DAILY MARKET REPORTS
- U.S. stocks were flat on Friday, after gains in the consumer staples sector, boosted by Kraft Heinz’s strong earnings, were offset by data which showed job growth slowed in July and as China proposed new tariffs on $60 billion worth of U.S. goods.
- China’s retaliatory tariffs on U.S. goods ranged from liquefied natural gas (LNG) to certain types of aircraft and came after President Donald Trump proposed 25% tariffs on $200 billion worth of Chinese imports.
- The markets got little impetus to move higher after U.S. jobs growth slowed in July, likely due to companies’ struggles to find qualified workers.
- Nonfarm payrolls increased by 157,000 jobs last month. Economists had forecast nonfarm payrolls increasing by 190,000 jobs.
- Kraft Heinz jumped 5.7% after it topped quarterly profit and revenue estimates as the velveeta cheese maker raised prices of its products.
- Dish jumped 9.4% after the satellite TV services provider reported a better-than-expected quarterly profit.
- Symantec slipped 14% and was the biggest decliner on the S&P after the antivirus software maker lowered its yearly revenue forecast.
US FINANCIAL MARKET
CBS beats Wall St estimate for quarterly revenue
- CBS, which has hired two law firms to investigate sexual misconduct allegations against its Chief Executive Les Moonves, topped Wall Street’s quarterly revenue estimates, helped by higher ad sales.
- Overall revenue increased to $3.47 billion, up from $3.26 billion a year earlier, beating analysts’ average estimate of $3.46 billion. CBS said advertising revenue during the second quarter rose slightly to $1.32 billion.
- Affiliate and subscription fees revenue, which includes revenue from cable, satellite, and streaming TV providers, rose to $989 million from $848 million a year before.
- Net income was $400 million in the quarter, up from $397 million a year earlier.
Kraft Heinz tops estimates as higher pricing boosts U.S. sales
- Kraft Heinz topped quarterly profit and revenue estimates as the Tater Tots maker raised product prices and posted higher-than-expected sales from the United States, sending its shares up in early trading.
- The company said net sales rose 0.7% to $6.69 billion, topping estimates of $6.59 billion. Second-quarter sales from the United States fell 1.9% to $4.51 billion but topped the average analyst estimate of $4.43 billion.
- Net income fell to $756 million compared to $1.2 billion in the previous year, weighed by heightened COGS and SGA expenses due to integration and restructuring expenses, but ahead of estimates on a per share basis.
- The company said it still expects second-half organic sales to be higher than in the first half of the year but warned that earnings would now be evenly split across both halves due to higher input costs and spending on commercial investments.
Activision Blizzard’s quarterly profit beats on “Call of Duty” strength
- Activision Blizzard topped Wall Street estimates for quarterly profit, driven by sales of its blockbuster video game, “Call of Duty”, but forecast current-quarter and full-year revenue below expectations.
- The company, which is behind popular franchises such as “Skylanders”, said total adjusted revenue fell 2.3% to $1.39 billion in the quarter. Analysts on average had expected $1.38 billion.
- The video game publisher’s net income jumped to $402 million in the second quarter, from $243 million, a year earlier and ahead of consensus estimates.
- Activision said it expected third-quarter adjusted revenue of $1.62 billion and profit of 47 cents per share, below analysts’ average estimate of $1.87 billion and 66 cents per share.
Symantec cuts 8% of workforce, slashes revenue forecast
- Symantec will cut 8% of its global workforce to boost profit margins, the antivirus software maker said on Thursday, while also lowering its yearly revenue forecast as it closed fewer business deals than expected.
- Symantec’s overall revenue in the quarter slipped 1.6% to $1.2 billion, largely due to lower sales at its enterprise customer division that serves businesses and other organizations.
- Symantec reported a first-quarter net loss of $63 million, compared with a loss of $133 million a year earlier, beating estimates.
- The company employed more than 13,000 employees worldwide as of March 2017, and the workforce cuts translate to around 1,000 workers. Symantec expects the workforce reduction will reduce costs by $115 million annually.
