DAILY MARKET REPORTS
- U.S. stocks were little changed Thursday, as investors awaited Federal Reserve Chairman Jerome Powell ‘s second appearance in front of Congress.
- Concerns around whether the U.S. economy may be growing so fast that it forces the Fed to speed up its pace of rate increases have caused stocks to stumble in the past month.
- Best Buy posted earnings much stronger than expected, rising 2.6%.
- Kohl’s same store sales beat expectations on demand for activewear and online growth, however weak guidance sent shares down over 7%.
US FINANCIAL MARKET
Best Buy sales jump during key holiday quarter
- Best Buy reported a greater-than-expected jump in quarterly sales as it sold more mobile phones, gaming products and appliances during the key holiday season.
- Sales at established stores jumped 9 percent in the fourth quarter, triple the average estimate of analysts for a 2.9 percent increase.
- The company’s revenue grew 14 percent to $15.36 billion, beating estimates for $14.5 billion.
- Online sales jumped 17.9 percent in the U.S. from a year ago, accounting for $2.8 billion of business in the quarter, or about 20 percent of Best Buy’s total revenue.
- The company’s net income fell to $364 million in the quarter from $607 million a year earlier, hurt by charges from the new U.S. tax reform.
- The company said it would shut 250 small mobile phone stores in U.S. malls as it looked for ways to operate more profitably.
Kohl’s sales growth, 2018 outlook send shares lower
- Kohl’s on reported strong comparable sales fueled by robust holiday-season demand for activewear and online growth and issued a 2018 earnings outlook that topped expectations, sending its shares higher in premarket trading.
- Kohl’s same-store sales rose 6.3 percent in the fourth quarter. Analysts on average had expected sales to rise 6.1 percent in stores open at least 12 months in the quarter.
- Revenue of $6.78 billion slightly edged out analyst estimates and was up 9 percent from a year earlier.
- Net income rose to $468 million from $252 million a year ago, thanks to a $136 million gain due to changes in the US tax code.
- Kohl’s expects fiscal 2018 comparable sales growth of flat to 2 percent.
Kroger to Stop Selling Guns to Buyers Under 21
- Supermarket chain sells firearms at 43 Fred Meyer locations in Alaska, Idaho, Oregon and Washington.
- Kroger stopped selling assault-style rifles in Oregon, Washington and Idaho at Fred Meyer stores several years ago.
- Kroger’s move follows announcements by Walmart and Dick’s Sporting Goods.
Equifax discovers another 2.4 million customers hit by data breach
- Equifax said it found another 2.4 million U.S. consumers hit by a data breach last year, bringing the total to 147.9 million.
- The company said the latest batch of consumers affected had their names and driver’s license information stolen, but noted less information was taken because it did not include home addresses, driver’s license states, dates of issuances, or expiration dates.
- Equifax said it will notify the affected consumers directly and will offer identity theft protection and credit file monitoring services at no cost to them.
P&G Slashed Digital Ad Spending by $200 Million Last Year
- Procter & Gamble slashed its spending on digital advertising by more than $200 million last year.
- The consumer products giant says that its push for more transparency over the past year revealed such spending had been largely wasteful and that eliminating it helped the company reach more consumers in more effective ways.
- The ad dollars were pulled back from a long list of digital channels but also included reducing spending with “several big digital players” by 20% to 50% last year.
- Long the biggest advertiser in the world, P&G carries significant weight among marketers and its efforts are closely tracked.
U.S. Car Sales Decline in February
- Detroit auto makers reported a drop in U.S. auto sales in February, as auto makers largely pulled back on incentives after using discounts as a way to drive showroom traffic and spur sales at the end of 2017 and into January.
- General Motors reported it sold 220,905 vehicles in February, a 6.9% decrease compared with the same period in 2017.
- Fiat Chrysler Automobiles said sales were down 1% in February, falling to 165,903.
- Ford reported a 6.8% decrease, selling 193,362 vehicles during the month. Sales of the auto maker’s cars and SUVs declined by double-digits in February, with Ford’s F-series trucks rising 3.5%.
Boom in Share Buybacks Renews Question of Who Wins from Tax Cuts
- Share buybacks announced by large U.S. companies have exceeded $200 billion in the past three months, more than double the prior year.
- Among the biggest: Cisco at $25 billion, Wells Fargo at about $21 billion, PepsiCo at $15 billion, AbbVie and Amgen at $10 billion apiece, and Alphabet at $8.6 billion.
- Of the companies in the S&P 500, about 44% have said they plan to reinvest some portion of their tax gains into capital expenditures or wages, while 28% said they would use them to increase shareholder returns.
US ECONOMY & POLITIC
U.S. inflation picks up
- U.S. consumer prices increased in January, with a gauge of underlying inflation posting its largest gain in 12 months, bolstering views that price pressures will accelerate this year.
- The Commerce Department said consumer prices as measured by the personal consumption expenditures (PCE) price index rose 0.4 percent.
- In the 12 months through January, the PCE price index rose 1.7 percent after a similar gain in December.
- Excluding the volatile food and energy components, the PCE price index advanced 0.3 percent in January – the largest gain since January 2017.
U.S. Jobless Claims Hit Lowest Level Since 1969
- The number of Americans filing new applications for unemployment benefits fell last week to the lowest level since December 1969, a fresh sign of health in the labor market.
