DAILY MARKET REPORTS
- U.S. stocks rose on Wednesday as Apple’s robust earnings report boosted shares of technology companies and eased worries over an escalating trade war between the United States and China.
- Apple jumped to a record high, after forecasting blowout current-quarter sales and was the biggest boost to all the three major indexes.
- The results come as disappointing reports from companies such as Facebook and Netflix have fanned worries over the growth of high-flying technology companies.
- The Trump administration plans to propose tariffs of 25 percent, instead of the initially proposed 10 percent, on $200 billion worth of imported Chinese goods. Beijing vowed to retaliate if the United States slapped further tariffs.
- Also in focus is the Federal Reserve, which is expected to keep interest rates unchanged in an announcement at 2 p.m. ET at the end of its meeting. The market expects another two rate hikes this year.
- Among stocks, Akamai Technologies dropped after its forecast for third-quarter revenue largely missed expectations.
- Tesla rose 1 percent ahead of its results scheduled after the bell.
US FINANCIAL MARKET
- Apple posted quarterly results that topped targets and forecast revenue in the current quarter above expectations, driven by sales of higher-priced iPhones and revenue from services like the App Store, Apple Music and iCloud.
- Apple posted third-quarter revenue of $53.3 billion compared with analyst estimates of $52.3 billion.
- Services revenue was $9.5 billion, up 31% and beating analyst expectations of $9.1 billion. That included $236 million from resolving lawsuits such as Apple’s long-running dispute with Samsung.
- Apple beat sales estimates in part by selling fewer but pricier iPhones than analysts expected. The company sold 41.3 million units, below expectations of 41.8 million units. The average iPhone selling price hit $724, beating analyst expectations of $694.
- Net income of $11.5 billion increased 32% from 2017’s $8.7 billion largely due to the top line growth and an effective tax rate of 13.2% compared to 24.1% in 2017.
Pandora wins more paid subscribers, posts smaller quarterly loss
- Pandora Media reported a smaller quarterly loss than Wall Street was expecting as the music streaming service lured more paid subscribers to its platform in a fiercely competitive market.
- Revenue climbed 2.1 percent to $384.8 million compared to estimates of $372.8 million. Total subscription and other revenue soared 65 percent to $113.7 million, comfortably above estimates of $110.9 million.
- Pandora had about 6 million subscribers for Pandora Plus and Pandora Premium as of June 30, about 351,000 more than it did three months earlier.
- Pandora said net loss narrowed to $99.5 million in the quarter, from $289.7 million a year earlier.
Spirit Aero profit beats estimate on higher deliveries to plane makers
- Spirit AeroSystems’ quarterly profit beat estimates, boosted by higher deliveries of aircraft parts to Boeing and France’s Airbus.
- Revenue rose slightly to $1.84 billion compared with analysts’ estimate of $1.83 billion.
- Spirit said ship-set deliveries — or complete sets of parts for each aircraft — to Airbus rose 2.5 percent to 203 units while deliveries to Boeing, its biggest customer, jumped 14 percent to 228 units during the quarter.
- The company reported net income of $145.2 million in the quarter, compared with a loss of $56.8 million a year earlier.
- The company reaffirmed its full-year adjusted earnings forecast of $6.25-$6.50 per share and revenue of $7.1 billion-$7.2 billion.
Sprint profit beats on strong wireless growth
- Sprint topped estimates for quarterly profit, helped by surprise growth in wireless subscribers in a competitive U.S. wireless market.
- Total operating revenue fell to $8.13 billion from $8.16 billion a year earlier. Sprint reported 87,000 net new phone subscribers who pay a monthly bill during the first quarter, more than double the average analyst estimate of 40,000 additions.
- Net income fell to $176 million in the quarter, compared with $206 million a year earlier.
Humana quarterly profit beats on Medicare Advantage demand
- Humana topped expectations for second-quarter profit as it sold more Medicare Advantage health care plans to the elderly and the disabled, prompting the U.S. health insurer to raise its full-year earnings forecast.
- Revenue rose 5.4 percent to $14.26 billion, above the average estimate of $14.16 billion.
- The company’s adjusted consolidated benefit ratio, the percentage of premiums spent on claims, deteriorated to 84.3 percent in the quarter, missing the consensus estimate of 83.9 percent.
- Humana said net income fell 70.3 percent to $193 million after the company recognized a pretax loss of $790 million on the sale of its KMG America unit. Ahead of estimates after adjustments.
- Humana said it now expects 2018 adjusted earnings of about $14.15 per share, compared to a previous forecast of $13.70 to $14.10 per share.
Automatic Data Processing Earnings Beat Estimates
- The company’s revenue for the quarter rose 8.5% to $3.32 billion from $3.06 billion last year.
