DAILY MARKET REPORTS
- U.S. stocks rose on Thursday as Apple led a rebound in technology shares and trade worries eased after China said it was open to fresh talks with the United States.
- Apple, which has said a “wide range” of its products could be hit by tariffs, fell 1.2% on Wednesday when it unveiled its largest-ever iPhone, but made only small changes to its line-up, which were widely expected. Shares were up 2% in early trading.
- Even as Washington prepares to slap tariffs on $200 billion worth of Chinese goods, the Trump administration on Wednesday invited Chinese officials to restart talks, although it is unclear when these talks could happen.
- U.S. consumer prices rose less than expected in August and underlying inflation pressures also appeared to be slowing.
- Chipmakers bounced back from a slide on Wednesday.
- Micron jumped 3.4%, while Qualcomm rose after the U.S. chipmaker said it would buy back about $16 billion of its stock as part of a previously announced $30 billion repurchase plan.
- Kroger fell 9.4% in early trading after the supermarket chain missed quarterly same-store sales estimates as customers were put off by changes in how it stocked merchandise on shelves.
US FINANCIAL MARKET
- Kroger’s sales grew less than expected and the grocer said it would sacrifice profit to continue investing in online ordering and other services to compete with Amazon and Walmart.
- Kroger reported revenue of $27.9 billion in the quarter, up from $27.6 billion the prior year but below projections of $28 billion.
- Same-store sales rose 1.6% in the quarter, compared with the 1.8% analysts expected.
- Kroger has invested in online selling strategies to compete, boosting debt above targets to a total of $14.5 billion, up $939 million from the previous year’s period.
- For the second quarter, earnings on an adjusted basis were $336 million, beating analyst expectations but below the $353 million in the prior year.
Apple iPhones get bigger and pricier, Watch turns to health
- Apple introduced its largest-ever iPhone and a watch that detects heart problems on Wednesday in an attempt to get customers to upgrade to more expensive devices in the face of stagnant global demand for smartphones.
- Apple opened its event with the new Watch, positioning it as a more comprehensive health device, able to take an electrocardiogram to detect an irregular heartbeat and start an emergency call automatically if it detects a user falling down, potentially appealing to older customers.
- Apple’s new iPhone XS, pronounced “ten S,” has a 5.8-inch (14.7-cm) screen, and will be sold at a starting price of $999.
- The XS Max, the largest iPhone to date and one of the biggest on the market, has a 6.5-inch (16.5-cm) screen and will start selling at $1,099.
- Apple also introduced a lower-cost 6.1-inch (15.5 cm) iPhone XR made of aluminum, at a starting price at $749.
Boeing Shores Up Its Defenses
- Boeing’s defense business is back on the offensive, with sales at the unit set to rise in 2018 after four years of decline, boosted in part by the Pentagon’s plans to increase spending.
- Boeing’s Defense, Space & Security unit has struggled in recent years as orders ebbed and it didn’t win some notable contracts.
- Last month, momentum seemed to change when the business won its first big Pentagon competition since 2011, an $805 million deal to build refueling drones based on aircraft carriers, part of a program that could be worth up to $13 billion.
- Boeing will compete with Lockheed later this year for a deal worth up to $2 billion to make helicopters to protect U.S. nuclear missile bases, and next year faces off with Northrop Grumman to replace America’s land-based nuclear missiles.
- That program is expected to cost more than $100 billion.
- Boeing also is up for a contract to build 350 new Air Force trainer jets that are due to be awarded later this month and is making its bid with Sweden’s Saab for a contract that could eventually be worth $16 billion.
Qualcomm targets $16 billion in share buyback
- U.S. chipmaker Qualcomm said on Thursday it would buy back about $16 billion of its common stock as part of the previously announced $30 billion stock repurchase plan.
- Qualcomm is seeking to compensate investors for the collapse of its $44 billion acquisition of NXP Semiconductors in July due to Chinese opposition.
Adobe in talks to buy marketing software firm Marketo – sources
- Adobe Systems, the maker of image-editing software Photoshop, is in negotiations to buy Marketo, a privately held cloud-based marketing software company.
- Marketo offers business-to-business marketing applications that would complement Adobe’s marketing business.
- The deal would boost Adobe’s cloud-based software offerings as it takes on larger peers Microsoft and Oracle.
GM Recalls One Million Pickups and SUVs in U.S. for Crash Risk
- General Motors is recalling more than one million late-model pickup trucks and large sport-utility vehicles in the U.S. for a steering defect that has been linked to 30 crashes and two injuries.
- The trucks are can lose their electronically controlled power steering momentarily before it suddenly comes back on, causing the driver to have difficulty steering, GM said in a filing to federal safety regulators.
- Subject to the recall are the Chevrolet Silverado 1500, GMC Sierra 1500, Chevy Suburban and Tahoe, GMC Yukon and Cadillac Escalade from the 2015 model year.
