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UPBEAT EARNINGS BOOST STOCKS AHEAD OF FED ANNOUNCEMENT

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DAILY MARKET REPORTS

  • U.S. stock indexes opened at record highs on Wednesday following a set of strong quarterly earnings, led by Boeing and AT&T.
  • Boeing rose 7%, boosting the Dow, while AT&T’s 4% gain made it the top stock on the S&P 500.
  • Both companies posted quarterly profit that topped analysts’ estimates.
  • Ford fell 1.7% however, despite posting a slight increase in second-quarter profit, while Coca-Cola fell 1.1%.
  • Earnings of the S&P 500 companies are expected to have climbed 9.1% in the second quarter, up from an 8% rise estimated at the start of the month.
  • Investors will also focus on the Fed’s statement, which is due at 2 p.m. ET.

US FINANCIAL MARKET

Boeing Boosts Its Profit Forecast After Strong Quarter

  • Jet maker plans to pay $3.5 billion in pension liabilities ahead of schedule, a sign of confidence.
  • In all for the quarter, Boeing earned $1.76 billion, up from last year’s loss of $234 million.
  • Revenue fell 8.1% to $22.7 billion, reflecting a dip in commercial and military jet deliveries.
  • The company retained its full-year guidance for delivering 760 to 765 jetliners.
  • Its backlog rose to $482 billion, including $27 billion of net orders during the latest quarter.

Ford Shows It Can Weather U.S. Auto Market Slowdown

  • Sales of profitable pickups and SUVs help buoy profits; company raises its earnings forecast for the year.
  • Operating income fell 16% to $2.5 billion in the second quarter due to higher commodity costs, unfavorable exchange rates in China and Europe and one-time charges related to a pullback in small-car production.
  • Revenue was $39.9 billion for the April-to-June period versus $39.5 billion a year ago.

Northrop tops estimates, raises profit forecast again

  • Net earnings rose 6.8 percent to $552 million in the quarter.
  • Total sales rose 6.3 percent to $6.38 billion.
  • Sales in the aerospace business, which makes manned aircraft, drones and space craft, rose 14 percent to $2.97 billion.
  • The maker of Global Hawk surveillance planes raised its full-year profit forecast for the second time.

Coca-Cola Reports Better Than Expected Earnings

  • The beverage giant on Wednesday also lifted its full-year earnings outlook.
  • Coke reported earnings of $1.37 billion, down from $3.45 billion a year earlier.
  • Last year’s quarter included the company’s now-divested bottling business.
  • Revenue fell 16% to $9.7 billion, but organic revenue grew 3%.

AT&T’s Results Top Wall Street Views

  • AT&T Inc., the telecom giant that is reinventing itself as a media conglomerate, on Tuesday reported its third-straight quarterly revenue decline as it struggles to add — and retain — subscribers.
  • Still, results beat Wall Street expectations.
  • Second-quarter profit rose 15% to $3.92 billion.
  • Revenue fell to $39.84 billion from $40.52 billion a year earlier.
  • As of June 30, AT&T had more than $25 billion in cash and more than $130 million in debt.
  • AT&T, having lost ground to companies like T-Mobile US Inc. and Sprint Corp. that lured customers away with unlimited offers, is hoping to move away from the lagging phone business by building out its media and entertainment business.
  • Already the biggest pay-television operator in the U.S. with its acquisition of satellite company DirecTV, AT&T is looking to add Time Warner to its fold, a pricey deal that would give the Dallas company such properties as CNN, HBO and the Warner Bros. film and TV studio.

General Dynamics’ second-quarter profit tops estimates

  • Net income rose $749 million from $714 million.
  • Revenue, however, fell 1.3 percent to $7.68 billion as sales decreased in both its aerospace unit and information systems and technology division.
  • The company’s aerospace business, its third biggest, delivered 30 aircraft in the second quarter, compared with 36 a year earlier.
  • General Dynamics’ margins rose to 13.8 percent in the quarter from 13.2 percent a year earlier.

Chipotle shares jump on earnings beat, but sales disappoint

  • Chipotle reported its second-quarter earnings rose to $66.7 million from $25.6 million a year ago.
  • Revenue grew 17.1% to $1.17 billion while same-store sales rose 8.1%.
  • U.S. same-store sales: 8.1 percent vs. 9.7 percent expected.

Amgen’s Guidance On Lower End Of Expectations

  • The company said it earned $2.2 billion, compared with $1.9 billion in the year-ago period.
  • Revenues rose 2% to $5.8 billion, from $5.7 billion a year ago.
  • Sales guidance was revised to a range of $22.5 billion and $23 billion.
  • The analysts had expected sales of $22.7 billion for the year.

AMD shares jump to 10-year high after saying sales this quarter will top Street by $100 million

  • The company reported a net loss of $16 million compared with a profit of $69 million a year earlier.
  • Revenue rose 19 percent to $1.22 billion.
  • Sales in AMD’s unit that makes processors, such as the Polaris chips used in PCs, rose 51.5 percent to $659 million in the second quarter.
  • AMD said it now expected annual revenue to increase by “a mid to high-teens percentage”, compared with its previous forecast of low double-digit percentage revenue growth.

Anthem Raises Outlook on Growth in Plan Enrollment

  • Anthem reported a profit of $855.3 million, compared with $780.6 million a year ago.
  • Premium rate increases and growing enrollment also drove operating revenues up 4.3% from last year to $22.2 billion.

