DAILY MARKET REPORTS
- U.S. stocks were flat on Wednesday after China retaliated to Trump administration’s latest tariffs, escalating trade tensions and muting strong corporate earnings.
- China said it was slapping additional import tariffs of 25% on $16 billion worth of U.S. goods, responding in equal measure to the United States’ new round of tariffs.
- The S&P 500 index slipped after coming within spitting distance of a record high following a four-day rise.
- However, the healthcare sector got a boost from a 3.6% gain in CVS Health and a 2.8% rise in Aetna. CVS beat analysts’ estimates for adjusted quarterly profit as it sold more prescription drugs at its stores.
- Walt Disney fell 1.2% and was the biggest decliner on the Dow after its quarterly profit missed estimates.
- Mylan’s 6.8% drop was the most on the benchmark S&P 500 after the drugmaker reported quarterly results and said it was actively evaluating a “wide range of alternatives”.
- Michael Kors gained after the fashion house topped forecasts for quarterly profit and revenue and raised its full-year forecast.
- With the second-quarter earnings season winding down, 79% of S&P 500 companies have topped estimates. If the beat rate holds, it will be the highest on record, dating back to the first quarter of 1994.
US FINANCIAL MARKET
- Walt Disney missed Wall Street profit targets as it lost more subscribers at its cable sports network ESPN and invested in technology and programming to try and capture audiences migrating to streaming television.
- Total revenue rose 7% to $15.23 billion but missed expectations of $15.34 billion.
- Disney said its studio revenue grew 20% year over year to $2.88 billion, driven by the strong performances of Marvel’s “Avengers: Infinity War” and Pixar’s “Incredibles 2.”
- Revenue at from Media and networks was $6.2 billion vs. $6.1 billion forecasted.
- Revenue at the Parks and resorts segment was $5.2 billion vs. $5.3 billion forecasted, while the Consumer and interactive segment made $1.0 billion vs. $1.1 billion as forecasted.
- While the parks business posted a 6% year-over-year increase in revenue, the segment saw operating income surge 15% year-over-year to $1.34 billion. Disney said the surge in operating income was driven by higher guest spending amid higher average ticket prices and room rates as well as increases in food, beverage and merchandise spending.
- Disney’s broadcasting business saw a stunning 43% year-over-year growth in operating income to $361 million amid higher program sales, affiliate revenue growth and network advertising revenue.
- Net income rose to $2.92 billion in the quarter, compared with $2.37 billion a year ago, missing estimates on a per share basis.
CVS Health profit beats on higher prescription drug sales
- Drugstore retailer CVS Health’s adjusted quarterly profit topped estimates as it sold more prescription drugs at its stores, sending its shares up 3.4% in premarket trading.
- Net revenue rose 2% to $46.71 billion, above analysts’ average estimate of $46.34 billion.
- Same-store sales rose 5.9% and pharmacy same-store sales increased 8.3% in the quarter, driven by an increase in prescription volumes.
- Net loss was $2.56 billion in the second quarter, compared with a profit of $1.10 billion a year earlier.
- CVS said it took a $3.9 billion goodwill impairment charge in the reported quarter related to its retail business.
Mylan misses profit estimates; considers strategic alternatives
- Drugmaker Mylan said it was evaluating a wide range of alternatives and reported a quarterly profit that fell far short of estimates, sending its shares down about 4% before the bell.
- Total revenue fell about 6% to $2.76 billion and missed the average analyst estimate of $2.96 billion.
- Sales in North America fell 22%.
- The company’s second-quarter profit slumped 87% to $37.5 million compared to $297 million a year ago as gross margin plummeted to 34.3% from 41.4% a year earlier.
Jimmy Choo helps Michael Kors strut past estimates raise forecast
- Fashion house Michael Kors’s efforts to revamp stores as well as its high-end shoe brand Jimmy Choo paid off as the company topped quarterly profit estimates and raised its full-year earnings forecast.
- Total revenue rose 26.3% to $1.20 billion, beating the average analyst estimate of $1.14 billion.
- Jimmy Choo sales came in at $172.7 million, comfortably beating analysts’ average estimate of $143.65 million.
- Net income rose to $186.4 million in the quarter, from $125.5 million a year earlier.
- The company raised its full-year earnings forecast range to $4.90 to $5.00 per share, above analysts’ estimates of $4.77.
Snap beats on revenue, loses users for the first time
- Snap reported higher-than-expected quarterly revenue but its first-ever drop in daily Snapchat users.
- Its revenue was $262 million in the second quarter, beating the average estimate of $250.43 million, as average revenue per user surged to $1.40 from $1.05 a year ago.
