DAILY MARKET REPORTS
- The Dow and the S&P 500 were little changed, while the Nasdaq was firmly higher, propped up by the high-flying technology trio of Apple, Amazon, and Microsoft.
- The S&P tech sector was up marginally. Tech stocks have been at the center of a sharp recovery in the S&P since a market rout in February, driving the index close to its record high.
- Seven of the 11 main S&P sectors were higher. The materials sector led the gains as aluminum prices rose due to fresh US sanctions against Russia regarding their use of a nerve agent against a former spy.
- The number of Americans filing for unemployment benefits unexpectedly fell last week, suggesting that a strong economy was helping the labor market counter ongoing trade tensions.
- Sinclair dropped after Tribune Media ended its $3.9 billion deal to be acquired by Sinclair and filed suit. Tribune shares rose.
- Rite Aid fell 11% after the drugstore chain and U.S. grocer Albertsons agreed to terminate their merger agreement.
- Yelp rose more than 26% in early trading as revenue and profit easily surpassed estimates and management significantly raised guidance.
US FINANCIAL MARKET
- Twenty-First Century Fox’s quarterly profit and revenue topped targets, thanks to the popularity of edgy superhero movie “Deadpool 2” and as the company’s cable unit earned higher fees from distributors.
- Overall, Fox’s revenue jumped 17.7% to $7.94 billion, topping expectations of $7.56 billion.
- Fox’s filmed entertainment unit saw revenue jump some 27% to $2.3 billion, driven largely by the success of “Deadpool 2” which has grossed $730 million worldwide at the box office.
- Revenue from the cable division rose 13.8% and accounted for more than half of overall revenue. Affiliate fees climbed 12.3% to $3.57 billion.
- The Indian Premier League, a hugely popular cricket tournament airing on Fox’s Star India and watched by over a billion viewers, drove a 55% surge in international advertising revenue.
- Net income increased to $920 million from $476 million a year earlier and ahead of estimates.
Viacom’s Revenue Falls on Slump in Ad Sales, Filmed Entertainment
- Viacom’s revenue declined in the latest quarter as lower international sales from its filmed entertainment division, which includes Paramount Pictures, and advertising sales weighed on its top line.
- Revenue at Viacom fell 3.8% from the comparable quarter a year ago to $3.24 billion. Analysts expected revenue of $3.27 billion.
- Viacom’s media networks segment revenue fell 2% to $2.5 billion.
- Filmed entertainment revenue fell 9% to $772 million as its international division posted declines in revenue. Domestic affiliate revenue fell 3% to $978 million, while International affiliate revenue fell 2% to $175 million.
- Viacom’s profit fell 24% to $522 million but was above estimates.
Roku’s platform drives quarterly revenue beat
- Roku topped Wall Street estimates for quarterly revenue as the company added more subscribers to its ad-supported platform.
- Total net revenue rose to $156.8 million from $99.6 million, beating the average analyst estimate of $141.5 million.
- The company’s subscriber addition rose 46% in the quarter, with its platform adding 22 million active accounts.
- This helped platform revenue nearly double to $90.3 million in the quarter. However, revenue from its streaming devices business rose only 24% to $66.5 million.
- The company reported a profit of $526,000 in the second quarter compared with a loss of $15.5 million a year ago.
Yelp’s profit tops expectations as ad revenue jumps
- Yelp’s second-quarter results blew past Wall Street expectations, fueled by a 21% surge in advertising revenue. The online business reviews company raised its profit forecast for the year and its stock soared more than 25% in early trading.
- It posted revenue of $234.9 million in the period, exceeding forecasts of $231.9 million.
- Advertising revenue rose to $226.2 million from $187.7 million a year earlier.
- Net income increased 38% to $11 million, compared to $8 million a year earlier.
- For the current quarter, Yelp said it expects revenue in the range of $242 million to $246 million. That’s up from a previous forecast of $230 million to $233 million.
Booking Holdings Shares Fall on Lower Outlook, Earnings Delay
- Shares of Booking Holdings fell in pre-market trading after the travel company delayed the release of its second-quarter results by half a day and provided a lower-than-expected outlook for the current quarter.
- The company said revenue for the second quarter rose 20% to $3.5 billion, ahead of the consensus forecast of $3.44 billion.
- Net bookings equaled $23.9 billion, a 15% increase, and on par with analysts’ expectations.
- Room nights booked rose 12%, compared with a 21% rise a year earlier.
- Total gross travel bookings rose 14.9%, compared with a 16.4% increase a year ago.
- Net income for the second quarter was $977.4 million, compared with $720.2 million for the same quarter a year earlier.
- The online travel company said it expects adjusted earnings per share of $36.70 to $37.70 in the third quarter, compared with estimates of $39.79 a share analysts were looking for. It also guided for year-over-year revenue growth of 6% to 9%.