D.R. Horton posts slowest order growth in three quarters

  • D.R. Horton’s net income rose to $289 million in the quarter, from $249.8 million a year earlier.
  • The company’s total revenue, which includes land and lot sales and sales from its financial services business and other items, was $3.78 billion.
  • The homebuilder, which mainly sells single-family homes, said it sold 12,497 homes in the quarter, compared with 10,739 a year earlier.
  • The company’s pending deal to buy a 75 percent stake in real estate developer Forestar Group could provide “some valuation and sentiment support”.

Hershey’s profit beats on cost cuts, strong U.S. demand

  • Hershey’s net income rose to $203.5 million in the second quarter from $146 million a year earlier.
  • Net sales rose 1.5 percent to $1.67 billion.
  • Sales in North America, Hershey’s largest market, rose 2.2 percent to $1.47 billion.
  • Hershey also raised its quarterly dividend to 65.6 cents for its Class A shares and 59.6 cents for its Class B shares.
  • The company, in February, said it would cut its global workforce by about 15 percent under its new Chief Executive Michele Buck.

Hilton’s profit beats; raises earnings forecast again

  • The company’s net income in the year-ago quarter was $239 million reflecting $144 million from discontinued operations.
  • Revenue rose to $2.35 billion from $1.95 billion.
  • System-wide occupancy rose 0.4 percent in the second quarter ended June 30, while average daily room rate rose 1.2 percent.

Texas Instruments’ profit beats on automotive, industrial demand

  • Texas Instruments said net income rose to $1.06 billion in the second quarter from $819 million a year earlier.
  • The chipmaker’s net revenue rose for the fifth straight quarter, to $3.69 billion from $3.27 billion.
  • The company’s core business consists of analog chips that are used to calculate changes in sound and temperature, and embedded chips that are used in IoT and personal devices.

Corning tops Street 2Q forecasts

  • The specialty glass maker posted revenue of $2.5 billion in the period, which also topped Street forecasts.

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US ECONOMY & POLITIC

Senate Republican plan to repeal, replace Obamacare fails to get enough votes

  • The vote was 43 in favor and 57 against. Nine Republicans voted against the measure.
  • The plan would have made deep cuts to Medicaid, the health insurance program for the poor, and reduced Obamacare subsidies to lower-income people to help them defray the cost of health insurance.

Fed expected to leave rates unchanged; balance sheet in focus

  • The Federal Reserve is expected to hold interest rates unchanged on Wednesday and possibly hint that it will start winding down its massive holdings of bonds as soon as September in what would be a vote of confidence in the U.S. economy.

EIA Petroleum Status Report

  • Crude oil inventories down 7.2 million barrels for this week.
  • Gasoline is down 1 million barrels for this week.
  • Distillates are down 1.9 million barrels for this week.
  • The Energy Information Administration (EIA) provides weekly information on petroleum inventories in the U.S., whether produced here or abroad.

MBA Mortgage Applications

  • Purchase applications for home mortgages fell a seasonally adjusted 2 percent to the lowest level since May in the July 21 week.
  • Applications for refinancing rose 3 percent as homeowners took advantage of a drop-in interest rates.
  • The refinancing share of mortgage activity increased by 1.3 percentage points to 46.0 percent.
  • The average interest rate on 30-year fixed rate conforming mortgages ($424,000 or less) dropping 5 basis points to 4.17 percent.

New Home Sales

  • New home sales entered the Spring on a down note before popping higher to a 610,000 annualized rate in a May report that also included a major upward revision for April.
  • Forecasters see new home sales in June adding very slightly to May’s strength with the consensus at 611,000.
  • New home sales measure the number of newly constructed homes with a committed sale during the month.

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EUROPE & WORLD

Daimler second quarter earnings lag as cartel allegations loom

  • Daimler’s group earnings rose to 3.74 billion euros in the second quarter.
  • Mercedes-Benz Cars sold 595,200 automobiles thanks to a 28 percent rise in demand in China.
  • German magazine Der Spiegel reported on Friday that German carmakers Daimler, BMW, VW, Porsche and Audi held meetings to discuss suppliers, prices and standards to the disadvantage of foreign carmakers.
  • The European Commission said on Saturday it was investigating.
  • Companies found guilty of breaching EU cartel rules face fines of as much as 10 percent of their global turnover.

Nintendo revenues surge nearly 150% as strong demand for the Switch console continues

  • Nintendo has sold 4.71 Switch consoles, and despite the slowdown, maintained its target of selling 10 million in this financial year.
  • Revenue of 154.07 billion yen ($1.37 billion) versus expectations of 136.53 billion yen.
  • Operating profit of 16.21 billion yen versus analyst forecasts of 9.52 billion yen.
  • Revenue from mobile and its intellectual property (IP) licensing category hit 9.06 billion yen, up nearly 450 percent from the 1.6 billion yen recorded in the same period last year.

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TODAY in HISTORY

  • New York became the 11th state in the United States (1788)
  • The Office of the Chief Examiner, which in 1935 became the Federal Bureau of Investigation (FBI), was created (1908)
  • President Harry S Truman signed the National Security Act, creating the Department of Defense, the National Security Council, the Central Intelligence Agency, and the Joint Chiefs of Staff (1947)

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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