- But daily Snapchat users fell to 188 million in the second quarter from 191 million in the prior quarter, Snap said, which could heighten investor anxiety about how competition and privacy issues are affecting Snap and its peers.
- Snap lost about 1 million users in each of its three geographic reporting regions: North America, Europe and rest of world.
- Snap lost $353 million in the quarter, down 20% from a $443 million loss a year ago and ahead of estimates after adjustments.
Tutor Perini Surpasses Earnings Estimates
- Tutor Perini posted revenues of $1.12 billion for the quarter, compared to year-ago revenues of $1.25 billion.
- Analysts expected $1.17 billion.
- Gross margin improved to 10.6% compared to 8.2% a year earlier.
- Backlog ended the quarter at $8.7 billion, up 15% from the 7.6 billion in 2017.
- Net income declined to $24.8 million compared to $30.1 million in the same period of 2017 as the previous year had a legal settlement of $37 million. After adjustments, this almost doubled consensus.
New York Times digital subscriber growth slows, shares drop
- The New York Times reported a better-than-expected quarterly profit but the company added fewer paid digital subscribers, sending its shares down about 5% in premarket trading.
- Revenue rose to $414.6 million from $407.1 million, above estimates of $412.3 million.
- Digital advertising revenue fell 7.5% to $51 million, hurt by a fall in display advertising.
- The company added 109,000 paid digital subscribers in the second quarter, compared with 114,000 a year earlier, when it offered heavy discounts for annual subscriptions.
- Net income jumped 51% to $23.6 million in the quarter.
Sinclair Profit Drops on Higher Expenses
- Sinclair Broadcast Group reported a drop in profit amid uncertainty for the company’s deal to acquire Tribune Media.
- Sinclair reported revenue of $730.1 million, up 12% from the comparable quarter a year ago.
- Media revenue, rose 9.2% to $695.9 million.
- Sinclair said revenue from political advertising climbed to $28 million from $5 million a year ago.
- Sinclair reported earnings of $28 million, down 37% from a year earlier.
- The company said its profit was cut by gross ticking fee costs of $39 million related to the Tribune deal. Other expenses more than doubled from a year ago to $105.6 million.
Papa John’s earnings forecast slips on public spat with founder
- Papa John’s posted a second-quarter comparable sales decline of 6.1% in North America and estimated a further 7 to 10% drop in the current quarter as the pizza chain’s spat with its founder hurts profits.
- Revenue declined 6.2% to $407.9 million compared to $434.8 million a year ago.
- Net income 50% to $11.8 billion compared to $23.5 billion a year ago.
- The company said it now expected to earn $1.30 to $1.80 per share, down from its previous estimate of $2.40 to $2.60.
Wendy’s North America same-restaurant sales top estimates
- U.S. burger chain Wendy’s topped targets for sales at established outlets, led by the popularity of its value-menu offerings.
- Overall revenue rose nearly 4% to $411 million, topping analysts’ estimates of $407.7 million.
- Sales at restaurants in North America open at least for a year rose 1.9% in the second quarter of 2018.
- Analysts had expected a 1.3% increase.
- The company reported second-quarter net income of $29.9 million, compared with a loss of $1.9 million a year earlier.
LendingClub tops profit estimates as loans, rates increase
- U.S. online lender LendingClub topped Wall Street estimates for quarterly profit as it lent more at higher rates.
- Total revenue rose to $177 million from $140 million but a 44% jump in operating expenses contributed to a bigger loss for the San Francisco-based online lender.
- LendingClub said transaction fees rose 27% to $136 million in the second quarter, while it originated $2.82 billion in loans, up 31% from a year earlier.
- Net loss widened to $60.9 million from $25.5 million a year earlier.
Builders FirstSource Reports Second Quarter 2018 Results
- Revenue at the construction company increased 13.4% to $2.1 billion, compared to $1.8 billion a year ago and ahead of estimates of $2.06 billion.
- Gross margin declined to 23% from 25% a year earlier on rising lumber and labor costs.
- Net income increased to $56.6 million compared to $37.9 million, primarily due to tax reform passed in December.
Match boosts revenue forecast as Tinder lures more paying users
- Dating app Tinder snagged thousands of paying users in the second quarter, helping its parent Match Group beat Wall Street profit targets and raise its yearly revenue forecast on Tuesday.
- Match’s second-quarter revenue jumped 36% to $421 million, topping financial analysts’ average estimate of $412.8 million
- Net profit surged to $132.5 million from $51.4 million a year earlier.
