US FINANCIAL MARKET

U.S. Stocks Slide After Strong Month of Gains – Wall Street Journal, 7/30/2021

• U.S. stocks edged lower Friday, although major indexes held on to their gains for the month.
• The S&P 500 fell 0.6% shortly after the opening bell. The Dow Jones Industrial Average declined 88 points, or 0.3%, to 34996 and the Nasdaq Composite slid 0.9%.
• Nevertheless, U.S. stock indexes remain on course to post gains for the month. The S&P 500 is up 2.2% for July, while the Dow industrials are up 1.5%. The Nasdaq Composite is up 0.8%.
• Amazon.com shares fell 7.8% after the giant retailer reported sales that were slightly below analysts’ expectations and signaled that it expects sales to slow further in the current quarter. The results highlighted the challenge of sustaining the unfettered growth it has logged during the pandemic.
• Shares of Pinterest fell 17% as the online sharing platform said its monthly average users in the U.S. contracted during the quarter, a trend that accelerated this month.
• Earlier, fresh data showed that consumer spending rose 1% in June from the prior month. The Federal Reserve’s preferred measure of inflation—the price index for personal-consumption expenditure, excluding food and energy—rose 3.5% from a year earlier.
• In bond markets, the yield on the 10-year Treasury note ticked down to 1.241% from 1.269% Thursday. Yields fall when prices rise.
• Overseas, the pan-continental Stoxx Europe 600 lost 0.2%, though it remains on track to end July with gains.
• The selloff this week in Hong Kong continued, with the city’s Hang Seng Index declining almost 1.4% Friday. The index shed 9.9% in July, its biggest monthly drop since October 2018.

Amazon Maintains Profit Run, but Sales Miss Expectations in Pandemic First – Wall Street Journal, 7/30/2021

• Amazon.com reported strong financial results that showcased its dominance even as a slight slowdown in e-commerce sales highlighted the challenge of sustaining the unfettered growth it has logged during the pandemic.
• Amazon posted second-quarter sales of $113.1 billion, slightly less than the $115.4 billion predicted by analysts polled by FactSet.
• Profit was $7.8 billion, or $15.12 a share, exceeding analysts expectations of $12.28 a share.
• Sales for the cloud unit totaled $14.8 billion in the second quarter, a 37% increase from a year earlier.
• Amazon’s online store sales, which had been growing at a high double-digit rate, eased to 16% year-over-year growth for the quarter.
• The company’s ad unit, which has been expanding at a high double-digit clip. grew 87% year-over-year in the second quarter.
• The company said it expects sales of $106 billion to $112 billion for the current quarter and operating income between $2.5 billion and $6 billion.

Procter & Gamble Warns of Higher Costs and Slower Sales – Wall Street Journal, 7/30/2021

• Procter & Gamble gave a somber outlook for the year ahead, predicting slower sales and historically high costs for raw materials and transportation as inflation picks up and the global health crisis continues.
• During the latest quarter, P&G’s net sales rose 7% to $18.94 billion, above the consensus forecast of $18.37 billion from analysts polled by FactSet. Core earnings per share fell 3% from a year ago to $1.13.
• P&G expects to take a $1.9 billion after-tax hit on higher freight and commodity costs and predicts sales growth to slow by half for the fiscal year that began July 1.
• For fiscal 2022, the company predicts net and organic sales growth of 2% to 4%, compared with the previous fiscal year’s 6% organic growth.
• It predicts core earnings-per-share growth of 3% to 6% relative to the previous fiscal year’s $5.66.

Pinterest Shares Fall as U.S. Monthly Average Users Decline – Wall Street Journal, 7/30/2021

• Shares of Pinterest fell more than 14% in after-hours trading, as the online sharing platform said its monthly average users in the U.S. contracted during the quarter, a trend that accelerated this month.
• Revenue totaled $613.2 million, compared with $272.5 million a year earlier. Analysts expected $562 million in revenue.
• The company reported 91 million monthly average users in the U.S. in the quarter, down 5% from a year earlier. Pinterest said that “engagement headwinds” continued this month, with monthly average users down 7% as of July 27.
• Globally, monthly average users increased 9% in the quarter.
• The company also reported Thursday second-quarter net income of $69.4 million, compared with a loss of $100.7 million a year earlier.

