DAILY MARKET REPORTS
- The benchmark S&P 500 and the Dow Jones Industrial Average were flat on Wednesday, as gains in energy companies helped offset a slide in technology stocks, which weighed on the Nasdaq.
- Shares of Apple, Twitter, Alphabet, and Amazon.com fell between 0.8 and 2.8% after executives at these companies, among others, were asked to testify about consumer data privacy before a U.S. Senate panel on Sept. 26.
- The Philadelphia Semiconductor index was down 2.51% after companies related to memory chips came under pressure after Goldman Sachs warned of lower prices for such chips due to an oversupply of DRAM and NAND chips.
- Micron fell 5%, the most on the S&P after Goldman Sachs cut its rating on the stock.
- Chip equipment makers slid, led by a 5.3% drop in ASML and a 4.3% drop in Entegris.
- The Federal Reserve’s “Beige Book”, a summary of the state of U.S. businesses across the central bank’s 12 regional districts for the month of August, is expected at 2 p.m. ET.
US FINANCIAL MARKET
- Apple is expected to blast further past the $1,000 price barrier when it launches new iPhones today, but Wall Street is most intrigued by how deep into its larger-than-ever lineup price hikes may go.
- The new top model – likely called the XS Max – is expected to have a 6.5-inch (16.5-cm) screen with an edge-to-edge OLED display, and Wall Street is targeting a price of $1,049 or $1,099 versus the current $999 base price for the iPhone X.
- The second phone with a 5.8-inch OLED display would be similar to the iPhone X but with an improved processor, and according to the sitemap will be called iPhone XS.
- The third expected model with a 6.1-inch display, potentially called iPhone Xr, is expected to use lower-cost LCD technology, but look more like last year’s iPhone X than the 8, which itself looked similar to phones going back to 2014’s iPhone 6.
- In addition to new models, Apple is also expected to unveil a gold-color option for the two new OLED-screened phones, a new version of its wireless Airpods earbuds with wireless charging and a new version of its Apple Watch with a bigger display.
Big Tech Companies to Appear Before Senate to Discuss Privacy
- The Senate Commerce Committee will hold a high-profile hearing on the privacy practices of big tech companies later this month, signaling intensifying government interest in a thorny issue for the industry.
- Google, Amazon, Twitter, and Apple will all send privacy executives to testify at the Senate hearing, along with telecommunications firms AT&T and Charter Communications.
- Lawmakers are likely to try to pin down the executives on how they make use of potentially sensitive information such as users’ location data.
- The hearing also will give the companies a chance to defend themselves, as well as lay out what they think lawmakers and the companies should and shouldn’t do to address concerns.
FDA Chief Considers Ban of All Flavored E-Cigarettes
- Calling a surge in teen use of e-cigarettes an epidemic, the head of the Food and Drug Administration says he is considering pulling all flavored e-cigarettes from the U.S. market.
- After years of declining U.S. smoking rates, sales of e-cigarettes have jumped in the past year, fueled in part by online startups selling vaporizers and nicotine-laced liquids.
- The most popular brand, Juul, sells refills with mango, cucumber and creme flavors. Each $4 pod contains as much nicotine as a pack of cigarettes.
- Juul’s vaporizers, introduced in 2015, have become a teen status symbol and a growing problem in U.S. schools, capturing 72% of the estimated $2.3 billion annual U.S. e-cigarette market.
- The FDA said it was sending letters to Juul and other top e-cigarette manufacturers, asking them to respond within 60 days with convincing plans for reducing teen use or risk having their products yanked.
FCC pauses review of T-Mobile, Sprint merger
- The Federal Communications Commission, which is reviewing the planned merger of T-Mobile and Sprint, said it has paused its review clock to give the agency time to analyze new and anticipated submissions from the companies.
- The FCC said it was pausing the informal 180-day review clock, now at day 55, because of two new and complicated submissions from the companies and a third submission that the FCC has not yet received.
- The FCC said it paused the informal “shot clock” because of a large, complex submission on benefits that the proposed merger would create and a separate submission on network expansion.
Tech Firms Face Prospect of Fines in Europe Over Terror Propaganda
- The European Union is proposing massive fines for online providers that aren’t fast enough in removing terrorist content from their services, raising pressure on big tech firms like Facebook and Google that have backed voluntary approaches.
- The bloc’s executive arm proposed new legislation that would create a legal obligation for any online service to remove terrorist content within an hour of notification, and to install automated systems to prevent removed content from popping up again.
- Tech firms said Wednesday that they support the EU’s goal of rapidly removing all terrorist content from their services.
Boeing 737 production rebounds as planemaker extends lead over Airbus
- Boeing bounced back from a production snarl to deliver 48 single-aisle 737s in August and extended its lead over rival Airbus for new orders.
- Boeing’s August 737 deliveries were an improvement from the 29 delivered in July, which was one of its lowest monthly tallies in years, due to ongoing supplier delays that caused unfinished aircraft to pile up at its Renton, Washington plant.
- The world’s biggest planemaker said it was making “good progress” toward fixing the logjam by year end.
- Boeing also said its 2018 net orders totaled 581 aircraft through August, up from 487 toward the end of July.
Discovery jumps 7% after announcing it will exclusively stream shows on Hulu
- Shares of Discovery jumped nearly 7% Wednesday after the media company announced it partnered with Hulu.
- Through the partnership, Hulu gains the exclusive streaming rights for thousands of episodes of Discovery shows like “Deadliest Catch,” “Say Yes to the Dress,” “Naked and Afraid” and cooking competition “Chopped.”
