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US FINANCIAL MARKET
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DAILY MARKET REPORTS

  • Equity markets are torn between buoyant economic growth and double-digit company earnings.
  • Strong fourth-quarter reports from S&P 500 companies so far have pushed up analysts’ profit growth estimate to 13.7 percent, from 12 percent at the start of the month.
  • Facebook rose 2.3 percent after the company forecast rising ad sales despite a dip in usage on the social media network.
  • UPS dropped 6.2 percent after the world’s largest package delivery company reported a fourth-quarter net profit that was hurt by additional costs.
  • EBay jumped 14 percent after posting higher revenue.
  • But PayPal fell 7 percent after former parent eBay said it planned to move to a new primary payment processor.
  • Mastercard shares rose 2.4% after the credit-card giant reported stronger-than-expected quarterly sales and profit.
  • Apple, Amazon.com and Google are set to report results after the close of the U.S. stock market.

US FINANCIAL MARKET

Facebook’s user engagement dips on News Feed tweaks

  • Facebook reported slightly slower-than-expected growth in daily active users in the latest quarter and said changes made to the News Feed reduced the time spent by users by about 50 million hours every day.
  • Total revenue rose 47 percent to $12.97 billion, while full-year revenue was also up 47 percent at $40.65 billion.
  • Total advertising revenue was $12.78 billion, compared with analysts’ estimate of $12.30 billion.
  • Net income rose to $4.27 billion from $3.56 billion a year earlier.
  • Facebook lost about 700,000 daily users in that market to total about 184 million, though it gained 33 million globally.
  • The average price per ad rose 43%.
  • Facebook accounted for about 17% of the global digital-ad market last year, behind Google, which accounted for 32%.
  • The company’s “average revenue per user“— commonly shortened to ARPU on Wall Street — hit $6.18, up from just over $5 over the summer.
  • But most of Facebook’s money still comes from users in the U.S. and Canada, where that number is even higher: $26.76 per user.

Microsoft reports better-than-expected quarterly revenue, profit

  • Microsoft reported better-than-expected quarterly revenue and profit on Wednesday, helped by robust demand for its cloud computing services and flagship Azure product.
  • Revenue climbed 12 percent to $28.92 billion, beating analysts’ expectations of $28.40 billion.
  • Revenue from the intelligent cloud segment rose 15.3 percent to $7.80 billion in the second quarter, including 98 percent growth for Azure (the 10th consecutive quarter of 90%+ growth).
  • Microsoft took a $13.8 billion charge in US tax law in the second quarter that resulted in a loss.
  • The company posted a net loss of $6.30 billion compared to a profit of $6.27 billion a year earlier.

AT&T quarterly profit tops estimates

  • AT&T announce that quarterly profit beat Wall Street analyst estimates, helped by impacts from tax cuts and wireless subscriber additions.
  • The company added 329,000 phone subscribers who pay a monthly bill in the quarter, compared with a loss of 67,000 a year earlier.
  • Revenue was $41.7 billion, compared with $41.8 billion in the year-earlier period. Analysts had expected $41.2 billion.
  • Net income was $19.0 billion up from $2.4 billion in the year-earlier period.

PayPal’s fourth-quarter profit beats estimates, but forecast disappoints

  • Payments processor PayPal’s fourth-quarter profit topped analysts’ forecasts on strength in its merchant services business, but the company gave a disappointing forecast for first-quarter earnings.
  • Net revenue climbed to $3.74 billion from $2.98 billion with total payments volume rising 32 percent to $131.45 billion.
  • PayPal said on Wednesday its net income rose to $620 million in the quarter from $390 million a year earlier.

Ebay posts loss for holiday quarter as it books $3.1 billion tax charge

  • EBay posted a loss for the key holiday quarter as it booked a $3.1 billion charge from the recent changes in U.S. tax laws.
  • Revenue in the fourth quarter was $2.6 billion, in line with consensus.
  • EBay’s net loss from continuing operations was $2.6 billion, a year-ago it earned $5.95 billion.
  • The company announced that Adyen will become eBay’s primary payments processor after the deal with PayPal expires in 2020.