Chevron tops profit estimates, joins share buyback stampede – Reuters, 7/30/2021

• Chevron on Friday reported its highest profit in six quarters and joined an oil industry stampede to reward investors with share buybacks, as rebounding crude oil prices carried earnings and cash flow to pre-pandemic levels.
• Total oil and gas production rose 5% over a year ago to 3.13 million barrels of oil equivalent per day (boepd), while Chevron sold its U.S. oil for $54 a barrel last quarter, compared with $19 a year earlier.
• The second-largest U.S. producer’s oil and gas production earned $3.18 billion in the quarter ended June 30, compared with a loss of $6.09 billion a year ago.
• The company’s adjusted profit of $1.71 per share beat Wall Street estimates of $1.59, according to Refinitiv IBES data.
• Chevron expects output from the Permian basin to be almost same as last year’s, but said it will add drilling rigs in the second half. Its production rate from the top U.S. shale basin is expected to be 600,000 boepd by the end of 2021.
• The company cut its annual capital spending forecast. At about $13 billion, it is now below what it had spent last year. It had earlier budgeted $14 billion to $16 billion a year in annual capital spending through 2025.

Exxon tops estimates with biggest quarterly profit in a year – Reuters, 7/30/2021

• Exxon Mobil on Friday posted its biggest quarterly profit in more than a year that also sailed past analysts’ estimates, boosted by higher oil prices and record earnings at its chemicals business.
• Higher oil prices pushed earnings in the company’s exploration and production business to a more than one-year high of $3.19 billion. Output fell 2% to 3.6 million oil-equivalent barrels per day during the quarter.
• Earnings from its chemicals and plastics business rose nearly five-fold from a year ago to a record $2.32 billion as margins expanded on strong demand for plastic packaging, tight industry supply and shipping constraints.
• Net income for the second quarter came in at $4.69 billion, compared with a loss of $1.08 billion a year ago, which included a gain related to reversing an inventory writedown. Absent the inventory change, the loss would have been $3 billion.
• Exxon said its 2021 capital spending is expected to be at the lower end of the previously forecast range of $16 billion to $19 billion.
• The company also reiterated its pledge to cut costs further, saying it was on pace to achieve total cost savings of $6 billion through 2023 relative to 2019.
• In the first half of 2021 Exxon cut over $1 billion in costs, it said, on top of reductions of $3 billion in 2020.

Caterpillar earnings soar as global recovery boosts equipment demand – Reuters, 7/30/2021

• Caterpillar on Friday reported higher quarterly earnings as a recovery in global economic activity from pandemic lows drove up sales across all regions and businesses.
• Equipment sales rose 31% year-on-year in the quarter to $12.2 billion, helped by stronger demand in North and Latin America.
• Adjusted profit for the second quarter came in at $2.60 per share, up from $1.27 per share a year earlier. Analysts surveyed by Refinitiv, on average, expected earnings of $2.40 per share.
• However, the Illinois-based manufacturer of heavy machinery did not provide an earnings forecast for this year.
• It also warned that operating profit margin would moderate in the current quarter because of rising freight and raw materials costs as well as higher marketing and R&D spending.
• In response to inflationary pressures, the company has increased prices twice this year.

Gilead’s COVID-19 drug helps boost 2nd-quarter results as HIV sales dip – Reuters, 7/30/2021

• Gilead Sciences on Thursday posted a higher-than-expected second-quarter profit, helped by strong demand for its COVID-19 antiviral treatment, Veklury, but sales of its flagship HIV drugs lagged as the pandemic continued to limit visits to doctors.
• The biotechnology company’s total revenue for the quarter rose 21% from a year earlier to $6.2 billion, slightly higher than the average analyst estimate of $6.07 billion, according to Refinitiv data.
• Sales of HIV medicines, which have stalled during the coronavirus pandemic, fell 2% to $3.9 billion.
• Sales of Veklury, known chemically as remdesivir, totaled $829 million for the quarter, easily topping Wall Street estimates of $675 million.
• Sales of Gilead’s hepatitis C drugs bounced back in the quarter, rising 23% to $549 million.
• Gilead reported adjusted quarterly earnings of $1.87 per share, beating Wall Street expectations by 12 cents.
• The company said it now expects product sales for the year of $24.4 billion to $25 billion, compared with a previous estimate of $23.7 billion to $25.1 billion.
• For full-year 2021, Gilead narrowed its forecast for adjusted earnings per share to $6.90 to $7.25 from its prior projection of $6.75 to $7.45.