- Initial jobless claims, a proxy for layoffs across the U.S., declined by 10,000 to a seasonally adjusted 210,000 in the week. Economists had expected 225,000 new claims last week.
- The four-week moving average for initial claims fell last week by 5,000 to 220,500.
- Unemployment claims have now remained below 300,000 for 156 straight weeks, the longest stretch since a 161-week run that ended in April 1970.
- The number of claims made by workers longer than a week increased by 57,000 to 1.931 million in the week ended Feb. 17.
U.S. Factory Sector Activity Surges in February
- Activity in the U.S. factory sector rose sharply in February to the highest level since 2004, suggesting strong demand in the economy.
- The Institute for Supply Management said its closely watched index of manufacturing activity climbed 1.7 points from a month earlier to 60.8. Economists expected a reading of 58.5.
- Any reading above 50 indicates expanding sector activity, as measured by factors like product sales, production, and prices.
- Private nonresidential spending fell 1.5 percent pulled down by the power, commercial, and office components.
- Year-on-year, nonresidential spending is down 1.1 percent and focuses attention on whether business confidence is as strong as advertised in reports like this morning’s ISM manufacturing.
- Housing continues to grow with residential spending up 0.3 percent in the month for a year-on-year gain of 4.2 percent.
- Single-family homes are holding up this component, up 0.6 percent in the month and 8.8 percent on the year, and offsetting a 1.3 percent decline for multi-family units where the yearly rate is minus 2.4 percent.
U.S. After-Tax Incomes Rise Due to Tax-Code Changes, Spending Slows
- Americans’ after-tax incomes jumped in the first month the new tax law took effect, but U.S. consumer spending slowed in January.
- Personal income rose 0.4% in January from December, matching the prior month’s gain. But after-tax income rose 0.9%, matching the largest monthly gain since December 2012.
- Economists had forecast a 0.3% rise in pretax incomes.
- The Commerce Department estimated that the changes to the tax code reduced personal taxes paid at a $115.5 billion annual rate in January.
- The department also increased its estimate of earnings by $30 billion, based on companies announcing bonuses early this year.
EUROPE & WORLD
AB InBev Boosts Profit but U.S. Struggles Continue
- AB InBev said its net profit for the fourth quarter was $3.04 billion, compared with $400 million a year earlier.
- Revenue rose to $14.60 billion from $14.20 billion.
- Total volumes sold rose 1.6% in the quarter to 146 million hectoliters, with own-beer volumes 2.3% higher at 126.8 million hectoliters.
- Among AB InBev’s major brands, global revenue from Budweiser grew 4.1% in 2017, while Stella Artois and Corona posted gains of 13% and 20%, respectively.
Spotify Kicks Off Its IPO
- Stockholm-based Spotify filed to go public Wednesday by submitting an F-1 to the Securities and Exchange Commission that contains years of data and details about how the 10-year-old company will launch its IPO.
- It posted €4.1 billion ($5.02 billion) of revenue in 2017, up nearly 39% from the prior year.
- The company, which has yet to turn a profit, posted a loss of €1.24 billion in 2017, wider than losses of €539 million in the prior year and €230 million in 2015.
- Spotify’s debut will be one of the biggest technology listings in recent years.
- Based on private transactions in February, Spotify’s value touched $22.6 billion.
- Figures released by the company indicated that 44% of users in 2017 were paying subscribers, up from 31% in 2015.
Bayer to win EU approval for $62.5 billion Monsanto deal
- German drug and crop chemicals maker Bayer is set to win conditional European Union antitrust approval for its $62.5 billion bid for world No. 1 seed company Monsanto.
- The takeover, one of a trio of major deals in the agribusiness sector in recent years, would create a company with a share of more than a quarter of the world’s seed and pesticides market.
- The Bayer-Monsanto tie-up has sparked criticism from environmentalists and some farming groups concerned about its market power and first mover advantage in digital farming data.
- As a result, Bayer has already pledged to sell certain seed and herbicide assets for 5.9 billion euros ($7.2 billion) to BASF to address EU regulatory concerns.
Brazil’s GDP grew slower than expected in fourth quarter
- Brazil’s economic recovery was weaker than expected in the fourth quarter, data from government statistics agency IBGE showed.
- Gross domestic product (GDP) grew 0.1 percent from the prior three months, falling short of the 0.4 percent median estimate in a Reuters poll of economists.
- GDP grew 2.1 percent in the quarter from the year-earlier period, less than the 2.5 percent estimate.
Exxon Abandons Russian Projects Brokered by Tillerson
- Exxon Mobil is ending ambitious Arctic projects with Russia’s state-controlled energy giant PAO Rosneft because of international sanctions on Moscow.
- Those penalties came on top of U.S. and European sanctions on Russia over its actions in Ukraine.
- Rosneft didn’t immediately respond to a request for comment.
TODAY in HISTORY
- The U.S. Congress authorized the first census. (1790)
- Ohio became the 17th state in the United States. (1803)
- Rebecca Lee was the first black woman awarded a medical degree. (1864)
- Nebraska became the 37th state in the United States. (1867)
- Yellowstone became the world’s first National Park. (1872)
- President John F. Kennedy signed a signed an executive order establishing the Peace Corps. (1961)
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