DAILY MARKET REPORTS
- The S&P 500 hit a three-week low on Tuesday as weak results and forecasts from a bunch of retailers including Target and Kohl’s fanned worries about holiday season sales, while tech stocks continued to slide on concerns about iPhone sales.
- Apple’s 3.8% fall added to the pressure as the stock that led the market through much of its bull run opened at its lowest level since early May, pushing the tech-heavy Nasdaq to more than 7-month lows.
- Retailers took a hammering with Target down 9.9% after it posted a lower-than-expected third-quarter profit.
- Home improvement chain Lowe’s fell 2.6% after it unveiled more restructuring plans in the face of worse-than-expected comparable sales numbers.
- Department store operator Kohl’s shed 10.9% after its full-year profit forecast fell below expectations.
US FINANCIAL MARKET
Target third-quarter comparable sales, earnings miss estimates
- Target reported third-quarter earnings and comparable sales below estimates on Tuesday at a time when a strong economy has boosted consumer spending at rival retailers, sending its shares down 7% in premarket trade.
- Sales rose to $17.59 billion, below the average estimate of $17.8 billion.
- Sales at stores open at least a year rose 5.1%, short of analysts’ estimates of a 5.21% increase.
- Net income increased to $622 million compared to $478 million in the same period a year ago, which missed expectations on a per share basis.
Best Buy holiday profit forecast fails to impress
- Best Buy predicted tepid holiday-quarter earnings on Tuesday, raising fears that weak demand for Apple’s newest iPhones are already starting to show up in the results of major consumer electronics retailers.
- Total revenue reached $9.59 billion, rising 2.9% year-over-year. Analysts had expected revenue of $9.57 billion.
- Best Buy’s U.S. same-store sales climbed 4.3% in the third quarter, topping analysts’ expectations of a 3.7% increase
- Net income surged to $277 million from $239 million a year earlier, well ahead of expectations.
- The company expects adjusted earnings of between $2.48 and $2.58 per share for the fourth quarter. Analysts were expecting earnings of $2.58 per share.
Lowe’s to get rid of Mexico stores in further streamlining
- Lowe’s said it was looking to shed its retail operations in Mexico and certain non-core U.S. businesses as the country’s second-biggest home improvement chain strives to compete with rivals including Home Depot.
- Net sales rose nearly 4% to $17.42 billion, edging past expectations of $17.36 billion.
- Sales at stores open for more than a year rose 1.5% in the third quarter, well below expectations of a 2.93% increase.
- Lowe’s net earnings fell to $629 million in the third quarter, from $872 million a year earlier – ahead of consensus.
Kohl’s raised profit view misses estimates, shares slip
- Department store operator Kohl’s forecast full-year earnings largely below estimates, a dire signal ahead of the all-important holiday shopping season, sending its shares down 8% on Tuesday.
- Net sales rose 1.3% to $4.63 billion, beating the average estimate of $4.36 billion.
- Kohl’s had a 2.5% increase in same-store sales for the third quarter, beating the 1.74% rise analysts had expected on average.
- Net income rose to $161 million in the third quarter, from $117 million a year earlier.
- Kohl’s raised the lower end of its adjusted full-year earnings forecast to $5.35-$5.55 per share from its prior forecast of $5.15-$5.55. The range was largely below the average analyst average of $5.51
TJX’s holiday profit forecast below expectations
- Off-price apparel retailer TJX forecast fourth-quarter profit largely below analysts’ estimate, ahead of the important holiday shopping season, sending its shares down 5%.
- Net sales climbed to $9.83 billion from $8.76 billion, beating analysts’ expectations of $9.49 billion.
- Comparable-store sales rose 7% in the third quarter, above analysts’ average estimate of a 4.1% increase.
- Net income rose to $762.3 million or 61 cents per share, from $641.4 million or 50 cents per share a year earlier.
- The company expects adjusted profit for the current quarter to be around 56 cents to 57 cents per share, below average analysts’ estimate of 71 cents
Cardiac and surgical product units drive Medtronic earnings beat
- Medical device maker Medtronic posted a better-than-expected profit, helped by strong performance across all segments.
- Net sales rose 6% to $7.48 billion, above estimates of $7.35 billion.
- Net income fell to $1.12 billion in the second quarter, from $2.02 billion a year earlier.
- The company also raised its full-year organic revenue forecast to a range of 5.0% to 5.5% from 4.5% to 5.0%.
Campbell Soup quarterly profit beats estimates, shares jump
- Campbell Soup reported a smaller-than-expected decline in quarterly earnings, sending shares of the embattled soup maker up 4% in premarket trading.
- Net sales jumped about 25% to $2.69 billion, boosted by Campbell’s recent acquisitions of Snyder’s-Lance and Pacific Foods. Organic sales fell 3%.
- Net earnings fell to $194 million in the first quarter, from $275 million a year earlier.
L Brands halves dividend, appoints new CEO for Victoria’s Secret
- L Brands slashed its full-year dividend and replaced the chief executive of its struggling Victoria’s Secret lingerie brand.
