US FINANCIAL MARKET
S&P 500, NASDAQ HIT RECORD HIGH ON U.S. JOBS REPORT, CHINA DATA
- U.S. stocks rose nearly 1% on Friday, taking comfort from October data that showed U.S. jobs growth slowed less than expected and China’s factory activity expanded at its fastest pace in more than two years.
- The Labor Department’s non-farm payrolls data showed jobs growth in October came in at 128,000 compared to expectations of 89,000, according to economists.
- Also Friday, a closely watched gauge of U.S. manufacturing activity came in weaker than expected for October.
- The Institute for Supply Management (ISM) said its manufacturers’ Purchasing Managers Index was 48.3 last month, below the 49.1 that had been forecast.
AbbVie boosts 2019 profit outlook as Humira helps beat revenue estimates
- AbbVie posted quarterly sales above estimates on Friday and raised the lower end of its 2019 profit forecast, getting a boost from strong demand for cancer medicine Imbruvica and a lower-than-expected drop in bestseller Humira’s revenue.
- Total revenue rose nearly 3% to $8.48 billion, beating estimates of $8.38 billion.
- Sales of cancer drug Imbruvica rose nearly 30% to $1.26 billion, ahead of estimates of $1.19 billion, while Humira sales dipped 3.7% to $4.94 billion, hurt by biosimilar competition outside the United States, but beat estimates of $4.89 billion.
- Net earnings fell to $1.88 billion, from $2.75 billion a year earlier, as research and development costs soared and the company took a charge related to assets acquired as part of an acquisition in 2016.
- AbbVie raised the lower end of its 2019 earnings per share forecast by 8 cents to $8.90, while maintaining the top end at $8.92.
Pinterest quarterly revenue, forecast disappoint; shares plunge
- Pinterest fell short of Wall Street estimates for quarterly revenue on lower-than-expected average revenue per user and its revised full-year sales forecast came marginally below expectations, sending its shares tumbling 19%.
- Total revenue rose about 47% to $279.7 million in the quarter, but fell short of analysts’ estimates of $280.6 million.
- Pinterest on average posted revenue of 90 cents per user globally, falling just short of expectations of 91 cents.
- Pinterest, which calls its users “Pinners”, said monthly active users jumped 28% to 322 million, beating expectations of 307 million users, but the number of monthly active users in the U.S. dropped 8%.
- The company’s net loss widened to $124.7 million from $18.9 million a year earlier, as total costs and expenses nearly doubled to $413.4 million.
- Pinterest expects 2019 total revenue to be between $1.10 billion and $1.115 billion, compared to its prior forecast of $1.095 billion and $1.115 billion. Analysts were expecting $1.12 billion.
- Adjusted losses before interest, taxes, depreciation, and amortization are now projected to be between $30 million and $10 million, compared with its previous guidance of a loss of $50 million and $25 million.
Newell Raises Outlook, Beats Expectations
- Newell Brands raised its full-year adjusted profit and sales guidance as it posted better-than-expected quarterly results for those measures.
- Sales declined 3.8% to $2.45 billion, beating analysts’ expectations of $2.43 billion.
- The company posted a loss of $625.8 million, compared with last year’s loss of $7.31 billion in the same quarter.
- The company, the parent of Yankee Candle, Sharpie pens and Elmer’s glue, expects sales of $9.6 billion to $9.7 billion for the full year, compared with its prior outlook of $9.1 billion to $9.3 billion.
- The consumer-goods conglomerate on Friday raised its adjusted earnings-per-share guidance to between $1.63 and $1.68 from between $1.50 and $1.65.
Exxon Mobil Reports Lower Profit, Revenue
- Exxon Mobil’s third-quarter profit nearly halved, hit by lower oil prices and weaker margins in refining and chemicals, with its three major business reporting lower year-over-year profit.
- Revenue fell to $65.05 billion from $76.61 billion a year earlier. Analysts had expected $60.90 billion of revenue in the quarter.
- Oil-equivalent production rose 3% to 3.9 million barrels a day.
- Earnings fell to $3.17 billion in the quarter, from $6.24 billion a year earlier, the company reported on Friday.
Chevron’s profit falls due to weaker oil and gas prices
- Chevron reported a larger-than-expected 36% drop in third-quarter profit on Friday, hit by lower oil and gas prices despite an overall increase in its output.
