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WALL STREET OPENS LOWER ON RISING BOND YIELDS, INFLATION CONCERNS

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US FINANCIAL MARKET
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DAILY MARKET REPORTS

  • Dow industrials have pulled back more than 5% from their Jan. 26 high.
  • Even with the recent losses, the Dow industrials are up about 2.5% for 2018.
  • Government bonds stabilized Monday, with the yield on the benchmark 10-year U.S. Treasury note recently at 2.837%.
  • Higher yields and rising interest rates typically mean higher borrowing costs for companies and can reduce the relative attractiveness of stocks.
  • Currently, traders are pricing in three rate hikes for 2018.
  • Roughly 80% of S&P 500 companies that have reported results for the fourth quarter have posted sales that beat analysts’ expectations, on track for the most positive surprises since at least 2008.
  • Wells Fargo fell 8% after the Fed imposed new regulatory restrictions over compliance issues.
  • Qualcomm fell 2% after Broadcom raised its offer to buy the chipmaker.
  • Bristol-Myers Squibb was up 3% after the drugmaker said a late-stage trial for a lung cancer drug met its main goal.

US FINANCIAL MARKET

Bristol-Myers Squibb Revenue Fueled By Eliquis

  • The company reported a loss of $2.33 billion compared to the same period last year of $894 million.
  • The loss was due to a $3.03 billion provision charge for income taxes as a result of the new tax law.
  • Revenue rose 3.9% to $5.45 billion.
  • Research and development costs were $1.92 billion, up 37%.
  • Sales of Eliquis, a drug to help with blood clots, rose 44% to $1.36 billion.

Broadcom Raises Offer for Qualcomm to Over $121 Billion

  • Broadcom said the revised bid—its “best and final offer”—represents a 50% premium to Qualcomm’s share price on Nov. 2.
  • Broadcom sweetened its takeover offer for Qualcomm in a deal that would be worth more than $121 billion.
  • Broadcom said Monday it would pay $82 a share in cash and stock, up from its initial offer in November of $70 a share in cash and stock, or $105 billion.
  • Combined, Broadcom and Qualcomm would form the No. 3 chip maker by revenue, behind Intel and Samsung Electronics.

Fed orders Wells Fargo to halt growth over compliance issues

  • Wells Fargo detailed new regulatory restrictions imposed by the U.S. Federal Reserve on Friday that sent its shares down sharply in after-hours trading.
  • Wells is not allowed to grow beyond the $1.95 trillion in assets it had at the end of last year “until it sufficiently improves its governance and controls.”
  • Wells estimated that the cap will cut its annual profit by $300 million to $400 million this year.
  • The bank must submit a plan to the Fed within 60 days detailing how it has enhanced oversight from its board of directors and improved compliance and risk management functions, and how it plans to improve further.

Metals maker Arconic’s revenue rises 10 percent

  • U.S. specialty metals maker Arconic’s revenue climbed 10.2 percent in the fourth quarter, led by higher demand for aluminum parts used in aircraft.
  • Arconic reported a net loss of $727 million in the quarter compared with $1.26 billion a year earlier.
  • Sales rose to $3.27 billion from $2.97 billion.

Hess Corp posts 13th straight quarterly loss

  • Net loss to the company was $2.68 billion compared to a loss of $4.89 billion a year earlier.
  • Total revenue in the reported quarter fell to $1.30 billion from $1.39 billion.
  • The year-earlier quarter included a $3.75 billion charge on deferred tax assets.

Kroger to sell convenience stores to UK’s EG Group for $2.15 billion

  • Kroger will sell its convenience stores business to British retailer EG Group for $2.15 billion, the U.S. grocery chain said.
  • Kroger said in October it was exploring the sale of its nearly 800 convenience stores.

Chipmaker Nvidia, auto supplier Continental in self-driving tie-up

  • Nvidia and German auto supplier Continental said on Monday they had teamed up to develop a self-driving system based on the U.S. chipmaker’s artificial intelligence platform.
  • There are 320 companies are involved in the development of self-driving cars use Nvidia Drive.
  • The companies did not disclose financial terms for the partnership.