Tesla board evaluating CEO Musk’s idea to take company private
- Tesla said its board is evaluating Chief Executive Elon Musk’s idea of taking the company private after he brought the matter up for discussion last week.
- Musk took Tesla shareholders and the stock market by surprise on Tuesday by announcing on Twitter he was considering taking the loss-making electric car-maker private at $420 a share. In his first tweet, he said funding was secured but provided no details.
- In a statement on Tesla’s website on Wednesday, six of Tesla’s nine directors said the board had met several times over the last week to discuss the idea and was “taking the appropriate next steps to evaluate this.
US ECONOMY & POLITIC
- The United States will begin collecting tariffs on another $16 billion in Chinese goods on Aug. 23, the U.S. Trade Representative’s office said on Tuesday as it published a final tariff list targeting 279 import product lines.
- USTR said that only five product lines were deleted from a list initially proposed on June 15, but semiconductors, among the largest categories, remained on the list.
- The latest list brings to about $50 billion in goods that now face a 25% tariff that U.S. President Donald Trump has imposed on Chinese imports in an escalating trade war over China’s intellectual property practices and industrial subsidy policies.
Weekly mortgage applications fall as home prices climb
- Total mortgage application volume fell 3% from the previous week, and 17% from a year ago.
- The market has been especially tough on new homebuyers, with data showing a downward trend in purchase volume. Applications to purchase a home fell 2% for the week and were also down 2% from a year ago.
- Mortgage applications to refinance a home loan have been falling, and they continued the downward trend, dipping 5% from the previous week to the lowest point since December 2000. That’s down 35% year over year.
- The average interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) remained unchanged at 4.84%, with points unchanged at 0.45 for loans with a 20% down payment. In June, home prices rose 6.8% from a year ago.
High-Stakes Races in Ohio and Kansas Are Too Close to Call
- Two high-stakes elections in Ohio and Kansas during the homestretch of primary season were too close to call late Tuesday, foreshadowing the fierce battle to come around the nation in November’s midterms.
- In an Ohio House district that President Trump won by 11 percentage points in 2016, Republican Troy Balderson claimed a razor-thin victory over Democrat Danny O’Connor, although the Associated Press said the race is too close to call.
- Ohio Secretary of State Jon Husted reported late Tuesday night that according to unofficial results, Mr. Balderson led Mr. O’Connor by 1,754 votes. Mr. Husted added there are 3,435 provisional ballots and 5,048 absentee ballots outstanding.
- The closely watched Republican gubernatorial primary in Kansas also was headed to a photo finish with Kris Kobach, the state’s controversial secretary of state, running neck and neck against Gov. Jeff Colyer.
Missouri Overturns ‘Right-to-Work’ Law in Referendum
- Missouri voters on Tuesday overturned a “right-to-work” law in a referendum, giving organized labor a substantial victory.
- The vote to undo the law passed in 2017 by the Republican-led Legislature was called by the Associated Press.
- With nearly two-thirds of precincts reporting results, the vote was 64% to 36% against, according to the Missouri secretary of state’s website.
- The law would have allowed private-sector workers to opt out of paying union fees in unionized workplaces. A union-backed group outspent supporters of the law by nearly 5 to 1 on advertising and other outreach efforts, according to the latest filings.
New York Congressman Chris Collins Arrested on Insider-Trading Charges
- Rep. Christopher Collins, a Republican congressman from New York, was arrested Wednesday and charged with insider trading related to an Australian biotechnology company.
- Federal prosecutors accused Mr. Collins of sharing with his son the results of a failed drug trial completed by Innate Immunotherapeutics.
- Mr. Collins was a member of Innate’s board of directors and one of the company’s largest shareholders, the indictment said.
EUROPE & WORLD
China to slap additional tariffs on $16 billion worth of U.S. goods
- China is slapping additional import tariffs of 25% on $16 billion worth of U.S. goods ranging from oil and steel products to autos and medical equipment, the commerce ministry said, as the world’s two largest economies escalate their trade dispute.
Toshiba posts record quarterly profit on-chip sale, outlook unclear
- Japan’s Toshiba reported a record quarterly net profit on Wednesday, thanks to the $18 billion sale of its flash memory chip business earlier this year to a consortium led by U.S. private equity firm Bain Capital.
- Toshiba posted a net profit of 1.02 trillion yen ($9.16 billion) for the quarter, up from 50.33 billion yen a year before, as it booked 966 billion yen from the deal to sell the No. 2 producer of NAND chips. That was above consensus of 570.29 billion yen.