- The company’s earnings came in at $108.7 million, compared with $265.8 million in last year’s fourth quarter. The company took a $365 million charge related to its Voluntary Early Retirement program.
- Excluding items, ADP reported adjusted earnings of $406.0 million for the period, ahead of estimates.
Carlyle posts smaller-than-expected drop in second-quarter earnings
- Private equity firm Carlyle Group reported a smaller-than-expected drop in its second-quarter earnings, as its funds appreciated less than a year earlier, but more than what most analysts had estimated.
- Overall economic net income, which reflects the mark-to-market valuation gains or losses on Carlyle’s portfolio and is a closely watched earnings metric, was $237.7 million. This exceeded estimates.
- Carlyle, which invests across private equity, credit, and real estate, continued to take advantage of the healthy investor demand for alternative assets. Its assets under management grew to $209.7 billion from $201.5 billion at the end of March.
- Distributable earnings – the actual cash available for paying dividends – fell to $115 million from $199 million a year earlier.
Bunge posts a quarterly loss on some soy crushing contracts
- Global grains merchant Bunge reported a loss, as its agribusiness unit took a $125 million hit on soy crushing contracts.
- The loss was partially offset as Bunge’s agribusiness segment sold 3.4 percent more grains and other commodities, in the second quarter, and gross profit from the unit more than doubled to $354 million.
- The White Plains, New York-based company said net sales rose to $12.15 billion from $11.65 billion.
AMC Earnings Top Estimates Thanks to Summer Box Office Hits
- A sizzling summer box office boosted earnings at AMC Entertainment during the second quarter of 2018, helping the world’s largest theater chain to achieve record admissions and food and beverage revenues.
- Total revenues for the quarter rose 20% to $1.44 billion, up from $1.20 billion in the prior-year period. Analysts had predicted revenues of $1.43 billion.
- Admissions revenues increased 17.7% to $896.3 million compared to $761.4 million in the year-ago period. Food and beverage revenues increased 19.2% to $445.8 million, compared to $374.1 million in 2017.
- Earnings before income taxes increased $305.7 million to $19.6 million, compared to a loss of $286.1 million for the same quarter a year ago after an investment in National CineMedia.
- In anticipation of the call, AMC announced on Tuesday that its subscription service A-List has attracted 181,790 paying members in its first five weeks.
Summit Materials Misses Earnings and Revenue Estimates
- Summit Materials posted revenues of $549.2 million for the quarter, missing estimates by 1.5%. This compares to year-ago revenues of $524.1 million.
- Gross margin declined to 31.6% compared to 36% in the previous year, as higher labor and material costs took their toll.
- This, combined with a higher tax bill, meant that net income declined to $36.9 million compared to $52.1 million a year ago – well below estimates.
- Management also reduced the midpoint of their guidance by 7%, which sent shares down more than 13% in early trading.
SiteOne Landscape Supply Earnings and Revenues Miss Estimates
- SiteOne Landscape Supply posted revenues of $687.80 million for the quarter, marginally missing estimates. This compares to year-ago revenues of $608.60 million.
- Gross profit increased 14% to $230 million from $202.4 million in the prior year period.
- However, an increase in SG&A due to acquisition expenses meant that SiteOne’s net income of $63.1 million, compared to $44.2 million a year ago, grew by less than expected and missed estimates.
Gartner Earnings Beat Estimates
- Gartner said it had revenues of $1 billion for the quarter, surpassing estimates by almost 2%. This compares to year-ago revenues of $843.7 million.
- Net income increased to $46.3 million compared to a loss of $92 million in the year-ago period as the company cut costs and disposed of an asset for $25 million.
Akamai Technologies Stock Falls Late on Earnings Call Guidance
- Revenue rose to $663 million, from $609 million a year ago. Analysts polled had expected sales of $661.9 million.
- The top line was largely driven by a 33% jump in sales from its cloud security segment to $155 million.
- General & Administrative expenses soared nearly 50% as Akamai said it earned $43 million in the quarter, compared with $57 million in the year-ago period. This marginally beat estimates, however lackluster guidance in the earnings call sent shares down in after-market trading.
Nanometrics Reports Second Quarter 2018 Financial Results
- A positive business environment for memory capital spending drove revenues to a new quarterly record of $88.6 million, exceeding estimates and up 8% from the first quarter, and up 38% from $64.4 million in the second quarter of 2017.
- Net income more than doubled to $17.7 million from $8.3 million in the previous year. This exceeded estimates on a per share basis.
- Nanometrics maintained guidance of at least 20% revenue growth for their fiscal third quarter.
Zendesk shares surge more than 7% following better-than-expected quarterly earnings
- Zendesk said revenue rose 39% to $142 million compared to $101.3 million a year earlier. Analysts expected sales of $137.5 million for the period.
