US FINANCIAL MARKET
Stocks Rise, on Track for Weekly Gains – Wall Street Journal, 7/23/2021
- U.S. stocks rose Friday, putting major indexes on track for weekly gains after a string of strong earnings reports bolstered investor confidence following a bout of market volatility.
- The S&P 500 climbed 0.4%, pushing the broad market gauge to a 1.3% jump for the week, despite the steep fall that the index suffered on Monday. The Dow Jones Industrial Average added about 125 points, or 0.4%. The Nasdaq Composite gained 0.3%. All three indexes are hovering near all-time highs.
- Among individual stocks, Snap leapt 25% on revenue that more than doubled in the second quarter and the fastest user growth in four years. American Express gained 4.5% on forecast-beating earnings and revenue as spending accelerated in the three months through June.
- Twitter shares rose 1% after the social-media company reported a 74% increase in revenue in the second quarter compared with a year before. Intel’s stock fell 4.9% after Chief Executive Pat Gelsinger said he sees the global semiconductor shortage potentially stretching into 2023.
- Of the roughly 110 companies in the S&P 500 that had posted results through Thursday for the second quarter, 85% topped analysts’ profit forecasts, according to FactSet.
- In the bond market, the yield on 10-year Treasury notes ticked up to 1.308% from 1.264% Thursday. Yields move in the opposite direction to bond prices, and have recovered all their lost ground after sliding Monday.
- In overseas markets, the Stoxx Europe 600 rose 1%, buoyed by shares of car and car-part makers, as well as commodities producers.
- In Asia, Japan’s stock market was closed due to a national holiday. China’s Shanghai Composite fell 0.7% by the end of trading, while Hong Kong’s Hang Seng Index dropped 1.5%.
Intel sales forecast implies rocky second half of 2021 amid supply constraints – Reuters, 7/23/2021
- Chipmaker Intel said on Thursday it still faces supply chain constraints and gave an annual sales forecast that implied a weak end of the year.
- For the just-ended second quarter, Intel reported $18.5 billion in adjusted sales, well above analyst estimates of $17.80 billion, according to Refinitiv data.
- Revenue from the company’s higher-margin data center business fell 9% to $6.5 billion in the second quarter, while its personal computing business revenue rose 6%, both beating Refinitiv estimates.
- On an adjusted basis, the company earned $1.28 per share in the second quarter, compared with estimates of $1.06, according to Refinitiv data.
- The 2021 forecast of $73.5 billion in adjusted sales was higher than Wall Street expectations, appeared driven by a strong second quarter ended June 26 and a modestly better-than-expected third-quarter, implying a weak fourth quarter.
- Intel raised its previous annual forecast $1 billion from its earlier $72.5 billion and beat expectations of $72.80 billion, according to Refinitiv IBES data.
- Intel expects adjusted third-quarter revenue of about $18.2 billion, only modestly above estimates of $18.09 billion, according to Refinitiv data.
Snap beats user, revenue estimates with highest growth in 4 years – Reuters, 7/23/2021
- Snap on Thursday beat Wall Street estimates for users and revenue in the second quarter, notching the highest growth rates since late 2017 as new features on its messaging app Snapchat attracted more users.
- Snap’s revenue jumped 116% to $982 million, well above the expectation of $845.9 million. Previously, its strongest growth rate was 66%.
- Daily active users rose 23% to 293 million during the quarter ended June 30, above analysts’ estimates of 290.3 million, according to IBES data from Refinitiv. User growth beat the company’s prior best of 22%.
- Snap forecast third-quarter revenue between $1.07 billion and $1.09 billion, and it expects daily active users to grow 21% to 301 million, both exceeding expectations.
- Analysts are expecting revenue of $1.01 billion and daily active users of 298.5 million.
AmEx beats profit estimates as consumer spending recovers from pandemic lows – Reuters, 7/23/2021
- American Express’s second-quarter profit blew past analysts’ estimates on Friday, driven by a recovery in global consumer spending, especially on travel, as more people ventured out after the rollout of vaccines.
- Excluding interest expense, AmEx’s total revenue rose 33% to around $10.24 billion.
- The company sold 2.4 million new proprietary cards in the quarter, while spending on goods and services on its cards grew 16% on a currency adjusted basis.
- Net income rose to $2.28 billion, or $2.80 per share, for the quarter ended June 30 from $257 million, or 29 cents per share, a year earlier. Analysts had expected $1.67 per share, according to Refinitiv IBES data.