Monster Beverage Reports 2018 Second Quarter Financial Results
- Monster Beverage said it had revenues of $1.02 billion for the quarter, missing estimates but up significantly from year-ago revenues of $907.07 million.
- Gross margin declined to 61.1% from 64.3% a year earlier.
- The company’s profit totaled $270.12 million compared with $222.63 million in last year’s second quarter and marginally ahead of estimates on a per share basis.
Jack in the Box Reports Third Quarter FY 18 Results
- Jack in the Box’s stock was up more than 7% in the extended session, after the fast-food restaurant beat earnings and revenue estimates for its third quarter.
- The burger chain posted revenue of $188 million in the period, which beat Street forecasts of $184.5 million.
- This was down from $246 million a year ago due to the disposition of Qdoba in December.
- Same-store sales increased 0.6% in the quarter compared to a 1.6% decline in the same period of 2017.
- Net income increased 24% to $45.3 compared to $36.4 million, predominantly from changes to the United States tax code.
- This beat estimates on a per share basis.
Nektar Therapeutics Earnings Meet Estimates
- Nektar Therapeutics had revenues of $1.09 billion for the quarter, above estimates and up a staggering 3,051% from year-ago revenues of $34.59 million.
- Research and development expenses jumped almost 50% to $88.3 million, compared to $60.3 million in the same period of 2017.
- The company reported second-quarter net income of $971.5 million compared with a loss of $59.9 million in the year-ago period.
Hostess Sales Suffer as Walmart Rearranges Shelves
- Hostess Brands’ sales and profit fell short of expectations in the second quarter as Walmart devoted less shelf space to the snack maker’s products.
- Hostess said second-quarter revenue rose 6.2% to $215.8 million, compared with an estimate of $220.9 million from analysts.
- Comparable sales in the quarter through June fell 4% from a year earlier. Analysts had expected sales would remain flat.
- Net income fell to $24.6 million compared to $28.2 million a year ago.
- The company reduced its full-year guidance for earnings per share to a range of 52 to 58 cents, from a previous range of 65 to 70 cents a share.
Rite Aid and Albertsons terminate merger amid opposition to deal
- Drugstore chain Rite Aid and U.S. grocer Albertsons agreed to terminate their merger agreement, the companies said on Wednesday, a little over 10 days after a shareholder advisory firm opposed the deal.
- Institutional Shareholder Services had said that Rite Aid investors should vote down its $24 billion mergers with Albertsons saying the agreement was not going to give the chain’s shareholders a “fair ownership interest” in the combined company.
- Albertsons said it disagreed with the view that the U.S. grocer was not offering sufficient merger consideration to the shareholders of Rite Aid, who was to get 30% of the combined company under the terms of the agreement.
Tribune Media files suit terminates Sinclair tie-up deal
- Tribune Media terminated its $3.9 billion deal to be acquired by Sinclair Broadcast and filed suit after regulators objected to the acquisition that had received support from U.S. President Donald Trump.
- Tribune filed a lawsuit against Sinclair, the largest U.S. broadcast station owner, alleging material breach of contract 15 months after the merger was first announced.
- The Federal Communications Commission (FCC) said in July that Sinclair “did not fully disclose” facts about the merger, raising questions about whether the company “attempted to skirt the commission’s broadcast ownership rules.”
Tesla likely to face SEC investigation following Musk tweets amid debate of market manipulation
- U.S. regulators are asking Tesla why Chief Executive Elon Musk announced his plan to take the electric carmaker private on Twitter and whether his statement was truthful.
- Musk announced his plan on his personal Twitter account on Tuesday, and the SEC has asked Tesla about the matter, why it was disclosed on Twitter rather than in a regulatory filing and whether it believed investor-protection rules had been met.
- Using Twitter to announce materially important information is not common, but the SEC allows companies to use social media to announce key information in compliance with its fair disclosure rules if investors are alerted about which outlets will be used.
- Musk is a prolific tweeter and Tesla alerted investors in a 2013 SEC filing that they should follow Musk’s Twitter feed for “additional information” about the company. There is no reference to Musk’s Twitter account on the company’s investor relations page under “investor communication,” although Tesla’s Twitter feed is included.
Maersk, IBM said 94 organizations have joined blockchain trade platform
- Shipping group Maersk said on Thursday 94 companies and organizations have so far joined a blockchain platform developed with IBM aimed at boosting efficiency and limiting the enormous paper trail of global container shipping.
- Under its new strategy, which includes the creation of an industry-wide blockchain-based trading platform, Maersk aims to expand its transport and logistics business in areas such as freight forwarding and trade finance.
- It wants to provide end-to-end solutions for customers rather than just shipping a container from port to port. The industry has seen little innovation since the container was invented in the 1950s, and cross-border trade still leaves an enormous trail of paperwork and bureaucracy.