- The deal also includes a tie-up with Oprah Winfrey’s network, OWN, to stream some of the network’s scripted shows on Hulu and brings five Discovery networks to Hulu’s Live TV offering.
Citigroup boosts guidance to reflect improved tax outlook
- Citigroup’s chief financial officer said the bank expects to exceed its previous targets for returns on shareholder equity and cost savings, helped in part by tax reform.
- Speaking at a conference John Gerspach said the bank now expects a return on average tangible common shareholders equity to be 13.5% by 2020 and 16% long-term, up from previous guidance of about 11%.
- The bank also raised its cost savings estimate by $300 million to $2.8 billion by 2020 and said it expects a new tax rate of below 24% over time.
Macy’s boosts holiday season hiring for online business
- Macy’s said it would hire 5,500 more seasonal workers over last year at its online fulfillment centers to handle the expected avalanche of orders for the holiday season, as it fends off competition from Walmart and Amazon.
- The department store chain said it would hire a total of 80,000 temporary workers for the upcoming holiday shopping season, with 23,500 located at fulfillment centers across the United States.
- The company said it expected a strong holiday shopping season, noting the rest of the hires would be based in call centers, shop floors at Macy’s and Bloomingdale’s, and to support its annual Thanksgiving Day Parade in New York.
FedEx to hire 55,000 workers, raise hours for holiday season
- FedEx said it would hire about 55,000 workers and increase hours for some existing employees for the holiday shopping season as the U.S. package delivery company prepares to cater to the expected jump in shipments due to online shopping boom.
- The company said it would also expand its U.S. ground-shipping operations to six and seven days per week for the busiest shopping season of the year.
- FedEx said the six-day ground-shipping operations would be extended throughout its U.S. network all-year round.
US ECONOMY & POLITIC
U.S. Business Prices Continue to Pull Back at the End of Summer
- The producer-price index, a measure of the prices businesses receive for their goods and services, declined a seasonally adjusted 0.1% in August from a month earlier, the first monthly drop since February 2017.
- Economists had expected price growth in August, the second-straight month business prices came in weaker than expected.
- The recent downtrend appears to be driven, in part, by a volatile gauge of margins called trade services
- When excluding this measure, along with food and energy, two other volatile categories, prices rose in August.
- Canada is ready to offer the United States limited access to the Canadian dairy market as a concession in negotiations to rework the North American Free Trade Agreement, two Canadian sources with direct knowledge of Ottawa’s negotiating strategy said.
- Canada’s protected dairy industry is one of three sticking points in NAFTA talks between the two countries, along with a system for settling trade disputes and cultural protections for Canadian media firms.
- Canada’s politically powerful dairy farmers are likely to resist changes to the price controls and high tariffs that protect them from foreign competition.
- But as an Oct. 1 deadline to renegotiate NAFTA looms, Canada is prepared to offer similar concessions on the dairy industry to those that it agreed to in free trade deals with the European Union and Pacific Rim nations.
- U.S. dairy farmers have long demanded more access to Canada and are unhappy about a Canadian decision – referred to as “Class 7” – to allow farmers to sell milk protein products to Canada’s processors at a lower price, cutting off American supplies.
States Prepare for ‘Storm of a Lifetime’ as Hurricane Florence Looms
- The Category 4 storm was expected to start hitting the North and South Carolina coasts sometime Thursday or Friday and should make landfall near Wilmington, N.C., early Saturday morning.
- The slow-moving storm, with maximum sustained winds of 130 miles per hour, is expected to gain strength as it approaches the U.S. and was 530 miles southeast of Cape Fear, N.C., early Wednesday morning.
- Widespread flooding is expected, with rainfall of up to 40 inches possible in some places.
- The hurricane could be the strongest to hit the Carolinas since Hugo, a deadly Category 4 storm that struck in 1989. The Carolinas’ population has grown by about five million since then.
EUROPE & WORLD
- Chinese auto sales fell in August for the second successive month, as market saturation and weak consumer confidence combined to slow the world’s biggest car market.
- Vehicle sales fell 3.8% to 2.1 million last month, following a 4% drop in July.
- Ford said its China sales fell 36% year-over-year to 62,683 vehicles, continuing a string of bad results for the automaker.
- Sales at SAIC-GM, which builds Buick, Cadillac, and Chevrolet vehicles, were down 4% at 158,616 vehicles, while sales at SAIC-GM-Wuling, which builds cars under local Chinese brands, fell 6% to 145,515 vehicles.
- In contrast, Toyota saw its sales increase 23% to 133,000 in August, and by 12% in the first eight months of the year.
Power Drain: China’s Tesla Rival NIO Raises $1 Billion in Underwhelming IPO
- Chinese electric-vehicle maker NIO priced its U.S. initial public offering near the bottom of its indicative price range, placing a $6.42 billion valuation on the Shanghai-based company that has billed itself as an emerging rival to Tesla.
- NIO set the final offer price at $6.26 per American depositary receipt, the company said Wednesday. That would yield proceeds of $1 billion, short of NIO’s earlier target of $2 billion to $3 billion previously reported by The Wall Street Journal.
- The car maker is due to debut on the New York Stock Exchange on Wednesday under the symbol NIO. It has yet to generate much revenue, reporting $7 million of sales in the first half of 2018.
TODAY in HISTORY
- Henry Hudson began his exploration of the Hudson River. (1609)
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