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WALL ST. LITTLE CHANGED AFTER GDP DATA; EYES ON EARNINGS

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US FINANCIAL MARKET
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DAILY MARKET REPORTS

  • The S&P 500 is up more than 5% so far this year, and data showing the U.S. economy on strong footing and corporate earnings improving point to further gains for U.S. stocks, many investors say.
  • The S&P has risen 10.3% since the U.S. election through Wednesday’s close.
  • The rapid climb in equities has raised concerns regarding valuations, with the S&P 500 trading at nearly 18 times earnings estimates for the next 12 months against its long-term average of 15 times.
  • GDP increased 2.1 percent, compared with the previously reported 1.9 percent.
  • The number of Americans filing for unemployment benefits fell less than expected last week.
  • ConocoPhillips rose 6.3% after the company said it agreed to sell oil sands and western Canadian natural gas assets to Cenovus Energy.

US FINANCIAL MARKET

ConocoPhillips to Sell Chunk of Canadian Oil-Sands Assets For $13.3 Billion

  • ConocoPhillips is selling a large portion of its Canadian oil-sands assets to Cenovus Energy to pay down debt and significantly increase stock buybacks, marking the latest exit from the oil sands by a non-Canadian player.
  • The $13.3 billion cash-and-stock deal would turn over to Alberta-based Cenovus the majority of ConocoPhillips’s western Canada Deep Basin gas assets along with its stake in the Foster Creek Christina Lake oil sands, in which Cenovus and ConocoPhillips each own 50% and that Cenovus operates.

Lululemon shares tumble after disappointing sales forecast

  • Lululemon issued a weak outlook for the current quarter, blaming spring clothing that wasn’t colorful enough to entice shoppers to its website or stores.
  • Shares of Lululemon fell 17%.
  • The company affirmed its long-term revenue goal of $4 billion by 2020.
  • Its profit for the quarter rose 16% to $136 million, compared with the year-earlier period, while revenue climbed 12% to $789.9 million.

Boeing Makes Billion-Dollar Bet on the 747 Hauling Cargo

  • Through the end of last year, Boeing had provided financing valued at $1.26 billion to 747 customers through Boeing Capital Corp., regulatory filings show.
  • Company buys its own jumbo jets and leases them to carriers.
  • Boeing is now renting out the massive, hump-backed 747s to cargo carriers in countries such as Russia and Azerbaijan, which increases the company’s exposure to potential defaults on payments.

 McDonald’s to Switch to Fresh Beef in Quarter Pounders

  • The fast food chain has been using frozen beef since the 1970s.
  • McDonald’s began testing Quarter Pounders made with fresh beef in Dallas last year and later expanded it to a larger area of North Texas and to Tulsa, Okla., after a Dallas franchisee pushed the company to try it.
  • The company is also testing delivery, rolling out mobile ordering and payment and offering table service in some restaurants as part of its efforts to modernize customers’ experience.

Jack in the Box inks DoorDash delivery deal

  • Jack in the Box will offer delivery services at more than 800 of the U.S. fast-food chain’s starting Thursday.
  • Partnering with DoorDash for delivery “is faster and more efficient” than doing it in-house, Iwona Alter, Jack’s chief marketing officer.
  • Under its new deal, Jack will extend delivery from its test market in San Francisco to cities such as Los Angeles, Dallas, Phoenix and Seattle.

AmEx Fires another Shot at Chase’s Sapphire Reserve

  • AmEx is planning to increase the points it is doling out to consumers who sign up for its Platinum card and spend a lot in the first three months.
  • AmEx in coming days is expected to increase the points bonus to 60,000, from 40,000.
  • But there is likely to be catch: To get the larger amount of points, card users will have to spend $5,000 in the first three months after receiving the card, up from $3,000 currently.
  • J.P. Morgan officially concluded its 100,000-points offer to Sapphire Reserve customers and downgraded it to 50,000 points.
  • Sapphire Reserve cardholders need to spend $4,000 in the first three months to get these points.

U.S. awards AT&T contract to build emergency broadband network

  • The U.S. Department of Commerce on Thursday awarded a 25-year contract to AT&T Inc for the construction of a nationwide wireless broadband network to better equip first responders during emergencies.
  • FirstNet, an independent arm of the Department of Commerce, will provide the No. 2 U.S. wireless carrier with 20 megahertz of telecom spectrum and success-based payments of $6.5 billion over the next five years.

