DAILY MARKET REPORTS
- U.S. stocks rose on Thursday, as robust earnings reports supported a third day of recovery from a bruising selloff in October, but a drop in Apple’s shares ahead of results kept technology stocks under pressure.
- Markets also got a lift after U.S. President Donald Trump said in a tweet he had a “very good” talk with Chinese President Xi Jinping on trade and North Korea and that the two planned to meet at the upcoming G-20 summit.
- The rebound comes after the benchmark S&P 500 in October posted its worst monthly performance since September 2011, battered by worries over rising borrowing costs, global trade disputes and a possible slowdown in U.S. corporate profits.
- S&P 500 companies are on pace to have posted a 26.3% rise in third-quarter earnings with more than half of the constituents having reported.
- Chemicals producer DowDuPont rose 6.6% after quarterly profit topped estimates and the company announced a $3 billion share buyback.
- Health insurer Cigna rose 3.1% after beating quarterly profit estimates and raising its full-year earnings forecast on tight cost controls..
US FINANCIAL MARKET
DowDuPont tops profit estimates as chemicals demand provides boost.
- DowDuPont topped estimates for third-quarter profit on Thursday, as stronger demand for chemicals used in cosmetics, paints and packaging gear helped offset slowing growth at its agriculture business.
- DowDuPont’s overall net sales rose 10% to $20.1 billion in the third quarter ended September.
- Net income more than doubled to $497 million compared to $232 million in the year ago period, coming in ahead of estimates.
- The world’s largest chemicals producer also said it would buy back $3 billion in shares over the next five months.
Health insurer Cigna raises forecast on tight cost control
- U.S. health insurer Cigna beat analysts’ estimates for quarterly profit and raised its full-year earnings forecast on Thursday, as it kept a tight lid on costs of the services provided under its health plans.
- Operating revenue rose 10.3% to $11.46 billion, beating estimate of $11.17 billion.
- In the third quarter, Cigna’s commercial medical loss ratio – the amount it spends on medical claims compared to income from premiums in its biggest business – improved to 76.3%, from 78.6% a year earlier, versus the consensus estimate of 77.4%.
- Net income rose nearly 38% to $772 million in the third quarter.
Teva raises 2018 profit outlook after third-quarter tops estimates
- Teva Pharmaceutical raised its earnings outlook for 2018 on Thursday and said it was seeing “very good signs of a successful launch” for its long-awaited migraine treatment Ajovy.
- Teva’s revenue fell 19% to $4.53 billion, in line with estimates, due to generic competition to its multiple sclerosis drug Copaxone, price erosion in its U.S. generics business and a loss of revenue from the divestment of some of its products and the discontinuation of some activities.
- Non-GAAP net income fell 30% to $694 million compared to $1.0 billion in the year ago period, but beat estimates on an adjusted per-share basis.
- Teva raised its full-year forecast for adjusted EPS to $2.80-$2.95, from a previous estimate of $2.55-$2.80.
XPO customer bankruptcy dents quarterly earnings, outlook
- XPO Logistics, one of the largest global freight transportation and warehousing companies, on Wednesday posted quarterly profit that missed Wall Street’s target and lowered its 2018 earnings forecast due to a customer bankruptcy.
- XPO, which is North America’s largest provider of “final-mile” deliveries of heavy, bulky goods such as sofas, barbecue grills and televisions from warehouses direct to homes, said revenue grew 11.5% to $4.34 billion for the quarter.
- Operating income was up 34.4% to $195.2 million in the quarter.
- XPO posted third quarter adjusted earnings of $121.3 million, missing analysts’ average estimate.
Music streaming leader Spotify reports modest rise in paid users
- Spotify, the world’s most popular paid music streaming service, reported a modest 5% rise in premium subscribers for its third quarter, while revenue and gross margins were roughly in line with market expectations.
- Third-quarter revenue rose 31% to 1.352 billion euros ($1.54 billion) versus the 1.33 billion euros estimate.
- Monthly subscribers, which deliver 90% of revenue, rose to 87 million, up from 83 million last quarter, in line with expectations.
- Net income increased to 43 million euros, compared to a loss of 278 million euros in the same period a year earlier.