Mastercard Revenue Rises But Tax Law Dents Earnings

  • Mastercard beat revenue expectations in its latest quarter, but its profit took a hit as it implemented U.S. tax law changes.
  • Mastercard’s revenue rose 20% from the year before to $3.31 billion, more than the $3.26 billion analysts expected.
  • Mastercard’s profit dropped to $227 million from $933 million the year before.
  • The company had about 2.43 billion Mastercard and Maestro-branded cardholders at year-end, and the value of transactions processed on its network rose 13% in the fourth quarter to $1.42 trillion.

Holiday shipping snags curb UPS’s quarterly profit growth

  • United Parcel Service said its fourth-quarter earnings suffered from higher costs resulting from surging shipping volumes during the peak holiday period.
  • UPS said fourth-quarter revenue increased to $18.83 billion from $16.93 billion a year earlier on stronger-than-expected U.S. domestic and international package volumes. That was above Wall Street’s estimate of $18.18 billion.
  • Net income came to $1.1 billion, compared with a year-earlier loss of $239 million.
  • UPS said it would invest $6.5 billion to $7 billion in 2018, including 14 additional Boeing 747-8 aircraft and four new aircraft freighters for its fleet.

Time Warner beats estimates on ‘Justice League’ success

  • Time Warner reported better-than-expected quarterly profit and revenue on Thursday, powered by the success of its latest superhero movie “Justice League”.
  • Revenue rose 9 percent to $8.61 billion, beating the average analyst estimate of $8.42 billion.
  • The company’s net income surged to $1.39 billion in the fourth quarter, mainly due to a gain related to changes to U.S. tax laws.
  • In the year-ago quarter, the company earned $293 million.
  • Time Warner’s HBO premium channel has more than 5 million online streaming subscribers, up from 2 million a year ago.
  • Those online subscribers come from all online streaming offerings it works with, including its own HBO Now as well as Amazon’s Amazon Channels, AT&T’s DirectTV Now and Sony Vue.

Qualcomm’s earnings top estimates as modem chip sales surge

  • Chipmaker Qualcomm’s earnings and revenue topped Wall Street forecasts for the first fiscal quarter as demand surged for its chips used in smartphones and cars, making up for a fall in licensing revenue.
  • Weighed down by the Apple dispute, the licensing business posted a 28 percent fall in revenue to $1.30 billion in the first quarter.
  • Revenue rose 1.2 percent to $6.07 billion and exceeded analysts’ estimates of $5.93 billion.
  • Qualcomm posted a net loss of $5.95 billion compared to a profit of $682 million a year earlier, reflecting a $6 billion one-time charge because of new U.S. tax laws.

DowDuPont upbeat on growth as sales rise 14 percent

  • For the reported quarter DowDuPont saw a $1.1 billion benefit from lower U.S corporate taxes.
  • The company posted a net loss of $1.2 billion substantially the result of merger-related costs.
  • Net sales came in at $20.1 billion versus comparable net sales – which the company terms “proforma” sales – of $17.7 billion a year earlier.

Mondelez’s profit beats on higher demand for key brands

  • Mondelez’s quarterly profit beat analysts’ estimates, fueled by strong demand for its key brands like Cadbury Dairy Milk and Oreo cookies in Europe and growth in emerging markets.
  • The company said its net revenue rose to $6.97 billion, meeting analysts’ average estimate.
  • Net income rose to $802 million from $93 million a year earlier. The company had a $59 million benefit from U.S. tax reform.
  • Mondelez also expects organic net revenue to increase 1 percent to 2 percent for 2018 and adjusted operating income margin of about 17 percent.

ConocoPhillips swings to profit, helping boost dividend, buyback

  • The company posted fourth-quarter net income of $1.58 billion compared to a net loss of $35 million in the year-ago period.
  • ConocoPhillips raised its quarterly dividend to 28.5 cents and increased its 2018 buyback plan by 33 percent to $2 billion.
  • Quarterly production fell 23 percent to 1.2 million barrels of oil equivalent per day, due in part to asset sales.
  • The company’s Canadian operations lost money during the quarter, offset by profit in U.S. assets, as well as projects in Europe, Africa and Asia.

