted earnings target to between $2.98 and $3.02 per share from $2.95 to $3.05 per share.
Tapestry tops sales estimates as Coach handbags draw shoppers
- Tapestry topped Wall Street estimates for sales on Tuesday, helped by stronger demand for Coach and Kate Spade handbags.
- Net sales rose to $1.38 billion, above analysts’ expectations of $1.36 billion.
- Sales at Coach, which makes up over 70% of Tapestry’s overall sales, rose 4% in the quarter.
- Tapestry said quarterly net income was $122.3 million, compared with a loss of $17.7 million a year earlier.
IT services firm Cognizant fourth-quarter forecasts miss estimates
- Cognizant Technology Solutions’ fourth-quarter revenue and profit forecasts missed analysts’ estimates, hurt by weaker-than-expected spending by its financial clients and higher investment by the IT services firm in digital services.
- Revenue rose to $4.08 billion from $3.77 billion.
- Analysts on an average had expected revenue of $4.08 billion.
- While services to big banks remain its biggest source of income, revenue in this sector rose just 2.6% to $1.46 billion in the third quarter, missing expectation of $1.50 billion.
- The company’s net income fell to $477 million in the third quarter, from $495 million a year earlier.
Baker Hughes predicts oil market growth, misses on profit
- Baker Hughes, GE’s oilfield services arm, said it expected higher rig count in North American and international markets in 2019.
- Total revenue rose to $5.67 billion from $5.30 billion.
- Baker Hughes said revenue in its oilfield services unit rose 12.5% to about $3 billion in the quarter from a year earlier while revenue from its oilfield equipment business, which includes deepwater drilling, rose 3% to $631 million.
- The company reported adjusted net income of $78 million in the third quarter, compared with an adjusted loss of $7 million a year earlier – marginally below estimates on a per-share basis.
Mondelez plans price rises to cope with rising freight costs
- Mondelez International said it would hike prices for biscuits, gums, and candies in the United States and certain emerging markets next year to battle rising transportation and freight costs.
- The company’s net revenue fell 3.7% to $6.29 billion, missing estimates of $6.32 billion.
- North America, its second-largest market, continued to see declining sales with a 2% fall in organic revenue growth.
- Net income rose to $1.19 billion in the third quarter, from $981 million a year earlier.
Coca-Cola’s low-sugar sodas, premium waters drive results
- Coca-Cola’s revenue and profit beat analysts’ estimates as investments to cater to changing consumer tastes paid off with higher sales of its sugar-free sodas and premium waters.
- Revenue fell 9% to $8.25 billion, due to the disposal of its low-margin bottling operations, but beat expectations of $8.17 billion.
- Organic revenue, or sales from its core beverage business, rose 6% in the third quarter, with double-digit volume growth for Diet Coke and Coca-Cola Zero Sugar.
- Net income rose 30% in the quarter to $1.9 billion from $1.4 billion a year earlier.
Engine maker Cummins beats profit on strong truck demand
- U.S. engine maker Cummins beat estimates for profit, boosted by strong demand for heavy trucks in a booming global construction market.
- Revenue rose 12.5% to $5.94 billion.
- Revenue at its engine unit, which makes diesel and natural gas engines for heavy-duty trucks, rose 17% to $2.73 billion.
- The U.S engine maker’s net income surged 53% to $692 million in the quarter, from $453 million a year earlier.
Aluminum products maker Arconic’s profit beats on strong aero parts demand
- U.S. specialty metals maker Arconic reported a better-than-expected quarterly profit and raised its full-year earnings forecast, driven by higher demand for aluminum parts used in airplanes.
- Sales rose about 9% to $3.52 billion and were above analysts’ consensus of $3.49 billion.
- Net income rose 35.3% to $161 million in the quarter, beating analysts’ average estimate.
- The company raised its 2018 adjusted per share forecast to a range of $1.28 to $1.34, from between $1.17 and $1.27, previously.
Vulcan Materials Surpasses Q3 Earnings and Revenue Estimates
- Vulcan Materials posted revenues of $1.24 billion for the quarter, up 13% from year-ago revenues of $1.09 billion.
