DAILY MARKET REPORTS
- U.S. stocks edged higher Friday, with major benchmarks on track for the best week in two months amid growing conviction that inflation will remain tame and as trade tensions eased.
- President Donald Trump will give a speech on drug pricing at 2:00 p.m. ET.
- Trump is also set to meet the heads of 10 major automakers, including those from General Motors, Ford and Fiat Chrysler, at the White House to discuss the fate of landmark fuel efficiency standards and a looming confrontation with California and other major states.
- Data on producer and consumer prices have suggested inflation pressures remain muted.
- Nvidia fell as investors worried that a short-term surge in demand for graphics chips from cryptocurrency miners may be undermining its core business with computer gamers.
- The results weighed on shares of other chipmakers. Advanced Micro Devices was down 3.1%.
- Symantec slumped 32.9% after the Norton Antivirus maker said it was investigating concerns raised by a former employee and reported full-year results below analysts’ estimates.
- Verizon rose 3.6% after JPMorgan upgraded the wireless carrier to “overweight”, saying 5G opportunity will start to crystallize in next few months.
US FINANCIAL MARKET
Crypto concerns push Nvidia shares lower
- Shares of Nvidia fell on Friday as investors worried that a short-term surge in demand for graphics chips from cryptocurrency miners may be undermining its core business with computer gamers.
- Gamers use GPUs to play high-quality video games, but Nvidia’s graphic cards are also used by cryptocurrency miners to build machines to solve the complex math puzzles that earn digital currencies such as Ethereum and bitcoin.
- That has pushed up prices of GPUs and also led to a shortage of cards for game enthusiasts who want to install extra processing power. Nvidia said it made $289 million in sales, or about 9% of its overall $3.2 billion in revenue, from chips for mining cryptocurrencies.
- Nvidia’s fast-growing data center business rose 71% to $701 million in the quarter, but missed analysts’ estimate of $703 million.
- Net income rose to $1.2 billion from $507 million in the year ago period.
Dropbox tops estimates in first results since IPO
- File sharing and storage company Dropbox beat Wall Street expectations for quarterly results and topped estimates for paying subscribers in its first financial report as a publicly traded company.
- Total revenue rose 28% to $316.3 million, above estimates of $309.2 million.
- Dropbox reported average revenue per user (ARPU) of $114.3 in the first quarter, beating analysts’ estimate of $110.
- The San Francisco-based company said the number of paying subscribers surged 23.7% to 11.5 million at the end of March, topping analysts’ average estimate of 11.3 million.
- Dropbox’s quarterly loss widened to $465.5 million, as the company accounted for IPO-related expenses.
Symantec shares set for worst fall in 17 years
- Symantec said on Thursday its financial results and forecast may change based on the outcome of an internal investigation that was initiated after concerns were raised by a former employee.
- Revenue rose 10% to $1.22 billion. Analysts were expecting the company to report revenue of $1.19 billion.
- Net loss narrowed to $35 million in the quarter, from $143 million a year earlier.
- Symantec’s shares sank almost 30% on Friday after the cyber-security firm said it was investigating concerns raised by a former employee but gave little other detail, puzzling investors and Wall Street analysts.
News Corp Revenue Lifted by Real Estate and Book Units
- News Corp posted a 6% gain in revenue for the March quarter, driven by strong results at its digital-real-estate and book-publishing units and the positive impact of foreign-currency fluctuations.
- Total revenue in the latest period was $2.1 billion. Revenue exceeded the forecast of $1.99 billion.
- At the company’s news and information-services business, which accounts for just under two-thirds of its top line, revenue rose 2% compared with the year-earlier quarter to $1.29 billion.
- The company reported a net loss of $1.1 billion because of noncash write-downs related to its TV assets in Australia and a noncash impairment charge related to its in-store coupon and advertising business, News America Marketing.
PPG Industries fires controller as it finds more accounting mistakes
- Paint maker PPG Industries has fired its controller and reassigned employees after it found additional accounting errors worth millions of dollars and said its investigation into alleged violations of its accounting policies continues.
- PPG said that errors pertained to the first quarter and would result in a $7.8 million net decrease in income from continuing operations before taxes. Additional errors may be identified, the company said.
- In addition to the first-quarter mistakes, the company has also found “improper” reclassifications of gains from income from discontinued operations to income from continuing operations. Those errors totaled $2.1 million, pre-tax, in the second quarter of 2017 and $4.7 million in the fourth quarter of 2017.
AT&T Executive Who Oversaw Michael Cohen’s Contract Forced Out
- AT&T’s top Washington executive and policy chief is being forced out of the company after his office paid $600,000 to Trump attorney Michael Cohen last year.
- The company told employees Friday in an internal memo that Bob Quinn was retiring, but people familiar with the matter said Mr. Quinn was being forced to leave.
- AT&T said earlier this week that it hired a company created by Mr. Cohen for insights into the Trump administration shortly after Donald Trump’s inauguration, at a time when it needed government approval for an $85 billion takeover of Time Warner.
- The company paid Mr. Cohen through the same vehicle, Essential Consultants, he used in October 2016 to direct $130,000 to the adult-film actress known professionally as Stormy Daniels to stay silent about an alleged sexual encounter with Mr. Trump in 2006.