Valero’s profit beats estimates as refining margins rise

  • Valero’s operating revenue rose 27.4 percent to $26.39 billion in the quarter.
  • Net income rose to $2.37 billion from $367 million a year earlier.
  • San Antonio, Texas-based Valero said operating income from its refining business, its largest revenue generator, rose 52.2 percent to $982 million.

Blackstone fourth-quarter profit up 5 percent on private equity gains

  • The world’s largest manager of alternative assets said on Thursday a key measure of its earnings rose by 5 percent, helped by large gains in its private equity unit and strong performance by its real estate, credit, and hedge fund businesses.
  • Economic net income rose to $850 million from $811.6 million in the year-ago period.
  • Blackstone’s assets under management rose to a record $434.1 billion in the fourth quarter, up from $387 billion in the previous quarter.

Altria beats 4Q profit forecasts

  • Altria reported fourth-quarter net income of $4.97 billion. The results surpassed Wall Street expectations.
  • The owner of Philip Morris USA, the nation’s largest cigarette maker posted revenue of $6.1 billion in the period. Its adjusted revenue was $3.94 billion.

Automakers post mixed U.S. January vehicle sales, SUVs in favor

  • U.S. auto industry sales fell 2 percent in 2017 to 17.23 million vehicles after hitting a record high in 2016 and are expected to drop further in 2018 as interest rates rise and more late-model used cars come back to dealer lots to compete with new ones.
  • General Motors reported a 1.3 percent increase in sales for the month.
  • Ford posted a 6.6 percent decline in new vehicle sales for January.
  • Toyota said its new vehicle sales rose 16.8 percent in January.
  • Fiat Chrysler said that its new vehicle sales fell 13 percent in January.

Lowe’s to pay U.S. staff $1,000 bonus following tax reform

  • Lowe’s said it would pay a one-time bonus of $1,000 for over 260,000 hourly U.S employees, as the home improvement chain takes advantage of changes in the U.S. tax code.
  • The company said it would also give new benefits, including additional paid maternity and parental leave and adoption assistance benefit of up to $5,000, to qualified hourly full-time employees.
  • Lowe’s joins a list of companies that include Home Depot, AT&T, Wells Fargo, and Boeing which have promised more pay for workers since the overhaul to the U.S. tax code.

Wells Fargo loses big client after dialing up risk in retirement funds

  • TexaSaver, a supplemental retirement program for nearly 240,000 state employees and elected officials ended a decade-long relationship with Wells Fargo, pulling more than $600 million from its target-date funds.
  • A Colorado-based retirement plan for more than 4,000 plumbers and pipe-fitters also pulled its money from the Wells Fargo funds, citing the “unproven nature and significance” of Wells Fargo’s changes.
  • Wells Fargo notified investors in April 2017 that its target-date funds would become more aggressive, outlining a plan for better returns that included buying junk bonds, stocks in emerging markets and derivatives.
  • TexaSaver was stunned by the changes. The retirement plan had fewer than 90 days to accept the revamped product or find another investment option.

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US ECONOMY & POLITIC

U.S. Jobless Claims Fell Last Week

  • Initial jobless claims, a proxy for layoffs across the U.S., declined by 1,000 to a seasonally adjusted 230,000 in the week ended Jan. 27.
  • The four-week moving average, a steadier measure, declined 5,000 to 234,500 last week.
  • The number of claims workers made for longer than a week increased, rising to 1,953,000 in the week ended Jan. 20.

U.S. Factory Sector Maintains Momentum

  • The Institute for Supply Management said its index of manufacturing activity stood at 59.1 last month, down slightly from 59.3 in December.
  • Any mark above 50 indicates expanding activity as measured by factors such as sales, prices and employment.
  • Economists surveyed by The Wall Street Journal had expected a reading of 58.5.

U.S. Construction Spending Rose in 2017 by Least in Six Years

  • The value of construction put in place increased 3.8 percent to $1.23 trillion last year, according to Commerce Department figures released Thursday.
  • That’s the smallest gain since a 2.6 percent drop in 2011.
  • Public construction spending fell 2.5 percent last year to $279.8 billion, as state and local governments trimmed outlays.
  • Private nonresidential construction rose just 0.6 percent last year, compared with a 10.6 percent increase in residential building.

