DAILY MARKET REPORTS
- Boeing and Apple led a slide in big U.S. manufacturers and technology companies on Wednesday, bearing the brunt of a deepening trade conflict between China and the United States.
- China’s retaliatory tariffs on American goods pummeled stocks around the world, pressuring shares of chip makers, manufacturers and machinery companies, along with a wide range of other risk assets.
- China and the United States announced tariffs on $50 billion of each other’s imports. But, while Washington’s list covers many obscure industrial items, Beijing’s covers 106 key U.S. imports including soybeans, planes, cars, and chemicals.
- The declines were broad based. All 30 Dow components were lower. About 469 of the S&P 500 components were lower.
- The industrials index’s 1.8 percent slide was the most among the 11 major S&P sectors, as has been the case since the trade war fears surfaced.
- Among the few bright spots was Lennar, whose shares jumped 6.2 percent after the homebuilder’s quarterly revenue beat estimates as it sold more homes at higher prices.
US FINANCIAL MARKET
Homebuilder Lennar quarterly revenue beats on higher demand
- U.S. homebuilder Lennar reported first-quarter revenue above Wall Street targets as it sold more homes at higher prices, indicating robust demand ahead of the crucial spring selling season.
- Revenue rose 27.5 percent to $2.98 billion, beating estimates of $2.65 billion.
- Orders, a key indicator of future revenue for homebuilders, rose 30.4 percent to 8,456 homes in the quarter. The acquisition of smaller rival CalAtlantic in February also helped boost the number of homes sold, which rose 24.1 percent in the quarter.
- The average sales price rose 7.7 percent to $393,000 in the quarter, with Lennar, which mainly sells single-family homes, benefiting from its shortage.
- Net income for Lennar rose to $136.2 million in the quarter, from $38.1 million a year earlier.
Spotify shares jump in record-setting direct listing
- Shares of Spotify ended up 12.9 percent on their first day of trade on the New York Stock Exchange, a smooth debut that could pave the way for other companies looking to go public without the aid of Wall Street underwriters.
- Spotify shares opened at $165.90, up nearly 26 percent from a reference price of $132 set by the NYSE late on Monday.
- The stock ended the session at $149.01, valuing the world’s largest streaming music service at $26.5 billion.
- Spotify has 71 million so-called premium subscribers, including users who have given the company a credit card number for a free trial. On a comparable basis the Apple Music service has 46 million subscribers.
CBS Submits Initial Bid for Viacom at Price Below Market Value
- CBS has made an offer to acquire Viacom and the bid is contingent on its management team being at the helm of the merged entity, according to people familiar with the matter.
- The all-stock offer is below Viacom’s current market valuation of $12.5 billion, the people said. A special committee of CBS board members tasked with handling negotiations presented the offer to a special committee of Viacom’s board in recent days.
- CBS’s proposal could be the beginning of a negotiation, if Viacom rebuffs the offer and pushes for better terms. A spokesman for Viacom declined to comment.
- Both CBS and Viacom are controlled by media mogul Sumner Redstone’s holding company National Amusements, which has a nearly 80% voting stake in each firm.
Mark Zuckerberg to Testify Before House Committee on April 11
- The hearing will be held by the House Energy and Commerce Committee, which oversees many telecommunications and internet policy issues. The hearing will focus on “the company’s use and protection of user data.”
- A Facebook spokesman confirmed Mr. Zuckerberg would appear and said conversations are continuing about other possible hearings. Mr. Zuckerberg is scheduled to hold a conference call with reporters Wednesday afternoon.
- The hearing has the potential to be a pivotal moment for the 14-year-old company at a time of mounting tension with regulators and lawmakers. It would mark Mr. Zuckerberg’s first public testimony before U.S. lawmakers.
- Last week, Mr. Zuckerberg declined to appear before a U.K. parliamentary committee seeking evidence on how companies acquire user data from Facebook, choosing to send a deputy instead.
Walmart opens first small high-tech supermarket in China
- Walmart has opened its first small high-tech supermarket in China, where smartphones can be used to pay for items that are mostly available on the U.S. retailer’s store on online platform JD Daojia.
- The world’s largest retailer, known for its hypermarkets, is expanding in China as shopping with mobile devices gains popularity in the country, and as retailers and technology companies such as Alibaba and Tencent cut deals to integrate online and offline shopping.
- Walmart is also targeting more online shoppers, who spend twice as much in the United States when buying on its website.
- Walmart did not specify the size of the China store, in the southern city of Shenzhen. The company did not immediately respond to a request for comment.
US ECONOMY & POLITIC
U.S. escalates China trade showdown with tariffs on $50 billion in imports
- The Trump administration on Tuesday raised the stakes in a growing trade showdown with China, targeting 25 percent tariffs on some 1,300 industrial technology, transport and medical products to try to force changes in Beijing’s intellectual property practices.
- The U.S. tariff unveiling, representing about $50 billion of estimated 2018 imports, drew an immediate condemnation from Beijing, along with a threat of retaliatory action.