Volvo Cars Picks Citi, Goldman, Morgan Stanley on IPO
- Volvo Cars owner Zhejiang Geely Holding has selected Citigroup, Goldman Sachs Group and Morgan Stanley to advise on an initial public offering for the Swedish carmaker this year.
- China’s Zhejiang Geely and Volvo have discussed valuing the Swedish automaker in a range of $16 billion to $30 billion in a stock sale.
AXA Equitable Flops in Largest IPO of the Year
- The largest initial public offering of the year received a weak reception from investors as shares of insurer AXA Equitable Holdings made their debut Thursday at a price well below earlier expectations, showing that recent strength in the new-issue market is largely confined to the technology sector.
- Shares of the U.S. life-insurance and money-management arm of French insurer AXA rose 1.7% to $20.34 on the New York Stock Exchange after pricing at $20 apiece Wednesday night.
- That was a far cry from the range of $24 to $27 the company targeted in April.
US ECONOMY & POLITIC
U.S. Consumer Sentiment Held Steady in Early May
- The University of Michigan said Friday its index of consumer sentiment was 98.8 in May, unchanged from April.
- Economists expected a preliminary May figure of 98.0. A final May reading will be released May 25.
- The sentiment measure had hit 101.4 in March, its highest level in 14 years.
Treasury: Federal Budget Surplus for April Largest on Record, Driven by Tax Deposits
- The U.S. government posted the highest surplus on record in April, although the federal deficit over the past several months widened as spending rose along with revenues.
- April, when individual income taxes are due, is typically the government’s biggest month for revenue collection.
- Government revenue rose by 12%, or $55 billion, in April from the same period a year earlier, the Treasury Department said Thursday. That brought April’s surplus to $214.3 billion, the largest April surplus on record.
US import prices rose 0.3% in April, vs 0.5% increase expected
- U.S. import prices increased less than expected in April as a rebound in the cost of petroleum products was tempered by a decline in food prices.
- The Labor Department said import prices rose 0.3% last month.
- Economists polled by Reuters had forecast import prices rising 0.5% in April.
- In the 12 months through April, import prices increased 3.3%, matching March’s gain.
- The report also showed export prices accelerated 0.6% in April after gaining 0.3% in March.
Trump Administration Irked With Car Makers on Fuel-Economy Policy
- The leaders of the world’s biggest car companies are heading to the White House on Friday, and it may be their last chance to prevent a head-on collision between the Trump administration and the state of California.
- Auto makers have complained the current standards for their cars and trucks are too rigorous, saying they don’t reflect consumer demand.
- High on the agenda will be California, which has its own powers over fuel-efficiency standards and is already suing to stop the administration’s overhaul.
- That has escalated a power struggle between Washington and Sacramento that some fear could result in auto makers having to meet two different standards for selling cars and trucks in the U.S.
EUROPE & WORLD
Canada Shed Jobs in April, While Wages Rose to Near Six-Year High
- Canada unexpectedly shed jobs in April on a drop in part-time employment. Meanwhile, the unemployment rate remained unchanged at a decade-plus low and wage growth accelerated at its fastest pace in nearly six years.
- Canada shed a net 1,100 jobs in April, following a net gain of 32,300 in the previous month.
- Economists were expecting an addition of 20,000 jobs.
- The unemployment rate held steady at 5.8%, or the lowest level since October 2007.
- Average hourly wage growth accelerated in April at its fastest pace since July, 2012, up 3.6% on a one-year basis. Every month so far in 2018 has recorded an hourly wage increase of at least 3% or higher.
Iran expects word from Airbus on plane deal soon: Fars
- Iran expects to hear from Airbus in the coming days about the fate of an order for 100 planes that looks to have been wrecked by the United States’ decision to reinstate sanctions on the Islamic Republic.
- The deal, potentially worth about $18-20 billion at list prices, was agreed in December 2016.
- But so far only three planes have been delivered, with industry sources blaming delays on the wariness of banks to finance business with Tehran.
- Washington’s decision to reinstate sanctions signals the collapse of about $38 billion in plane deals between Tehran and Western firms, with Airbus facing greater risks than its U.S. rival Boeing.
- IranAir, the national flag carrier, had ordered 200 passenger aircraft, with 100 from Airbus, 80 from Boeing and 20 from ATR.
TODAY in HISTORY
- Minnesota became the 32nd state in the United States. (1858)
- Reggae performer Bob Marley died of cancer in Miami at the age of 36. (1981)
- IBM’s supercomputer, Deep Blue defeated Garry Kasparov, the reigning world champion, in a six game chess match. (1997)
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.
Content posted by third parties on this site is screened in order to protect clients’ privacy and comply with regulatory requirements. Content containing sensitive personal information, inappropriate language, information about specific investments, misleading information, information about other companies or websites, or information related to litigation will be removed. Content posted by third-parties on this site remains the responsibility of the party posting the content and is not adopted or endorsed by Pence Wealth Management or LPL Financial. Any opinions or statements posted by third parties are their own and may not be representative of the experience of others and are not indicative of future performance or success. Third party content on this site does not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy or completeness.