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DAILY MARKET REPORTS

  • Disappointing earnings reports and a selloff in government bonds weigh on markets.
  • Corporate results drove many of the Friday’s biggest share moves.
  • Earnings from U.S. technology giants late Thursday were mixed.
  • Shares of Amazon.com climbed 4.9% after its quarterly profit topped $1 billion for the first time.
  • Apple shares dropped 2.3% after reporting a slight drop in iPhone sales but overall beating expectations.
  • Google edged down 5.7% after posting weaker-than-expected earnings, even when stripping out a big one-time tax hit.
  • Shares of oil majors Exxon and Chevron were down 4.1 percent and 1.9 percent, respectively, after they both posted lower-than-expected quarterly profits.
  • In Europe, shares of Deutsche Bank fell 5.1% after it reported a sizable loss for the fourth quarter and its third consecutive full-year loss.
  • Data showed nonfarm payrolls rose a seasonally adjusted 200,000 during the month and wage growth accelerated, up 2.9% over the past year.
  • Yields on 10-year U.S. Treasuries rose to 2.852% from 2.773%.

US FINANCIAL MARKET

Amazon posts largest profit in its history on sales, tax boost

  • Amazon reported a profit near $2 billion, the largest in its history, as the online retailer drew millions of new customers to its Prime fast-shipping club for the holiday season.
  • Sales rose 38 percent to $60.5 billion in the quarter, beating estimates.
  • Net income more than doubled to $1.86 billion in the quarter, helped by a provisional $789 million boost from the U.S. tax bill.
  • Prime saw more than 4 million sign-ups in one week alone last quarter, and revenue from subscription fees grew 49 percent to $3.2 billion. AWS posted a 45 percent rise in sales to $5.1 billion.

Strong iPhone prices, cash plans buoy Apple shares after muted outlook

  • Stronger iPhone prices and hints by Apple that it could return more than half of its $285 billion in cash to shareholders eased concerns among investors, even as the company gave a disappointing revenue outlook for the current quarter.
  • The company posted revenue of $88.3 billion from $78.4 billion a year earlier. The results beat analyst expectations of revenue of $87.3 billion.
  • Apple’s profit rose 12% to $20.07 billion, a record.
  • Apple’s services business, which includes Apple Music, the App Store and iCloud, grew 18 percent to $8.4 billion, missing analyst expectations of $8.6 billion.
  • Bright spots in the fiscal first quarter included average selling prices for the iPhone that topped Wall Street predictions, at $796 versus expectations of $756.
  • The strong prices offset unit sales of iPhones that missed Wall Street expectations, coming in at 77.3 million units versus estimates of 80 million.
  • Apple forecast revenue of $60 billion to $62 billion and gross margins of between 38 percent and 38.5 percent for its fiscal first quarter ending in March. Analysts were expecting $65.7 billion in sales and a gross margin of 38.9 percent for the March quarter.

Alphabet’s earnings miss profit estimates as spending grows

  • Google parent Alphabet missed quarterly profit forecasts as steady ad sales growth was offset by increased spending to promote its consumer gadgets, YouTube video app and cloud computing services.
  • Expenses jumped 27 percent to $24.7 billion in the fourth quarter from the year-earlier period.
  • Fourth-quarter sales increased 24 percent to $32.3 billion, above the average analysts’ estimate of $31.9 billion.
  • Adjusted quarterly profit of $6.8 billion that missed estimates of $7 billion.
  • The profit figure excludes a $9.9 billion tax charge due to U.S. legislation enacted in December.
  • Alphabet generated $110.9 billion in full-year revenue, up 23 percent from 2016 and topping $100 billion for the first time.
  • Google Chief Executive Sundar Pichai noted that cloud computing is generating $1 billion in quarterly sales.

