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DOW SURGES AFTER OPENING DROP

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US FINANCIAL MARKET
| US ECONOMY & POLITICS
 EUROPE & WORLD | TODAY IN HISTORY

DAILY MARKET REPORTS

  • Dow industrials rise as much as 367 points after falling more than 500 points at the open before.
  • It dropped nearly 1,600 points at one-point Monday and erased its gains for the year.
  • There was no obvious catalyst for the erratic trading, but analysts and investors said recent worries about rising bond yields and stronger inflation had hurt market sentiment at a time when valuations were high.
  • Many longer-term investors embraced the declines in stocks as healthy and viewed it as an opportunity to re-enter the market, noting the earnings picture and economic backdrop remained supportive for equities.
  • Many analysts had attributed the start of the pullback in equity markets over the past week to climbing bond yields and expectations of tighter monetary policy, but 10-year yields have now erased February’s gains.

US FINANCIAL MARKET

What Was Really Behind the Stock Market Selloff?

  • Many investors say that is what happened Monday, when long-successful bets on rising prices and low market volatility turned awry.
  • While fears about inflation and rising bond yields have played a role, analysts say much of the equity-market slump can be explained by other, less fundamental factors—raising hopes that stock markets will recover and continue to do well against a backdrop of robust economic growth and beefy earnings.

Cost-cutting and higher vehicle prices lift GM margins

  • GM’s results came despite selling 135,000 fewer vehicles to dealers in North America in the fourth quarter.
  • Sales fell around 2 percent in 2017 after hitting an all-time record in 2016.
  • GM reported a fourth-quarter loss of $4.9 billion compared with a profit of $2.1 billion a year earlier.
  • Revenue for the quarter fell to $37.7 billion from $39.9 billion a year earlier.

Allergan’s profit beats; migraine drug succeeds in key study

  • Botox sales jumped nearly 17 percent to $864.3 million in the fourth quarter.
  • Allergan said it recorded a gain of about $2.8 billion in the fourth quarter related to recent changes to the U.S. tax law.
  • Profit was $3.05 billion in the quarter, compared with a loss of $70.2 million a year earlier.
  • Revenue rose 12 percent to $4.33 billion, above analysts’ estimates of $4.28 billion.
  • Sales of dry-eye drug Restasis rose nearly 1 percent to $414.9 million, ahead of estimates of $388.6 million.

Micron shares surge after stronger than expected chip outlook

  • Amid the focus on the market’s recent volatility, Micron announced better than expected guidance on Monday.
  • The memory chipmaker raised its fiscal second quarter 2018 revenue forecast range to $7.2 billion to $7.35 billion from its previous target of $6.8 billion to $7.2 billion.
  • Micron also increased its earning per share guidance for the quarter to $2.70 to $2.75 from $2.51 to $2.65.

Aecom beats Street 1Q forecasts

  • The provider of technical and management-support services posted revenue of $4.91 billion in the period, analysts expected $4.59 billion.
  • Net income increased 9% to $92 million excluding tax benefits from the new US tax laws.
  • The company’s backlog increased to $49 billion, a 11% increase from the year ago period.
  • For the full year, the Company now expects an effective tax rate for adjusted earnings of approximately 20% compared to prior guidance of 21%.

Cummins results beat estimates; forecasts higher 2018 revenue

  • Net loss to Cummins was $274 million in the fourth quarter compared with a profit of $378 million a year earlier.
  • Net sales rose 21.6 percent to $5.48 billion and were ahead of analysts’ average estimate of $5.24 billion.
  • The quarter included $777 million in one-time charges related to tax reform.

Dunkin’ Brands profit, sales beat targets amid price war

  • The Canton, Massachusetts-based owner of the Dunkin’ Donuts and Baskin-Robbins brands said fourth-quarter net income more than tripled to $195.5 million.
  • Total sales climbed 5.3 percent to $227.1 million.
  • Same-store sales at U.S. Dunkin’ Donuts restaurants, which account for roughly 70 percent of overall company revenue, rose 0.8 percent.

ADM profit beats estimates on demand in agriculture, corn businesses

  • ADM said profit from its agricultural services business jumped nearly 23 percent to $301 million last quarter.
  • ADM buys, stores and trades commodity crops.
  • Overall, earnings rose to $788 million from $424 million a year earlier.
  • The company’s results were helped by a $249 million tax benefit.

