DAILY MARKET REPORTS
- U.S. stocks turned lower in early trading on Thursday, with investors still on edge as volatility in financial markets persisted following the worst declines in more than two-and-a-half years earlier in the week.
- The market’s main gauge of volatility, the CBOE Volatility VIX Index fell to 26.18 on Thursday, still more than twice the level it held over the past few months.
- Dallas Fed President Robert Kaplan said on Thursday the central bank could hike rates three times this year and the recent market volatility in itself was not enough to change his base scenario.
- The 10-year U.S. Treasury yield crept back to 2.875 percent, near Monday’s four-year peak of 2.885 percent.
- Among stocks, Twitter jumped 23 percent after it reported its first quarterly net profit and topped Wall Street targets as video ad sales rose.
- Teva Pharmaceutical fell 9 percent after the world’s largest generic drugmaker forecast 2018 would be weaker than analysts estimate as the U.S. generics market continues to deteriorate.
- Yelp was down 8.5 percent after a host of brokerages cut their price targets on the consumer review website operator’s stock following quarterly results.
US FINANCIAL MARKET
Twitter delivers first profit, shares surge 25 percent
- Twitter shares surged after the social network reported its first quarterly profit and better-than-expected revenue, helped by ads that better targeted users and sales growth outside the United States.
- Overall revenue rose 2 percent year-over-year to $731.6 million, the first increase since the fourth quarter of 2016, beating Wall Street’s target of $686.1 million
- U.S. revenue fell 8 percent from a year earlier, but sales elsewhere rose 17 percent. Revenue from Japan was a particular strength, rising 34 percent to $106 million.
- Twitter reported a net profit of $91.1 million, compared to a loss of $167.1 million a year earlier.
- Twitter reported 330 million monthly active users for the quarter, a 4 percent increase from a year earlier but flat from the third quarter. Analysts on average had expected 332.5 million monthly active users.
Tesla sticks by Model 3 target, warns spending could rise in 2018
- Tesla ended the fourth quarter with $3.37 billion in cash, just below the $3.5 billion in the previous quarter, which had been boosted by a $1.8 billion debt sale.
- Net loss widened to $675.4 million for the fourth quarter from $121.3 million a year earlier.
- Total revenue rose to $3.29 billion from $2.28 billion.
- Tesla stuck by its previous production target made in January – that it expected to build 2,500 Model 3s per week by the end of March, and 5,000 by the end of the second quarter.
- Automotive gross margin, which excludes the sale of zero emission vehicle (ZEV) credits, fell to 13.8 percent from 22.2 percent last year, below the 15.7 percent margins expected by analysts.
Teva Shares Tumble on Weak Outlook
- For full-year 2018, Teva said it expects revenue of $18.3 billion to $18.8 billion and non-GAAP earnings per share of $2.25 to $2.50. Analysts expected, on average, revenue of $19.24 billion and adjusted EPS of $2.93.
- For full-year 2017, Teva reported revenue of $22.4 billion.
- For the quarter, revenue was down 16% year-over-year to $5.5 billion. Analysts expected revenue of $5.29 billion.
T-Mobile profit surges on $2.2 billion tax gain
- The No. 3 U.S. wireless carrier added subscribers and recorded a $2.2 billion gain from recent changes in U.S. tax laws.
- The company said it added 891,000 phone subscribers in the fourth quarter, compared with 933,000 a year earlier.
- T-Mobile’s net income was $2.71 billion in the quarter up from $390 million a year earlier.
- Revenue rose 5.1 percent to $10.76 billion.
- Last month, the wireless carrier said it had closed on its acquisition of Layer3 TV.
Yelp slides amid light guidance on underlying profit
- Net income was $142.1million compared to $8.3 million a year ago; results included a $164.8 million pretax gain on selling Eat24.
- For Q1, it’s guiding to revenues of $218M-$221M (vs. consensus for $219.4M) and EBITDA of $29M-$32M (light of expected $38M); for the full year, it sees net revenues at $935M-$965M (vs. $951.4M consensus) and EBITDA of $175M-$187M (light of consensus for $196.4M).
Twenty-First Century Fox tops profit estimates as cable shines
- Twenty-First Century Fox’s quarterly profit and revenue trounced analysts’ estimates, driven by higher sales through cable and satellite companies.
- Revenue from Fox’s cable division, which houses the Fox News and FX channels among others, rose 11% to $4.41 billion, accounting for more than half of total revenue in the quarter.
- Revenue at the Fox broadcasting unit fell 5.8 percent to $1.81 billion, as the year-ago quarter included strong ratings during the U.S presidential election and baseball’s World Series.
- Total revenue rose 4.6 percent to $8.04 billion, beating analysts’ average estimate of $7.94 billion.
- Net income increased to $1.83 billion in the second quarter from $856 million a year earlier.
- The company said it gained $1.34 billion from the recent U.S. tax law.