Strong Card Spending Lifts Visa’s Revenue and Profit

  • A rise in card spending from increasingly confident consumers helped Visa beat revenue expectations for the first quarter of its fiscal year.
  • Visa’s revenue for the quarter rose 9% from the year before to $4.86 billion, just above the $4.85 billion analysts expected.
  • Visa’s profit rose to $2.52 billion from $2.07 billion the year before. But excluding two special items related to the impact of the new U.S. tax law, profit totaled $2.54 billion or $1.08 a share.
  • Visa processed a total of 30.5 billion transactions in 2017, up 12% from a year prior.
  • The company reported a 10% increase on a constant-dollar basis in debit and credit payments volume that was processed on its network in the quarter from a year prior, totaling $2.0 trillion.
  • The company updated its outlook for adjusted operating expense growth to the high end of mid-single digits, up from mid-single digits, and it reaffirmed its outlook for annual net revenue growth of high single digits.

Exxon profit misses expectations; sees $5.9 billion tax gain

  • Exxon Mobil posted a lower-than-expected quarterly profit due to falling production and weakness in its chemical and refining operations.
  • Total revenue rose 18% to $66.52 billion. Money spent on capital expenditures and exploration rose 86% to $9 billion.
  • Exxon posted fourth-quarter net income of $8.4 billion compared to $1.7 billion in the year-ago quarter.
  • The company saw a $5.9-billion non-cash benefit related to recent U.S. tax reform.
  • Production fell 3 percent to 4 million barrels of oil equivalent per day, with the only output gains in the company’s portfolio coming from the United States.
  • Refinery throughput fell world-wide by 3.8%, while petroleum product sales and chemical prime product sales both rose globally.
  • Exxon said earlier this week it would triple its Permian shale production to about 600,000 barrels of oil equivalent per day by 2025, part of a plan to invest $50 billion in the United States thanks to U.S tax reform.

Chevron fourth-quarter profit misses on refining weakness

  • Chevron posted a lower-than-expected quarterly profit on Friday as sales slumped in its international refining business,
  • Sales and other operating revenues in fourth quarter 2017 were $36 billion, compared to $30 billion in the year-ago period.
  • Chevron posted fourth-quarter net income of $3.1 billion compared with $415 million a year ago.
  • Chevron recorded a $2 billion noncash benefit in the period related to the recent U.S. tax overhaul.
  • Production rose 3 percent to 2.7 million barrels of oil equivalent per day.
  • Its international refining division recorded a 77 percent drop in profit due to lower margins on gasoline and other products.
  • The miss in profit comes the same day that rival Exxon Mobil reported lower-than-estimated earnings, also due to trouble in its refining arm.

Amgen Plans New U.S. Plant After Tax Changes

  • Amgen said Thursday it will spend up to $300 million to build a new U.S. manufacturing plant as it detailed the impact of the recent tax law changes.
  • The company also said it has added $10 billion under an existing share buyback program.
  • It had $4.4 billion remaining under a current buyback program at the end of 2017.
  • The company swung to a loss in its latest quarter on a $6.1 billion tax-related charge and missed expectations for revenue and profit.
  • In the fourth quarter, Amgen reported a loss of $4.26 billion, compared with a profit of $1.94 billion a year earlier.
  • Revenue fell 2.7% to $5.8 billion, below the $5.83 billion expected by Wall Street.

Merck posts mixed fourth-quarter results as Keytruda sales skyrocket

  • In the fourth quarter, the pharmaceutical company reported it had a net loss of $872 million, compared with a net loss of $594 million in the year-earlier quarter.
  • After stripping out special items, such as a $2.6 billion charge related to the new tax law, the company earned $2.7 billion.
  • Merck posted revenue of $10.43 billion, up 3 percent from a year ago but below expectations of $10.5 billion.
  • Sales of Keytruda, Merck’s blockbuster cancer drug, rocketed 169 percent to hit $1.3 billion, narrowly beating Street expectations of $1.27 billion, according to StreetAccount.
  • Diabetes drugs Januvia and Janumet reached $1.52 billion, up 1 percent from the year-ago quarter and just above estimates of $1.5 billion.

Charter Communications profit surges on $9.3 billion tax reform benefit

  • Charter’s net income rose to $9.55 billion in the fourth quarter from $454 million a year earlier.
  • Total revenue rose 3.2 percent to $10.60 billion, helped by strong growth in its residential services business that includes video, internet and voice services.
  • U.S. cable operator Charter said on Friday its quarterly profit surged due to a $9.3 billion benefit related to the recent changes in U.S. corporate tax laws.

