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TECH, HEALTHCARE STOCKS BOOST WALL STREET AFTER MIDTERM RESULTS

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

DAILY MARKET REPORTS

  • U.S. stocks surged on Wednesday, as investors piled into growth sectors such as technology and healthcare on relief that the outcome of the U.S. midterm elections was as expected.
  • Democrats won control of the House of Representatives on Tuesday, while Republicans tightened their grip on the Senate, pointing to a political gridlock in Washington.
  • The technology and healthcare sectors rose more than 1.5% each, with investors betting that a gridlocked Congress would not be able to push through restrictive regulations, a fear that has weighed on the growth sectors.
  • A Democrat-controlled House will likely hamper Trump’s pro-business agenda, but the results for Republicans were no worse than feared, allowing investors to buy back into a market that had its worst month in seven years in October.
  • The Federal Reserve starts its two-day monetary policy meeting on Wednesday, where it is expected to keep interest rates unchanged, but a rate hike in December is largely priced in.

US FINANCIAL MARKET

No blockbuster from Fox results before Disney sale

  • Twenty-First Century Fox fell short of estimates for quarterly revenue, hit by the absence of a major movie hit at the end of the U.S. summer as it prepares to sell the bulk of its business to Walt Disney.
  • Overall revenue rose to $7.18 billion from $7.00 billion, shy of a consensus estimate of $7.23 billion.
  • Revenue at Fox’s filmed entertainment division fell 7.5% to $1.82 billion, missing estimates of $1.95 billion.
  • Revenue from Fox’s cable division rose 3.6% to $4.35 billion, accounting for more than half of total revenue in the quarter and compared to estimates of $4.48 billion.
  • Net income increased to $1.29 billion in the first quarter, from $855 million a year earlier.

Dish revenue falls 5% as satellite subscribers drop

  • U.S. satellite TV service provider Dish Network reported a 5% fall in quarterly revenue on Wednesday as it leaked more subscribers in the face of cheaper options like Netflix and Hulu.
  • Revenue fell to $3.40 billion from $3.58 billion in the prior-year quarter, but was ahead of expected revenue of $3.397 billion.
  • Dish shed a net 367,000 satellite subscribers during the quarter, far beyond a consensus estimate of 232,000 net customer losses.
  • Net income rose to $432 million in the third quarter, from $297 million a year earlier.

Humana third-quarter profit beats on Medicare Advantage business

  • Humana reported third-quarter profit that beat estimates and the U.S. health insurer raised its full-year profit forecast, helped by strong demand for health plans in its core Medicare Advantage business for people who are older than 65 or with disabilities.
  • Total revenue rose nearly 7% to $14.21 billion.
  • Humana’s adjusted consolidated benefit ratio, the percentage of premiums spent on claims, improved to 82% in the quarter from 82.4% last year.
  • Humana said net income rose 29% to $644 million in the quarter.

Supply-chain disruptions weigh on Coty’s revenue

  • Beauty products maker Coty missed revenue estimates for the second consecutive quarter, as the company took a hit from lingering supply chain problems both in the United States and Europe, sending its shares down 10%.
  • Net revenue fell 9.2% to $2.03 billion, missing analysts’ average estimate of $2.17 billion.
  • Sales in Europe, its biggest market, fell 10% in the quarter, while the hurricane that hurt manufacturing and distribution centers in North Carolina drove a 14% dip in North America.
  • Net loss narrowed to $12.1 million in the fiscal first quarter.

Michael Kors misses revenue estimates as European sales take hit

  • Michael Kors missed Wall Street’s quarterly revenue estimates for the first time in almost two years, as the luxury hand-bag maker recorded lower sales at retail outlets in Europe, where it is trying to gain a stronger foothold.
  • Total revenue rose 9.3% to $1.25 billion, falling short of analysts’ expectations of $1.26 billion.
  • Revenue from Kors’ European retail stores fell nearly 10% during the quarter, leading to total retail revenue of $643.9 million. The result missed analysts’ average estimate of $661.1 million.
  • Kors said quarterly net income fell to $137.6 million from $202.9 million a year earlier.

GoDaddy misses profit estimates on higher expenses, shares fall

  • GoDaddy missed estimates for third-quarter profit, as the web hosting company spent more on customer acquisitions and international expansion, sending its shares down 5%.
  • Total revenue rose to $679.5 million, beating analysts’ estimate of $673.9 million.
  • The company had about 18.3 million customers at the end of the quarter, up 6.7% from a year earlier and the average revenue per user rose 8.6% to $145.00.
  • Net income fell to $13.2 million in the quarter, from $22.4 million a year earlier.

Papa John’s new advertising blitz helps North America restaurant sales

  • Papa John’s International reported a smaller-than-expected decline in quarterly comparable sales in North America, helped by new advertising and rebranding as it tries to recover from bad publicity stemming from an acrimonious split with its founder.
  • Revenue fell 15.7% to $364.01 million, missing Wall Street estimates of $393.7 million.
  • The company reported a 9.8% sales decline in North America compared to an expected a 10.9% drop.
  • Papa John’s reported a net loss of $13 million, compared to a profit of $22 million a year earlier.
  • The company now expects full-year North America comparable sales to decline in the range of 6.5% to 8.5%, compared to a prior outlook for a 7% to 10% decline.

