DAILY MARKET REPORTS
- U.S. stock indexes rose on Thursday, helped by a string of robust earnings reports, a dip in the dollar and after China said it will hold talks with the United States later this month.
- Industrials rose 0.9% on hopes that Beijing and Washington may resolve a conflict that has roiled financial markets since March.
- Shares of trade-sensitive companies Boeing rose 3.2% and Caterpillar 2.1%.
- The greenback fell with investors buying back into currencies that were hit hard in the recent selloff, while the lira rallied after Turkey’s finance minister said his country will come out of the current market volatility stronger.
- Walmart’s shares surged 9.2%, the most on the benchmark S&P 500 index, after the retailer said its U.S. comparable sales grew the most in a decade and posted strong e-commerce sales.
- Cisco jumped 4.3% after posting quarterly results and first-quarter sales forecast that topped Wall Street expectations.
- JC Penney slumped 26.6% after the department store chain cut its full-year forecast and posted lower-than-expected results.
- Second-quarter earnings have been stronger than expected, with 79% of the 460 S&P 500 that have reported so far beating analyst expectations.
US FINANCIAL MARKET
Cisco tops revenue estimates as newer bets pay off
- Cisco Systems reported quarterly revenue above estimates, driven by growth in the network gear maker’s newer businesses such as cyber security.
- Total revenue rose to $12.84 billion from $12.13 billion. Analysts on average had expected revenue of $12.77 billion.
- Revenue in its infrastructure platform division, which houses the company’s traditional business of supplying switches and routers, rose 7% to $7.44 billion. Analysts had expected revenue of $7.32 billion.
- Revenue in its application software businesses rose 10% to $1.34 billion.
- The company’s net income rose to $3.80 billion in the fourth quarter from $2.42 billion a year earlier, beating consensus.
- Walmart said sales rose at the fastest rate in over a decade as the world’s largest retailer continues to draw more people to stores and benefit from strong consumer spending boosting performance at many retailers.
- Total revenue increased 3.8% to $128 billion, beating analysts’ estimates of $125.97 billion.
- Walmart said its quarterly U.S. e-commerce sales picked up compared with earlier this year, rising 40% versus the same quarter last year, up from 33% during the first quarter and in line with the retailer’s expectations.
- Sales at existing U.S. stores and websites rose 4.5% during the second quarter.
- Walmart also said it expects sales and profit to rise more than previously expected during the current fiscal year. Sales in existing U.S. stores will rise 3%, the retailer said.
- But the retailer continues to invest heavily online and to lower product prices versus competitors while facing rising commodity and transportation costs. In the second quarter operating income fell 3.7% to $5.8 billion.
- Walmart posted a loss of $861 million compared to a profit of $2.9 billion due to a $4.8 billion charge in the second quarter.
J.C. Penney Lowers Earnings Outlook as Sales Fall
- J.C. Penney lowered its full-year earnings outlook after the retailer reported a wider loss and lower sales.
- The company reported that net sales for the second quarter fell 7.5% to $2.76 billion, missing the $2.86 billion in revenue analysts were looking for.
- The decline in sales was primarily due to 141 store closures in fiscal 2017, J.C. Penney said.
- Same-store sales grew 0.3%, missing the estimate of a 1% increase.
- The company reported a net loss of $101 million more than double what the company lost a year earlier.
- The company now expects same-store sales to be flat, compared with its previous outlook of flat to up 2%.
- The company also said it expects an adjusted loss per share of between $1 and 80 cents, compared with its a loss of 7 cents to a profit of 13 cents.
- Shares are down more than 33% in the past year.
Uber’s Revenue Growth Keeps Up Fast Pace
- The company’s second-quarter revenue rose 63% from the prior year to $2.8 billion, while gross bookings, a measure of the overall demand for its ride and delivery services, jumped 41% to about $12 billion.
- Uber makes most of its money by taking a commission from each fare.
- Its net revenue now makes up 23% of total bookings—up from 20%—signaling it is extracting more money from each ride.
- Bookings are the total value of trips before Uber takes its cut of the rides.
- Uber’s year-over-year growth in bookings slowed this quarter, to 41%, compared with 55% growth in bookings during the first quarter of this year.
- The company narrowed its loss to $891 million from $1.1 billion a year ago.
- The loss was, however, wider than the $550 million loss in the first quarter, not including a $3 billion gain from the sales of its southeast Asian and Russian operations.
