DAILY MARKET REPORTS
- U.S. stocks dropped on Monday as marquee technology companies continued to slide on growth concerns, with losses being curbed by a rise in energy firms on higher oil prices and in financials ahead of the Federal Reserve meeting.
- The technology index has been under pressure after underwhelming forecasts from Facebook, Intel and Twitter threw up questions about the growth prospects of a sector whose surge has propelled the stock market to record highs.
- The Fed meets on Tuesday and Wednesday and is expected to keep rates unchanged and reaffirm outlook for further hikes.
- The market has almost fully priced in a September hike and is leaning towards a further move before the end of the year.
- Caterpillar’s shares were flat, pulling back from gains of nearly 3% premarket after it reported a second-quarter profit that beat estimates and the heavy equipment maker raised its full-year profit outlook.
- American Express fell after the Wall Street Journal reported the company raised currency conversion rates for its business clients without notifying.
- Tyson Foods dropped 5.6%, after the company cut its full-year profit forecast, saying uncertain trade policies and higher tariffs hurt domestic and export prices, specifically for chicken and pork.
US FINANCIAL MARKET
- Caterpillar upgraded its full-year profit outlook after earnings in the second quarter doubled, beating market expectations, helped by robust global demand for its equipment.
- Sales were up 24% from a year ago to $14 billion, driven by double-digit growth across all markets.
- In the Asia-Pacific region equipment sales surged 39% from a year ago, helped by increased construction activity and infrastructure investment in China. For oil and gas and mining machines, the demand is so strong that the company said it was taking orders for delivery well into 2019.
- Net income more than doubled to $1.7 billion from $0.8 billion in the year-ago period, exceeding estimates.
- Caterpillar said U.S. import tariffs could inflate material costs in the second half of the year by up to $200 million. It also expects supply chain challenges to continue to pressure freight costs.
- The company now expects adjusted profit per share to be between $11.00 and $12.00 in 2018, compared with $10.25 to $11.25 projected earlier.
Eagle Materials Reports First Quarter EPS Up 22% On Record Revenues
- The maker of gypsum wallboard and cement posted record revenue of $393.8 million in the period, up 8%, which also missed Street forecasts. Four analysts expected $403.9 million.
- Results were driven by a 15% increase in sales in its Oil and Gas Proppants segment, and an 11% increase in the sales of light materials.
- Its heavy materials segment was up modestly, held down by sales of cement of which operating margins declined by 14%.
- Net income increased 22% to $66 million from $54.9 million in the previous year, this however also missed estimates.
Seagate Technology Reports Fiscal Fourth Quarter and Fiscal Year 2018 Financial Results
- Seagate Technology revealed earnings for its fourth quarter that climbed from the same period last year.
- Revenue increased to $2.8 billion compared to $2.4 billion in the year-ago period.
- Net income quadrupled to $461 million from $114 million in the previous year’s quarter as gross margin improved by 400 basis points. This beat estimates.
Booz Allen Hamilton Announces First Quarter Fiscal 2019 Results
- Booz Allen reported first-quarter revenue growth of 8.1% to $1.7 billion, beating estimates of $1.58 billion.
- The top-line growth contributed to a 25.1% increase in Adjusted EBITDA to $177.8 million.
- Total backlog increased by 21.4% over the prior year period to $17.1 billion.
- Net income increased 47% to $104.2 million from $70.6 million in the year-ago period.
CBS board to discuss CEO Moonves investigation on Monday
- CBS’s board will discuss the investigation into allegations of personal misconduct against the U.S. broadcasting and media company’s Chief Executive Leslie Moonves on Monday, according to two people familiar with the matter.
- CBS said it would investigate accusations against Moonves, 68, made by six women in a New Yorker magazine article featuring several instances of alleged sexual harassment spanning 1985 to 2006.
- Moonves said that he regretted “immensely” making some women uncomfortable by making advances but added that he abided by the principle that ‘no’ means ‘no,’ and stated he has never misused his position to harm or hinder anyone’s career.
Tyson Lowers Outlook on Fallout From Tariffs, Commodity Market Volatility
- Tyson Foods cut its full-year profit guidance on trade uncertainties related to tariffs and volatility in commodity markets.
- The food company now expects an adjusted per-share profit of $5.70 to $6, down from its prior forecast of $6.55 to $6.70. The company said tariffs have hurt domestic and export prices on chicken and pork.
- Tyson also said domestic chicken demand has weakened due to an abundance of “relatively lower-priced beef and pork.”
Nokia, T-Mobile US agree $3.5 billion deal, world’s first big 5G award
- T-Mobile named Nokia to supply it with $3.5 billion in next-generation 5G network gear, the firms said on Monday, marking the world’s largest 5G deal so far and concrete evidence of a new wireless upgrade cycle taking root.
- No.3 U.S. mobile carrier T-Mobile – which in April agreed to a merger with Sprint to create a more formidable rival to U.S. telecom giants Verizon and AT&T – said the multiyear supply deal with Nokia will deliver the first nationwide 5G services.