- Symantec now expects adjusted revenue of between $4.67 billion and $4.79 billion for the year, down from its previous forecast of $4.76 billion to $4.90 billion. Analysts on average were expecting $4.84 billion.
Dish results beat estimates as subscriber losses slow
- U.S. satellite TV provider Dish Network reported better-than-expected quarterly profit and revenue on Friday, as the company lost fewer subscribers than expected.
- Revenue fell 5% to $3.46 billion. Analysts on average had expected revenue of $3.44 billion
- Dish shed a net 192,000 satellite customers during the second quarter, below analyst expectations for losses of 235,000 customers. Sling TV added 41,000 subscribers during the quarter, reaching a total of 2.34 million customers.
- Net income rose to $439 million in the second quarter from $40 million a year earlier.
Fluor Tops Earnings and Revenue Estimates
- Fluor posted revenues of $4.88 billion for the quarter, compared to year-ago revenues of $4.72 billion and surpassed the Zacks Consensus Estimate by 8.3%.
- The company won $5.4 billion worth of new contracts in the quarter compared to $3.2 billion in 2017, and ended with a backlog of $29.3 billion, up from $29.1 billion at the end of their previous quarter.
- Net income increased to $114.8 million compared to a loss of $24 million in the same period of 2017. Gross margin improved to 4% in the quarter, compared to a negative margin in 2017.
- The company maintained its full-year revenue and earnings guidance.
MasTec Tops Net Income, Revenues Miss
- Second quarter 2018 revenue was $1.62 billion, a 14% decrease compared with $1.89 billion for the same period last year, primarily due to expected timing variances in large project activity in the Oil & Gas segment. This was almost 10% below consensus estimates.
- Gross margin improved about 200 basis points to 15.5% and the company’s backlog increased to $7.7 billion, up $168 million sequentially and $2.5 billion year over year.
- Net income decreased to $80.5 million from $81.7 million a year earlier, slightly above estimates.
AIG quarterly profit falls 17% as general insurance business weighs
- American International Group reported a 17% fall in quarterly profit as its general insurance business failed to show improvement, missing analysts’ expectations.
- Adjusted pretax income from AIG’s general insurance business dropped 46% to $568 million, while underwriting income swung to a loss of $89 million from a $149 million profit a year ago.
- The combined ratio in AIG’s general insurance business rose to 101.3% from 97.7% a year ago, as more claims were paid than premiums earned because of severe and catastrophe-related losses.
- Net income fell to $937 million from $1.13 billion in the year-ago quarter. The second-quarter results included a $200 million restructuring charge related to “efficiency initiatives,” including compensation.
Take-Two tops revenue estimates as ‘Grand Theft Auto’ drives gains
- U.S. video game publisher Take-Two Interactive beat Wall Street targets for quarterly revenue, helped by the popularity of its “Grand Theft Auto” and “NBA 2K18” franchises.
- Take-Two reported adjusted revenue of $288.3 million in the quarter, comfortably above estimate of $258.4 million.
- The company’s first-quarter net income rose to $71.7 million, from $60.3 million a year earlier.
- Take-Two raised its adjusted revenue forecast for the fiscal year, to between $2.70 billion and $2.80 billion. Analysts were expecting $2.77 billion. Video game makers are typically known to provide conservative forecasts but almost always beat them.
GoPro stock seesaws after a narrower-than-expected loss
- Action-camera maker GoPro forecast current-quarter revenue above estimates and said it would launch three new cheaper cameras for the holiday season.
- Revenue fell 5% to $282.7 million but topped estimate of $270.2 million.
- The net loss widened to $37.3 million in the second quarter, from $30.5 million a year earlier. This was ahead of estimates after adjusting for items.
- GoPro, which said it would launch the three cameras at a price point of $199 and $299, forecast third-quarter revenue of $260 million to $280 million. GoPro is targeting fourth-quarter gross margin of 40% plus or minus 1 percentage point, up from 34% plus or minus 1 percentage point in the third and 31% in the reported quarter.
