DAILY MARKET REPORTS
- U.S. stocks edged lower on Thursday, as a clutch of weak earnings reports punctured a rally from the previous session, which was spurred by the outcome for midterm elections.
- Stocks had gained more than 2% on Wednesday after Americans voted for a divided Congress, which was largely anticipated by investors who raised bets that it would be positive for stocks.
- While it could make it harder for President Donald Trump to push through new legislations such as additional tax cuts, investors are hoping for compromise on policies such as increasing infrastructure spending.
- The Fed, which is set to release its rate decision at 2:00 pm ET, is expected to leave interest rates unchanged, but the statement that follows could lay the ground for a fourth-rate hike in December and for the next year.
- D.R. Horton dived 9.4% after the largest U.S. homebuilder warned of rising home prices and higher mortgage rates weighing on demand and reported a quarterly revenue that missed estimates.
- Qualcomm dropped 7.1% after the chipmaker forecast sales revenue for the holiday shopping quarter below analysts’ estimates, as it took a hit from the loss of chip sales to Apple.
US FINANCIAL MARKET
Qualcomm forecast falls short as Apple sales disappear
- Qualcomm forecast sales revenue for the holiday shopping quarter below analysts’ estimates on Wednesday as it took a hit from the loss of chip sales to Apple, sending its shares down 3.4%.
- Revenue fell to $5.80 billion for the fiscal fourth quarter, but was still above estimates of $5.52 billion.
- Qualcomm’s loss was $493 million in the quarter, compared with a profit of $168 million a year earlier.
- The San Diego chipmaker also forecast its fiscal 2019 first-quarter profit above analysts’ estimates, but the better-than-expected outlook was largely due to a one-time tax benefit of about 45 cents per share.
D.R. Horton says rising prices weighing on housing demand
- D.R. Horton, the largest U.S. homebuilder, said rising home prices and higher mortgage rates were weighing on demand, particularly for expensive homes.
- Revenue rose 8.3% to $4.51 billion, but slightly missed estimate of $4.57 billion.
- The company’s net income rose 48.8% to $466.1 million in the fourth quarter, in line with analysts’ expectation.
Square beats profit estimates, shares fall on weak forecast
- Payments company Square forecast fourth-quarter adjusted profit below estimates and its shares fell nearly 4% in after-hours trading.
- The company reported a 51% rise in total net revenue to $882.1 million for the third quarter.
- Transaction-based revenue, which accounted for nearly 75% of total revenue, jumped 29% from a year earlier.
- Net income was $19.6 million, compared with a loss of $16.1 million a year earlier.
Huntington Ingalls Beats Earnings and Revenue Estimates
- Huntington Ingalls beat estimates for earnings and revenue, driven by higher volumes in the shipbuilding segments.
- Total revenue increased 11.8% to $2.1 billion compared to $1.9 billion in the same period a year ago, analysts were expecting revenue of $1.92 billion.
- Net income increased 54% to $229 million, compared to year ago profit of $149 million and ahead of expectations on a per share basis, due to a higher operating margin and a lower tax rate.
Discovery Stock Hits 52-Week High as Earnings Miss, Analysts Cheer U.S. Ad Growth
- Discovery, led by CEO David Zaslav, on Thursday reported lower third-quarter earnings that missed Wall Street consensus estimates amid higher charges related to the acquisition of Scripps Networks Interactive, but U.S. advertising growth and other financials exceeded expectations, helping drive the stock to a new 52-week high.
- Total revenue increased 57% to $2.6 billion compared to $1.7 billion in the same period a year ago.
- The company’s third-quarter revenue, excluding the impact of foreign currency fluctuations and the acquisition of Scripps, increased 2%, exceeding Wall Street projections, as the U.S. business grew 4% and international networks grew 2%.
- In another positive, U.S. networks advertising revenue increased 5%, distribution revenue remained unchanged and “other” revenue rose 18%.
- The company posted earnings of $117 million, compared with $218 million in the year-ago period.
‘Red Dead Redemption 2’ to power Take-Two sales jump
- Game publisher Take-Two Interactive Software forecast third-quarter revenue above estimates on Wednesday and raised its full-year outlook, thanks to a record-breaking opening of western-themed “Red Dead Redemption 2”.
- The launch of the latest installment of the “Red Dead” series on Oct. 26, broke records for the biggest opening weekend in the entertainment industry’s history with more than $725 million in global sales.
- Revenue increased 11% to $493 million compared to $444 million in the same period a year ago and ahead of expectations.
- Take-Two reported a net income of $25.4 million in the second quarter, compared with a loss of $2.7 million a year earlier.
- Take-Two forecast full-year adjusted revenue between $2.80 billion and $2.90 billion, up from its previous forecast of $2.70 billion to $2.80 billion. Analysts were expecting revenue of $2.85 billion
Roku forecasts surprise loss for holiday quarter, shares fall
- Roku forecast a surprise holiday-quarter loss and missed third-quarter revenue estimates for its high margin video streaming platform, sending its shares down nearly 13% in after-market trading on Wednesday.
- Roku reported revenue of $100.1 million from the streaming platform unit, missing estimates of $103.2 million.
- Net loss narrowed to $9.5 million in the third quarter, from $46.2 million a year earlier.
