DAILY MARKET REPORTS
- Wall Street was trading slightly lower on Wednesday as bank stocks came under pressure from a near-flat Treasury yield curve and investors remained focused on the debate among lawmakers over the tax bill.
- U.S. Treasury yields edged higher but the yield curve remained close to its flattest level in a decade, potentially cutting into the profits of banks.
- Senate Republican leaders are considering a one-year delay in the implementation of a major corporate tax cut to comply with Senate rules, The Washington Post reported on Tuesday.
- Shares of Snap fell 15% after its quarterly results fell short of expectations, but the company pared bigger losses after it disclosed that Chinese tech giant Tencent Holdings bought a 12% stake.
- Regeneron Pharmaceuticals was up 4.9%, after the drugmaker reported a better-than-expected quarterly profit.
US FINANCIAL MARKET
Defense stocks are among the best trades since Trump’s election — here are the other winners and losers
- It’s been exactly one year since President Donald Trump was elected and investors in defense stocks have benefited greatly.
- The aerospace and defense industry has risen more than 40 percent since Nov. 8, 2016. The only two industries that have outperformed defense are computers and peripherals and semiconductors.
Snap Plunges Nearly 15% as Quarterly Loss More Than Triples
- Snap failed to live up to Wall Street’s forecasts for revenue.
- Revenue in the third quarter rose 62% to $207.9 million. Analysts expected $236.9 million in revenue.
- Snap’s quarterly loss came to $443.2 million, significantly wider than the $124.2 million loss reported a year earlier.
- Expenses ballooned from a year earlier, to $669.8 million from $259.2 million.
- The company said it recorded $39.9 million in charges related primarily to excess inventory of Spectacles, its video-recording sunglasses.
- Snap said it added 4.5 million daily users during the quarter, bumping its total user base to 178 million but representing the slowest growth since the company started reporting the figure.
- Nearly all of Snap’s revenue comes from advertising.
- The company is competing for ad dollars against not only Facebook but also its rival’s Instagram photo-sharing app.
Rockwell Automation’s profit misses on higher investment spending
- Rockwell’s operating margins fell to 17 percent in the fourth quarter from 19.8 percent a year earlier, hurt by its control products business.
- The control products division, which accounts for more than half of total sales, makes motor starters and condition sensors for the transportation, oil and gas, mining, and food and beverage industries.
- Rockwell’s net income rose 10.5 percent to $204.6 million.
- Revenue rose 8 percent to $1.67 billion.
- Last month, the company rejected bigger rival Emerson Electric’s $27.6 billion takeover bid.
Huntington Ingalls beats 3Q profit forecasts
- Huntington Ingalls reported third-quarter profit of $149 million. The results beat Wall Street expectations.
- The shipbuilder posted revenue of $1.86 billion in the period.
Energizer beats Street 4Q forecasts
- Energizer reported fiscal fourth-quarter earnings of $34.1 million. The results beat Wall Street expectations.
- The battery and personal care products company posted revenue of $465.1 million in the period, also exceeding Street forecasts.
Regeneron beats Street 3Q forecasts
- Regeneron reported third-quarter earnings of $388.3 million. The results beat Wall Street expectations.
- The biopharmaceutical company posted revenue of $1.5 billion in the period, which also topped Street forecasts.
Humana’s Earnings Fall as Insurer Cuts Jobs
- Humana reported a third-quarter pretax profit of $799 million, compared with $902 million a year ago.
Sears Holdings same-store sales to drop 15.3% as company looks for more cash
- Sears Holdings announced a number of steps it’s taking to gain liquidity.
- Sears struck an agreement with insurers of its underfunded pension fund — Pension Benefit Guaranty Corp. — to allow for the sale of 140 Sears properties, though the company didn’t say when those sales will take place. In exchange, Sears said it paid $407 million to the plan.
- Same-store sales at Sears stores fell 17 percent, while those at Kmart stores dropped 13 percent during the third quarter.
- Sears expects a net loss of between $525 million and $595 million, compared with a $748 million loss in the same period last year.
Stiff competition, hurricanes dampen Wendy’s results, forecast
- The company blamed hurricanes Irma and Harvey denting same-store sales in North America by 30 to 40 basis points.
- The company said it sold 249 restaurants to franchisees in the quarter, resulting in a 15.4 percent drop in sales to $308 million.
Marriott raises full-year profit forecast amid strong demand
- Revenue rose 43.7 percent to $66 billion.
- Net income rose to $392 million from $70 million a year earlier.
