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U.S. STOCKS CLIMB, DRIVEN BY STRONG EARNINGS REPORTS

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DAILY MARKET REPORTS

  • A set of strong earnings from companies, including Caterpillar and McDonald’s, lifted the Dow and drove the S&P 500 to a record high, but the tech-heavy Nasdaq was dragged lower by losses in Google.
  • Shares of McDonald’s surged 5 percent after the fast-food giant posted the biggest rise in sales at established restaurants globally in five years.
  • Caterpillar’s shares rose 4.1 percent after the company reported quarterly results that smashed expectations and raised its full-year outlook for the second time this year.
  • However, Alphabet fell 2.6 percent, after the tech giant warned that expenses would remain high as more searches shift to mobile devices.
  • Earnings are expected to have climbed 8.8 percent in the second quarter, compared with an 8 percent rise estimated at the start of the month.
  • Elsewhere, the Stoxx Europe 600 rose 0.5% after a measure of German business confidence climbed to a record high in July.

US FINANCIAL MARKET

Google’s Profit Dragged Lower by Hefty EU Fine

  • Company’s ad business continues to grow rapidly.
  • Alphabet’s second-quarter profit fell to $3.52 billion, compared with $4.88 billion a year prior.
  • Alphabet said net revenue rose 21% to $26.01 billion in the quarter, above analysts’ expectations and continuing a streak of steady growth.
  • Google said clicks on its ads increased 52% in the quarter compared with a year ago, though advertisers paid 23% less per ad click.
  • European regulators ruled Google used its monopoly position in search advertising to hurt rivals by favoring its online shopping service over competitors, and fined the company $2.74 billion.

McDonald’s Earnings Top Expectations, Helped by New Sandwiches

  • Fast-food chain has sought to improve customer experience after losing store traffic.
  • McDonald’s reported net income of $1.4 billion, up from $1.09 billion a year before.
  • Revenue for the quarter totaled $6.05 billion, down from $6.27 billion last year, but above the $5.96 billion analysts expected.
  • Revenue fell for the quarter, however, as McDonald’s sold more of its restaurants to franchisees and is no longer collecting the full amount of revenue from them.

Caterpillar Boosts Outlook as Revenue Jumps 10%

  • The heavy machinery giant said Tuesday it expects revenue of $42 billion to $44 billion for all of 2017, up from a previous forecast of as much as $41 billion.
  • Caterpillar took in $38.5 billion in revenue last year, its fourth-straight year of declining sales.
  • Caterpillar said its second-quarter revenue jumped 10% to $11.3 billion from the prior year, fueled by Chinese demand for equipment for infrastructure projects and residential construction, as well as the market for equipment in the North American natural gas industry.
  • The company reported a profit of $802 million, compared with $550 million a year ago.

GM’s Profit Falls on Pending Sale of Europe Business, Asia Charges

  • GM’s second-quarter net income fell 42% on costs related to its pullback from Europe and other overseas markets.
  • GM on Tuesday reported net income of $1.7 billion, down from $2.9 billion a year earlier.
  • The result included about $1.3 billion in special items related partly to its planned exit from India and losses stemming from the discontinued operations of the European unit.

3M Misses Q2 Earnings & Revenues, Updates Guidance

  • Revenue for the quarter came in at $7.8 billion versus the consensus estimate of $7.86 billion.
  • The company now forecasts organic local-currency sales growth to be 3 to 5 percent, up from previous guidance of 2 to 5 percent.

DuPont Quarterly Earnings, Sales Outstrip Expectations

  • The chemicals heavyweight said second-quarter operating earnings were $1.21 billion, compared with $1.09 billion year ago.
  • Revenue in the second quarter rose to $7.42 billion from $7.06 billion a year ago, above expectations of $7.3 billion.

Biogen Profit, Revenue Beats

  • Earnings for the latest quarter fell to $863 million from $1.05 billion in the year-earlier period.
  • Revenue rose to $3.08 billion from $2.89 billion, compared with the FactSet consensus of $2.81 billion.