- The company tightened its expectations for full-year 2018 monthly active listeners to between 199 million to 206 million users. Analysts, on average, had been predicting 208 million users by the end of the year.
Fitbit posts adjusted profit on smartwatch sales, shares up 10%
- Wearable device maker Fitbit reported a surprise third-quarter adjusted profit on Wednesday, driven by its fast-growing smartwatch business that contributed to nearly half of its total revenue.
- Revenue rose marginally to $393.6 million from $392.5 million. Analysts on average had expected revenue of $381.2 million.
- Fitbit sold 3.5 million devices in the quarter, beating estimates of 3.42 million. Average selling price increased 3% to $108.
- The company’s net loss narrowed to $2.1 million in the quarter, from $113.4 million a year earlier.
Shell accelerates share buybacks as profits soar
- Royal Dutch Shell’s profits soared to a four-year high in the third quarter, boosted by rising oil and gas prices as the company accelerated its giant $25 billion share buyback program.
- Revenue increased almost 30% to $100.2 billion in the quarter compared to $75.8 billion in the same period of 2017.
- Shell’s net income in the quarter rose 39% to $5.624 billion from a year ago. That compared with $4.691 billion in the second quarter, and a company-provided analysts’ consensus of $5.766 billion.
- Shell said it completed the first tranche of buybacks in October for $2 billion and was launching a second tranche on Thursday of up to $2.5 billion by Jan. 28.
Apache profit beats on higher oil prices, increased U.S. output
- U.S. oil and gas producer Apache reported a better-than-expected quarterly profit and raised its U.S. production forecast for the year as it benefited from rising oil prices and increased output from the Permian basin.
- Oil and gas revenue rose 42.3% to $1.98 billion, and average realized oil prices jumped about 40% to $69.12 per barrel, while total production rose to 476,255 barrels of oil equivalent per day (boe/d) from 448,235 boe/d a year earlier.
- Net income rose to $81 million in the third quarter, from $63 million a year earlier.
Noble Energy profit beats estimates on higher crude prices
- U.S. oil and gas producer Noble Energy reported a better-than-expected quarterly profit on Thursday, as the company boosted oil production and sold at higher prices.
- Houston-based Noble Energy’s total revenue rose to $1.27 billion from $960 million.
- Sales volumes from the company’s U.S. onshore business, its biggest, rose 17.2% in the third quarter to 109,000 barrels of oil equivalent per day.
- The company said average realized prices for U.S. onshore rose 41.3% to $65.54 per barrel.
- The company said net income was $227 million in the quarter, compared with a loss of $136 million a year earlier.
Avon misses estimates as sales reps drop out
- Avon Products’ third-quarter profit and sales missed estimates as the U.S. cosmetics maker struggled to retain its salespeople in all markets, particularly Brazil and Russia.
- Total revenue was flat at $1.42 billion, including a one-time $168 million tax reversal in Brazil. Excluding the benefit, revenue fell 11% to $1.25 billion missing the analysts’ average estimate of $1.32 billion.
- Benefiting from the Brazil tax reversal, Avon’s net income rose to $114.5 million in the quarter, from $12.5 million a year earlier.
New York Times adds more digital subscribers, tops profit estimates
- The New York Times signed up thousands of digital subscribers in the third quarter, helping the newspaper publisher top Wall Street profit forecasts and driving its shares 12.5% higher.
- Revenue rose 8.2% to $417.3 million.
- Analysts on average had expected $408.5 million in revenue.
- Digital advertising revenue jumped about 17% to $57.8 million, while print advertising revenue continued to decline.
- Net income, however, fell 22.7% to $25 million, as total expenses climbed 8.4%.
U.S. auto sales rise as SUVs, trucks dominate
- Top U.S. automakers reported another month of rises in sales of sports utility vehicles and pick-up trucks on Thursday as American consumers continued to shun sedans and hatchbacks.
- The country’s No. 2 producer, Ford, reported a 6.7% rise in SUV sales to 67,554 units in October, while smaller rival Fiat Chrysler saw overall sales rise 16% on higher demand for its Jeep and Ram vehicles.
- Sport utility vehicles contributed about 35% of Ford’s total U.S. sales volumes in October, up from 31.6% a year ago.