- The company says Q3 gross profit for its core Aggregates segment rose 15% to $295M, driven by a 6% increase in shipments and an 8% gain in gross profit per ton, to $5.45.
- Net income increased 65% to $179 million compared to $109 million in the year prior and ahead of estimates on an adjusted per-share basis.
Eagle Materials Earnings and Revenues Miss Estimates
- Revenue increased to $381.5 million from $376 million in the year prior, missing the average estimate of $405 million.
- Net income increased to $72 million compared to $63.4 million a year ago, primarily due to a lower tax rate, which missed estimates on a per share basis.
Take-Two soars after company says ‘Red Dead Redemption 2’ made $725 million on opening weekend
- Shares of Take-Two Interactive opened up more than 11% in premarket trading Tuesday after the company discussed the opening-weekend figures for “Red Dead Redemption 2,” which was released on Friday.
- The company said that the latest “Red Dead” title brought in more than $725 million in worldwide sales from Friday through Sunday.
- This was less than Take-Two’s “Grand Theft Auto V,” which debuted in 2013, brought in more than $1 billion in its first three days, but ahead of Activision Blizzard’s “Call of Duty: Black Ops V” which sold more than $500 million in its first three days.
Apple unveils its new MacBook computers, iPad Pro
- Apple unveiled its latest Mac computers and iPad Pro models at an event in Brooklyn on Tuesday, offering long-awaited updates to some of its most popular devices.
- The new iPad Pros eliminate the home button and incorporate Apple’s facial recognition technology, Face ID, first introduced with the company’s iPhone X product line.
- The new MacBook Air comes with a 13.3-inch, edge-to-edge retina display, as well as Touch ID that allows users to unlock the device with the scan of a fingerprint. The sensor sits in the keyboard and enables touch-based Apple Pay.
- The new MacBook Air starts at $1,199, about $100 cheaper than the baseline MacBook computer.
US ECONOMY & POLITIC
- Nationally, prices rose 5.8% in August compared with August 2017, according to the S&P CoreLogic Case-Shiller home prices indices. That is less than the 6% annual gain in July.
- The index’s 10-City Composite rose 5.1% annually, down from 5.5% in the previous month.
- The 20-City Composite posted a 5.5% year-over-year gain, down from 5.9% in the previous month.
Trump says he expects ‘great deal’ with China, but more tariffs if not
- U.S. President Donald Trump said he thinks there will be “a great deal” with China on trade, but warned that he has billions of dollars worth of new tariffs ready to go if a deal isn’t possible.
- Both Trump and Xi are expected to attend next month’s G20 summit in Buenos Aires, where they could meet.
- Chinese Foreign Ministry spokesman Lu Kang said China and the United States have all along been in communication about exchanges at all levels, including a possible Xi-Trump meeting in Argentina, though he gave no details.
- If the United States is not willing to promote win-win cooperation with China then China is fully confident in being able to continue with its reforms and develop itself, Lu added.
U.S. restricts exports to Chinese semiconductor firm Fujian Jinhua
- U.S. President Donald Trump’s administration took action to cut off a Chinese state-backed chipmaker from U.S. suppliers amid allegations the firm stole intellectual property from U.S. semiconductor company Micron Technology.
- Micron, a maker of memory chips with factories in Virginia and Utah, has accused Fujian Jinhua and Taiwanese partner United Microelectronics of stealing its chip designs in a lawsuit in California.
- In turn, the companies countersued Micron in China, where courts sided with them and banned some of Micron’s chips in China.
- The administration is concerned the Chinese firm could flood the market with cheap chips that are also made by U.S. companies that supply the U.S. military.
- If the U.S. chipmakers go out of business, the military would lose a supplier for an item that must come from the United States.
Trump to push end to birthright citizenship as U.S. elections loom
- President Donald Trump said he will seek to end the right of citizenship to children born in the United States to non-citizens and illegal immigrants in his latest bid to dramatically reshape immigration policies as he seeks to shore up Republicans ahead of next week’s congressional elections.