- Many consumer electronics products such as cellphones made by Apple and laptops made by Dell were excluded, as were footwear and clothing, drawing a sigh of relief from retailers who had feared higher costs for American consumers.
- More than 200 products on the list saw no U.S. imports last year, including large aircraft and communication satellites, while some categories were highly unlikely to ever be imported, such as artillery weapons.
U.S. Commerce chief Ross: trade talks likely with China
- U.S. Commerce Secretary Wilbur Ross said on Wednesday he expects trade actions between the United States and China will likely lead to a negotiated deal, but that it was unclear whether such talks would happen by the end of May or later.
- Ross’ comments come after China slapped retaliatory duties on a number of American products earlier on Wednesday in response to Trump’s planned tariffs on Chinese goods, rattling global financial markets.
- U.S. President Donald Trump earlier Wednesday stood by his administration’s actions, tweeting: “We are not in a trade war with China.”
- Ross echoed those sentiments, telling CNBC that China’s response was “relatively proportionate to the tariffs that we put on based on the intellectual property.”
- He added that he also expected other countries to start “coalescing against China” over its trade practices.
ISM: U.S. Nonmanufacturing Activity Kept Expanding in March
- The Institute for Supply Management on Wednesday said its nonmanufacturing index—tracking a wide range of U.S. industries such as health care, finance, construction and agriculture—fell to 58.8 in March from 59.5 in February.
- Economists surveyed by The Wall Street Journal had expected a March reading of 59.0. A number above 50 indicates expansion while a figure below 50 signals contraction.
Manufacturing Industry Has Strongest Jobs Increase in Three Years
- Firms across the country added 241,000 workers in March, according to payroll processor Automatic Data Processing and forecasting firm Moody’s Analytics. Economists had expected the addition of 200,000 jobs.
- Midsized businesses added nearly half of all jobs in the month. The job growth came from across industries, with construction, professional business services and trade, transportation and utilities leading the way.
- The February figure was revised up to 246,000 from 235,000.
- The ADP report comes ahead of the monthly jobs report from the U.S. Bureau of Labor Statistics on Friday. Economists expect nonfarm jobs to rise by 178,000 for March, compared with 313,000 the prior month.
U.S. mortgage applications fall as home loan costs stay elevated
- U.S. mortgage applications declined from a seven-week high in the latest week as 30-year home borrowing costs hovered near their loftiest levels in four years, the Mortgage Bankers Association said.
- The Washington-based industry group said its seasonally adjusted index on mortgage application activity fell 3.3 percent to 388.1 in the week ended March 30.
- Interest rates on 30-year fixed rate conforming mortgages or home loans with balances of $453,100 or less averaged at 4.69 percent, unchanged from the previous week, MBA said.
Home Solar Dims as Tesla, Others Curb Aggressive Sales
- The number of U.S. homeowners putting solar panels on their roofs declined last year after leading installers including Tesla abandoned aggressive sales practices that had helped drive breakneck growth.
- Residential solar had been on a tear, averaging 48.6% annual growth between 2010 and 2016, but the number of megawatts added last year dropped by 15.6% compared to the year before, a firm that tracks renewable energy.
- Industry experts said the slowdown was driven by a sharp retreat by large national solar installers, which had deployed large sales forces to pitch homeowners on the benefits of rooftop solar, and heavily marketed deals to lease panels that required little to no money down.
- SolarCity posted the largest declines. Once the clear-cut leader among solar installers, with one-third of the national market two years ago, it ended door-to-door sales last year and cut customer acquisition spending.
- Its sales, as measured by megawatts deployed, fell by 38% in 2017 from a year earlier, according to company figures, which include both residential and commercial installations.
EUROPE & WORLD
China announces additional tariffs on $50 billion of U.S. goods
- China will impose additional tariffs of 25 percent on 106 U.S. goods including soybeans, autos, chemicals, some types of aircraft and corn products, among other agricultural goods, the finance ministry said on Wednesday.
- The products targeted by the tariffs were worth $50 billion in 2017, according to a separate statement from the commerce ministry.
- Extra tariffs will also be slapped on products such as whisky, cigars and tobacco, some types of beef, lubricants, and propane and other plastic products, the finance ministry said in its statement.
- China’s commerce ministry also said it has initiated a World Trade Organization dispute procedure against the U.S. 301 tariffs investigation on Wednesday, amid an escalating trade dispute between the world’s two largest economies.
India’s Vistara orders two more A320neo aircraft to start international operations
- India’s Vistara, a joint venture of Tata Sons and Singapore Airlines, said on Wednesday it had ordered two more A320neo aircraft from Airbus to kick-start its international operations.
- The carrier has received its initial fleet order with the arrival of its seventh Airbus A320neo aircraft on Wednesday, to scale up its frequency in existing operations in the domestic market, it said.
TODAY in HISTORY
- Congress adopted a U.S. flag with one star for each state. (1818)
- President William Henry Harrison died from pneumonia, one month after his inauguration. (1841)
- The treaty establishing the North Atlantic Treaty Organization (NATO) was signed. (1949)
- Martin Luther King, , was assassinated. (1968)
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