Wendy’s surprise same-restaurant sales drop burn shares

  • Wendy’s reported quarterly sales at established outlets in North America below analyst estimates and lowered its same-store sales forecast for the year, as the burger chain struggles to lure customers in a fiercely competitive U.S. fast-food industry.
  • Revenue rose 2.4% to $400.6 million, missing expectations of $405.36 million.
  • Wendy’s same-restaurant sales in North America fell 0.2% in the quarter, well below an expected same-store sales rise of 1.84%
  • Net income rose to $391.2 million in the third quarter, from $13.7 million a year earlier.

Apple is preparing for a $7 billion court battle with Qualcomm, not in settlement talks

  • Apple is not in talks “at any level” to settle its wide-ranging legal dispute with mobile chip maker Qualcomm, according to a source familiar with the matter.
  • The case is to go to trial early next year and has spawned related legal actions in other courts around the world.
  • In addition to its dispute with Apple, Qualcomm is in a dispute with another phone maker, widely believed by analysts to be China’s Huawei Technologies, that is withholding payments.

Boeing alerts pilots after Indonesia crash, FAA plans directive

  • Boeing said on Wednesday it had issued a safety bulletin reminding pilots how to handle erroneous data from a key sensor in the wake of last week’s Indonesian jetliner crash.
  • The U.S. planemaker said investigators probing the Lion Air crash off the coast of Indonesia, in which all 189 on board were killed, had found that one of the “angle of attacksensors on the brand-new Boeing 737 MAX jet had provided erroneous data.
  • Experts say the angle of attack is a crucial parameter that helps the aircraft’s computers understand whether its nose is too high relative to the current of air – a phenomenon that can throw the plane into an aerodynamic stall and make it fall.
  • The Boeing 737 MAX has three such blade-shaped sensors. Erroneous readings can in some circumstances cause the 737 MAX to point the nose down sharply to keep air under the wings and avoid a stall.
  • The U.S. Federal Aviation Administration said it would issue an airworthiness directive to make Boeing’s advice mandatory.

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US ECONOMY & POLITICS

Trump Constrained as Democrats Take Back Control of U.S. House

  • Trump faced greater restraints on his presidency and intrusive investigations from Democrats who won control of the U.S. House of Representatives and pledged to hold the Republican accountable after a tumultuous two years in the White House.
  • Trump and his fellow Republicans expanded their control of the U.S. Senate in Tuesday’s midterm elections, following a divisive campaign marked by fierce clashes over race and immigration.
  • But they lost their majority in the House, a setback for the president after a campaign that became a referendum on his combative leadership.
  • The Democrats fell short of a tidal wave of voter support that would have won them control of both chambers of Congress. But in the 435-member House, the party was headed for a gain of around 30 seats, beyond the 23 they needed to claim their first majority in eight years but significantly below the majority the Republicans had after the 2016 elections.
  • The House Democrats could force Trump to scale back his legislative ambitions, possibly dooming his promises to fund a border wall with Mexico, pass a second major tax-cut package, or carry out his hardline policies on trade.
  • A Democrat-controlled House will hamper Trump’s pro-business agenda and could lead to uncertainty about his administration, but corporate tax cuts and deregulation measures that have played a large hand in the U.S. stock market’s rally since the 2016 election are likely to remain untouched.
  • Financial markets often favor Washington gridlock because it preserves the status quo and reduces uncertainty.

Mortgage applications drop to 4-year low as interest rates hit 8-year high 

  • Total mortgage application volume fell 4% last week from a week earlier and plunged 16% from a year ago, according to the Mortgage Bankers Association’s seasonally adjusted index.
  • Mortgage applications to purchase a home led the volume lower, falling 5% for the week to the lowest level in two years. Purchase applications were 0.2% lower than a year ago.
  • Mortgage applications to refinance a home loan have been falling for more than a year and fell 3% more last week. Volume was 33% lower than a year ago.
  • The average contract interest rate for 30-year fixed-rate conforming increased to 5.15% from 5.11% for loans with 20% down payments. That is the highest rate since April 2010.

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EUROPE & WORLD

Adidas slips in Europe as Stan Smiths, Superstars go out of fashion

  • Adidas cut its 2018 revenue forecast after sales fell in western Europe, where it was hit by changing fashions and Nike’s gains in soccer.
  • Overall, Adidas said its third-quarter sales rose by a currency-adjusted 8% to 5.873 billion euros ($6.75 billion), shy of analysts’ forecasts, while net profit from continuing operations jumped 19% to 656 million euros, beating consensus.
  • Ecommerce sales jumped 76% in the quarter and Adidas saw the September launch of Yeezy Boost shoes designed by rapper Kanye West drive traffic to its website, with sales and margins of the new styles above its expectations.

GE and Rolls Royce finalists for Chinese-Russian CR929 jet engine, designer says

  • General Electric and Rolls Royce are the two finalists to supply engines for a new long-haul jet developed by a Russian-Chinese joint venture that aims eventually to switch to a Sino-Russian engine, a chief designer of the aircraft said.
  • Russia’s United Aircraft Corporation and the Commercial Aircraft Corp of China kickstarted full-scale development of the CR929 widebody jet program last year, to build an aircraft that can muscle into a lucrative market now dominated by Boeing’s 787 and Airbus’s A350 jets.
  • The venture, China-Russia Commercial Aircraft International, said in May it had received proposals from seven foreign and local companies to supply the jet’s engine.

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TODAY in HISTORY

  • The Republican Party was first symbolized as an elephant in a cartoon drawn by Thomas Nast in Harper’s Weekly magazine. (1874)
  • Vladimir Lenin’s forces overthrew Alexander Kerensky’s government in Russia’s Bolshevik Revolution. (1917)

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, the Wall Street Journal.

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