DAILY MARKET REPORTS
- U.S. stocks rose on Tuesday as technology stocks rebounded and a report said the United States and China were trying to restart negotiations to defuse a trade war between world’s two largest economies.
- Representatives of U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He are having private conversations as they look for ways to reengage in negotiations, Bloomberg reported, citing two people familiar with the effort.
- The likelihood of a respite in the tensions boosted the markets on Tuesday, with nine of the 11 major S&P sectors higher.
- Also boosting the market was a rebound in technology stocks, which lost 5.3% in the past three days as lackluster earnings sparked concerns about their future growth.
- Economic data was also healthy, with the Commerce Department reporting consumer spending jumped in June, building a strong base for the economy heading into the third quarter, while inflation rose moderately.
- The year-on-year increase in the so-called core personal consumption expenditures (PCE) was at 1.9% for a third straight month, a shade below the Federal Reserve’s 2% inflation target.
- Among stocks, Pfizer’s shares dipped after the drugmaker lowered its full-year revenue forecast due to the strong dollar.
- Chipotle slipped after the burrito chain operator shut a restaurant in Ohio following reports of customers getting severely ill.
US FINANCIAL MARKET
Charter profit beats on internet subscriber gains
- Charter Communications topped analysts’ estimates for quarterly profit as the cable operator lost fewer-than-expected video subscribers, while signing up more customers for its internet services.
- Charter added 218,000 residential internet customers in the second quarter, higher than the 185,000 estimated. Charter reported a loss of 73,000 residential video customers in the quarter, fewer than the 91,000 it had lost in the prior year period. Analysts had expected a loss of 108,000 video subscribers.
- Total revenue rose to $10.85 billion from $10.36 billion, beating expectations of $10.83 billion.
- Net income rose to $273 million for the quarter from $139 million a year earlier.
- Procter & Gamble’s quarterly sales fell below estimates, as the consumer products company had a disappointing performance at its grooming unit that makes Gillette razors and shaving products.
- Net sales rose 2.6% to $16.50 billion. Analysts had forecast sales of $16.54 billion. The company cut prices on products in the grooming business by 3% to claw back market share lost to upstarts such as Dollar Shave Club. Sales in the unit fell 1% to $1.65 billion, while volumes dropped 1%.
- Net income fell to $1.89 billion in the fourth quarter, compared with $2.22 billion a year earlier.
- For fiscal 2019, P&G said it sees organic sales rising 2-3% and core earnings per share growth of 3-8%.
Pfizer beats profit estimates but lowers 2018 revenue forecast
- Pfizer topped Wall Street estimates for quarterly profit on Tuesday, driven by higher sales of its cholesterol and arthritis drugs, but the biggest U.S. drugmaker lowered its full-year revenue forecast due to a stronger dollar.
- Revenue rose 4.4% to $13.47 billion, ahead of expectations of $13.31 billion.
- The company’s rheumatoid arthritis drug, Xeljanz, reported sales of $463 million for the quarter, beating consensus estimates of $432 million. Sales of cholesterol-lowering medicine Lipitor came in at $521 million, easily topping estimate of $466 million.
- Net income rose 26% to $3.87 billion in the second quarter, ahead of estimates.
- Pfizer now expects revenue between $53 billion and $55 billion, compared to $53.5 billion to $55.5 billion previously, due to the strengthening dollar. However, it raised its full-year EPS forecast to between $2.95 and $3.05, from $2.90 to $3.00 earlier.
Illumina shares lit up by earnings beat, outlook raise
- Growing demand for genomic information and applications saw diagnostics company Illumina soar past analysts’ expectations in the second quarter and boost its forecast for full-year sales growth and earnings.
- Revenue rose 25% year-over-year to $830m, while net income came in at $209m, up from $121m in the year-ago period.
- Analysts had expected revenue of $787m on net income of $163m according to Factset.
Vulcan Materials Earnings Miss, Revenue Beat
- The construction aggregate company posted revenues of $1.2 billion, ahead of estimates of $1.16 billion and up 16% from the $1.03 billion in the previous year’s quarter.
- Aggregate shipments increased 15% by 7 million tons to a total of 55 million tons in the quarter.
- Net income increased by nearly 33% to $159.6 million compared to $120 million in the same period in 2017. This missed estimates by 9.6%.
ADM quarterly profit beats on strong growth in oilseeds unit
- Archer Daniels Midland’s profit beat estimates by a wide margin, driven by higher returns from its oilseeds processing business.
- Total revenue rose 14.2% to $17.07 billion. With roughly half of its $14.1 billion global oilseed crushing business based in North America, ADM has also been benefiting from strong processing margins at home.
- Profit in the business jumped 70% to $341 million in the second-quarter due to strong demand for soybean meal. Nutrition business profit rose about 21% to $114 million.
- Net profit rose to $566 million in the second quarter from $276 million a year earlier, beating estimates by over 30%.
Incyte Revenue Comes In Ahead of Consensus
- Incyte posted revenues of $521.5 million for the quarter, surpassing estimates of $473.8 million by 12.21%. This compares to year-ago revenues of $326.44 million.