- Terms of the deal call for Nokia to supply a range of 5G hardware, software, and services that will allow T-Mobile to capitalize on licensed airwave to deliver 600 megahertz spectrum and ultra-high-speed capacity on 28 megahertz airwaves in densely trafficked urban areas.
Harley drives deeper into Asia with smaller bikes to fuel growth
- Harley-Davidson is launching lightweight motorcycles in Asian markets and electric bikes in the hope of sparking demand as it faces declining sales in the United States and the threat of trade tariffs increasing its costs.
- Laying out a plan it calls “More Roads to Harley-Davidson”, the company expects to spend $675 million-$825 million over the next four years, looks to chop costs and generate more than $1 billion of incremental annual revenue in 2022.
- Harley will develop motorcycles with smaller engines of 250cc to 500cc for Asia, including India, which the company said was one of its fastest growing markets in the world.
AmEx raised currency prices for business clients without warning
- American Express raised currency conversion rates for business clients without notifying customers in an attempt to boost revenue and employee commission, the Wall Street Journal reported, citing people familiar with the matter.
- The practice, mainly within the forex department, was occurring until early this year and dates back to at least 2004. The practice mostly targeted small and midsize businesses, where a salesperson would tell potential clients that AmEx would beat the price they were paying banks or other financial institutions to convert currency and send money abroad.
- The salespeople didn’t inform customers that the margin, a markup that AmEx tacks on to the base currency exchange rate, was subject to increase without notice.
US ECONOMY & POLITIC
U.S. pending home sales unexpectedly rise in June
- Contracts to buy previously owned homes unexpectedly rose in June after two straight monthly declines, but the housing market remains hobbled by a dearth of properties available for sale.
- The National Association of Realtors said its Pending Home Sales Index, based on contracts signed last month, increased 0.9% to a reading of 106.9. Economists had forecast pending home sales unchanged in June.
- Pending home sales fell 2.5% from a year ago. In June, contracts increased 1.1% in the populous South. They gained 0.7 in the West and jumped 1.4% in the Northeast. Contracts rose 0.5% in the Midwest.
- U.S. President Donald Trump said on Sunday he would allow the federal government to shut down if Democrats do not fund his border wall and back immigration law changes, betting that maintaining a hard line will work in Republicans’ favor in November congressional elections.
- However, a disruption in federal government operations could backfire on Trump if voters blame Republicans, who control Congress, for the interruption in services.
- Americans are divided along party lines on immigration, and 81% of Republicans approved Trump’s handling of the issue, according to a Reuters/Ipsos poll released this month.
- Congress must agree on a spending measure to fund the government by a Sept. 30 deadline.
EUROPE & WORLD
- Heineken, the world’s second-largest beer maker, cut its guidance for full-year margins after reporting first-half earnings below market expectations.
- The Dutch brewer reported a 3% drop in half-year operating profits, to €1.75bn, in spite of sales rising by 4% to €10.8bn.
- Beer volumes slipped, due partly to cold weather during the first three months of the year and the CO2 shortage in June, but the hot summer weather helped make up for that to a degree.
- The brewer of Heineken lager, Tiger, Sol and Strongbow cider forecast that its operating margin would decline by 20 basis points, compared with a previous forecast of 25 basis point increase.
China tempts Britain with free trade, says the door to U.S. talks open
- China offered Britain talks on a post-Brexit free trade deal on Monday, reaching out to London as Beijing remains mired in an increasingly bitter trade war with Washington, even as a senior Chinese diplomat reiterated its door remained open for dialogue.
- Britain has pushed a strong message to Chinese companies that it is fully open for business as it prepares to leave the European Union next year, and China is one of the countries with which Britain would like to sign a post-Brexit free trade deal.
- Speaking to reporters in Beijing after meeting British Foreign Secretary Jeremy Hunt, the Chinese government’s top diplomat, State Councilor Wang Yi, said both countries agreed to step up trade with an investment in each other.
Review of Toshiba’s delayed British nuclear plant raises new doubts
- Delays to the planned sale of Toshiba’s NuGen nuclear project in Britain have prompted a review of the roles of 60 direct employees, who are mainly based in Manchester, raising further doubts over its future.
- The plant in Moorside, north-west England, was expected to provide around 7% of Britain’s electricity when built but has faced several setbacks after Toshiba’s nuclear arm Westinghouse went bankrupt last year.
- Following the Westinghouse bankruptcy, Engie pulled out of the project, leaving the Japanese firm searching for new investors. Toshiba put NuGen up for sale and Korea Electric Power was chosen as preferred bidder last year, but the process has stalled.
TODAY in HISTORY
- The USS Indianapolis was torpedoed by a Japanese submarine and sank within 15 minutes. It was one of the greatest naval losses of World War II, resulting in the deaths of nearly 900 men. (1945)
- President Lyndon Johnson signed the Medicare Bill into law. (1965)
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