US FINANCIAL MARKET
Stocks Tick Lower, Retreating Farther From Highs – Wall Street Journal, 11/18/2021
- U.S. stocks turned lower in morning trading despite strong earnings from Macy’s and Kohl’s and unemployment data that showed the labor market is continuing to recover.
- The S&P 500 ticked down 0.1% after the broad-market index closed down 0.3% Wednesday. The Nasdaq Composite Index declined 0.2%, as technology stocks erased early gains. The Dow Jones Industrial Average slipped 0.5%.
- Shares of Macy’s surged 19% and Kohl’s jumped 7.4%, as both retailers released earnings that beat analysts’ estimates and raised their full-year guidance.
- U.S.-listed Alibaba shares declined 11% after the Chinese e-commerce giant reported a drop in quarterly profit due to losses from its investments in equities.
- Technology firm Nvidia rose 8.8% after posting record quarterly revenue. Cisco Systems slid 8.5% after the company gave earnings guidance that was below Wall Street’s estimates and said it was affected by the semiconductor shortage.
- The latest data showed 268,000 people filed for jobless claims in the week ended Nov. 13, a decline from the previous week. The number of claims is beginning to approach pre-pandemic levels, as employers hang on to their workers in a tight labor market.
- Overseas, the Turkish lira has depreciated for eight consecutive days, reaching a record low of 11.1 lira to $1.
- The country’s central bank cut its key policy rate to 15% Thursday after President Recep Tayyip Erdogan renewed his calls for reduction, despite surging inflation.
- In Asia, most major benchmarks declined. The Shanghai Composite Index retreated 0.5% and Japan’s Nikkei 225 edged down 0.3%.
- Hong Kong’s Hang Seng Index fell 1.3%, dragged down by a series of Chinese technology companies missing earnings expectations, according to Deutsche Bank.
Nvidia Posts Record Revenue as Videogaming Sales Soar – Wall Street Journal, 11/18/2021
- Graphics-chip company Nvidia posted another quarter of record sales amid supercharged demand for videogaming and data centers.
- Nvidia said Wednesday that sales for the third quarter rose 50% to $7.1 billion, generating net income of $2.46 billion. The figures surpassed Wall Street expectations, with analysts surveyed by FactSet estimating the company would bring in $6.8 billion in revenue and $2.27 billion in net income.
- Revenue was buoyed by record videogaming sales of $3.2 billion, up 42% from the year-ago period, and record data-center sales, up 55% from the same time a year earlier.
- Nvidia Chief Financial Officer Colette Kress on Wednesday said supply-chain constraints hitting car makers led Nvidia automotive sales to fall 11% from the second quarter, though they were still up 8% from the year-ago period as customers ramped up self-driving-vehicle programs, she said.
Cisco reports disappointing revenue and issues forecast that misses estimates – CNBC, 11/18/2021
- Cisco shares tumbled as much as 8% in extended trading on Wednesday after the computer networking company reported quarterly revenue that fell short of analysts’ expectations and issued weaker-than-expected guidance.
- Revenue rose 8% in the first quarter from a year earlier, the company said in a statement.
- Net income, at $3 billion, grew 37%.
- For the full fiscal year, Cisco’s forecast was $3.38 to $3.45 in adjusted earnings per share and 5% to 7% revenue growth.
- Analysts polled by Refinitiv were looking for earnings of $3.42 per share and $52.87 billion in revenue, which would equal 6.1% growth.
Kohl’s shares jump after retailer reports 16% sales increase as shoppers buy clothes and makeup – CNBC, 11/18/2021
- Kohl’s on Thursday said sales rose 16% in the fiscal third quarter, as shoppers turned to its stores and website for clothes and makeup.
- Revenue climbed to $4.6 billion from $3.98 billion a year ago, outpacing estimates of $4.27 billion.
- Same-store sales, which track sales online and at Kohl’s stores open for at least 12 months, grew 14.7% in the third quarter, topping the 12.5% gain that analysts expected, according to StreetAccount.
- Digital sales grew 6% in the third quarter and 33% on two-year basis, Gass said on an earnings call. E-commerce drove 29% of total sales in the quarter.
- In the third quarter ended Oct. 30, net income rose to $243 million, or $1.65 per share, from a net loss of $12 million, or 8 cents per share, a year earlier. The results topped the 64 cents per share expected by analysts surveyed by Refinitiv.
Macy’s Hires Adviser to Study Separation of E-commerce Business – Wall Street Journal, 11/18/2021
- Macy’s said it hired consulting firm AlixPartners to evaluate whether it makes sense to spin off its e-commerce operations, a move that comes amid pressure from an activist investor to separate the fast-growing digital segment from the department-store chain’s physical stores.
- Macy’s sales at stores open at least a year rose roughly 36% in the three months ended Oct. 30, compared with the previous year, and up nearly 9% from 2019.
- Digital sales made up a third of Macy’s net sales of $5.4 billion in the latest quarter.
- It reported a profit of $239 million, from a loss of $91 million in the prior-year quarter.
- In its revised forecast Thursday, the company said it expects full-year earnings excluding special items between $4.57 a share and $4.76 a share, up from between $3.41 a share and $3.75 a share.
- It expects net sales between $24.12 billion and $24.28 billion, up $450 million at the midpoint.
Ford Steps Into the Chips Business – Wall Street Journal, 11/18/2021
- Ford Motor is looking to get into the semiconductor business, after a year of computer-chip shortages that snarled its global factory output.