- The right of U.S. citizenship is granted to U.S.-born children under the 14th Amendment of the Constitution, which cannot be changed by the president.
- It was unclear what specific action his order would pursue, and Trump gave no details. Representatives for the White House did not immediately respond to a request for comment.
Defense firms see only hundreds of new U.S. jobs from Saudi mega deal
- Every time President Donald Trump mentions the $110 billion arms deal he negotiated with Saudi Arabia last year, he quickly follows up, saying “It’s 500,000 jobs.”
- But if he means new U.S. defense jobs, an internal document seen by Reuters from Lockheed Martin forecasts fewer than 1,000 positions would be created by the defense contractor, which could potentially deliver around $28 billion of goods in the deal.
- Lockheed instead predicts the deal could create nearly 10,000 new jobs in Saudi Arabia while keeping up to 18,000 existing U.S. workers busy if the whole package comes together – an outcome experts say is unlikely.
- Trump’s 500,000 figure has been greeted with widespread skepticism given the five biggest U.S. defense contractors, who make nearly every item on the Saudi list, now employs 383,000 people.
EUROPE & WORLD
- BP’s profits thundered to a five-year high, boosted by stronger oil prices with production set to rise further thanks to the $10.5 billion acquisition of BHP Billiton’s U.S. shale business this week.
- Net revenue increased to $79.4 billion from $60.3 billion in the year earlier.
- BP’s third-quarter underlying replacement cost profit, the company’s definition of net income, rose to $3.8 billion, far exceeding forecasts of $2.85 billion and compared with a profit of $1.86 billion a year earlier and $2.8 billion in the second quarter of 2018.
- Oil and gas production for the first nine months of the year increased to 2.5 million barrels of oil equivalent per day (boed) and was set to rise further with the expected completion of the BHP deal on Oct. 31.
Sony forecasts big jump to record annual profit on winning gaming strategy
- Japan’s Sony boosted its annual profit outlook by 30% to a record level after a strong second quarter, propelled by popular game titles like “Marvel’s Spider-Man” as well as growing demand for its online gaming services.
- In the second quarter, operating income climbed 17% to 239.5 billion yen. Profit for its gaming division surged 65%.
- Sony now expects an annual operating profit of 870 billion yen ($7.7 billion), a level that comfortably beats market expectations of 796 billion yen. The gaming business will be the biggest profit driver generating 310 billion yen.
- Sony also raised its annual profit forecast for its semiconductor division, which includes imaging sensors, by 17% to 140 billion yen.
Nintendo second-quarter profit hits eight-year high, powered by Switch sales
- Japan’s Nintendo on Tuesday said sales of Switch consoles and games pushed operating profit up 30% in the July-September period to reach its highest quarterly result in eight years.
- Nintendo said it sold 5.07 million of its Switch consoles over April-September and maintained its sales forecast for the year ending March at 20 million consoles.
- Second-quarter profit hit 30.9 billion yen ($274.11 million), though that undershot analyst estimates.
VW rides out impact of new pollution rules on car sales
- Volkswagen posted a forecast-beating third-quarter profit, weathering a storm of lower car sales, higher spending and new pollution rules which dented earnings at rivals Daimler and BMW.
- Adjusted operating profit totaled 3.51 billion euros ($4 billion) in the quarter, down 18.6% but better than the 3.21 billion euros predicted.
- Weaker sales at Audi and the core VW brand, caused by problems adapting the carmaker’s model range to new anti-pollution rules, and quality problems at Bentley, were also partially offset by higher earnings at Porsche.
- Despite the new WLTP rules, VW said it expects new vehicle sales to rise moderately this year, after delivering 10.74 million vehicles to customers in 2017.
TODAY in HISTORY
- George C. Marshall won the Nobel Peace Prize for originating the Marshall Plan. (1953)
- Muhammad Ali knocked out George Foreman in the eighth round of a 15-round bout in Kinshasa, Zaire (“rumble in the jungle”) to regain his world heavyweight title. (1974)
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