Apple supplier Skyworks’ revenue rises 15 percent

  • Skyworks provides wireless chips and technology that powers Internet of Things.
  • Net income fell to $70.4 million for the first quarter from $257.8 million a year earlier.
  • The latest quarter included a provision for income taxes of $315.2 million.
  • Revenue rose to $1.05 billion from $914.3 million.

Boeing signs nearly $1 billion of services deals, eyes $50 billion target

  • Boeing’s services unit announced deals worth nearly $1 billion as part of its effort to more than triple the division’s annual revenue to $50 billion in as little as five years.
  • Revenue grew by 5.5 percent to $14.6 billion in 2017 and the growth rate is forecast to be even higher this year, Boeing Global Services CEO announced.
  • The agreements announced on Tuesday included landing gear exchange deals with Japan’s ANA Holdings Inc and Malaysia Airlines and an order from cargo group DHL for a 767-300ER converted freighter.
  • Boeing stated that areas of interest for future acquisitions included aircraft interiors and data analytics.

Arby’s owner takes control of Buffalo Wild Wings

  • Arby’s Restaurant Group completed a $2.9 billion acquisition of Buffalo Wild Wings and renamed itself Inspire Brands.
  • Buffalo Wild Wings shareholders approved the deal on Friday, pricing the company’s shares at $157.
  • Buffalo Wild Wings had been struggling for some time and estimated a same-store sales decrease of 1.6-1.7 percent for the 2017 fiscal year.

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US ECONOMY & POLITIC

International Trade Gap Widened to $53.1 billion

  • The U.S. trade deficit widened more than expected in December as robust domestic demand pushed imports to a record high,
  • The trade deficit increased 5.3 percent to $53.1 billion, the highest level since October 2008.
  • Imports swelled by a steep 2.5 percent in the month to $256.5 billion which is a direct subtraction from GDP.
  • The good news in the report is a solid 1.8 percent rise in exports to $203.4 billion which will add to GDP.
  • China up 8.1 percent on the year at $375.2 billion; EU up 3.2 percent at $151.4 billion; Mexico up 12.2 percent at $71.1 billion; Japan up fractionally at $68.9 billion; and Canada up the most by far in percentage terms, 63 percent higher to $17.6 billion.

Job Openings in U.S. Declined to Seven-Month Low in December

  • Job Openings fell from 5.879 to 5.811 million.
  • There were 1.1 unemployed people vying for every opening in December, compared with 1.9 people when the recession began at the end of 2007.
  • Number of layoffs dropped to 1.65 million from 1.73 million.

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EUROPE & WORLD

BP profits surge as oil major leaves downturn behind

  • BP’s profits more than doubled in 2017 to $6.2 billion powered by higher prices and output of oil and gas.
  • Full-year production rose 12 percent to 2.47 million barrels per day (bpd) after BP launched seven new oil and gas fields in 2017, a record year.
  • Net debt was $37.8 billion, up from $35.5 billion a year earlier, after the company paid $5.4 billion related to the Deepwater Horizon spill.

BNP Paribas punished as profit falls short of forecasts

  • BNP Paribas reported quarterly net profit that fell short of market forecasts causing shares in France’s biggest bank to slump as part of a broader market sell-off.
  • Revenues also fell 1.2 percent to 10.53 billion euros, versus the 10.47 billion predicted by analysts.
  • Net profit slipped to 1.43 billion euros ($1.8 billion) in the quarter from 1.44 billion a year earlier, and below the 1.59 billion euros expected by analysts.
  • Revenues at the corporate and institutional banking (CIB) division also dropped by 6.9 percent.
  • Fixed income trading declined by 27.4 percent, although equity and prime services revenue rose 12.1 percent.

Toyota expects record net profit as weaker yen offsets U.S. struggle

  • Toyota expects a weaker yen to lift net profit to a record high this year, offsetting sluggishness in the United States
  • Japan’s biggest automaker on Tuesday forecast a 31 percent profit jump for the year to 2.4 trillion yen ($22.02 billion).
  • This is on the back of an expected 10 percent rise in operating profit to 2.2 trillion yen – up from previous forecasts of 1.95 trillion yen and 2.0 trillion yen respectively.

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TODAY in HISTORY

  • Massachusetts ratified the U.S. Constitution, becoming the sixth state to join the Union. (1788)
  • Joseph Priestley, British chemist, died. His work on the isolation of gases led him to discover oxygen in 1774. (1804)
  • The Spanish-American War ended when a peace treaty between Spain and the United States was signed. (1899)
  • The 20th Amendment to the Constitution, which set the date for the president’s inauguration on 20, was adopted. (1933)
  • The popular board game Monopoly® went on sale for the first time. (1935)

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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