- Japan’s Toyota separately said its U.S. sales rose about 1.4% to 191,102 units, due to increased demand for Highlander and Tacoma SUVs.
Google workers walk out to protest office harassment, inequality
- Over 1,000 Google employees and contractors in Asia and Europe staged brief midday walkouts on Thursday, with more expected to follow at offices worldwide, amid complaints of sexism, racism and unchecked executive power in their workplace.
- In a statement late on Wednesday, the organizers called on Google parent Alphabet to add an employee representative to its board of directors and internally share pay-equity data.
- Google Chief Executive Sundar Pichai said in a statement that “employees have raised constructive ideas” and that the company was “taking in all their feedback so we can turn these ideas into action.”
- The demonstrations follow a New York Times report last week that said Google in 2014 gave a $90 million exit package to Andy Rubin after the then-senior vice president was accused of sexual harassment.
Apple held talks to take stake in iHeartMedia
- Apple has held talks with iHeartMedia to take a stake in the U.S. radio company, the Financial Times reported on Thursday.
- The discussions between the two companies remain at a preliminary stage and no deal has been agreed, the report said.
- The tie-up could result in a multi million-dollar marketing partnership rather than a direct investment.
- iHeartMedia filed for chapter 11 in March, after reaching an agreement with creditors to more than halve its $20 billion debt.
US ECONOMY & POLITICS
U.S. weekly jobless claims fall
- New applications for U.S. unemployment aid fell last week and the number of Americans receiving benefits was the lowest in more than 45 years as labor market conditions tightened further.
- Initial claims for state unemployment benefits dropped 2,000 to a seasonally adjusted 214,000 for the week ended Oct. 27, the Labor Department said.
- Economists had forecast claims falling to 213,000 in the latest week. Data for the prior week was revised to show 1,000 more claims received than previously reported.
- 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 1,750 to 213,750 last week.
U.S. productivity slows in third quarter
- In a second report on Thursday, the Labor Department said non farm productivity, which measures hourly output per worker, increased at a 2.2% annualized rate in the third quarter. That was a step down from the 3.0% pace logged in the April-June period, which was the strongest since the first quarter of 2015.
- Hourly compensation jumped at a 3.5% rate in the third quarter after rising at a 1.9% pace in the April-June period.
- Hourly compensation increased at a 2.8% rate compared to the third quarter of 2017.
U.S. online spending set to rise 14.8% in 2018 holiday season
- U.S. online spending during the holiday shopping season is likely to grow 14.8% this year to $124.1 billion, far outpacing the 2.7% growth predicted for brick-and-mortar locations and highlighting the ongoing switch from stores to web shopping.
- The forecast was released on Thursday by Adobe Analytics, which measures transactions from 80 of the top 100 U.S. retailers and trillions of customer visits to U.S. retail sites.
- Online sales this year will benefit from an extra day between Cyber Monday to Christmas, which is likely to provide a $284 million sales boost, the report said.
- Overall U.S. holiday sales including stores and online in 2018 will increase by 4.3% to 4.8% from a year ago, when consumer spending surged to a 12-year high, according to The National Retail Federation.
- The trade body said holiday sales growth will be higher than an average increase of 3.9% over the past five years but slower than last year’s 5.3% gain, when consumer spending grew the most since 2005, boosted by tax cuts.
Trump says had good talk with China’s Xi on trade, North Korea
- U.S. President Donald Trump in a tweet on Thursday said he had a “very good” talk with Chinese President Xi Jinping on trade and North Korea and that the two planned to meet at the upcoming G-20 summit.
- “Just had a long and very good conversation with President Xi Jinping of China. We talked about many subjects, with a heavy emphasis on Trade,” Trump wrote.
- “Those discussions are moving along nicely with meetings being scheduled at the G-20 in Argentina. Also had good discussion on North Korea!”.
EUROPE & WORLD
Airbus says tougher to meet jet delivery goal after snags
- European plane maker Airbus softened its key target for jet deliveries on Wednesday and warned that reaching it would be a “greater stretch” after a sequence of industrial problems.
- The cautious tone on deliveries – which implied a 2% cut in the annual target by changing its parameters to include a recently acquired Canadian jet – came despite higher than expected third-quarter core earnings and strong demand from airlines.