- “The business related to the hurricane response increased North American lodging demand modestly in the third quarter, even as business transient and group demand was in line with expectations” Chief Executive Arne Sorenson said in a statement.
China’s Tencent Buys 12% Stake in Snap
- Less than a day after Snap posted weak results that sent its shares plunging, the struggling social-media and camera company disclosed that Chinese internet giant Tencent recently bought a 12% stake, becoming one of its largest shareholders.
- Tencent, an early pre-IPO backer of Snap, acquired roughly 146 million of its shares in the public market, Snap said in a filing Wednesday. The purchase adds to an investment Tencent made in Snap in 2013 during a fundraising round before the company went public.
- Tencent’s current total position in Snap wasn’t clear.
- Earlier this year, Tencent bought a 5% stake in Silicon Valley electric-vehicle maker Tesla.
- In a tweet at the time, Tesla Chief Executive Elon Musk said he was “glad to have Tencent as an investor and advisor to Tesla.”
Snap’s head of engineering leaves company after weak quarter
- Snap’s head engineer Tim Sehn resigned Tuesday, after more than four years at the company.
AT&T Executive Says Timing of Time Warner Deal ‘Now Uncertain’
- AT&T executive warned for the first time that the company is unsure about the timing of its planned takeover of Time Warner as the combination of the telecom and media giants faces extended antitrust review.
- AT&T agreed last year to buy Time Warner, the owner of HBO, CNN and Warner Bros. studios, in a cash-and-stock deal worth $85 billion.
- The Wall Street Journal last week reported the Justice Department was laying the groundwork for a possible lawsuit to stop the deal while at the same time negotiating with company executives.
FedEx Seals Turboprop Deal Amid Strength in Airfreight Market
- FedEx is renewing part of its fleet of smaller cargo planes in a deal valued at $1.3 billion at list price, amid an improved outlook for the global airfreight market.
- FedEx will buy up to 50 turboprop planes from European aircraft maker ATR—a joint venture between Airbus and Italy’s Leonardo.
- The deal comprises a firm order for 30 planes and options for 20 more, and represents a boost for ATR in the U.S., the world’s largest single aviation market.
Twitter to roll out 280-character tweets worldwide
- Twitter said it ran a test on 280-character tweets in September that showed users spent less time editing their tweets and were less likely to abandon them.
- User posting in languages including Japanese, Korean and Chinese, which do not face the issue of “cramming”, will continue to have a limit of 140 characters, Twitter said.
Apple is hoping an augmented reality headset will be its next hit product
- Apple is reportedly building an augmented reality headset that could launch as soon as 2020.
- The product is being developed by a team working on several other new Apple gadgets, Bloomberg says.
- Apple will need to create a headset that doesn’t have the same shortfalls as Google Glass.
US ECONOMY & POLITIC
Treasury Yields and the Dollar Are Breaking Up
- The correlation between the WSJ Dollar Index, which measures the greenback against 16 other currencies, and the 10-year Treasury yield fell to 47% Tuesday from about 88% two weeks ago.
Americans Feel Like It’s a Better Time to Sell Than to Buy a Home
- For the first time in more than a decade, Americans are feeling better about selling a home than buying one.
- The University of Michigan’s consumer sentiment data showed the index for consumers who said it’s a good time to sell a house ticked above those who said it’s a good time to buy a home in August for the first time since April 2006, with September’s index levels showing the same trend.
- The index of Americans who said it was a good time to sell a home was 70 in August and September, while the index for those who said it was a good time to buy a home was 69 in August and 68 in September.
- Overall, Americans’ optimism toward selling a house has risen sharply since the Great Recession, while their view toward buying has stagnated over the course of the expansion and dipped 11.69% in September from an index level of 77 in January.
MBA Mortgage Purchase Applications Rose 1%
- The slowdown in refinancing continued, with applications falling another 1 percent following the prior week’s 5 percent drop.
- Mortgage rates fell back after rising in the prior week to the highest level since July, with the average interest rate on conforming 30-year fixed-rate mortgages ($424,100 or less) down by 4 basis points to 18 percent.
EUROPE & WORLD
Trump’s China Trip Brings Admonitions on North Korea, Along with Business Deals
TODAY in HISTORY
- Montana became the 41st state. (1889)
- John F. Kennedy defeated Richard M. Nixon for the presidency of the United States. (1960)
- Edward W. Brooke of Massachusetts became the first African American to be elected to the U.S. Senate since Reconstruction. (1966)
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