Sprint beats on quarterly revenue, raises outlook

  • Sprint reported quarterly revenue that beat analyst estimates, as the wireless carrier raised its free cash flow outlook for the 2017 fiscal year.
  • Net operating revenue in the third quarter was $8.24 billion, down from $8.55 billion a year earlier.
  • Analysts had expected revenue of $8.15 billion and a net loss of 4 cents a share.
  • Sprint reported quarterly net income of $7.16 billion due to the impact of federal tax reforms, after a loss of $479 million a year earlier.
  • Sprint now expects $2.5 billion to $2.7 billion in operating income, up from its previous estimate of $2.1 billion to $2.5 billion.
  • It expects adjusted free cash flow of $500 million to $700 million, compared to previous estimates of breaking even.
  • The company reported net additions of 184,000 phone subscribers who pay a monthly bill in the quarter, compared to additions of 368,000 a year earlier.

GoPro misses revenue forecast for holiday quarter

  • GoPro missed its forecast for holiday-quarter revenue as it struggles to drive demand for its flagship action cameras.
  • Revenue fell 38.1 percent to $334.8 million in the fourth quarter.
  • Net loss narrowed to $55.8 million from $115.7 million a year earlier.

Mattel reports surprise loss for holiday period

  • Mattel reported a surprise loss for the holiday quarter on Thursday, as the toy maker faced weak demand for key brands including Fisher-Price and as the effect of the collapse of Toys “R” Us lingered.
  • Mattel’s net revenue fell 12.1 percent to $1.61 billion, missing analysts’ average estimate of $1.69 billion.
  • Mattel reported a net loss of $281.3 million in the fourth quarter, hurt by a one-time, $457-million charge related to new U.S. tax laws.
  • Sales in the company’s construction, arts and crafts unit sank 25 percent in the holiday quarter, while sales from Fisher-Price toys dipped 12 percent.

Guess shares slump after model Kate Upton tweets about exec

  • Guess shares fell more than 17 percent on Thursday following a tweet by model and actress Kate Upton accusing the company’s co-founder of using his power to harass women.
  • The fashion retailer said it will investigate Upton’s concerns if it determines they have merit, adding that she had not yet made any specific allegations.
  • Guess also said it had investigated claims that Marciano behaved inappropriately towards two women in November 2017, after an entertainment website contacted them.

Boeing says structure of possible Embraer tie-up not defined

  • A Brazil-based spokeswoman for Boeing said on Friday that the structure of a potential tie-up with Brazilian planemaker Embraer was “still being studied” and nothing about a possible partnership had yet been defined.

Bitcoin Is Falling Fast, Losing More Than Half Its Value in Six Weeks

  • Bitcoin plunged below $8,000 on Friday, extending its sharp rout since the start of the year in a selloff triggered by a widening regulatory crackdown on cryptocurrencies.
  • The digital currency has now fallen by nearly 60% from a record high of close to $20,000 in December.

US 10-year Treasury yield jumps to 4-year high of 2.85% after jobs report

At the latest reading, the 10-year note was higher at around 2.852 percent at 10:10 a.m. ET, while the yield on the 30-year Treasury bond was also higher at 3.074 percent. Bond yields move inversely to prices.

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US ECONOMY & POLITIC

U.S. Gained 200,000 Jobs in January as Wages Picked Up

  • U.S. hiring was solid in January as the unemployment rate hovered at its lowest level in 17 years and wage growth picked up to its strongest pace since the recession.
  • Nonfarm payrolls rose a seasonally adjusted 200,000 in January.
  • Wage growth accelerated, with average hourly earnings for private-sector workers climbing 0.34% on the month and up 2.9% over the past year. That was the strongest year-over-year gain since June 2009.
  • Economists had expected 177,000 new jobs in January, an unemployment rate of 4.1% and a 0.2% monthly gain for hourly earnings.
  • In January, most industries added jobs, including a 196,000 gain for private payrolls and 4,000 new government positions.
  • The labor-force participation rate in January was steady at 62.7%.