Samsung Has a Lot Riding on the Galaxy S8 Launch

  • Samsung unveiled a new flagship smartphone on Wednesday, its first product launch following last year’s Galaxy Note 7 debacle.
  • The South Korean tech giant’s new phone, the Galaxy S8, is loaded with consumer-pleasing innovations.
  • The device is longer and slimmer than prior premium models.
  • Its “infinity display” screen extends to the top and bottom edges, as well as side to side.
  • It unlocks via a touch-screen home button, full-face recognition or a fingerprint scanner on the back of the device.
  • An earphone jack is included.
  • AT&T, Sprint and T-Mobile US plan to offer the Galaxy S8 at a starting price of $750; Verizon’s starting price is $720.
  • The Galaxy S8+, with an even bigger screen, would cost about $100 more. Phones will hit shelves on April 21.

In Rebuke to Trump Policy, GE Chief Says ‘Climate Change Is Real’

  • CEO Jeffrey Immelt defended efforts to reduce emissions and fight climate change, after President Donald Trump reversed rules that pushed U.S. utilities to use cleaner-burning fuels.
  • “We believe climate change is real and the science is well accepted,” Mr. Immelt wrote.

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US ECONOMY & POLITICS

Fourth-quarter economic growth revised higher, boosted by consumer spending

  • GDP increased at a 2.1 percent annualized rate instead of the previously reported 1.9 percent pace.
  • Corporate profits after tax, without inventory valuation and capital consumption adjustments, rose 3.7% from the prior quarter to a seasonally adjusted annual rate of $1.741 trillion in the fourth quarter.
  • It was the fourth consecutive quarter of profits growth.
  • Profits jumped 22.3% in the fourth quarter compared with the same period in 2015.
  • For all of 2016, profits rose 4.3% from the prior year after falling 8.5% in 2015—the strongest calendar-year profits growth since 2012.
  • Consumer spending drove overall GDP growth in late 2016, contributing 2.4 percentage points to the quarter’s 2.1% growth rate.
  • A wider foreign-trade deficit subtracted 1.82 percentage points but another volatile category, private inventories, boosted growth by 1.01 percentage points.
  • Business investment, government spending and the housing sector made smaller contributions to fourth-quarter growth.
  • U.S. growth has been stuck near 2% since the recession ended in mid-2009.

CBO Report Shows Higher Long-Term Deficits and Lower Interest Rates

  • National debt projected to reach 150% of GDP in 2047.
  • That is up from an estimate of 145% made this past January.

Weekly jobless claims fall less than expected

  • Initial claims for state unemployment benefits slipped 3,000 to a seasonally adjusted 258,000.
  • Claims have now been below 300,000, a threshold associated with a healthy labor market, for 108 straight weeks.

Fed Officials Say They May Need to Pick Up Pace of Rate Increases

  • Officials warn more than the 3 raises now projected for 2017 may be justified if the economy tops expectations.

Trump Administration Signals It Would Seek Mostly Modest Changes to Nafta

  • The Trump administration is signaling to Congress it would seek mostly modest changes to the North American Free Trade Agreement in upcoming negotiations with Mexico and Canada, a deal President Donald Trump called a “disaster” during the campaign.

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EUROPE & WORLD

Chinese Bank Profits Improve, But Interest Is Fading

  • Interest once accounted for 90% of Chinese banks’ income, but now it’s about 70%—and falling.
  • For the first time since at least the 2008 global financial crisis, major lenders earned less in 2016 from interest payments than a year earlier.
  • Noninterest income, while growing, is far too small to make up for the shortfall.

H&M Falters as Zara Owner Inditex Speeds Ahead

  • Swedish clothing retailer reports a 3% fall in first-quarter net profit on lower-than-expected sales growth.
  • Though sales rose 7% during the quarter, which marked a slowdown from a year earlier.
  • It said its performance reflected tough market conditions in the U.S. and in Central and Southern Europe.

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TODAY in HISTORY

  • Anesthesia was used for the first time in an operation (1842)
  • The Treaty of Paris was signed, ending the Crimean War (1856)
  • A treaty for the purchase of Alaska from Russia for the sum of $7.2 million, approximately two cents an acre, was submitted to the U.S. Senate (1867)
  • The 15th Amendment to the U.S. Constitution went into effect, guaranteeing the right to vote regardless of race (1870)
  • The game show Jeopardy debuted on television (1964)
  • President Ronald Reagan was shot in the chest by John Hinckley as he left a Washington hotel (1981)
  • The Queen Mother Elizabeth of England died at the age of 101 (2002)

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, Wall Street Journal.

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