- It is the second major recall by a Detroit automaker in the past week.
Walmart’s Jet.com to offer Nike products in bid for urban consumers
- Walmart’s Jet.com said it will sell Nike products and offer more delivery options, beginning in its top market of New York City, in a bid to sharpen its aim for affluent, urban consumers and better compete with e-commerce rivals like Amazon.
- Nike launched a pilot to sell footwear and apparel on Amazon last year, in a dramatic turnaround after long steering clear of the world’s largest online retailer.
- That partnership was a signal that Amazon was serious about fighting counterfeit goods on its site and was courting once weary fashion brands.
- Jet said it is still finalizing the line-up of Nike products to be offered on the site.
Global Oil Supply Hit a Record High in August as OPEC Ramps Up Production
- OPEC oil production surged last month, more than making up for a decline in Iranian supply due to U.S. economic sanctions, the International Energy Agency said.
- In its closely watched monthly oil market report, the IEA said crude oil output in the Organization of the Petroleum Exporting Countries climbed in August by 420,000 barrels a day, to average 32.63 million barrels a day.
- Iranian crude production fell month-on-month by 150,000 barrels a day in August, to 3.63 million barrels a day, while exports dropped by 280,000 barrels a day to stand at 1.9 million barrels a day.
- “Top buyers China and India cut back sharply,” the agency’s report noted.
Target to hire 20% more workers this holiday season, doubling the number of jobs dedicated to online orders
- Target plans to hire 120,000 seasonal workers this holiday season, a 20% increase from last year, as the retailer expects to receive more online orders and see heightened traffic at its stores.
- The company said Thursday that it plans to double the number of temporary roles dedicated to fulfilling online orders during the holidays, to meet rising demand for its order pickup and drive-up services that have been rolling out across the U.S.
- The hiring announcement by Target follows similar ones from Macy’s and Kohl’s.
UPS expects automation, expansion plans to boost earnings by 2022
- United Parcel Service expects its automation and expansion plans to add between $1.00 and $1.20 to its adjusted earnings per share by 2022, the world’s biggest package delivery company said on Thursday.
- UPS is in the early stages of its $20 billion capital spending project to automate and expand facilities.
- The company will increase its sorting capacity in the United States by 350,000 to 400,000 pieces per hour, each year between 2018 and 2020, or about seven times the additional sorting capacity added in 2017, UPS said.
US ECONOMY & POLITIC
(Sharon Nunn, Eric Morath)
- Initial jobless claims, a proxy for layoffs across the U.S., fell by 1,000 to a seasonally adjusted 204,000 in the week ended Sept. 8, the lowest level since December 1969.
- Economists expected 210,000 new claims last week.
- The four-week moving average of claims, a steadier measure, fell 2,000 to 208,000, also the lowest level since 1969.
- Thursday’s report showed the number of claims workers made for longer than a week declined by 15,000 to 1,696,000 in the week ended Sept. 1.
U.S. Consumer Prices Edged Higher in August
- The consumer-price index, which gauges what Americans pay for everything from rent to razorblades, rose a seasonally adjusted 0.2% in August from the prior month.
- Excluding volatile food and energy components, “core” prices increased 0.1%.
- Economists had expected a 0.3% uptick in August for the headline measure, and a 0.2% advance in so-called core inflation.
- From a year earlier, prices rose 2.7%, a slightly slower growth rate than the 2.9% annual gain recorded the prior two months.
U.S. Proposing New Round of Trade Talks with China
- The Trump administration is giving Beijing another chance to try to stave off new tariffs on $200 billion in Chinese exports, asking top officials for a fresh round of trade talks later this month, people briefed on the matter said.
- The invitation from Treasury Secretary Steven Mnuchin comes as some Trump officials said they sense a new vulnerability—and possibly more flexibility—among Chinese officials pressured by U.S. tariffs imposed earlier this year and threats for more.
- It also follows a steady rise in political pressure on President Trump to ease up on trade fights ahead of November elections in which his Republican Party risks losing congressional control.
- Given the difficult nature of the trade talks between the two countries over the past year, there is no guarantee the invitation will yield a meeting.
- On Thursday, China’s Commerce Ministry confirmed it received and “welcomes” the invitation.
Trump says there’s no pressure to make China trade deal
- President Donald Trump contended Thursday that he faces no pressure to strike a trade deal with China as Washington and Beijing exchange shots in a mounting trade conflict.
- In a tweet Thursday, Trump downplayed the need for discussions, saying “we are under no pressure to make a deal with China, they are under pressure to make a deal with us.”
- He wrote that the U.S. “will soon be taking in Billions in Tariffs & making products at home.”
