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U.S. STOCKS SLIP AFTER WEAK JOBS REPORT

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US FINANCIAL MARKET
| US ECONOMY & POLITICS
 EUROPE & WORLD | TODAY IN HISTORY

DAILY MARKET REPORTS

  • Nonfarm employment fell by a seasonally adjusted 33,000 in September.
  • Economists polled by Reuters had expected jobs to rise by 90,000.
  • The unemployment rate fell two-tenths of a percentage point to 4.2%, a level not seen since early 2001.
  • Federal-funds futures, used by traders to place bets on the Fed’s rate-policy outlook, showed early Friday a roughly 93% chance of higher rates by year-end.
  • Costco dropped 5% after the warehouse club retailer reported a fall in gross margins due to an intense price war among grocers.

US FINANCIAL MARKET

Dollar hits 10-week highs, U.S. yields jump on strong wages data

  • The dollar rose to its strongest in 10 weeks on Friday and short-dated U.S. Treasury yields climbed to a nine-year high, after data showing the largest gain in U.S. wages since December 2016 bolstered bets on an interest rate hike by year-end.
  • The dollar index – which measures the greenback against a basket of major currencies – climbed to 94.267, its highest since late July.

Shrinking margins cloud Costco’s profit beat

  • Profit margins in the fourth quarter fell slightly as Costco spent more to lower prices on some items and sales of low-margin gas made up a higher percentage of its business.
  • Net income was $919 million in the period, which was a week longer than the year-ago period, in which it earned $779 million.
  • Total revenue rose 15.7% to $42.30 billion.
  • Membership fees, which accounted for about 72% of Costco’s operating income in 2016, rose 13 percent.
  • Costco implemented its annual membership fee increase by $5-$60 for Goldstar and business members, and by $10-$120 for executive memberships in the quarter.
  • Excluding the impact of fuel and currency fluctuations, total comp sales rose 5.7%.

Costco, With an Eye on Amazon, Expands Home Delivery Service

  • This week Costco started offering two-day delivery on shelf-stable food from its own website and expanded a fresh-food delivery partnership with Instacart, a startup that delivers groceries from retailers in one day.
  • Both services let Costco members buy food online at lower prices than available under previous options.
  • The new Costco.com delivery service, dubbed CostcoGrocery, will offer free shipping on around 500 products for orders of at least $75.

Summit Materials makes $3.8 billion bid for Ash Grove Cement

  • Summit Materials has made a $3.8 billion offer for rival Ash Grove Cement, hoping to trump an earlier takeover bid from Irish building materials firm CRH.

Amazon reportedly has fewer than 1 million viewers for one of its most acclaimed shows

  • Amid a disappointing showing at this year’s Emmys, an Amazon Studios executive said “we’re getting chewed up,” according to a Wall Street Journal report published on Friday.
  • The company also plans to pare back children’s programming and shift away from so-called hipster shows, in favor of content with wider appeal, like sci-fi and spy fiction, the report said.
  • Amazon Studios’ Original Movies won three Academy Awards this year, two for the hit “Manchester by the Sea.” Amazon has also had success with deals like Thursday Night Football, which drew 1.6 million viewers to the recent Chicago-Green Bay game. And the company has said for several years that it will be flexible in balancing artists’ creativity and the use of data-driven programming.

Sprint and T-Mobile Are Ironing Out Final Deal Details

  • Merger likely to be announced with earnings at end of month.
  • A traditional breakup fee isn’t expected to be included.

GE has eliminated corporate cars for senior execs as part of cost-cutting measures

  • GE informed senior execs via email that leases on corporate cars won’t be renewed after 2018.

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US ECONOMY & POLITIC

Hurricane-Battered U.S. Shed 33,000 Jobs in September

  • Nonfarm employment fell by a seasonally adjusted 33,000 in September, the first decline since September 2010.
  • That ended seven straight years of job growth, including an average monthly gain of 172,000 in the 12 months through August.
  • Meanwhile, the unemployment rate, calculated by a survey of households, fell two-tenths of a percentage point to 4.2%, a level not seen since early 2001.
  • Workers’ wages jumped last month, another figure that may have been affected by the storms. Average hourly earnings rose 12 cents, or 0.45% from a month earlier.
  • Wages were 2.9% higher from a year earlier.

U.S. Postal Service Likely to Raise Prices to Bolster Cash Cushion

  • The agency is expected to soon announce price increases for 2018, but the move could be challenged since rate changes require approval of its Board of Governors. The board, which is appointed by the President, hasn’t had a member since last December.
  • The Postal Service has reported a loss of $55 million through nine months ended June 30.
  • Revenue during the period slipped 3% to $53.1 billion compared with last year.
  • Both FedEx and UPS have been posting strong revenue growth as they ship more e-commerce packages, though they have had to invest heavily to keep up with the demands of speedier delivery especially during the holidays.

New rules aim to curb payday loan abuses

  • New rules on payday lending from the Consumer Financial Protection Bureau require an upfront test to determine if borrowers will be able to afford to repay the loan.
  • Rates on such short-term loans can top 390 percent, and struggling borrowers often reborrow, piling on fees and interest.

Gross Says Kashkari Would Be Good Fed Chair But Won’t Be Chosen

  • ‘He’s a brilliant man,’ but won’t be picked by Trump, he says.
  • Gross echoed comments by Jeffrey Gundlach earlier this week.

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EUROPE & WORLD

Canada Added Jobs in September While Wages Surged

  • The Canadian economy added a net 10,000 jobs in September.
  • The unemployment rate in September stood at 6.2%, matching market expectations and a low last reached in October, 2008.

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TODAY in HISTORY

  • The Yom Kippur War began when Syria and Egypt attacked Israel (1973)
  • President Jimmy Carter received Pope John Paul II, the first pope to visit the White House (1979)
  • Egypt’s President Anwar Sadat was assassinated in Cairo (1981)

This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S&P 500, are unmanaged and may not be invested into directly. Sources: Reuters, Bloomberg, Wall Street Journal.

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