- Ford entered a strategic agreement with U.S.-based chip maker GlobalFoundries to develop chips, a pact that could eventually lead to joint production in the U.S., the companies said Thursday.
- They didn’t disclose terms or say how much they might invest in future production capacity.
- In the autos and semiconductor industries, the parts crisis is driving deeper collaboration with executives from both sectors establishing closer ties to address challenges and working together to introduce new products.
Portillo’s Hikes Menu Prices on Surging Labor, Commodity Costs – Bloomberg, 11/18/2021
- Portillo’s raised menu prices by about 3% in its current quarter as higher wage and commodity costs weigh on results.
- The hot-dog chain says it doesn’t see inflation abating anytime soon, and that more price hikes may be in store next year. At the same time, the dine-in business continues to be pressured by Covid-19 and mask mandates.
- “I don’t think we see an end in sight in terms of commodity inflation,” Chief Financial Officer Michelle Hook said during a conference call Thursday. She said the company “will continue to evaluate” more price increases into 2022.
CVS to Close 900 Stores Over Three Years – Wall Street Journal, 11/18/2021
- CVS Health said Thursday it will close 900 stores over the next three years, nearly 10% of its U.S. locations, while adding more health services at remaining locations.
- The largest U.S. pharmacy chain said it would close 300 stores a year while adding primary care offices at certain sites as well as converting more stores into so-called health hubs with offerings such as diagnostic testing, mental-health services and hearing exams.
- In connection with the planned store closures, the company said it expects to record an impairment charge in the fourth quarter of 2021 of between $1 billion and $1.2 billion, or 56 cents to 67 cents a share of earnings.
Sony’s PlayStation and Others Pressure Activision Blizzard to Better Address Sexual-Misconduct Issues – Wall Street Journal, 11/18/2021
- Sony’s PlayStation unit has asked Activision Blizzard to explain how it plans to address a Wall Street Journal article about its chief executive’s handling of sexual misconduct issues.
- The Journal article, which was published on Tuesday, said Activision Chief Executive Bobby Kotick didn’t inform the company’s board of directors about some reports of sexual misconduct by male employees toward female employees, including alleged rapes.
- Activision issued a statement Tuesday saying the article paints “a misleading view of Activision Blizzard and our CEO” and that it “ignores important changes underway to make this the industry’s most welcoming and inclusive workplace.”
US ECONOMY & POLITICS
U.S. Unemployment Claims Steady in Tight Job Market – Wall Street Journal, 11/18/2021
- U.S. jobless claims are gradually drifting down toward pre-pandemic levels as employers avoid layoffs and many workers quit or remain sidelined in a tight labor market.
- Initial claims for jobless benefits edged down to seasonally adjusted 268,000 last week from a revised 269,000 a week earlier, the Labor Department said Thursday. Claims are at the lowest level since the pandemic hit the U.S. economy last spring.
- Continuing claims, which provide an approximation for the number of people receiving regular state benefits, fell to a pandemic low of 2.08 million in the week ended Nov. 6 from 2.21 million a week earlier.
EUROPE & WORLD
Alibaba Cuts Growth Forecast on Slower Consumption, Tough Competition – Wall Street Journal, 11/18/2021
- Alibaba slashed its growth expectations for this fiscal year, as Chinese consumers spend less in an increasingly competitive e-commerce market.
- In the July-September quarter, net income attributable to shareholders was 5.37 billion yuan, or $833 million as of Sept. 30, down from 28.77 billion yuan in the same period last year.
- Ant Group, Alibaba’s financial-technology affiliate, had an estimated net profit of 19.7 billion yuan in the quarter ended June 30, up 39% from the same period a year ago, according to The Wall Street Journal’s calculations based on Alibaba’s earnings disclosures.
- The retail behemoth said it expects its fiscal 2022 revenue to increase by 20% to 23%, down from its forecast of about 30% in May.
China Evergrande to Shed Stake in Tencent-Backed Venture for $273 Million – Wall Street Journal, 11/18/2021
- Cash-strapped property giant China Evergrande Group said it will sell its entire stake in a company that provides online video-streaming and Internet home services for the equivalent of $273 million, closing a chapter in a six-year business venture with internet behemoth Tencent.
- Evergrande said Thursday it has agreed to unload its remaining 18% stake in HengTen Networks Group at around a 24% discount to the Hong Kong-listed company’s stock price a day earlier.
- The developer, which recently reported around $300 billion in liabilities, and has been scrambling to sell assets to make interest payments and avoid defaulting on its international bonds.
China Releasing Some Oil From Strategic Reserves After U.S. Invite – Bloomberg, 11/18/2021
- China is releasing some oil from its strategic reserves days after the U.S. invited it to participate in a joint sale, suggesting the world’s two biggest oil consumers are willing to work together to keep a lid on energy costs.
- U.S. President Joe Biden and Chinese President Xi Jinping had discussed the merits of releasing oil from strategic reserves during their virtual summit this week, and Beijing’s decision will be seen as a win in Washington’s campaign to bring down prices.
- The administration has been lobbying Asian nations including China, India, Japan and South Korea to release reserves after OPEC+ rebuffed pressure from Biden to pump more crude.
- Captain Nathaniel Palmer discovered Antarctica. (1820)
- Mickey Mouse made his debut in Steamboat Willie. (1928)
- Jim Jones, a U.S. pastor, led 914 of his followers to their deaths at Jonestown, Guyana, by drinking a cyanide-laced fruit drink. Cult members who refused to swallow the drink were shot. (1978)