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.
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.
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.
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)
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