- Jakafi had sales of $346 million, up 25% of the same period in 2017.
- Net income increased to $52.4 million compared to a loss of $12.5 million in the year ago period. However, on a per share basis this missed estimates.
Cardiovascular Systems Reports Fiscal 2018 Fourth-Quarter Financial Results
- The medical device developer posted revenue of $59.2 million in the period, up 11.8% and topping Street forecasts. Four analysts expected $58.4 million.
- Net income more than quadrupled to $3.8 million compared to $0.8 million in the previous year, roughly twice consensus estimates on a per share basis.
- For the year, the company reported net income of $1.7 million swinging to its first profit. Revenue was reported as $217 million.
American Tower Corporation Reports Second Quarter 2018 Financial Results
- The wireless communications infrastructure company posted revenue of $1.78 billion in the period, up 7.1% and surpassing Street forecasts of $1.75 billion.
- Adjusted Funds from Operations rose 16.4% year over year to $844 million and ahead of estimates
- Net income declined 19.1% to $314 million due to a $33 million impairment charge associated with company assets in India.
KLA-Tencor shares rise on earnings beat, strong outlook
- KLA-Tencor shares rose in the extended session Monday after the equipment maker for the chip industry reported that quarterly results topped Wall Street estimates on process control and metrology demand and forecast a strong outlook.
- Revenue increased to $1.1 billion from $0.9 billion in the previous year’s quarter. This was above estimates of $1.05 billion.
- Net income increased to $349 million compared to a year ago’s $256 million, beating consensus.
- For the September-ending quarter, KLA-Tencor estimates adjusted earnings of $2.04 to $2.36 a share on revenue of $1.03 billion to $1.11 billion. Analysts expect earnings of $2.06 a share on revenue of $1.04 billion.
Amkor Technology Reports Financial Results for the Second Quarter 2018
- Revenue for the packaging and test company rose 4% sequentially to $1.1 billion, up from $1.0 billion in 2017.
- Net income declined significantly to $33 million compared to $119 million in the previous year’s quarter which included the sale of factory in Korea for an after-tax gain of $82 million.
- The company guided for third quarter revenue of $1.14 billion, up 7%, net income of $28-$55 million and a full year capital expenditure of roughly $600 million.
AMETEK Announces Record Second Quarter Results and Raises 2018 Guidance
- AMETEK’s second quarter 2018 sales were a record $1.21 billion, up 14% compared to the second quarter of 2017, with organic sales growth of 7%. Both of AMETEK’s segments posted revenue growth over 13%.
- Net income increased to $193.9 million, compared to $150.5 million in the previous year’s quarter.
- AMETEK also announced it had closed on the acquisition of Motec, a provider of integrated vision systems serving the high growth mobile machine vision market.
- The company raised guidance for 2018, expecting EPS to be in the range of $3.16 to $3.20, up 21% to 23% over 2017’s adjusted diluted earnings per share and up from the previous guidance range of $3.06 to $3.12 per diluted share.
Cognex Reports Results for the Second Quarter of 2018
- Revenue increased 19% to $211 million from $178 million in the same period a year ago. This exceeded estimates of $205 million.
- Net income declined to $56.2 million from $56.5 million as margin fell from 76% to 74% and SG&A climbed from 5% of revenue to 27% due to sales investments and higher costs for travel and demonstration. On a per share basis this beat consensus.
- Guidance of $220 to $230 million with gross margin in the mid 70% range was in line with consensus.
Arconic to sell unit, posts higher-than-expected profit
- Aluminum products maker Arconic said it would sell its building and construction systems unit, as it focuses on its aircraft parts business that helped the company post better-than-expected quarterly results.
- Sales in the construction business rose 11.5%. Sales in its engineered products business, which makes aircraft parts, increased 7.5% to $1.60 billion. Sales in its global rolled products business jumped 14.2% to $1.45 billion.
- Total sales rose to $3.57 billion from $3.26 billion, beating estimates.
- Net income declined to $194 million from $269 million in the previous year’s quarter, however this also beat estimates after adjusting for items.
- The company reaffirmed its 2018 forecast for revenue of $13.7 billion to $14.0 billion and adjusted profit of $1.17 to $1.27 per share.
Hefty legal bills push Lumber Liquidators into loss, shares sink
- Lumber Liquidators Holdings shares slumped 18% after the hardwood flooring retailer said a spike in legal bills resulted in a surprise second-quarter loss.
- Net sales of $283.47 million beat estimates of $280.7 million. Comparable store sales rose 4.7%, beating estimates of 3.1%.
- The company paid $9.5 million in legal bills in the quarter to settle several lawsuits that followed a CBS report in 2015 that alleged that some of the company’s flooring products had high levels of formaldehyde, a known carcinogen.
- SG&A expenses rose nearly 11% due to legal costs, while gross margins fell due to higher costs related to transportation and increased promotions.
- This led to a quarterly net loss of $1.5 million in the second quarter, compared with a profit of $4.5 million a year earlier.
AK Steel Stock Plummets as Earnings Decline Despite Tariff Boost
- AK Steel said that its revenue for the period was better than during the year-ago period as it amassed $1.75 billion in sales, a 12.2% gain compared to the $1.56 billion from a year ago.