U.S. Worker Productivity Slips in Final Months of 2017

  • U.S. worker productivity stumbled at the end of 2017 after solid gains earlier in the year.
  • Nonfarm business-sector productivity, measured as the goods and services produced per hour worked, decreased at a 0.1% seasonally adjusted annual rate in the fourth quarter of 2017.
  • It was the first quarterly decline since early 2016.
  • Productivity growth in the third quarter was revised down to a 2.7% rate an earlier estimate of up 3%.
  • For all of 2017, productivity improved 1.2% from the prior year. That matched the average rate recorded from 2007 through 2017.

Fed Holds Rates Steady, Sees ‘Solid’ Economic Gains

  • The Federal Reserve held short-term interest rates steady Wednesday and said it would continue along its path of gradual increases aimed at keeping the economy on track.
  • Fed officials are hoping to keep rates low enough to encourage inflation to firm up a bit without surging out of control, amid a tight labor market and solid economic growth.
  • The Fed said Mr. Powell will begin his term as FOMC chairman on Saturday and is scheduled to be sworn in as chairman of the Fed board of governors on Monday.

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EUROPE & WORLD

Alibaba beats forecasts again, takes stake in affiliate Ant

  • Alibaba said its third-quarter revenue jumped 56 percent, beating expectations as it shrugged off concerns about a wider market slowdown.
  • Revenue rose to 83.03 billion yuan ($13.19 billion), up from 53.2 billion yuan a year earlier. That exceeded the 79.8 billion yuan average estimate of analysts.
  • Net income rose to 24.07 billion yuan, up 35 percent from 17.9 billion yuan in the year-earlier quarter. That compared with the 21.5 billion yuan estimate of analysts.
  • The firm also raised 2018 revenue guidance to growth of 55-56 percent, up from previous guidance of 49-53 percent.

Shell Is Almost Back to the Profits of the Oil Boom

  • The British-Dutch oil giant said Thursday its 2017 profit was $12.1 billion.
  • Shell said it is on track to pay down its large debt load and commence a $25 billion share buyback program by the end of the decade.
  • Shell’s cash flow fell to $7.3 billion in the fourth quarter from $9.2 billion a year earlier.
  • Shell also said changes to the U.S. corporate tax rate could encourage further investment in the U.S., where the company already spends around $10 billion a year.

Lenovo to miss mobile turnaround target, posts third quarter net loss

  • Lenovo’s overall revenue for the October-December period came in at a three-year high of $12.94 billion.
  • Its bottom line for the period, however, swung to a loss of $289 million, versus a $98 million profit a year ago.
  • Lenovo plans to open 1,000 new retail shops in China over three years to sell a wide range of products.

Japan’s Takeda raises profit estimate on cancer drug sales

  • Takeda, Japan’s largest drugmaker by sales, has been focusing its research on developing treatments for cancer and diseases of the digestive and nervous systems.
  • For the third quarter ended December, Takeda’s operating profit jumped almost 60 percent to 87.9 billion yen.
  • Last month, Takeda said it would pay about $646 million for Belgian biotech group TiGenix whose drug Cx601, a stem cell therapy for Crohn’s disease.

Google Parent Alphabet and Aramco in Talks to Build Tech Hub in Saudi Arabia

  • Saudi Arabia’s state-owned oil giant and Google are in talks about jointly building a large technology hub inside the kingdom.
  • As part of the potential joint venture, Alphabet would Aramco build data centers around Saudi Arabia.
  • The size of the potential joint venture is unclear, although it could be big enough to become listed on Saudi Arabia’s stock exchange.
  • Amazon is also close to finalizing a $1 billion deal to build three data centers in Saudi Arabia.

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TODAY in HISTORY

  • The Supreme Court of the United States convened for the first time, in New York City. (1790)
  • The first volume of the Oxford English Dictionary A–Ant, was published. (1884)
  • A press conference announced the first electronic digital computer, ENIAC, was held at the University of Pennsylvania. (1946)
  • The space shuttle Columbia disintegrated as it tried to reenter the Earth’s atmosphere after a sixteen-day mission in space. All seven members of the crew were lost. (2003)

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