- Shares of the credit-card issuer, which recorded a benefit of $606 million from the release of its loan-loss reserves, rose nearly 4% to a record high of $177.49 in early trade.
Honeywell raises full-year targets after profit beats on aerospace strength – Reuters, 7/23/2021
- Honeywell International reported a better-than-expected quarterly profit and raised its full-year forecasts on Friday, helped by a rebound in demand in its main businesses that serve the aerospace and the energy industries.
- Excluding items, Honeywell earned $2.02 per share above analysts’ average estimate of $1.94, while net sales rose 17.8% to $8.81 billion in the reported quarter.
- Sales in Honeywell’s aerospace unit, its biggest, rose 8.8% to $2.77 billion in the second quarter ended June 30, while revenue in its performance materials and technologies business that serves the energy sector jumped 15% to $2.55 billion.
- Honeywell said it now expects full-year sales to be between $34.6 billion and $35.2 billion, up from its prior forecast of $34 billion to $34.8 billion.
- The company also raised its profit forecast in the range of $7.95 to $8.10 per share, from $7.75 to $8 per share previously.
Twitter beats revenue targets with ad improvements, shares jump 5% – Reuters, 7/23/2021
- Twitter on Thursday reported higher revenue growth than Wall Street had expected, as the social media platform rolled out ad targeting improvements to help brands reach potential customers.
- Total revenue, which also includes revenue the company earns from data licensing, rose 74% year-over-year to $1.19 billion, beating analyst estimates of $1.07 billion.
- Advertising revenue totaled $1.05 billion, up 87% from the year-ago quarter, and beat Wall Street estimates of $909.9 million.
- Twitter reported 206 million monetizable daily active users (mDAU), its term for users who are served advertising, for the second quarter ended June 30, matching analyst targets of 205.9 million users, according to IBES data from Refinitiv.
- On an adjusted basis, Twitter earned 20 cents per share during the second quarter, well above the estimate of 7 cents.
- Twitter forecast third quarter total revenue to be between $1.22 billion to $1.3 billion, roughly in line with or slightly ahead of consensus analyst estimates of $1.17 billion.
Schlumberger’s profit beats forecast as margins soar on revenue gains – Reuters, 7/23/2021
- Oilfield services giant Schlumberger issued a bullish forecast for 2021 on Friday as second-quarter profit topped estimates due to surging margins, with a rebound in oil prices boosting demand for its software and equipment.
- Operating margins nearly doubled to 14.3%, the highest since 2018, led by big gains in its software and reservoir performance units. Gains reflected past cost-cutting and big year-over-year software revenue increases.
- Schlumberger reported net income of $431 million, or 30 cents per share, for the three months to June 30, compared with $299 million, or 21 cents per share, in the first quarter. Wall Street analysts had anticipated earnings of 26 cents per share, according to Refinitiv IBES.
GM Recalls All-Electric Chevy Bolt for Second Time Due to Fire Risk – Wall Street Journal, 7/23/2021
- General Motors is recalling its all-electric Chevrolet Bolt for a second time because of a potential battery defect that can cause a fire, underscoring the technical challenges car companies face as they race to develop more plug-in vehicles.
- GM said Friday that its investigation into recent battery fires involving the cars found that manufacturing defects in a certain battery cell were the root cause.
- It is asking owners of 2017-2019 model year Bolts to keep their electric-vehicle charges at a certain level and to park the cars outside after charging them.
- Under the previous recall, initiated in November, owners of 69,000 Bolts were advised to get a software update that would monitor the condition of the lithium-ion battery and flag any potential problems.
US ECONOMY & POLITICS
U.S. business activity cools further in July – IHS Markit survey – Reuters, 7/23/2021
- U.S. business activity grew at a moderate pace for a second straight month in July amid supply constraints, suggesting a cooling in economic activity after what was expected to have been a robust second quarter.
- Data firm IHS Markit said on Friday its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, fell to a four-month low of 59.7 from 63.7 in June.
- The IHS Markit survey’s flash services sector PMI fell to a reading of 59.8 from 64.6 in June, slowing further from May’s record high. Economists polled by Reuters had forecast a reading of 64.8 this month for the services sector, which accounts for more than two-thirds of U.S. economic activity.
- The survey’s measure of prices paid by services businesses slipped to 72.1 from a reading of 74.2 in June.
- The survey’s flash manufacturing PMI rose to an all-time high reading of 63.1 from 62.1 in June. Economists had forecast the index for the sector, which accounts for 11.9% of the economy, would dip to 62.