- Net sales rose 6% to $2.77 billion, also topping estimates.
- The company said third-quarter sales at its established stores rose 4%, easily topping analysts’ estimate of 1.53%.
- L Brands posted a net loss of $42.8 million compared to a profit of $86 million in the year ago period due to $101.2 in miscellaneous charges.
Boeing cancels airline call on 737 MAX systems: sources
- Boeing has canceled a conference call it had scheduled for Tuesday morning with airlines to discuss systems on the 737 MAX model that crashed in Indonesia last month, two sources familiar with the matter said.
- The stock has fallen in a broadly lower market amid increasing scrutiny by regulators and pilots into cause of the first major accident involving the 737 MAX, the latest version of the U.S. aircraft manufacturer’s popular narrow-body plane.
- A preliminary report on the Lion Air crash will be released on Nov. 28 or 29, according to Indonesian investigators who have analyzed the doomed jet’s flight data recorder.
South Korea’s Jeju Air orders 40 Boeing planes worth $4.4 billion
- Jeju Air, South Korea’s biggest low-cost carrier, purchased 40 Boeing 737 Max 8 planes worth $4.4 billion.
- The deal marks the biggest contract by a South Korean carrier in numbers of a single aircraft type model, the company said.
- The purchase contract includes an option to buy an additional 10 aircraft, Jeju Air said.
Northrop Grumman wins $490 million U.S. defense contract: Pentagon
- Northrop Grumman has been awarded a $490 million U.S. defense contract for the sale to Japan of Global Hawk unmanned surveillance aircraft, the Pentagon said on Monday.
Amazon bids for Fox’s 22 regional sports networks, including YES Network, sources say
- In addition to Amazon, Apollo Global Management, KKR, The Blackstone, Sinclair Broadcast and TEGNA also made first round bids for the full slate of networks, the sources said.
- Fox, which owns the Yes Network with the New York Yankees, was seen as a front-runner to bid for the nearly two dozen regional networks.
- Fox itself did not submit a bid in the first round for the networks although there’s potential that it will join in the second round, the sources said.
Google invests $700 million in Danish data center, secures green energy
- Google will invest almost $700 million in a Danish data center powered by the abundant green energy that underpins power- intensive companies’ interest in the Nordic region.
- Google also said it would sign a power purchase agreement (PPA) for the new Danish data center to ensure it is powered by renewable energy.
- The Nordic countries, which can generate electricity relatively cheaply from renewable sources such as hydropower and wind, have long been a magnet for heavy power-using industries, but are now attracting power-hungry data centers.
Bitcoin for payments a distant dream as usage dries up
- The use of bitcoin for commercial payments has dropped dramatically this year, even as the original digital coin starts to fulfill one of the basic features of any payment currency: stability.
- The value of bitcoins handled by major payment processors shriveled nearly 80% in the year to September, data from blockchain researcher Chainalysis shows.
- The blockchain technology, where all bitcoin activity is recorded and validated, can only process a fraction of the transactions per second that major credit card companies can. That renders its mass use impractical.
US ECONOMY & POLITICS
U.S. housing starts rise on multi-family segment
- U.S. homebuilding rose in October amid a rebound in multi-family housing projects, but construction of single-family homes fell for a second straight month, suggesting the housing market remained mired in weakness as mortgage rates march higher.
- Housing starts increased 1.5% to a seasonally adjusted annual rate of 1.228 million units last month.
- Building permits slipped 0.6% to a rate of 1.263 million units in October. Economists had forecast housing starts rising to a pace of 1.225 million units last month.
- Homebuilding completions in October fell 3.3% to a rate of 1.111 million units, the lowest level since September 2017.
Sixteen House Democrats oppose Pelosi, offer no rival
- Sixteen Democratic members of Congress vowed on Monday to oppose fellow Democrat Nancy Pelosi’s bid to become speaker of the U.S. House of Representatives, but none of them openly said they would run against her.
- As Democrats wrestle with the choice of speaker for 2019-2020, Pelosi has argued that even at the age of 78 she is best qualified, rejecting some younger Democrats’ argument that a new generation of leaders was needed.
- Fourteen men and two women signed a letter saying they believed “the time has come for new leadership in our caucus.”
EUROPE & WORLD
Northern Irish kingmakers send May a warning over Brexit deal
- The Northern Irish kingmakers who prop up British Prime Minister Theresa May’s government sent her a stark warning over her draft Brexit divorce deal, pulling support in several parliamentary votes on a finance bill.
- The move breaches the DUP’s deal with May and throws further doubt over whether she has the numbers to approve a draft Brexit deal in parliament.
- Since striking a draft divorce deal with the EU a week ago, some lawmakers in her Conservative Party have tried to trigger a leadership challenge and her Northern Irish allies have said the deal threatens the unity of the United Kingdom.
TODAY in HISTORY
- President John F. Kennedy agreed to lift the American blockade of Cuba, ending the Cuban missile crisis. (1962)
- Spain’s General Francisco Franco (1975)
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