SEC Sends Subpoena to Tesla in Probe Over Musk Tweets
- Federal regulators have subpoenaed Tesla, ramping up an investigation into Chief Executive Elon Musk’s tweet last week that he had secured funding to take the electric-car maker private.
- The subpoena from the Securities and Exchange Commission seeks information from each of Tesla’s directors, according to a person familiar with the matter. It isn’t known what information is being sought.
- The subpoena indicates senior SEC officials have authorized a formal investigation of the company, a step up from the initial inquiries the regulator made to Tesla last week. The SEC opens formal investigations when it thinks that a violation of law has occurred and that a probe is justified.
Starboard eyes Symantec board seats after taking stake
- Hedge fund Starboard Value has nominated five directors to Symantec’s board after taking a 5.8% stake in the cybersecurity firm, it said on Thursday, upping pressure for moves to improve performance.
- Symantec said it was evaluating Starboard’s nominations.
- Symantec, which is carrying out an internal accounting probe, has been cutting jobs in an attempt to improve margins and its shares have plunged 34% this year.
Amazon considering UK insurance comparison site
- Amazon.com is sounding out some of Europe’s top insurance firms to see if they would contribute products to a UK price comparison website in what would be a major foray by the U.S. online retail giant into the region’s financial services.
- Three industry executives told Reuters they had held talks with Amazon about the possible launch of a site.
- One said the talks were part of several discussions Amazon is having with insurers.
- A second said there were no imminent launch plans.
- While it was not immediately clear what type of insurance would be sold on any Amazon site, home and motor policies are popular sellers on existing UK price comparison sites.
Kroger begins tests of driverless grocery delivery in Arizona
- U.S. supermarket operator Kroger said it will start testing driverless grocery delivery on Thursday with technology partner Nuro at a single Fry’s Food Store in Scottsdale, Arizona.
- Kroger and rival Walmart each have teamed up with autonomous vehicle companies in a bid to lower the high cost of “last–mile” deliveries to customer doorsteps, as online retailer Amazon rolls out free Whole Foods delivery for Prime subscribers.
- The first phase of the test will use a fleet of Toyota Prius cars equipped with Nuro technology.
- Those cars have seats for humans who can override autonomous systems in the event of an error or emergency.
- Self-driving car delivery from the Fry’s store will cost $5.95 with no minimum order.
- It is only available at addresses within the store’s zip code of 85257, Kroger said.
US ECONOMY & POLITIC
U.S., China to Resume Trade Talks as Tariffs Bite
- China and the U.S. reached a modest breakthrough in their standoff over trade, saying they would hold lower-level talks later this month on the spiraling dispute.
- China’s Commerce Ministry said Thursday that a vice minister would travel to the U.S. on an unspecified date, at the invitation of the Treasury Department, to discuss trade issues.
- A senior U.S. government official confirmed the talks and said, “We expect to discuss steps to achieve a more balanced trading relationship.”
- The talks would be the first in more than two months.
- In preparation, the U.S. Treasury has been trying to focus the list of demands for Beijing, those people said.
- Those demands have included lowering tariffs, ending policies that pressure U.S. firms to transfer technology to Chinese partners and improving market access for foreign firms to reduce a trade imbalance that the U.S. puts at $375 billion in China’s favor last year.
U.S. Jobless Claims Fell Last Week
- Initial jobless claims, a proxy for layoffs across the U.S., dropped by 2,000 to a seasonally adjusted 212,000 in the week ended August 11. Economists expected 215,000 new claims last week.
- Data can be volatile from week to week. The four-week moving average of claims, a steadier measure, rose by 1,000 to 215,500.
- Thursday’s report showed the number of claims workers made for longer than a week declined by 39,000 to 1,721,000 in the week ended August 4. That figure, also known as continuing claims, is reported with a one-week lag.
- Housing starts grew 0.9% in July from the prior month to a seasonally adjusted annual rate of 1.168 million.
- Residential building permits also jumped, rising 1.5% from June to an annual pace of 1.311 million last month.
- Economists had expected an 8.3% jump for starts and a 2.9% gain for permits in July.
- Continued job and wage growth are helping drive housing demand, but factors such as rising material costs and labor shortages have posed challenges to builders.
- Despite these headwinds, home builders seem willing to attempt to push through new construction projects.
- Permits for single-family homes grew 1.9% in July from the prior month, the largest monthly gain since October of last year.
Trump is preparing to expand ‘Buy America’ rules to include government infrastructure projects
- The White House is preparing a new executive order expanding rules favoring American-made products in government projects, according to four administration officials and two other people familiar with the matter.
