US FINANCIAL MARKET
Wall Street opens flat after mixed retail earnings
- Wall Street’s main stock indexes opened flat on Tuesday, after closing at record highs in the previous session, with a handful of retailers reporting mixed results ahead of the latest batch of consumer confidence data.
- Shares of Best Buy advanced 4.2% after the consumer-electronics retailer said sales rose last quarter, thanks to a boost in online orders, and gave a more upbeat outlook for the holiday shopping season.
- But any broad stock market advance was held back by a sharp decline in shares of discount store chain Dollar Tree, which lowered its earnings guidance for the year, due, in part, to the anticipated impact of tariffs on goods imported from China.
- Corporate profit reports for the third quarter are mostly finished, with retailers among the last to report.
- Trade tensions also remain subdued after Chinese officials said they had reached a consensus with their U.S. counterparts on resolving certain problems.
Best Buy’s profit forecast points to robust holiday shopping demand
- Best Buy signaled it expected a strong holiday shopping season by forecasting fourth-quarter profit above estimates on Tuesday, sending the shares of the biggest U.S. tech retailer up 5% in premarket trading.
- Revenue rose to 1.8% to $9.76 billion, beating expectations of $9.70 billion.
- In the third quarter, overall same-store sales rose 1.7%, beating analysts’ average estimate of a 1.3% increase, including a 15% increase in domestic online sales.
- Profit rose 6% to $293 million, beating estimates on a per share basis.
- Best Buy said it expected fourth-quarter adjusted earnings of $2.65 to $2.75 per share, largely above expectations of $2.65.
- For the fourth quarter, the company said it expects revenue of between $14.75 billion to $15.15 billion, and comparable sales growth of 0.5% to 3.0%, the mid-point of which is above estimates of a 1.4% increase.
- They put comparable sales growth at 1% to 2% for the year, up from its prior target of 0.7% to 1.7%.
Dollar Tree holiday-quarter forecast disappoints as tariffs bite; shares fall
- Dollar Tree forecast holiday-quarter profit below Wall Street expectations, as the discount store operator expects a hit from U.S. tariffs on Chinese imports, sending its shares down about 8% before the opening bell.
- Net sales rose 3.7% to $5.75 billion, above analysts’ average estimate of $5.74 billion.
- Same-store sales rose 2.50%, slightly falling short of the average analyst estimate of 2.54%.
- For its fiscal third quarter, the company posted a profit of $255.8 million, compared with $281.8 million a year ago.
- The company forecast fourth-quarter sales in the range of $6.33 billion to $6.44 billion, the mid-point of which is below the average analyst estimate of $6.41 billion.
- The company said it expects fourth-quarter profit in the range of $1.70 to $1.80 per share, including roughly $120 million in additional costs related to store closures and the impact of tariffs, which was below the average analyst expectation of $2.02.
Hewlett Packard Enterprise’s Revenue Drops Across Segments
- Hewlett Packard Enterprise reported a larger-than-expected revenue decline in the latest period but said it still expects to return to revenue growth this year, when adjusted for currency fluctuations.
- Revenue fell to $7.22 billion, below analysts’ projected $7.4 billion, according to FactSet.
- The company said it swung to a fourth-quarter profit of $480 million from a loss of $757 million a year earlier, when it booked more than $1 billion in U.S. tax overhaul-related expenses.
- HPE maintained expectations for full-year adjusted profit of between $1.78 per share and $1.94 per share.
Dick’s Raises Earnings Outlook; Shares Jump
- Dick’s Sporting Goods raised its profit expectations for the fiscal year as the company reported a 6% rise in same-store sales in the third quarter, its largest quarterly increase in six years.
- Net sales at Dick’s were $1.96 billion, up more than 5% from a year ago. Analysts were expecting $1.92 billion.
- Dick’s reported a net income of $57.6 million, up from $37.8 million.
- The company said it expects per-share earnings between $3.63 and $3.73 for the year, an increase from its previous guidance of between $3.30 and $3.45 a share.
- The company said it expects same-store sales to increase between 2.5% and 3% for the year. Dick’s had said before it expected them to rise in the low single digits.
Abercrombie & Fitch reports rise in Abercrombie same-store sales
- Abercrombie & Fitch reported a better-than-expected 3% rise in same-store sales at its flagship brand on Tuesday, but said tariffs would hurt gross profit in the current quarter.
- Revenue of $863.5 million were roughly flat on a reported basis and grew 1% excluding currency.
- Sales at established stores were flat in the third quarter ended Nov. 2, compared with estimates of a 0.30% rise.
- Net income fell to $6.5 million, from $23.9 million a year earlier.
- Abercrombie said it expects comparable sales to be in the range of flat to up 2% for the fourth quarter, while analysts were expecting a 1.22% rise.
Calvin Klein-owner PVH Corp raises FY profit outlook on strong demand in Europe
- PVH raised full-year adjusted profit forecast on Monday after its third-quarter results beat Wall Street expectations, powered by higher demand for its Calvin Klein and Tommy Hilfiger apparel in Europe.