- The company’s adjusted EBITDA for the period was $148.5 million, which comprised roughly 8.5% of its quarterly sales.
- AK Steel reported net income of $56.6 million for the second quarter of 2018 compared to $77.8 million a year ago.
- On a per share basis this missed by 2 cents, or nearly 10%. AK Steel declined to give per share guidance, sending shares steeply lower after hours.
Freddie Mac’s 2nd quarter income rises vs year ago
- Freddie Mac said its comprehensive income rose to $2.435 billion in the second quarter from $1.986 billion a year earlier as gains on derivatives offset a decline in its net interest income.
- The U.S. mortgage finance agency said it will pay a $1.6 billion dividend to the U.S. Treasury after making no payment in the prior quarter as it sought to build a $3 billion capital cushion due to the overhaul of the U.S. tax code enacted last December.
Chipotle shuts Ohio restaurant after reports of illness
- Chipotle Mexican Grill has shut a restaurant in Ohio following reports of customers falling sick after eating there, the burrito chain said on Monday.
- At least two customers wrote on food safety website iwaspoisoned.com that they suffered nausea and diarrhea after eating at the Powell, Ohio restaurant, but added that they had not visited a doctor.
- Addressing food safety concerns is among the top priorities for Chipotle Chief Executive Officer Brian Niccol, who took the helm in March.
US ECONOMY & POLITIC
- U.S. consumer spending increased solidly in June as households spent more at restaurants and on accommodation, building a strong base for the economy heading into the third quarter, while inflation rose moderately.
- Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.4% last month. Data for May was revised up to show consumer spending advancing 0.5% instead of the previously reported 0.2% increase.
- Prices continued to steadily rise last month. The personal consumption expenditures (PCE) price index excluding the volatile food and energy components gained 0.1% in June. It had risen by 0.2% in the prior month.
- Wages and salaries, which account for 70% of employment costs, rose 0.5% in the second quarter, retreating from a 0.9% surge in first three months of the year. Wages and salaries were up 2.8% in the 12 months through June, also the biggest annual gain since September 2008.
- Private sector wages and salaries rose 0.6% in the second quarter after jumping 1.0% in the January-March period.
US and China reportedly seeking to restart talks to avert trade war
- The U.S. and China are seeking to restart talks to avert a trade war, according to a Bloomberg News report. The media outlet said representatives of Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu are talking privately.
- Mnuchin told CNBC last week there continues to be “some quiet conversations” with China.
- The U.S. Department of the Treasury declined to comment on the status of the talks.
EUROPE & WORLD
- Samsung Electronics posted its slowest quarterly profit growth in more than a year as its Galaxy S9 device missed sales targets and competition heated up, casting doubt on its leadership of the smartphone market.
- The Apple components supplier and smartphone rival said operating profit from the mobile business recorded its steepest rate of decline since the first quarter of 2017, as cheaper Chinese-made handsets put pressure on margins.
- The world’s biggest chip and smartphone maker said Revenue for the April-June period fell 4% to 58.5 trillion won.
- Operating profit rose 5.7% to 14.9 trillion won ($13.3 billion) in the second quarter, slightly ahead of its 14.8 trillion won estimate. The mobile business booked a 34% fall in operating profit to 2.7 trillion won ($2.4 billion) in the second quarter.
- The chip unit posted a record 11.6 trillion won operating profit in the second quarter, up 45% from a year ago and nearly 80% of its total operating income. Samsung said demand for DRAM chips, its main memory product, would stay strong in the second half thanks to the growth of server data centers used for cloud computing.
Shire profit edges higher ahead of Takeda sale
- Shire, the London-listed pharmaceutical group being bought by Japan’s Takeda, reported a 4% rise in second-quarter earnings as revenue rose 5% to $3.92 billion, just ahead of market expectations.
- The company said its outlook for the year, including its oncology franchise that it has separately agreed to sell, was unchanged. Its shares were up 0.5%.
Takeda operating profit halves, looks to asset sales to shore up finances
- Japan’s Takeda Pharmaceutical reported that its operating profit halved from the year-ago quarter, when the drugmaker had booked gains from asset sales.
- Sales of bowel disease drug Entyvio hit 61.3 billion yen, up 34% on year. Multiple myeloma drug Ninlaro sales were 14 billion yen, up 40%. The company is bracing for lower sales of blockbuster blood cancer drug Velcade, which lost market exclusivity in the United States last year.
- Many of Takeda’s top-performing drugs posted stronger sales in the first quarter, but the company is facing a weak late-stage pipeline. To plug the gap, the company agreed in May to acquire Shire for $62 billion dollars.
BOJ adopts forward guidance on rates, makes framework flexible
- The Bank of Japan pledged to keep interest rates “very low” for the time being and took measures to make its massive stimulus program more flexible on Tuesday, reflecting its forecast that it would take time for inflation to hit its 2% target.
TODAY in HISTORY
- Columbus arrived at the island of Trinidad. (1498)
- The U.S. space probe Ranger 7 transmitted pictures of the Moon’s surface. (1964)
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