Walmart will offer Black Friday deals earlier this year
- Walmart said it would start offering holiday deals for customers as early as Thursday, as it prepares to compete with Amazon, Target and other rivals for shoppers on one of the busiest shopping days of the year.
- The company will offer Black Friday deals at 10 p.m. EST online on Thanksgiving eve – two hours earlier than in previous years – in order to give shoppers more shopping time earlier, and at 6 p.m. local time in its stores on Thanksgiving Day.
- Amazon said it would offer free shipping with no purchase minimum for the first time this season, heating up the competition with Walmart and Target, which in recent years have chipped away at Amazon’s lead with their own two-day shipping.
Tesla names director Denholm as chair after Musk rows
- Tesla has ended weeks of speculation by promoting one of the electric carmaker’s independent directors, Australian accountant Robyn Denholm, to replace Elon Musk as chairman.
- The change in structure at the Silicon Valley firm, agreed to by Musk in a September court settlement with regulators, is supported by many on Wall Street who worry that his erratic behavior is undermining the company’s progress.
- Denholm has been an independent director of Tesla since 2014 and heads its audit committee. She was paid $5 million, mainly in stock options, by the company last year, making her the highest remunerated of its board members.
US ECONOMY & POLITICS
- U.S. weekly jobless claims fall slightly in latest week
- New applications for U.S. unemployment fell slightly last week and the number of Americans receiving benefits remained at a 45-year low as strong labor market conditions continued.
- Initial claims for state unemployment benefits dropped by 1,000 to a seasonally adjusted 214,000 for the week ended Nov. 3.
- The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell to 213,750 in the latest week, a decline of 250 from the prior week’s upwardly revised reading of 214,000.
Democrats warn Trump after Attorney General Sessions forced out
- The ouster of Attorney General Jeff Sessions by President Donald Trump on Wednesday drew sharp criticism from Democrats, who warned Trump against moving to squash a probe of Russian meddling in the 2016 U.S. presidential election.
- Democrats raised concerns about Sessions’ acting replacement, Matthew Whitaker, who now oversees Mueller and once argued Mueller’s probe was going too far.
- Justice Department rules on special counsels set boundaries on how Mueller could be removed. Under those rules, he could only be discharged for good cause, such as misconduct or dereliction of duty, such as violating department policy.
- A permanent replacement for Sessions must be confirmed by the Senate, which Trump’s Republicans will continue to control as a result of Tuesday’s midterm elections.
High-profile U.S. races still unresolved two days after election
- A hard-fought race for governor in Georgia remained unresolved on Thursday, two days after U.S. elections, with Democrat Stacey Abrams forming a litigation team for possible legal challenges even as Republican Brian Kemp met with the state’s current governor to begin planning his transition to the office.
- Kemp declared victory late on Wednesday, hours after the Abrams campaign said it believed thousands of as-yet uncounted provisional, mailed-in and absentee ballots could still force a runoff election.
- Republican Martha McSally and Democrat Krysten Sinema, both congresswomen, were locked in a tight battle, with McSally holding a 49.4% to 48.4% lead as of Thursday morning.
- The Florida race for U.S. Senate was headed for an automatic recount, with Republican Rick Scott, the state’s outgoing governor, holding a lead of less than half a percentage point over the Democratic incumbent, Bill Nelson.
EUROPE & WORLD
- BAE Systems sticks to forecast for flat earnings
- Britain’s biggest defense company BAE Systems, which counts Saudi Arabia as its third biggest customer, stuck to a forecast for flat earnings in 2018 and said programs in the UK and the United States were making progress.
- BAE’s update is its first since companies have come under pressure for doing business with Saudi Arabia in the wake of the killing of Saudi journalist Jamal Khashoggi in the Saudi consulate in Istanbul on Oct. 2.
- The case has raised questions about the UK government’s 10 billion pound deal to sell Saudi Arabia 48 new Typhoons, which are made by BAE Systems and its partners.
- BAE, which builds ships and fighter jets for the UK, and combat vehicles and other equipment for the United States, said that for 2018 earnings per share would be in line with the previous year, with some small additional benefit from exchange rates.
Premium PC business boosts Lenovo’s quarterly profit
- Chinese PC maker Lenovo reported a 21% rise in second-quarter net profit, beating expectations, thanks to more premium computers it sold during the period.
- Revenue rose 14% to $13.38 billion, the highest quarterly revenue in almost four years, helped by an improvement in product mix toward more commercial PCs – a more lucrative category than consumer PCs.
- Loss at its data center business group narrowed to $123 million, while revenue jumped 63% to $3.2 billion.
- Net profit for the quarter came in at $168 million, versus $139 million a year earlier and an average estimate of $118 million.
Samsung gives first glimpse of foldable phone
- Samsung unveiled its much-anticipated foldable phone, urging Android developers to start writing apps for it.
- The South Korean tech company needs to get the foldable phone right to reverse steep declines in profit for its mobile division and restore some of the cachet its brand has lost to Apple.
- Folded in two it appeared to resemble a thick phone, but Samsung did not give media or developers a chance to touch or see the device up close.
TODAY in HISTORY
- Montana became the 41st state. (1889)
- Former president Grover Cleveland beat incumbent Benjamin Harrison and became the only president to win nonconsecutive terms in the White House. (1892)
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