- Total revenue rose 2.5% to $2.59 billion, above average analysts’ estimate of $2.54 billion, according to IBES data from Refinitiv.
- Net income fell to $209.2 million from $243.1 million a year earlier.
- The company now expects to earn between $9.43 and $9.45 per share for full year 2019 on an adjusted basis, compared with its prior range of $9.30 to $9.40.
Palo Alto forecasts current-quarter profit below estimates, shares fall
- Palo Alto Networks forecast second-quarter profit well below Wall Street expectations on Monday, as the cyber security firm grapples with higher costs and rising competition, sending its shares down about 8% in extended trading.
- Revenue rose 18% to $771.9 million in the first quarter, beating analysts’ expectations of $767.8 million.
- Net loss widened to $59.6 million, or 62 cents per share, from $38.3 million, or 41 cents per share, a year earlier.
- The company expects second-quarter adjusted profit between $1.11 and $1.13 per share, while analysts were expecting $1.30.
Apple Settles Allegations of U.S. Sanctions Violations
- Apple has agreed to pay about $467,000 to settle allegations it violated U.S. sanctions by dealing with a blacklisted entity for more than two years, the Treasury Department said Monday.
- The Cupertino, Calif.-based technology giant allegedly violated U.S. sanctions by hosting, selling and facilitating the transfer of software applications from a Slovenian software company that was previously blacklisted by the U.S., according to the Office of Foreign Assets Control.
- During the time SIS was blacklisted, Apple made 47 payments related to the company’s blocked apps, including making payments directly to SIS, OFAC said. Apple also collected about $1.2 million from customers that downloaded SIS’s apps.
Impossible Foods eyes doubling valuation with new funding
- Impossible Foods, maker of the plant-based Impossible Burger, is in talks with investors about a new round of fundraising that could more than double the $2 billion valuation it attained in May, according to people familiar with the matter.
- Impossible Foods, aiming for a valuation of between $3 billion and $5 billion in the fundraising round, is looking to raise between $300 million and $400 million, the sources said.
- Some existing Impossible Foods investors have been pushing for a larger raise at a higher valuation, one of the sources said.
Texas, Nevada drop out of state AG group suing to block Sprint, T-Mobile merger
- Texas’ attorney general settled with T-Mobile and Sprint and will drop his opposition to the $26.5 billion merger, leaving just Democratic attorneys general fighting the proposed combination.
- Texas Attorney General Ken Paxton had been the only Republican among the state attorneys general who had argued that the deal to combine the No. 3 and No. 4 wireless carriers would lead to higher prices and filed a lawsuit to stop it.
- Also on Monday, Nevada said it would withdraw from the lawsuit in exchange for early deployment of the next generation of wireless in the state, creation of 450 jobs for six years and a $30 million donation to be distributed by Nevada Attorney General Aaron Ford and aimed at helping women and minorities, Ford’s office said.
- Without Texas and Nevada, 13 Democratic state attorneys general and the District of Columbia will take up the case.
Amazon opens pop-up store on China’s Pinduoduo until year-end
- Amazon on Monday said it will open a pop-up store on Chinese e-commerce platform Pinduoduo that will run until the end of December and carry a selection of about 1,000 products from overseas.
- The move points to how the U.S. firm’s China strategy is evolving after it decided earlier this year to stop operating a marketplace in the country for domestic-selling merchants.
- In April, it said it would instead increase its focus on selling goods from abroad to Chinese buyers and on its other businesses in the country like cloud services.
US ECONOMY & POLITICS
US consumer confidence falls for fourth consecutive month
- Consumer confidence dipped for a fourth straight month in November as economic conditions weaken toward the end of 2019, data released Tuesday by The Conference Board shows.
- The Board’s consumer confidence index dipped to 125.5 this month. That’s down from 126.1 in October.
- Economists expected the index to rise to 126.6.
Powell Says Fed’s Rate Cuts Reflect More Bearish View of Economy
- Federal Reserve Chairman Jerome Powell said the central bank cut interest rates this year in part because officials concluded the economy wasn’t as strong as anticipated when the Fed lifted rates last year.
- Officials have said a slowdown in business investment and global growth—amplified by the U.S.-China trade war—justified those cuts.
U.S. goods trade deficit narrows sharply in October
- The U.S. goods trade deficit fell sharply in October as both exports and imports declined, pointing to a continued reduction in trade flows that has been blamed on the Trump administration’ “America First” policy.
- The Commerce Department said on Tuesday the goods trade gap dropped 5.7% percent to $66.5 billion last month.
- Exports fell 0.7% after decreasing 1.3% in September.
- Exports were depressed by a drop in shipments of foods and feeds, likely soybeans.
- Goods imports tumbled 2.4% in October after falling 2.1% in the prior month, amid decreases in imports of industrial supplies, motor vehicles and consumer goods. Imports of capital goods rebounded modestly.