- The platform is still in the pilot phase and “is expected to be fully commercially available by the end of this year,” they said.
New York Plans to Cap Uber and Lyft
- New York moved to become the first city in the U.S. to cap ride-hailing services including Uber Technologies and Lyft, freezing new vehicle licenses for one year while it studies the fallout from the booming industry.
- The vote Wednesday by the New York City Council could cripple the growth of Uber and Lyft in their biggest U.S. market as both companies are heading toward eventual initial public offerings. The Silicon Valley companies’ businesses depend on recruiting as many drivers as they can to drive down fares and cut pickup times.
- Council members approved a package of bills after months of campaigning from taxi drivers and others in favor of the legislation and a challenge by the ride-hailing companies urging customers to oppose the bills. Mayor Bill de Blasio, who has championed the measures and unsuccessfully tried to rein in the services in 2015, said he would sign the legislation.
US ECONOMY & POLITIC
U.S. Jobless Claims Fell Last Week
- Initial jobless claims, a proxy for layoffs across the U.S., declined by 6,000 to a seasonally adjusted 213,000 in the week ended Aug. 4. Economists expected 220,000 new claims last week.
- Data can be volatile from week to week. The four-week moving average of claims, also fell, declining to 214,250.
- Still, Thursday’s report showed the number of claims workers made for longer than a week increased by 29,000 to 1,755,000 in the week ended July 28. The figure, also known as continuing claims, is reported with a one-week lag.
- The producer-price index, a measure of the prices businesses receive for their goods and services, was flat in July from a month earlier. When excluding the often-volatile food and energy categories, prices were up 0.1% in July from the prior month.
- Prices excluding food, energy and a volatile gauge of margins called trade services rose 0.3% last month.
- Economists had expected a 0.2% increase in overall prices, a 0.2% rise in prices excluding food and energy and a 0.3% climb for prices excluding food, energy and trade services.
- From a year earlier, overall prices grew 3.3% in July.
Pricey Housing Markets in West Are Cooling Off Most Quickly
- Western states experienced the sharpest decline for existing-home sales in the second quarter, a sign that rising prices, higher mortgage rates and, to a limited extent, the new tax law are weighing on pricier markets.
- Existing-home sales in the western region, including California, Washington, and Arizona, declined 4.1% in the second quarter compared with the first quarter. Sales in the Northeast were unchanged from the first quarter, while sales in the more affordable Midwest and South rose 1.6% and declined 2.7%, respectively.
- 26% of California households could afford to purchase a home at the median price of $596,730 in the second quarter, down from 31% in the first quarter, according to a separate report released Wednesday.
- In 2012, 56% of households could afford to purchase the median-priced home.
U.S. to Impose New Sanctions on Russia Over Nerve-Agent Attack in U.K.
- The U.S. unveiled a new series of sanctions on Moscow over a nerve-agent attack on a former Russian spy in the U.K., in a rare direct confrontation that could escalate into a broad series of diplomatic and economic measures between the two countries.
- The U.S. announcement Wednesday included an additional threat to follow through with the second round of measures in 90 days’ time if Russia doesn’t meet a list of three criteria.
- Officials said the first round of sanctions could prevent hundreds of millions of dollars of sophisticated U.S. equipment from reaching Russian state-owned companies and will require the U.S. to halt aid to Russia, except for urgent humanitarian assistance such as food and agricultural products.
Most Candidates Backed by Alexandria Ocasio-Cortez, Bernie Sanders Falter
- The Democrats’ vocal, liberal wing sought to ride rising party enthusiasm to upset victories over more-centrist candidates or incumbents in Tuesday’s primaries across four states. But it scored only a few wins.
- Instead, a big winner of the night was Emily’s List, a Democratic group whose candidates have at times challenged those backed by liberal firebrands Sanders and Ocasio-Cortez, whose upset primary victory against Rep. Crowley propelled her to national recognition.
- Of the Tuesday races that have been called so far, 27 of the 28 candidates supported by Emily’s List won their races, said Stephanie Schriock, president of the group, which backs only women.
EUROPE & WORLD
Adidas Earnings More Than Double Amid Fresh Nike Challenge
- Adidas’s net income more than doubled in the quarter, after demand for merchandise from the soccer World Cup boosted sales growth in North America and China.
- Profit growth outpaced the increase in sales revenue, which rose 4.4% to €5.26 billion.
- In North America, the company generated revenues of €1.08 billion, up 15.6% in currency-neutral terms.
- Adidas’ revenue in Asia rose nearly 19% to €1.73 billion, driven by a 26% increase in China.
- Western European revenues were nearly unchanged at €1.4 billion.
- Sales of Adidas branded products rose 12% on the back of strong demand for training, running and soccer merchandise.