U.S. Consumer Sentiment Tops Estimates on Jobs, Income Outlook

  • U.S. consumer sentiment exceeded analyst estimates in January as the outlook for jobs and household income improved, University of Michigan survey data showed.
  • Sentiment index inched down to 95.7 (est. 95) from 95.9 in December; preliminary reading was 94.4.
  • Current conditions gauge, which measures Americans’ perceptions of their finances, dipped to 110.5 from 113.8 in the prior month; preliminary reading was 109.2.
  • Expectations measure advanced to 86.3 from 84.3; preliminary reading was 84.8.
  • Year-ahead inflation expectations were unchanged at 2.7%.

US factory orders up 1.7% in Dec., vs 1.5% increase expected

  • Factory goods orders rose 1.7 percent, advancing for a fifth straight month.
  • November’s report was revised to show orders jumping 1.7 percent instead of the previously reported 1.3 percent increase.
  • Orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans, dropped 0.6 percent in December.
  • Orders for these so-called core capital goods edged up 0.1 percent in November.
  • Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, rose 0.4 percent in December instead of increasing 0.6 percent as reported last month.

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EUROPE & WORLD

Sony reports best-ever third quarter profit, forecasts new annual record

  • Sony reported a nearly four-fold jump in third-quarter operating profit on growing demand for its image sensors and raised its full-year earnings outlook.
  • The electronics firm posted an operating profit of 350.8 billion yen ($3.20 billion) for the October-December quarter, up from 92.4 billion yen a year ago.
  • That was Sony’s highest third-quarter profit ever and far above a consensus estimate of 240.8 billion yen from analysts.
  • Sony raised its profit forecast for the year ending March to 720 billion yen from 630 billion yen, its best ever in its 72-year-old history.
  • Chief Executive Kazuo Hirai also announced he was stepping down, to be replaced by Kenichiro Yoshida – Sony’s CFO.

Honda lifts profit forecast, sees China overtaking U.S. as biggest market

  • Honda said it expected China would overtake the United States as its biggest market for cars in the coming years after higher sales in Asia prompted the automaker to raise its full-year profit outlook by 4 percent.
  • Profit was 284.5 billion yen in October-December, up 37 percent from a year earlier, and exceeding a 281.6 billion yen estimate from 11 analysts.
  • Expectations for stronger sales growth in Asia prompted Japan’s third-biggest automaker to raise its full-year forecast for operating profit to 775 billion yen ($7.06 billion).
  • In the third quarter, Asia including China was the only region where Honda saw year-on-year growth in vehicle sales, while sales at home, North America, Europe and other regions fell.

Deutsche Bank reports third consecutive annual loss

  • Deutsche Bank on Friday posted its third consecutive annual loss in 2017, taking a hit from challenging markets, a drop in investment bank revenue and a U.S. tax reform, after a difficult fourth quarter.
  • U.S. tax reforms prompted a non-cash tax charge of 1.4 billion euros, pushing the bank into a full-year loss.
  • In the fourth quarter, its net loss widened to 2.19 billion euros from 1.89 billion a year earlier and revenue slumped 19 percent to 5.7 billion euros.

Ford’s China joint venture to recall more than 500,000 vehicles

  • Ford’s China joint venture will recall more than half a million vehicles due to brake-related issues, an additional headache for the U.S. carmaker as it faces rising challenges in the world’s top auto market.
  • Changan Ford, Ford’s passenger car joint venture, would recall 371,371 Mondeo models and 195,796 Edge SUVs.
  • The recall follows the sudden resignation of Ford’s China chief, Jason Luo, this week after only five months at the helm
  • Toyota, which announced a 24.5 percent jump in its January China sales, will also recall 181,797 vehicles.

Toyota sets tough China sales goal of 1.4 million vehicles for 2018

  • Toyota aims to sell 1.4 million vehicles in China in 2018, nearly 9 percent more than it sold last year.
  • The sales goal announced by Japan’s biggest automaker on Friday comes at a time when the world’s biggest auto market is experiencing a slowdown in overall vehicle sales growth.
  • Toyota’s sales in China in January rose 24.5 percent from a year earlier to 127,500 vehicles.

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TODAY in HISTORY

  • The city of Buenos Aires, Argentina, was founded by Spanish conquistador Pedro de Mendoza. (1536)
  • South African President F. W. de Klerk lifted a ban on the African National Congress and promised to free Nelson Mandela. (1990)

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, Wall Street Journal.

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