Hurricane Florence bringing ‘catastrophic’ flooding to the Carolinas, officials say
- The hurricane weakened to a Category 2 storm with winds of 110 mph about 170 miles southeast of Wilmington, North Carolina as of 8 a.m. ET Thursday.
- But authorities at the National Hurricane Center (NHC) warned Florence has an enormous wind field that has been growing larger, raising the risk of the ocean surging on to land and making Florence extremely dangerous.
- The storm is still expected to hit portions of the Carolinas with life-threatening storm surge and rainfall, according to the NHC.
- The hurricane center is forecasting the storm to hover near the coast Saturday with winds of around 80 mph before landfall, but with rainfall in the 20 to 30 inches range and up to 13 feet of storm surge.
Fewer Households in Hurricane Florence’s Path Have Flood Insurance Than in 2013
- Fewer homeowners in North and South Carolina own flood insurance than five years ago, signaling many won’t have access to ready cash if they need to rebuild after Hurricane Florence.
- As of July 31, the latest figures available, the 134,306 policies in place in North Carolina from the National Flood Insurance Program represented a 3.6% decline from 2013.
- In South Carolina, ownership was down 1.2%, to 204,342, according to an analysis of government data by The Wall Street Journal.
- The widespread lack of flood insurance and low savings balances across much of the U.S. population will force hundreds of thousands of homeowners to seek federal disaster assistance in the form of grants and loans.
- A year after Hurricane Harvey left many Texans in dire financial straits, tens of thousands of uninsured or underinsured residents continue to struggle to repair flooded homes.
EUROPE & WORLD
- The European Central Bank on Thursday lowered its forecasts for Europe’s economic growth this year and next but said it would press ahead with a carefully telegraphed plan to phase out easy money.
- In a statement, the ECB said it expects to wind down its €2.5 trillion ($2.9 trillion) bond-buying program—known as quantitative easing, or QE—by year-end, confirming a plan outlined in June.
- The bank also expects to hold its benchmark interest rate at the record low of minus 0.4% at least through the summer of 2019.
- Earlier Thursday, Bank of England policymakers struck a cautious note, voting unanimously to leave interest rates on hold at 0.75% despite strengthening growth and inflation.
Turkey Central Bank Raises Benchmark Rate to 24%; Lira Rallies
- Turkey’s central bank raised its benchmark interest rate by the most since Recep Tayyip Erdogan came to power 15 years ago, countering the president’s call for lower borrowing costs just two hours before the decision was announced. The currency rallied.
- The Monetary Policy Committee led by Governor Murat Cetinkaya on Thursday increased the one-week repo rate by 625 basis points to 24 percent, more than the median estimate in a Bloomberg survey that called for a hike of 325 basis points.
Pound Rises to Six-Week High
- The U.K. pledged to provide information that could help solve a stand-off with the European Union over the Irish border.
- The pound was little moved by the Bank of England’s latest policy decision earlier in the session, which saw the central bank keep interest rates on hold.
- Officials led by Governor Mark Carney upgraded their view of the economy and pointed to strengthening pay, as they reaffirmed a gradual pace of tightening.
Singapore’s ST Engineering to buy aircraft part maker from GE for $630 million
- Singapore Technologies Engineering said it had agreed to purchase aircraft part manufacturer MRA Systems from General Electric for $630 million.
- The Singapore-based company, which conducts maintenance and repair operations for airlines, said the deal would allow it to move upstream into the manufacturing and spare parts business for engine nacelles, the casing that houses an aircraft engine.
- In partnership with Safran Nacelles, U.S.-based MRA is the sole supplier of nacelles for Airbus A320neos using LEAP-1A engines manufactured by CFM International, a GE and Safran joint venture.
U.S. imposes North Korea-related sanctions on Russian, Chinese firms
- The United States on Thursday imposed sanctions on two firms, one in Russia and one in China, for supporting North Korea’s nuclear and missile programs.
- The new sanctions target Russian-based Volasys Silver Star and China-based Yanbian Silverstar, the U.S. Treasury Department said on its website.
Saudi-led coalition seizes main road linking Yemen’s Hodeidah to Sanaa
- Yemeni forces backed by a Saudi-led coalition seized the main road linking the port city of Hodeidah to the capital Sanaa, blocking a supply route for the Houthi group that controls both cities
- The Western-backed alliance resumed its offensive after the collapse of peace talks on Saturday which the UN had hoped would avert an assault on the city, the country’s main port and a lifeline for millions, and start a process to end the three-year war.
- The United Nations fears an attack on Hodeidah, the entry point for the bulk of Yemen’s commercial imports and aid supplies, could lead to a famine in the impoverished country where an estimated 8.4 million people are facing starvation.
TODAY in HISTORY
- Israeli Prime Minister Yitzhak Rabin and PLO Chairman Yasir Arafat shook hands after signing a historic peace agreement. (1993)
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.