- A measure of new orders received by factories increased and manufacturers reported unfinished work continued to pile up even as hiring picked up. Suppliers continued to struggle to deliver inputs on time.
Tenants at Risk for Eviction as Pandemic Protections Are Set to Expire – Wall Street Journal, 7/23/2021
- State and local governments are struggling to distribute $47 billion in federal money aimed at helping tenants who can’t pay rent because of the Covid-19 crisis, leaving many people at risk of being thrown out of their homes when an eviction moratorium expires on July 31.
- Just $3 billion of the aid authorized by Congress in December and March had been delivered to landlords and tenants as of June 30, the Treasury Department said in a report on Wednesday. About 8.2 million adults were behind on their rent or mortgage as of July 5 and have low confidence they can pay on time next month, a Census Bureau survey showed.
- Biden administration officials say they are taking steps to speed up the distribution of aid. Measures include hosting two “eviction prevention summits” as well as encouraging local jurisdictions to adopt programs that offer tenants legal assistance and aim to avoid evictions.
New Aid Planned for Mortgage Borrowers at Risk of Foreclosure – Wall Street Journal, 7/23/2021
- The Biden administration on Friday plans to expand assistance programs for borrowers who fell behind on their mortgages during the Covid-19 pandemic and continue to face economic hardship, a bid to prevent a sharp rise in foreclosures over the coming months.
- New modification options will be offered for borrowers with Federal Housing Administration loans and other federally guaranteed mortgages, administration officials said. The changes would aim to extend the length of their mortgages and lock in lower monthly principal and interest payments to keep more borrowers in their homes.
- The vast majority of the 1.55 million homeowners who are seriously delinquent—meaning they haven’t made mortgage payments in at least 90 days—are in active forbearance, according to the mortgage-data firm Black Knight.
- That represents about 2.9% of the 53 million active mortgages, down from a high of about 4.4% in August and September 2020.
EUROPE & WORLD
Euro zone businesses boomed in July but confidence weakened – Reuters, 7/23/2021
- Euro zone business activity expanded at its fastest monthly pace in over two decades in July as the loosening of more COVID-19 restrictions gave a boost to services but fears of another wave of infections hit business confidence, a survey showed.
- IHS Markit’s Flash Composite Purchasing Managers’ Index, seen as a good guide to economic health, climbed to 60.6 in July from 59.5, its highest reading since July 2000.
- Indicating that pace won’t slow anytime soon, demand was racing. The new business index rose to 59.7 from 58.7, one of the highest readings in the survey’s 23 year history.
- Factories had another blistering month. The manufacturing PMI only dipped from June’s record high of 63.4 to 62.6. An index measuring output that feeds into the composite PMI fell to 60.9 from 62.6.
- The composite future output index slumped to 67.8 from 71.9, its lowest February.
Builder Skanska posts profit jump but flags supply chain pressures – Reuters, 7/23/2021
- Sweden’s Skanska on Friday reported a jump in second-quarter profit as building activity rebounds, boosting its shares despite warning of rising pressure on its supply chain.
- The Nordic region’s largest builder and one of the biggest in the United States posted an operating profit of 2.34 billion crowns ($269.5 million) versus 845 million a year earlier when the pandemic halted much of the industry.
- Orders at Construction, which books the bulk of group revenue, jumped 35% to 49.8 billion crowns while its operating margin widened to 4.7% from 2.2%.
India’s Reliance quarterly profit falls as expenses weigh – Reuters, 7/23/2021
- Indian oil-to-telecom conglomerate Reliance Industries posted a 7.2% fall in first-quarter profit on Friday, hurt by a surge in expenses.
- Total revenue at India’s most valuable company rose 58% to 1.44 trillion rupees.
- Revenue at the company’s telecom unit Jio rose 8.6%, while the retail business reported a 19% rise in revenue.
- The company, led by billionaire Mukesh Ambani, said consolidated profit fell to 122.73 billion rupees ($1.65 billion) in the quarter ended June 30, from 132.33 billion rupees a year earlier.
- Ulysses S. Grant, the 18th president of the United States, died at Mount McGregor, N.Y., at age 63. (1885)
- Austria and Hungary issued an ultimatum to Serbia after the assassination of Archduke Ferdinand, precipitating World War I. (1914)
- Revolution erupted in Egypt as the military took power in a bloodless coup. The following year the monarchy was abolished and, for the first time since the pharaohs, Egypt was again ruled by Egyptians. (1952)
- Groundbreaking singer Amy Winehouse died. (2011)