CVS nearly doubles profit, hikes minimum wage on U.S. tax overhaul
- CVS reported fourth-quarter revenue and earnings that beat expectations and said it would use part of a $1.2 billion savings from the new U.S. corporate tax law to increase hourly pay for its workers.
- The tax windfall will help CVS raise its minimum wage for hourly employees to $11 an hour, effective April 2018, and offer a paid parental leave program. The company will invest $425 million annually toward these efforts.
- Revenue rose 5.3 percent to $48.4 billion, exceeding the $47.5 billion expected by Wall Street.
- Net income rose 92.6 percent to $3.3 billion in the quarter, from $1.7 billion a year earlier, helped by an income tax benefit of $1.5 billion.
Cardinal Health beats profit estimates on acquisition, raises forecast
- Cardinal Health reported a better-than-expected quarterly profit as its purchase of Medtronic’s patient recovery business started to pay off.
- Net earnings to the company rose to $1.05 billion in the second quarter from $324 million a year ago.
- The Dublin, Ohio-based company recorded a $736 million benefit from income taxes, and said its board had authorized a $1 billion share repurchase program.
Tyson Foods profit tops estimates, shares rise
- Tyson Foods reported better-than-expected revenue and profit on stronger sales of beef products and higher-margin prepared foods.
- Tyson’s net revenue rose 11.4 percent to $10.23 billion. Analysts on average had expected $9.87 billion.
- Sales in the beef business rose 10.1 percent in the first quarter, while its prepared foods segment saw an increase in sales of 21 percent.
- Net income nearly tripled to $1.63 billion in the quarter.
- The company forecast more than $300 million in savings in fiscal 2018 related to the overhaul of U.S. tax laws, with $100 million in bonuses paid to employees.
Yum Brands posts profit, takes stake in GrubHub
- Yum Brands reported fourth-quarter profit that beat analyst estimates, boosted by sales at its KFC chain, and announced a stake in delivery company GrubHub.
- Total revenue fell 16.4 percent to $1.58 billion, lower than the analysts’ estimate of $1.59 billion.
- KFC same-store sales were up 3 percent in the fourth quarter, slightly more than analysts expected.
- Taco Bell reported a 2 percent gain in same-store sales, just short of estimates.
- Pizza Hut reported a 1 percent rise in same-store sales, missing analysts’ targets.
- The company said net income rose to $436 million in the quarter, from $303 million a year earlier.
- Yum separately said it would buy a 3 percent stake in online food-ordering company GrubHub for $200 million to increase sales through pickup and deliveries at its restaurants.
Kellogg’s Problem: Americans Aren’t Eating as Much Cereal
- Kellogg’s sales rose 3.6% to $3.2 billion in the fourth quarter.
- Profit rose 3.3% to 94 cents a share when adjusted for one-time events and currency fluctuations.
- For this year, Kellogg expects its comparable sales, excluding currency fluctuations, will fall by 1% to 2%, while its earnings will rise by 9% to 11% per share.
New York Times beats estimates on strong digital revenue growth
- The New York Times reported a better-than-expected quarterly profit and revenue, as the newspaper publisher signed up more digital subscribers, which more than offset a decline in print sales.
- Digital advertising revenue rose 8.5 percent in the fourth quarter, while print advertising revenue fell 8.4 percent.
- The company’s digital revenue accounted for about 46 percent of total advertising revenue in the latest quarter, up from about 42 percent of total advertising revenue a year ago.
- The company’s total revenue rose 10 percent to $484.1 million. Analysts’ on an average estimated revenue of $467.3 million.
- However, it posted a net loss of $57.8 million, compared with a year-ago profit of $37.6 million, mostly due to higher costs and pension settlements.
Thomson Reuters beats profit forecast, misses on revenue
- Thomson Reuters beat Wall Street profit expectations in the fourth quarter as it kept a lid on costs, but revenue slightly missed forecasts.
- Reuters News revenue was $75 million in the quarter, down 5 percent excluding currency.
- The news and information company reported quarterly revenue of $2.94 billion, up 3 percent.
- Net earnings were $591 million, down from $2.24 billion a year earlier.
Zynga beats bookings estimate as ‘Words with Friends 2’, ‘CSR Racing 2’ deliver
- Zynga reported fourth-quarter bookings above analysts’ estimate, driven by the success of its mobile games.
- The company reported bookings of $223.8 million for the quarter, well above the $213.9 million estimated by analysts.
- Zynga’s mobile revenue rose 32 percent to $203.6 million. The segment accounted for 86 percent of total revenue in 2017, up from 77 percent in 2016.
- Zynga reported net income of $12.9 million, compared with a loss of $35.4 million a year earlier.
- Zynga’s average daily active users at the end of fourth quarter were 22 million, a 22 percent jump from a year earlier. Analysts had expected 21.3 million.