Kimberly-Clark Beats Profit Expectations, Sees 2017 Earnings At Low End Of Guidance Range

  • Kimberly-Clark reported second-quarter net profit of $531 million, down from $566 million in the same period a year ago.
  • Revenue fell 1% to $4.55 billion from $4.59 billion, in line with the FactSet consensus of $4.56 billion.

United Technologies Beats, Guides Higher

  • United Technologies reported second-quarter net income of $1.44 billion, up from $1.38 billion in the year-earlier period.
  • Second-quarter sales of $15.3 billion were up 3% and matched FactSet forecasts.

Seagate Shares Slide after Earnings Miss

  • Seagate shares plunged 19% to $32.01 in early trading Tuesday after the company reported fourth-quarter profit and sales well below expectations.
  • Separately, Seagate said that Chief Executive Steve Luczo will step down from his role effective Oct. 1.
  • Seagate, one of the biggest makers of disk drives, has suffered from weakening demand for personal computers that use its storage products. In response, the company has cut jobs and costs, among other actions.

Michael Kors Shops for Glamour, Buys Jimmy Choo for $1.2 Billion

  • The luxury-handbag maker said it has agreed to acquire luxury shoe maker Jimmy Choo for £896 million ($1.17 billion), as it seeks new avenues for growth amid a slowdown in its core handbag business.

Citigroup shares pop 3% as bank kicks off first investor day since financial crisis

  • The bank will reach an 11 percent return on tangible common equity by 2020, according to a slide from CFO John Gerspach’s presentation.

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US ECONOMY & POLITIC

U.S. Consumer Confidence Rose in July

  • The Conference Board’s index rose to 121.1 in July from a revised 117.3 in June.
  • The index in March had hit 124.9, its highest level since December 2000, but has slid downward in recent months.

Home-Price Growth Flattened in May

  • Home-price growth flattened across the U.S. in May, a sign that the rapid upward trajectory in the cost of buying a home may finally be coming to an end.
  • S&P CoreLogic Case-Shiller Indices rose 5.6% in the 12 months ended in May, the same as the prior month.

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EUROPE & WORLD

IMF Warns Eurozone against Complacency, Sees Serious Threats

  • High debt levels, a fragile banking sector and the widening gap between economies in the bloc are seen as risks.
  • The eurozone economy has gained momentum this year, outpacing the U.S. in the first quarter and likely to come close to matching it in the second.
  • There is also a sense of relief among mainstream politicians at having seen off challenges from parties hostile to the euro and the European Union in elections in the Netherlands and France.
  • In its annual review of the eurozone’s economic policies, the IMF warned it faces “significant downside risks,” with government debt levels still too high and the banking sector still fragile and weighed down by bad loans.

LG Display Pours $7 Billion into OLED Panels for Smartphones

  • Seoul-based LG Display has already said it would invest $6.5 billion in OLED production at its two factories in South Korea.
  • The global OLED market is expected to reach $25.2 billion this year, IHS Markit, up 63% from last year.
  • Samsung Display holds 97.1% market share by revenue.

World needs $94 trillion spent on infrastructure by 2040: report

  • To close the spending gap, annual infrastructure spending needs to rise to 3.5 percent from 3 percent of global gross domestic product, the GIH said.
  • Every year, $3.7 trillion needs to be invested in infrastructure to meet demand – equivalent to the annual economic output of Germany, the world’s fourth largest economy.
  • The United States will have the largest gap in infrastructure spending, at $3.8 trillion.
  • China will have the greatest demand, at $28 trillion, representing 30 percent of global infrastructure investment needs.
  • The report, which includes a deep study of 50 countries and seven industry sectors, was written by Australia-based GIH and Oxford Economics.

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TODAY in HISTORY

  • The United States tested the first underwater atomic bomb at Bikini Atoll  (1946)
  • Puerto Rico became a commonwealth of the United States (1952)
  • The world’s first test-tube baby, Louise Joy Brown, was born in Lancashire, England (1978)
  • Soviet cosmonaut Svetlana Savitskaya became the first woman to walk in space (1984)
  • The supersonic airliner Concorde crashed after takeoff outside Paris (2000)

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.

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