- Adidas’s net income rose to €396 million ($460 million) in the second quarter, up from €158 million in the comparable period of 2017.
- Revenues increased 4.5% sequentially and 18.1% on a year-over-year basis (44% on an FX neutral basis) to $335.4 million, surpassing estimates of $331.8 million.
- The company’s strong performance across all geographies drove year-over-year top-line growth.
- GMV of $3.13 billion increased 15.2% year over year (35.9% on an FX neutral basis) and 0.3% sequentially.
- This was primarily attributed to increasing mobile penetration which reached 55% in the reported quarter.
- Additionally, the company’s mobile-point-of-sale business gained traction during the second quarter and accounted for 43.3% of the total off-platform payment volume which remained positive throughout the quarter.
- The company reported operating loss of $28.2 million against the year-ago quarter profit of $30 million.
China’s Tariff Turnaround: U.S. Crude Oil Drops Off the Target List
- As China made good on its threat to impose 25% tariffs on $16 billion worth of U.S. imports, one big-ticket item originally on its hit list was conspicuously missing: crude oil.
- Oil had been one of a slate of targets China listed in June for tariffs to counter those the Trump administration threatened on Chinese imports. The gambit jeopardized a budding relationship: Over the past two years, China has become the biggest buyer of U.S. crude-oil exports, last year taking a fifth of the total.
- But oil was off Wednesday’s final list.
- China’s Ministry of Commerce didn’t explain the omission and didn’t immediately respond to questions.
- Analysts and industry insiders said the change could signal that China is reassessing its bluster, given its slowing economy, the ease with which crude sellers can find new buyers—and, most of all, its climbing reliance on foreign oil.
- China depends on imports for 70% of its energy needs, and the IEA forecasts that will climb to 80% by 2040.
U.S. Sanctions Put Russia on Edge
- Russian officials and companies were bracing for further economic pain Thursday, as the U.S. decision to punish the Kremlin for an alleged nerve-agent attack in the U.K. diminished hopes of a bilateral thaw.
- The ruble registered the steepest daily decline in almost two years, losing as much as 5% against the dollar since the State Department said Wednesday it would impose new sanctions on Russia later this month over the incident.
- Russian blue-chip stocks plunged as much as 9%, led by state banks and national airline Aeroflot, which risk losing access to U.S. markets if the sanctions are deepened.
- Although the first tranche of sanctions would focus on Russia’s defense sector and have a limited initial effect, investors and firms are preparing for a downward spiral of measures and countermeasures that would hurt the wider economy.
- The second set, which could be triggered by the end of the year, would include the downgrade or suspension of diplomatic relations, suspension of flights between the U.S. and Russia, and restriction of imports of Russian goods. A separate set of financial measures against Russia being considered in Congress would reduce the country’s ability to raise capital abroad.
Venezuela’s President Pushes Crackdown in Wake of Drone Attack
- Two prominent Venezuelan lawmakers face treason and terrorism charges as President Nicolas Maduro broadens a crackdown on political rivals he has accused of organizing an assassination plot shaking the troubled country.
- Authorities handed down arrest orders in recent days as Venezuelans tried to make sense of the murky details surrounding the two blasts, caused by a pair of drones mounted with C-4 explosives that purportedly targeted Mr. Maduro Saturday.
- On Wednesday, Venezuela’s government lifted the immunity from prosecution usually granted to Venezuelan lawmakers to try Julio Borges, who has been key in lobbying foreign governments to slap sanctions on the Maduro administration.
- The move came after a 29-year-old congressman, Juan Requesens, was detained by several armed officers of the Bolivarian Intelligence Service. Venezuela’s government has accused the two congressmen of being part of a network of at least 19 conspirators they say coordinated the attack. More than seven people, including Mr. Requesens, have been arrested.
Samsung to Spend Over $22 Billion on AI, Auto Tech, and 5G
- The Samsung conglomerate said it will invest more than $22 billion over the next three years to target such areas as artificial intelligence and auto-technology components, as it seeks out growth drivers beyond phones and memory chips.
- Samsung said it would invest heavily in four key areas through 2020. Auto tech, artificial intelligence, and new fifth-generation, or 5G, cellular technology—all of which that fall under Samsung’s umbrella—will draw funding, as will its nascent drug companies specializing in contract manufacturing and biosimilar medications.
- When combined with previously announced investments, the company will spend 180 trillion won, or about $161 billion, over the three-year period, a total that includes commitments for semiconductors and displays. Roughly $100 billion will go to capital expenditures.
TODAY in HISTORY
- Jesse Owens became the first American to win four gold medals in one Olympics. (1936)
- The United States exploded a nuclear bomb over Nagasaki, Japan, killing an estimated 74,000 people. (1945)
- Vice president Gerald Ford was sworn in as president following Nixon’s resignation. (1974)
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