- The order, which is said to be nearing completion, would apply current “Buy America” provisions to programs where they do not currently exist. In particular, the rules will apply to infrastructure projects such as roadways, pipelines and broadband.
- Earlier iterations of the order sought broader — and stricter — mandates for federal agencies to source U.S. goods and services, but the language was significantly tailored during the review process as procedural and ideological roadblocks arose, three of these people said.
Trump, Seeking to Relax Rules on U.S. Cyberattacks, Reverses Obama Directive
- President Trump has reversed an Obama-era memorandum dictating how and when the U.S. government can deploy cyberweapons against its adversaries, in an effort to loosen restrictions on such operations
- Mr. Trump signed an order reversing the classified rules, known as Presidential Policy Directive 20, that had mapped out an interagency process that must be followed before U.S. use of cyber attacks, particularly those geared at foreign adversaries.
- The change was described as an “offensive step forward” by an official briefed on the decision, intended to help support military operations, deter election influence and thwart intellectual property theft by meeting threats with more forceful responses.
- The Trump administration has faced pressure to show that it is taking seriously national-security cyberthreats—particularly those that intelligence officials say are posed by Moscow.
Trump Revokes Ex-CIA Director John Brennan’s Security Clearance
- President Trump drew a direct connection between the special counsel investigation into alleged Russian interference in the 2016 election and his decision to revoke the security clearance of former CIA Director John Brennan and review the clearances of several other former officials.
- In an interview Wednesday, Mr. Trump cited Mr. Brennan as among those he held responsible for the investigation, which also is looking into whether there was collusion between the Trump campaign and the Kremlin.
- Mr. Brennan—who since leaving office has become a frequent critic of the Republican president—in a tweet called the revocation of his clearance “part of a broader effort by Mr. Trump to suppress freedom of speech & punish critics.”
Manafort Jury to Begin First Day of Deliberations
- A federal jury was set to begin deliberations Thursday in the case against former Trump campaign chairman Paul Manafort, who faces 18 criminal counts alleging tax fraud, bank fraud and failing to disclose foreign bank accounts.
- At the trial over the past two weeks, prosecutors called more than 20 witnesses, including former associate Rick Gates as well as a former accountant, and introduced hundreds of emails and financial records.
- They alleged Mr. Manafort earned millions from political-consulting work in Ukraine in the early 2010s but didn’t pay taxes on at least $16 million, and later submitted misleading loan applications to obtain millions of dollars in mortgages in 2016 after that income dried up.
- The 12 jurors received instructions from U.S. District Judge T.S. Ellis late Wednesday, and he said they would begin deliberating Thursday morning.
EUROPE & WORLD
- China almost quadrupled the value of fixed-asset investment projects approved in July from the previous month as Beijing looks to accelerate infrastructure spending to stabilize the cooling economy.
- China gave the green light to 17 fixed-asset investment projects in July, worth a combined 77.69 billion yuan ($11.24 billion) an official at the National Development and Reform Commission (NDRC), told reporters on Thursday.
- That compared with approvals for 20.8 billion yuan of spending in June, Reuters calculated from official data.
- Beijing is accelerating infrastructure spending and rolling out other support measures for businesses to cushion the economy as it braces for the impact of escalating U.S. trade tariffs.
Turkey’s Energy Bill Soars as Its Currency Tumbles
- Energy makes up more than two-thirds of Turkey’s large current-account deficit—a measure of a nation’s transactions with the rest of the world. That now amounts to 5.5% of gross domestic product.
- Turkey’s need for foreign energy could push President Recep Tayyip Erdogan closer to oil-producing nations—and U.S. irritants—like Iran and Russia.
Judge: Women Accused of Killing Kim Jong Nam Must Begin Defense Phase
- Two women accused of killing the half-brother of North Korean leader Kim Jong Un will need to enter a defense in their murder trial, a judge ordered Thursday.
- The judge said the prosecution had made a compelling case that the two women had intended to kill Kim Jong Nam, who died in Kuala Lumpur’s airport in February 2017 after they allegedly smeared VX, a banned nerve agent, on his face.
- The judge’s decision will extend a trial that has already lasted 10 months and will provide a relief for prosecutors, who have struggled to establish a clear motive for the women’s role in the killing. The women have said they were duped by a group of four North Koreans who orchestrated the killing and fled hours later, abandoning them to suffer the consequences.
TODAY in HISTORY
- The Revolutionary War battle of Bennington, Vt., won by American forces. (1777)
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