FleetCor Technologies Earnings Surpass Estimates
- FleetCor Technologies posted revenues of $584.99 million for the quarter compared to year-ago revenues of $541.24 million. However, this missed estimates by almost 2%
- The company processed 4.1 million fewer transactions at 691.1 million, down 1%, however, the revenues per transaction increased 9% to 85 cents from 78 cents a year earlier.
- Net income increased to $176.9 million from $130.9 million a year earlier due to an improved operating margin and a significantly lower tax bill. On a per share basis, this was ahead of estimates.
Shake Shack’s delayed restaurant openings weigh on revenue growth
- Shake Shack said that delays in new restaurant openings would slow revenue growth this year, disappointing Wall Street which was expecting the company to raise its guidance.
- Total revenue rose 27.3% to $116.3 million, beating the average analyst estimate of $111 million. Sales at Shake Shacks open for at least two years rose 1.1%, in line with what analysts had expected.
- The company said more than 70% of its 32 to 35 new restaurants will open in the second half of the year due to bottlenecks such as a prolonged permitting process as well as a shortage of labor and construction equipment.
- Net income increased 29.2% to $10.6 million compared to $11.0 million a year ago, exceeding Street estimates.
Healthcare Trust of America Matches Estimates
- Healthcare Trust of America posted revenues of $173.33 million for the quarter, compared to year-ago revenues of $139.88 million but missing consensus by 1.7%.
- Funds from Operations (FFO) grew 55.8%, to $84.4 million, compared to $54.2 million in the second quarter of 017. FFO per diluted share increased 33.3%, to $0.40 per diluted share, compared to Q2 2017.
- Same-Property Cash Net Operating Income (“NOI”) increased $1.9 million, or 2.6%, to $77.9 million, compared to Q2 2017. Excluding the MOBs located on its Forest Park Dallas campus, Same-Property Cash NOI growth would have been 3.1%.
- Net Income increased to $15.3 million, compared to a loss of $5.9 million in the second quarter of 2017.
Apple breaches $1 trillion stock market valuation
- Apple on Thursday became the first $1 trillion publicly listed U.S. company, crowning a decade-long rise fueled by its ubiquitous iPhone that transformed it from a niche player in personal computers into a global powerhouse spanning entertainment and communications.
- The tech company’s stock jumped 2.9% to end the day at $207.39, giving it a market capitalization of $1.002 trillion. During the session, Apple’s stock market value reached as much as $1.006 trillion.
- Apple has rallied about 9% since Tuesday when it reported June-quarter results above expectations and said it bought back $20 billion of its own shares. It was Apple’s best two-day run since April 2014.
US ECONOMY & POLITIC
- U.S. job growth slowed more than expected in July as employment in the transportation and utility sectors fell, but a drop in the unemployment rate suggested that the labor market was tightening.
- Nonfarm payrolls increased by 157,000 jobs last month. The unemployment rate fell one-tenth of a percentage point to 3.9% in July, even as more people entered the labor force in a sign of confidence in their job prospects.
- Economists had forecast nonfarm payrolls increasing by 190,000 jobs last month and the unemployment rate falling to 3.9%.
- Looking over a broader period, job growth appears stronger. Revised figures show employers added 248,000 jobs in June and 268,000 in May, a net upward revision of 59,000.
- Average hourly earnings increased seven cents, or 0.3%, in July after gaining 0.1% in June.
- Wages rose 2.7% from a year earlier in July, a modest pace.
U.S. Trade Deficit Widened in June for First Time in Four Months
- The U.S. trade deficit grew in June for the first time in four months as imports increased and the value of shipments overseas declined against a backdrop of escalating tensions with America’s trading partners.
- The gap widened 7.3% to $46.3 billion from a revised $43.2 billion in the prior month, Commerce Department data showed Friday. The median estimate of economists called for a June trade deficit of $46.5 billion.
- Exports dropped 0.7% to $213.8 billion, despite record overseas shipments of petroleum and industrial supplies and materials.