- The company reported June quarter billings of $164.6 million, up 47% and topping expectations. Analysts estimated second-quarter billings, a sales growth metric, at $149 million.
- Zendesk’s net loss widened to $34.4 million from $26.9 million in the year-ago period. However, on a per share basis this beat estimates after adjustments.
Chesapeake Energy reports a quarterly loss on lower natural gas prices
- U.S. natural gas producer Chesapeake Energy posted a quarterly loss as a drop in natural gas prices and higher expenses ate into the company’s margins.
- Natural gas prices have fallen about 4 percent this quarter from year-ago levels, as production has reached a record high. The company sold natural gas, its prime revenue generator, at an average sales price of $2.56 per thousand cubic feet (mcf), down from $2.88 per mcf a year ago.
- The company said the net loss was $40 million in the second quarter compared with a profit of $470 million a year earlier.
Cheesecake Factory stock falls on earnings miss
- The restaurant chain posted revenue of $593.2 million in the period, which beat forecasts of $589.9 million.
- Net income fell to $28.4 million from $38.2 million as labor costs rose 200 basis points as a percentage of sales and the company booked a $2.6 million charge on the termination of a lease. Even after adjustments, this was below consensus.
US ECONOMY & POLITIC
- U.S. manufacturing activity slowed in July amid signs that a robust economy and import tariffs were putting pressure on the supply chain, which could hurt production in the long term.
- The Institute for Supply Management (ISM) said its index of national factory activity fell to a reading of 58.1 last month from 60.2 in June. A reading above 50 in the ISM index indicates an expansion in manufacturing, which accounts for about 12 percent of the U.S. economy.
- Separately, the ADP National Employment Report showed private payrolls surged by 219,000 jobs in July after rising by 181,000 in June. Economists polled by Reuters had forecast that private payrolls would increase by 185,000 jobs last month.
- According to a survey of economists, nonfarm payrolls likely increased by 190,000 jobs in July after advancing by 213,000 positions in June. The unemployment rate is forecast falling one-tenth of a percentage point to 3.9 percent in July.
Housing demand sees the biggest drop in more than 2 years
- Housing demand fell 9.6 percent in June, compared with June of 2017, according to a monthly index from Redfin. That is the largest decline since April 2016.
- Red-hot home prices, rising mortgage interest rates, very few listings on the entry level, and a high rate of student loan debt have weighed on buyers for a while, but a strong economy and growing employment had mitigated those factors.
- As a result, the number of people requesting home tours fell 6.1 percent annually in June, according to Redfin’s index, which is seasonally adjusted and covers 15 large metropolitan housing markets.
- There were 15 percent fewer offers made on homes as well.
EUROPE & WORLD
- China’s Baidu reported a 24.4 percent rise in quarterly revenue, driven by gains in the internet search firm’s online ad business.
- Total revenue rose to 25.97 billion yuan from 20.87 billion yuan. Baidu said online advertising revenue rose by 25 percent to 21.1 billion yuan ($3.10 billion) in the quarter, partly driven by growth in its newsfeed product, an app similar to Facebook’s feed.
- Net income rose 45% to 6.4 billion Chinese yuan ($940.65 million) in the second quarter from 4.42 billion yuan a year earlier and well above analyst expectations of 13% growth.
iQIYI Announces Second Quarter 2018 Financial Results
- Total revenues were RMB6.2 billion (US$932.5 million), representing a 51% increase from the same period in 2017.
- The number of total subscribing members were 67.1 million as of June 30, representing a 75% increase from 38.3 million as of June 30, 2017. The number of paying subscribing members were 66.2 million.
- Net loss was RMB2.1 billion (US$316.9 million), compared to RMB953.2 million in the same period in 2017.
Huawei overtakes Apple as world No. 2 smartphone seller, gains ground in China
- China’s Huawei Technologies overtook Apple to become the world’s second-biggest smartphone seller in the June quarter, data from market research firms showed, as it gained ground in Europe and expanded its lead back home.
- The estimated rise in market share comes as a slowdown in the world’s biggest smartphone market, China, eased. Huawei has also managed to get ahead of rivals by selling more feature-packed phones, analysts said.
- According to IHS and Strategy Analytics, Huawei grabbed more than 15 percent of the global smartphone market over April-June, overtaking Apple’s roughly 12 percent and just behind Samsung’s nearly 20 percent share.
TODAY in HISTORY
- The first U.S. census was completed, showing a population of 3,929,214 people. (1790)
- Adolf Hitler presided over the opening of the Berlin Olympic Games. (1936)
- MTV made its debut at 12:01 AM. The first video shown was Video Killed the Radio Star by the Buggles. (1981)
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