- Toshiba maintained its profit forecast for the year at 1.07 trillion yen, versus a consensus of 1.11 trillion yen from 12 analysts.
Glencore Notches Record Profit on Commodities Recovery
- Swiss mining-and-trading giant Glencore posted record first-half earnings, fueled by rising commodity prices and cementing its comeback amid a volatile year in which its important copper businesses in Congo has drawn fierce scrutiny.
- Revenue rose 8% to $108.6 billion. Earnings before interest, taxes, depreciation, and amortization totaled $8.3 billion, up 23% from last year to reach a record for a six-month period, but was slightly below analysts’ consensus expectations.
- Glencore, one of the world’s largest coal, copper and zinc producers, reported net income of $2.78 billion for the first six months of the year, up 13% from $2.45 billion.
- China’s exports growth unexpectedly accelerated in July despite fresh U.S. tariffs, while its trade surplus with the United States remained near record highs as Beijing and Washington ramped up a bitter dispute that has rattled financial markets.
- Imports also rose much faster in July thanks to still solid domestic demand, official data showed on Wednesday, with purchases of commodities like copper and iron ore rising from June.
- China’s July exports rose 12.2% from a year earlier, beating forecasts for a 10% increase, and up from an 11.2% gain in June.
- Imports grew 27.3% in July, beating a forecast of 16.2% growth, and compared with a 14.1% rise in June.
- In July the surplus with the United States was at $28.09 billion, down a touch from $28.93 billion in June, according to Reuters calculations based on customs data released on Wednesday.
China soybean prices spike as trade war worries feed supply fears
- China’s soybean and soymeal prices jumped on Wednesday, with beans posting their biggest daily gain in a decade, as data showing a drop in soybean imports stirred supply concerns as a bitter trade dispute between Washington and Beijing plays out.
- The most actively traded soybean futures on the Dalian Commodity Exchange (DCE) for January delivery rallied 3.95% to close at 3,789 yuan ($555.93) per ton on Wednesday, their biggest one-day gain since 2008.
- Beijing hit U.S. shipments of soybeans with a 25% tariff on July 6 in retaliation for a similar move by Washington as part of the tit-for-tat trade dispute. The United States is China’s No. 2 supplier of soybeans, which are processed to make cooking oil and animal feed, after Brazil.
China, Germany defend business with Iran in face of U.S. threats
- China and Germany defended their business ties with Iran on Wednesday in the face of President Donald Trump’s warning that any companies trading with the Islamic Republic would be barred from the United States.
- The comments from Beijing and Berlin signaled growing anger from partners of the United States, which reimposed strict sanctions against Iran on Tuesday, over its threat to penalize businesses from third countries that continue to operate there.
- The German government said U.S. sanctions against Iran that have an extra-territorial effect violate international law, and Germany expects Washington to consider European interests when coming up with such sanctions.
- Iran has dismissed a last-minute offer from the Trump administration for talks, saying it could not negotiate while Washington had reneged on the 2015 deal to lift sanctions.
Saudi Arabia is selling off its Canadian assets as row intensifies, the report says
- Saudi Arabia’s diplomatic spat with Canada looks set to escalate following a report that the Middle Eastern country has instructed its brokers to sell Canadian assets.
- Anger between the two countries erupted last week when Canadian officials urged Riyadh to “immediately release” women’s rights activists Samar Badawi and Nassima al-Sadah.
- Now the Financial Times has reported that the Saudi central bank and state pension funds have instructed third-party asset managers to sell Canadian bonds, stocks, and cash. The selling is said to have begun on Tuesday.
- In a sign of its rage, Saudi Arabia has already expelled the Canadian ambassador, frozen trade and investment between Riyadh and Ottawa and halted flights to and from Canada.
TODAY in HISTORY
- English forces attacked the Spanish Armada, permanently crippling Spain’s “invincible” fleet. (1588)
- Thomas Edison patented the mimeograph machine. (1876)
- President Nixon announced he would resign the following day as a result of the Watergate scandal. (1974)
This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S&P 500, are unmanaged and may not be invested into directly. Sources: Reuters, Bloomberg, the Wall Street Journal.
Content posted by third parties on this site is screened in order to protect clients’ privacy and comply with regulatory requirements. Content containing sensitive personal information, inappropriate language, information about specific investments, misleading information, information about other companies or websites, or information related to litigation will be removed. Content posted by third-parties on this site remains the responsibility of the party posting the content and is not adopted or endorsed by Pence Wealth Management or LPL Financial. Any opinions or statements posted by third parties are their own and may not be representative of the experience of others and are not indicative of future performance or success. Third party content on this site does not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy or completeness.