Home-Price Growth Picked Up in September
- Home-price growth accelerated in September, marking two-straight months of increases after a period of decelerating gains.
- The S&P CoreLogic Case-Shiller U.S. National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 3.2% annually, up from 3.1% the previous month.
- While home prices grew 3.2% nationally in September, they rose more modestly—2.1%—in large metro areas tracked in the 20-city composite index.
China Stays Upbeat About Trade Deal with U.S.
- China offered its most positive message in recent weeks that trade talks with the U.S. are going smoothly after a phone call Tuesday between the countries’ top negotiators, raising the prospects for a limited deal.
- China’s Commerce Ministry said the two sides had “reached a consensus on properly resolving related issues.”
- The message, though short and formulaic, followed a phone call between China’s chief trade negotiator, Liu He, and his U.S. counterparts, Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.
- Beijing and Washington are seeking an interim trade agreement that would, at minimum, put a hold on U.S. tariff increases while China gives some assurance that its state companies will buy more U.S. farm products.
- Along with intellectual-property protection, the U.S. is looking for more commitments from China on forced technology transfers and agricultural purchases.
- The sticking point for Beijing remains the U.S.’s reluctance to roll back tariffs on the majority of its Chinese imports.
Trump, Democrats Spar Over North American Trade Deal
- House Speaker Nancy Pelosi, facing criticism from Republicans for not embracing a renegotiated trade agreement with Canada and Mexico, said Monday she is awaiting final written commitments from the Trump administration.
- A Trump administration official confirmed Mrs. Pelosi’s description of the state of negotiations and said it appears one of the president’s priorities is close to advancing.
- Mrs. Pelosi, House Ways and Means Committee Chairman Richard Neal of Massachusetts and other House Democrats have been working with Mr. Lighthizer for months on changes to USMCA to boost the enforcement potential of new labor provisions that are aimed at Mexico.
Bank Branch Closings Weigh on Rural Communities, Fed Finds
- A majority of U.S. counties lost bank branches in recent years, and rural communities with poorer residents or large minority populations have been particularly hard hit, according to new Federal Reserve research.
- A little more than half—51%—of the 3,114 counties in the U.S. saw net declines in the number of bank branches between 2012 and 2017, said the report released Monday, a result of industry consolidation in the wake of the financial crisis.
- A total of 794 rural counties lost a combined 1,553 bank branches over the five-year period, representing a decline of 14% in the number of institutions.
- The drop was much greater than the 9% drop in the country’s 802 urban communities that also saw a decline.
U.S. sets out procedure for barring threats to telecom networks
- The U.S. Commerce Department on Tuesday set out a procedure to protect U.S. telecommunications networks and their supply chains from national security threats, saying it would consider whether to bar transactions on a case-by-case basis.
- The Commerce Department said Tuesday that Secretary Wilbur Ross had chosen to adopt a “case-by-case, fact-specific approach to determine which transactions must be prohibited, or which can be mitigated.”
- The Commerce Department said on Tuesday that its proposed procedure is open to public comment before it becomes final, but that the determination of “foreign adversaries” is solely at Ross’s discretion.
- It also gives Ross the power to immediately prohibit or revise transactions that pose national security risks.
EUROPE & WORLD
China Readies Big Dollar Bond Sale
- China is taking advantage of low global yields to raise billions in what is likely to be its largest-ever dollar bond sale.
- The four-part deal could raise around $6 billion in total, a record, according to Dealogic.
- It comes after China sold $3 billion of dollar debt last year and $2 billion the year before.
- Investors placed orders exceeding $20 billion, an update from one of the banks handling the sale showed Tuesday.
EU on course to allow in more U.S. beef from 2020
- European Union plans to allow more U.S. beef imports cleared a key hurdle on Monday when EU lawmakers specializing in trade backed the move, which is likely to ease transatlantic tensions.
- Members of the parliament’s international trade committee voted 26-7, with four abstentions, for an agreement that will see U.S. farmers take up the majority of an existing 45,000-tonne allotment.
- The whole of the European Parliament will vote on the deal on Thursday, but it is widely expected to follow the lead of its trade committee. If approved, increased shipments of U.S. beef should start at the beginning of 2020.
TODAY in HISTORY
- The first national Thanksgiving Day in the U.S. was proclaimed by President George Washington. (1789)
- China entered the Korean War. (1950)
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.
Content posted by third parties on this site is screened in order to protect clients’ privacy and comply with regulatory requirements. Content containing sensitive personal information, inappropriate language, information about specific investments, misleading information, information about other companies or websites, or information related to litigation will be removed. Content posted by third-parties on this site remains the responsibility of the party posting the content and is not adopted or endorsed by Pence Wealth Management or LPL Financial. Any opinions or statements posted by third parties are their own and may not be representative of the experience of others and are not indicative of future performance or success. Third party content on this site does not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy or completeness.