- Revenue increased 20% to 15.5 billion euros, compared to 12.8 billion euros in 2017, and above expected sales of 15.136 billion.
- The company made an adjusted operating profit of 1.576 billion euros ($1.8 billion). Analysts expected profit of 1.441 billion.
- Airbus stuck to its headline target of around 800 commercial deliveries in 2018 but disclosed this now included 18 deliveries of the Bombardier CSeries jet, renamed A220.
ArcelorMittal remains upbeat as U.S. steel tariffs drive up prices
- ArcelorMittal, the world’s largest steelmaker, expects its financial results to improve in the coming months as global economic growth drives demand and U.S. tariffs lead to higher prices for the metal.
- Arcelor reported a 42% year-on-year increase in third-quarter core profit (EBITDA) to $2.73 billion, roughly in-line with analyst expectations, while sales rose 5% to $18.5 billion.
- Steel tariffs worked to Arcelor’s advantage in the third quarter, as 5% higher prices offset an equally large decline in steel shipments in the North American region, as the U.S. market weakened.
- Total shipments of steel also fell 5% in the July-September period, due to supply problems stemming from a disruptive power outage in France and a furnace blast in Poland.
Upbeat sales lift Novo Nordisk as drug maker weathers U.S. pricing pressure
- Novo Nordisk, the world’s top maker of diabetes drugs, reported encouraging sales of its main growth drivers on Thursday as it announced more job cuts amid a restructuring to cope with intensifying pricing pressure in the United States.
- Third-quarter operating profit totaled 11.81 billion crowns, below an average forecast of 11.93 billion crowns by analysts.
- Novo narrowed its 2018 sales growth forecast to 4-5% from previously 3-5% but kept its operating profit growth outlook at 2-5%, both measured in local currencies.
- Novo said it had expanded its share buyback program by 1 billion crowns to 15 billion crowns and free cash flow this year is now seen at 29-33 billion crowns from a previous guidance of 27-32 billion crowns.
TransCanada sees Keystone XL decision by first quarter, posts surge in profit.
- Canadian pipeline operator TransCanada said it expects the Nebraska Supreme Court to reach a decision on its Keystone XL pipeline by the first quarter of 2019.
- The hearing, scheduled to be held on Thursday, is crucial as residents as well as environmental groups have been opposing the pipeline’s route through the region. If they win, it will create yet another hurdle for the already embattled $8 billion project.
- Revenue fell marginally to C$3.16 billion.
- The company’s net income rose to C$928 million ($708.18 million) in the quarter, from C$612 million a year earlier.
Danske Bank boss says too early to assess scandal damage
- Danske Bank’s interim chief executive said that it was too early to assess what damage Denmark’s largest lender had sustained from a 200 billion-euro ($230 billion) money laundering scandal and warned of potentially “big” fines.
- Danske said its pretax profit dropped to 3.59 billion Danish crowns ($547 million), missing the 3.72 billion expected by analysts in a Reuters poll, after the 1.5 billion crown donation following the money laundering affair.
- Danske said potential fines resulting from investigations in payments through Danske’s Estonian branch between 2007 and 2015, many of which the bank said in September were suspicious, could be “big”.
- Danske stuck to its to its full-year forecast from September for a net profit of between 16 and 17 billion Danish crowns.
Indonesian investigators examine black box from crashed jet
- Indonesian authorities said they would immediately begin examining a damaged black box retrieved on Thursday from the sunken wreckage of a Lion Air jet that crashed off Jakarta this week, killing all 189 people on board.
- The investigation of the first crash of a Boeing 737 MAX, introduced into commercial service last year, will also be scrutinized by the global aviation industry.
- The plane, which had only been in service since August, went silent 13 minutes after taking off on Monday from Jakarta, heading for the tin-mining town of Pangkal Pinang.
- Indonesia’s second-deadliest air disaster since 1997 has prompted renewed concern about its patchy safety record, and the government has said Lion Air will be regulated more closely.
TODAY in HISTORY
- Michelangelo’s paintings on the ceiling of the Sistine Chapel were shown to the public for the first time. (1512)
- The Stamp Act, the first direct tax on the American colonies, went into effect. (1765)
- The United States exploded the first hydrogen bomb in a test in the Marshall Islands. (1952)
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