DAILY MARKET REPORTS
- The S&P 500 posted slight gains on Thursday as declines in technology companies and packaged food makers, dragged down by J.M. Smucker’s quarterly report, were offset by rising energy shares.
- Brent crude gained more than 1 percent on concerns about a plunge in exports from Venezuela.
- Washington had reached a deal with China’s No. 2 telecommunications equipment maker ZTE that would allow it to do business again with U.S. suppliers.
- Shares in J.M. Smucker fell 6.8 percent after the Folgers coffee maker reported quarterly results and full-year forecast that missed Wall Street estimates.
- Initial jobless claims, or the number of Americans claiming new unemployment benefits, dropped by 1,000 to a seasonally adjusted 222,000 last week.
US FINANCIAL MARKET
Oil gains as reality dawns over Venezuela’s export crisis
- Oil rose by nearly $1 a barrel on Thursday, lifted by concern about a steep drop in exports from Venezuela, although surging U.S. production kept gains in check.
- Venezuela, which faces the threat of U.S. sanctions and is in the midst of an economic crisis, is nearly a month behind delivering crude to customers from its main oil export terminals.
- Tankers waiting to load more than 24 million barrels of crude, almost as much as state producer PDVSA shipped in April, are sitting off the OPEC member’s main oil port.
J.M. Smucker quarterly sales miss estimates
- J.M. Smucker Co’s fourth-quarter sales missed analysts’ forecasts, hurt by weak demand for its edible oil brands such as Crisco, peanut butter and baking items.
- Net income rose to $185.9 million from $110.4 million a year earlier.
- Net sales fell to $1.78 billion, missing the average analyst estimate of $1.80 billion.
Airlines Raise Ticket Prices as Fuel Costs Surge
- Oil is again the largest expense for most airlines prompting higher domestic fares, surcharges on international flights.
- Average domestic airline fares have fallen in each of the past four years, according to trade group Airlines for America, as carriers handed most of the fall in fuel prices back to passengers.
- Now, higher fuel costs have forced carriers to decide how much can be passed on directly to domestic fliers through higher fares or via surcharges on international flights, without deterring too many travelers.
Amazon Scores Rights Deal for English Premier League Soccer
- Amazon boosted its bet on live sports programming, Thursday, by winning the rights to broadcast some soccer games from the English Premier League.
- The broadcasting rights are limited to Britain and Ireland, where viewers will be able to watch a small number of games on the company’s Amazon Prime video service.
- Amazon last year broadcast 10 Thursday-night NFL games, typically the league’s least-compelling match ups.
Altaba Looks to Buy Back 24% of Shares in Exchange for Alibaba Stock
- Altaba, the former Yahoo, has launched a tender offer for about 24% of its shares, using Alibaba stock as currency, as it tries to reduce the gap between its share price and net asset value.
- The move will reduce Altaba’s stake in the operator of two of China’s largest e-commerce sites to about 11% from about 15%.
- Altaba said it would pay 0.35 Alibaba American depositary share, plus cash tied to Alibaba’s volume-weighted average price, each for 195 million Altaba common shares.
- Altaba said it plans to sell at least 10 million Alibaba ADSs to pay taxes related to the tender offer and to fund part of the cash portion. The fund held about 383.6 million Alibaba shares at the end of the first quarter.
- At the close of trading Wednesday, Alibaba ADSs traded at $208.30.
After Scrutinizing Facebook, Congress Turns to Google Deal with Huawei
- Silicon Valley giant drawn into Washington’s escalating digital cold war with Beijing.
- Members of Congress have begun scrutinizing Google’s relationship with China’s Huawei.
- The review—of a facet of Google’s Android operating system partnership with Huawei—comes after lawmakers questioned Facebook about its data partnerships with Huawei and three other Chinese electronics makers. Facebook said it would wind down the Huawei deal by the week’s end.
McDonald’s Plans Corporate Job Cuts, ‘Eliminating Layers’
- McDonald’s is planning a fresh round of layoffs to further shrink its corporate structure as the burger chain struggles to turn around its crucial U.S. business.
- The latest reorganization is part of a plan to reduce administrative expenses by $500 million by the end of 2019. The company has already cut an undisclosed number of corporate jobs. The company has said it is reinvesting some of its cost-savings in technology, such as digital ordering, that it believes will lead to growth.
Dimon, Buffett Urge CEOs to End Quarterly Earnings Forecasts
- Buffett, who runs Berkshire Hathaway Inc., and Dimon, JPMorgan Chase & Co.’s chief executive officer, said in a joint Wall Street Journal editorial that they are encouraging all public companies to consider moving away the practice, arguing that it can stifle long-term investments.
- “Quarterly earnings guidance often leads to an unhealthy focus on short-term profits at the expense of long-term strategy, growth and sustainability,” they said.
- The two men are among the financial industry’s most powerful leaders
US ECONOMY & POLITIC
U.S. Jobless Claims Fell Last Week
- Initial jobless claims, a proxy for layoffs across the U.S., dropped by 1,000 to a seasonally adjusted 222,000 in the week ended June 2.
- The four-week moving average of claims, a more-stable measure, increased to 225,500 last week.
- The number of claims workers made for longer than a week increased by 21,000 to 1,741,000.
Ross Says U.S. Has Deal to Let ZTE Get Back in Business
- The U.S. has reached a deal that will allow ZTE to get back in business after the Chinese telecommunications company pays a record-large fine and agrees to management changes, Commerce Secretary Wilbur Ross said.
- “We still retain the power to shut them down again,” he said Thursday in an interview on CNBC. He said the Commerce Department is fining the company $1.4 billion, including $400 million in escrow, on top of a $1 billion U.S. penalty a year ago.
- The U.S. blocked ZTE’s access to U.S. suppliers in April, saying the company violated a 2017 sanctions settlement related to trading with Iran and North Korea and then lied about the violations.
- The company announced it was shutting down just weeks after the ban was announced.
US homeowners are $1 trillion wealthier
- The average borrower gained $16,300 in home equity from 2017 to 2018, according to CoreLogic.
- Home equity jumped 13.3 percent from to a year earlier.
- Despite the big value gains in the past few years, 2.5 million borrowers, 4.7 percent of all homeowners with a mortgage, are still underwater on their home loans.
EUROPE & WORLD
Google faces EU antitrust fine over Android case in July
- Google is expected to be hit with a second EU antitrust fine in mid-July for using its dominant Android mobile operating system to squeeze out rivals, three people familiar with the matter said.
- The European Commission, which has been investigating the case involving the unit of Alphabet since 2015, could issue its decision in the week of July 9, although the timing might change.
- Android is the most important of three EU cases against world No. 1 internet search engine Google because of its huge growth potential.
TODAY in HISTORY
- Spain and Portugal signed the Treaty of Tordesillas, which divided the New World between the two countries (1494)
- Louis XIV was crowned king of France (1654)
- Richard Henry Lee of Virginia introduced a resolution in the Continental Congress proposing a Declaration of Independence (1776)
- Vatican City became a sovereign state (1929)
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