AbbVie raises annual profit forecast as Botox demand rebounds – Reuters, 7/30/2021

• Drugmaker AbbVie raised its 2021 adjusted profit forecast on Friday, betting that a demand uptick for its Botox anti-wrinkle injection due to easing lockdowns will help overcome weak international sales for blockbuster drug Humira.
• Sales of Humira, a treatment for rheumatoid arthritis and which is already facing rivals in Europe, rose 4.8% to $5.07 billion, roughly in line with a Refinitiv IBES estimate of $5.08 billion.
• But sales of the drug fell 6% on a reported basis in international markets while rising 7.1% in the United States.
• The company swung to a profit of $766 million from a loss of $738 million a year earlier. Excluding one-time items, it earned $3.11 per share.
• AbbVie said it expects full-year adjusted earnings between $12.52 and $12.62 per share, compared with $12.37 to $12.57 per share previously. Analysts expected 2021 earnings per share of $12.61.

Burger King U.S. sales power Restaurant Brands’ results beat – Reuters, 7/30/2021

• Restaurant Brands International, beat estimates for quarterly profit and revenue on Friday, as Americans spent more at its Burger King outlets after COVID-19 restrictions were eased.
• Total revenue for Restaurant Brands jumped 37% from a year earlier to $1.44 billion, beating Refinitiv IBES estimates of $1.37 billion.
• Comparable sales at Burger King in the United States increased 13% from a year earlier, above estimates of 12.3% and pre-pandemic levels two years ago.
• Net income attributable to common shareholders more than doubled to $259 million, or 84 cents per share. Excluding items, it earned 77 cents per share, beating 62 cents estimates.

Michael Kors parent rides on post-lockdown splurge to lift forecasts – Reuters, 7/30/2021

• Michael Kors parent Capri Holdings on Friday raised its annual forecasts for the second time after trouncing Wall Street estimates for quarterly results, as shoppers splurge on its high-end clothes and bags.
• Overall revenue nearly tripled to $1.25 billion in the first quarter compared to a year ago when stores were largely shut.
• Excluding items, the company earned a better-than-expected $1.42 per share.
• Capri, meanwhile, raised its forecast for annual revenue to about $5.3 billion, just about a month after predicting $5.15 billion, while warning that the Delta variant could dampen some expectations around a quick recovery in Europe.
• The Versace and Jimmy Choo owner forecast annual adjusted profit to be about $4.50 per share, higher than the $3.80 to $3.90 range predicted earlier.

Amazon Hit With Record EU Privacy Fine – Wall Street Journal, 7/30/2021

• Amazon.com has been fined 746 million euros, equivalent to $887 million, by a European Union privacy regulator for violations related to its advertising, by far the largest-ever fine under the EU’s data-protection law.
• The fine, which Amazon disclosed Friday in a securities filing, was issued two weeks ago by Luxembourg’s privacy regulator, the CNPD, and accompanied by an order to revise certain business practices that Amazon didn’t specify.
• The Wall Street Journal in early June reported that the CNPD had circulated a draft decision sanctioning Amazon’s privacy practices and proposing a fine of more than $425 million to the EU’s 26 other national data-protection authorities.

Nikola Founder Trevor Milton Charged With Securities Fraud – Wall Street Journal, 7/30/2021

• Trevor Milton, the founder of Nikola and onetime executive chairman of the electric-truck startup, was indicted Thursday on securities-fraud charges for allegedly lying to investors about its business making commercial trucks powered by alternative fuel.
• Mr. Milton, who resigned from the company last September, faces two counts of securities fraud and one count of wire fraud, according to an indictment made public Thursday.
• The 39-year-old faces a maximum 25-year prison term if convicted of the top securities-fraud charge.
• The Securities and Exchange Commission also filed a civil complaint Thursday against Mr. Milton.

SEC to Set New Disclosure Requirements for Chinese Company IPOs – Wall Street Journal, 7/30/2021

• U.S. regulators will require additional disclosures from Chinese companies before allowing them to sell shares in the U.S., following new restrictions from China’s government on companies that raise capital offshore.
• The new disclosure requirements from the Securities and Exchange Commission will mostly focus on so-called Variable Interest Entities, or VIEs, a form of a shell company used to skirt Chinese-government restrictions on foreign ownership and listing on overseas exchanges.
• The entities, which are often based in offshore jurisdictions such as the Cayman Islands, allow U.S. investors to gain exposure to Chinese companies through service agreements and other contracts with the operating company.