KKR Profit Declines; Firm Evaluating Change of Corporate Structure
- KKR’s fourth-quarter profit fell as it faced a higher-than-expected provision for income taxes. The firm said it is weighing whether to change its corporate structure on the heels of the new tax law.
- Firm’s earnings fell to $166.4 million from $171 million a year earlier.
- Economic profit rose to $414.9 million from $339.2 million a year earlier.
- The result fell short of estimates.
- Assets under management were $168 billion, up 30% over the previous year.
Amazon to Deliver Whole Foods Groceries
- The online retail giant will add Whole Foods to its one- and two-hour delivery option, Prime Now, in the grocer’s hometown of Austin, Texas, as well as Dallas, Virginia Beach, Va. and Cincinnati, Ohio.
- Stephenie Landry, the Amazon vice president who oversees Prime Now, said it plans to expand the effort, but declined to say how quickly.
- She noted that Prime Now grew to more than 50 global markets in less than three years following its creation.
TD Ameritrade to Allow Trading via Twitter
- TD Ameritrade is letting customers initialize trades over Twitter, the latest attempt by the discount brokerage to attract digitally savvy and younger investors
- The firm’s Twitter “chatbot” resembles the one it launched via Facebook Messenger in August, and it is powered by an algorithm that produces “social signals.”
- The algorithm sifts through tweets and then rates the relevance of the information to provide “intelligence” to investors, such as volume spikes, live trading quotes and company news.
- The bot is accessible via direct message over Twitter.
- Trading via Twitter is TD Ameritrade’s latest effort to pull in new clients.
US ECONOMY & POLITIC
U.S. Jobless Claims Fell Last Week
- The number of Americans filing applications for new unemployment benefits fell last week for the third time in four weeks, pointing to continued labor market tightness.
- Initial jobless claims, a proxy for layoffs across the U.S., fell by 9,000 to a seasonally adjusted 221,000 in the week ended Feb. 3, the Labor Department said Thursday.
- Weekly jobless claims have held below 300,000 for almost three years, the longest streak since 1970
- The four-week moving average, a steadier measure, fell by 10,000 to 224,500 last week, the lowest level since the beginning of 1973.
Congress expected to vote on budget to avert government shutdown
- The U.S. Senate and House of Representatives are expected to vote on a proposed budget deal that would avert another government shutdown but that has angered fiscal conservatives who complain it would lead to a $1 trillion deficit.
- The bipartisan deal reached by Senate leaders on Wednesday raises spending on military and domestic programs by almost $300 billion over the next two years.
- The agreement would allow for $165 billion in extra defense spending and $131 billion more for non-military programs, including health, infrastructure, disaster relief and efforts to tackle an opioid crisis in the country.
- The agreement disappointed conservative House Republicans and outside groups. Republicans control both chambers of Congress.
- House Speaker Paul Ryan said on Thursday morning he believed there would be enough votes to pass the budget deal in that chamber.
EUROPE & WORLD
Chinese Yuan Slides to Biggest One-Day Drop Since 2015 Devaluation
- One dollar bought 6.3260 yuan as of the 4:30 p.m. close for domestic trading on Thursday, marking a 1% decline in the Chinese currency against the dollar from Wednesday.
- It fell as much as 1.5% earlier in the session, according to Wind Info.
- The Trump administration last month announced it would impose tariffs on imports of washing machines and solar panels, a move widely interpreted as a warning shot against cheap Asian exports.
- China has in turn this month launched an anti-dumping investigation into imports from the U.S. of sorghum, a crop.
Manchester United profit weighed down by higher wage bill
- English soccer club Manchester United said its core quarterly earnings dipped because of rising wages for its players after its return to the Champions League.
- The club’s earnings slipped to 67.8 million pounds ($94.9 million) from 69 million pounds a year ago.
- Revenue increased 3.8 percent to 163.9 million pounds in the period — the second quarter of its 2017-18 financial year.
- Controlled by the American Glazer family, United have won the English league title a record 20 times.
Nissan on Track to Report Record Yearly Profit
- Japan’s second-largest car maker by sales after Toyota Motor projected profit for the full fiscal year would grow to ¥705 billion ($6.4 billion).
- Nissan expected Americans to purchase 17.5 million new cars in 2017, but they actually bought around 17.2 million.
- Trouble in Japan, the U.S. and Mexico helped push profit down in the October-December quarter by nearly 50% to ¥82.4 billion.
- Profit would have declined year-over-year without a ¥208 billion bump from adjusting its books to account for the lowered U.S. corporate tax rate.
TODAY in HISTORY
- College of William and Mary in Williamsburg, Va., received its charter, becoming the second institution of higher learning in the United States. (1693)
- The National Weather Service was established under the U.S. Army Signal Corps. (1870)
- The gas chamber was used for the first time as a method of execution in the United States. Gangster Gee Jon was put to death at the Nevada State Prison in Carson City. (1924)
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