- Imports climbed 0.6% to $260.2 billion, boosted by pharmaceuticals, crude oil, chemicals and other industrial supplies.
- The trade gap data for July will be more closely watched for signs that developments related to President Donald Trump’s trade policies are taking a toll on the economy.
U.S. states vow to fight Trump rollback on auto emissions
- California and 18 other U.S. states promised to fight a Trump administration proposal to weaken fuel efficiency standards and force states into line, arguing the United States has an obligation to protect the environment for future generations.
- The administration billed the proposed rollback from Obama-era fuel efficiency standards as a way to help car companies and lower vehicle prices for consumers, but critics said the plan would accelerate climate change and increase fuel prices.
- The 19 states announced they would sue to halt the proposed rollback, touching off what will likely be a heated legal showdown, possibly making it to the Supreme Court. It could also become a polarizing issue in elections in November.
- Many U.S. states have adopted California’s emission rules, and together they make up about one-third of the U.S. auto market – making the stakes for the autos industry enormous.
EUROPE & WORLD
- China on Friday announced retaliatory tariffs on $60 billion worth of U.S. goods ranging from liquefied natural gas (LNG) to some aircraft and warned of further measures, signaling that it won’t back down in a protracted trade war with Washington.
- China’s finance ministry unveiled new sets of additional tariffs on 5,207 goods imported from the United States, ranging from 5 to 25%. Timing will depend on the actions of the United States, the Chinese Commerce Ministry said in a separate statement.
- Among U.S. products targeted were a wide range of agricultural and energy products such as beef and LNG. LNG’s inclusion marks a deployment by Beijing of one of its last major weapons from its energy and commodities arsenal in its fight with Washington.
China’s Unipec suspends U.S. oil imports as trade spat intensifies
- China’s Unipec, the trading arm of state oil major Sinopec, has suspended crude oil imports from the United States due to a growing trade spat between Washington and Beijing, three sources familiar with the situation said.
- It is not clear how long the temporary halt will last, but one of the sources said Unipec has no new bookings of U.S. crude until at least October.
- China’s crude oil imports from the United States reached an average of 334,880 bpd in the first eight months of this year, according to trade flows data on Thomson Reuters Eikon.
Pompeo says North Korea weapons work counter to denuclearization pledge
- Less than two months after a landmark U.S.-North Korea summit in Singapore, U.S. Secretary of State Mike Pompeo flew back to the city-state on Friday and said North Korea’s continued work on weapons programs was inconsistent with its leader’s commitment to denuclearize.
- Pompeo was asked en route to Singapore about his statement in the U.S. Senate last month that North Korea was continuing to make bomb fuel and reports that North Korea, led by Kim Jong Un, was building new missiles.
- On Monday, a senior U.S. official said U.S. spy satellites had detected renewed activity at the North Korean factory that produced the country’s first intercontinental ballistic missiles capable of reaching the United States.
The U.S. issues fresh North Korea-related sanctions: statement
- The United States on Friday issued a fresh round of North Korea-related sanctions, designating a Russian individual and three entities, including a Moscow-based bank and a Chinese trade company.
- The U.S. Treasury Department, in a statement on its website, named the Russian Commercial Bank Agrosoyuz, Pyongyang-based Korea Ungum Corp and Chinese-based Dandong Zhongsheng Industry & Trade Co Ltd, which it said was linked to North Korea’s Foreign Trade Bank.
Zimbabwe opposition leader to pursue legal challenge to election result
- Zimbabwe opposition leader Nelson Chamisa said on Friday that he would pursue all legal and constitutional means of challenging this week’s presidential election, which he lost to President Emmerson Mnangagwa.
- Mnangagwa polled 2.46 million votes against 2.15 million for Chamisa, the Zimbabwe Electoral Commission (ZEC) announced in the early hours of Friday morning.
TODAY in HISTORY
- Germany declared war on France. (1914)
- The National Basketball Association (NBA) was formed. (1949)
- The Iran-Contra hearings ended. (1987)
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