KGI: 2018 iPhones to use Intel baseband chips exclusively

  • Apple is set to ditch Qualcomm as a baseband chip supplier and to exclusively use Intel chips in future iPhone models.
  • Intel’s latest modem supports both GSM and CDMA, meaning that Apple could release a single iPhone model that works across AT&T, Verizon, T-Mobile, and Sprint.
  • Intel modems previously lacked CDMA, meaning Apple could never fully leave out Qualcomm for all iPhone models.

Apple Music on Track to Overtake Spotify in U.S. Subscribers

  • Apple’s music-streaming service has been quietly gaining ground in part thanks to the popularity of the company’s devices.
  • Apple Music told The Wall Street Journal it now has 36 million paid global users, up from the 30 million it last reported in September.
  • Spotify has 70 million users.

UPS order for Boeing freighters highlights trade growth

  • UPS handed Boeing a lifeline order for 14 more 747-8 freighters, easing doubts over the jumbo’s future.
  • The deal extends a turnaround since a year ago when half a dozen 747-8s were sitting unsold after being built.
  • Although Boeing offers a 467-seat passenger version of the modernized 747-8, its future is tied firmly to cargo.

Facebook looking for an ‘extra-terrestrial product manager’ as it plans to deliver internet from the sky

  • The company is looking for a veteran engineer with experience “taking novel communication/aerospace systems from early development phases to productization and industry infusion,” according to a recent job posting.
  • The extra-terrestrial product manager will be based in Northridge, California, and work in the company’s Facebook Connectivity research unit, which is looking into technologies that include “free-space optical communication, high frequency RF/mmWave RF, and electro-mechanical.”
  • Facebook has used satellite data to map human populations in about two dozen countries as it searches for the best way to deliver connectivity worldwide.

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US ECONOMY & POLITIC

 

PMI Service Index held at 53.3

  • America’s service industries expanded in January at the fastest pace in at least a decade as a surge in orders led to a pickup in hiring.
  • The ISM index of business activity, which parallels the ISM’s measure of factory production, increased to 59.8 from 57.8.
  • A number above 50 indicates expansion.

Employment Index Rose in January

  • The Conference Board Employment Trends Index rose to 106.93 in January from 106.59 in December.
  • The change is a 5.4% gain from a year ago.

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EUROPE & WORLD

Amazon settles tax row with France, value undisclosed

  • Amazon settled a long-running dispute with French tax authorities, who have been seeking nearly 200 million euros ($249 million) from the online retail giant.
  • The French government was seeking back taxes, interest and penalties for the fiscal years from 2006 to 2010
  • Neither Amazon nor the French authorities would say what the settlement was worth.

Alibaba leads $1.24 billion investment in film unit of China’s Wanda

  • Dalian Wanda Group is selling a $1.24 billion stake in its listed film business to a pair of investors led by Alibaba, as the conglomerate looks to bring in strategic partners and raise new funds.
  • The property-to-entertainment firm will sell the combined 12.77 percent in Wanda Film to Alibaba and state-backed Cultural Investment Holdings for a total of 7.8 billion yuan ($1.24 billion).
  • In the latest deal, Alibaba will invest 4.68 billion yuan of the total.
  • The stake sale will add to the around $16 billion in investment deals that Wanda has announced since last year.

Panasonic hikes outlook after third-quarter earnings surge on automotive demand

  • Panasonic raised its profit forecast for the year ending March to 350 billion yen from 335 billion yen.
  • Panasonic is the exclusive battery cell supplier for Tesla’s mass-market Model 3 sedan.
  • For the quarter just ended, Panasonic’s operating profit surged to 120.1 billion yen ($1.09 billion).
  • It started mass production of battery cells at Tesla’s Gigafactory in Nevada earlier last year and started mass production at a new plant in Dalian, China in December.
  • It is also adding new production lines in Japan.

Sony Pictures Television in joint venture with Russia’s NMG

  • Sony production studio Sony Pictures Television and Russian media holding company National Media Group (NMG) have set up a joint venture to operate Sony’s pay television channels in Russia.
  • NMG said it was buying 80 percent in a company broadcasting Sony channels in Russia.

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TODAY in HISTORY

  • Belgian chemist Leo Baekeland announces the creation of Bakelite, the world’s first synthetic plastic (1909)
  • Mexico adopted its present constitution. (1917)
  • FDR proposed increasing the number of Supreme Court justices—”packingthe court. (1937)

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