- Sales and other operating revenues in third quarter 2019 were $35 billion, compared to $42 billion in the year-ago period.
- Chevron’s worldwide net oil equivalent production grew about 3% to 3.03 million barrels per day, but average sales prices fell both in the United States and internationally.
- Chevron’s profit fell to $2.58 billion in the quarter, from $4.05 billion a year earlier.
- The company offered a tepid outlook for the fourth quarter, saying it expected full-year oil and gas production to fall in the middle of its targeted increase of 4% to 7%.
AIG Swings to Profit, as Catastrophes Take a Smaller Toll
- Global insurer American International Group swung to a profit in third-quarter net income, as catastrophes took significantly less of a bite out of earnings than the year before.
- The New York company posted overall net profit of $648 million, reversing a year-earlier loss of $1.26 billion.
- Net catastrophe losses declined to $404 million in the quarter, compared with $1.3 billion in the prior-year quarter.
- The insurer’s general insurance accident year combined ratio, excluding changes from losses incurred in past years, was 95.9, compared with 99.4 a year earlier.
Google to Buy Fitbit, Bolstering Hardware Business
- Google has reached a deal to buy wearable fitness products company Fitbit for roughly $2.1 billion, an acquisition which would extend the internet-search giant’s reach in consumer electronics.
- Google said it would acquire the maker of fitness trackers and smartwatches for $7.35 a share in cash, a 19% premium to Fitbit’s closing price Thursday.
- Fitbit has since sold more than 100 million devices world-wide, and has more than 28 million active users, the company said.
Qantas Grounds Three Cracked Boeing 737 Jets
- Qantas Airways became the latest airline to ground some older Boeing 737s for structural cracks, another headache for the plane maker grappling with the global grounding of the newer MAX model.
- Qantas Airways said it found three aircraft with hairline cracks in the “pickle fork,” a component located between the plane’s wing and fuselage.
- Boeing notified the Federal Aviation Administration of the potential issue after detecting cracks in this component on three 737-800s it was converting to freighters.
- The FAA in October mandated urgent structural inspections of Boeing 737 NG models that had completed more than 30,000 takeoff and landing cycles, along with subsequent checks and repairs, as necessary, of other NG jets that had flown 22,600 cycles.
Amazon’s bid to acquire stake in Indian retailer faces antitrust hurdle: sources
- India’s antitrust body has sought more information from Amazon about its planned acquisition of a stake in India’s Future Retail, sources with knowledge of the matter told Reuters, which could potentially delay the deal.
- Amazon in August agreed to acquire a 49% stake in a unit of India’s Future Group which owns 7.3% of Future Retail, giving the U.S.-based company a 3.58% stake in the retailer which operates more than 1,500 stores in the country.
- In a notice to Amazon last month, the Competition Commission of India (CCI) said “in certain overlapping segments and areas of operation of the parties, the combined market share exceeds the threshold specified in the combination regulations”.
US ECONOMY & POLITICS
U.S. job growth slows less than expected despite GM strike
- U.S. job growth slowed less than expected in October as the drag from a strike at General Motors was offset by gains elsewhere and hiring in the prior two months was stronger than previously estimated.
- The economy added 128,000 jobs in October, while job creation in September and August was revised up by a net 95,000.
- The jobless rate ticked up to 3.6% last month from 3.5% in September, reflected 325,000 people streaming into the labor force.
- Average hourly earnings climbed 3% from October 2018.
- Economists forecast payrolls to grow by 75,000, an unemployment rate of 3.6%, and a 3% increase in wages from a year earlier.
- The labor force participation rate increased to 63.3% last month from 63.2% in September.
- A broader measure of unemployment (U6), which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, rose to 7.0% last month from 6.9% in September.
- Government employment fell by 3,000 jobs as 20,000 temporary workers hired for the 2020 Census completed their work.
US manufacturing contracts for a third straight month
- A gauge of U.S. manufacturing showed the sector continued to contract in October, the third straight month of slowdown amid global trade uncertainties.
- The purchasing manufacturing index from the ISMA came in at 48.3% last month, up from a 47.8% reading in September but below economists’ expectations of 49.1%.
- The production index was only 46.2% in October, compared to the September reading of 47.3%.
- The backlog of orders index was 44.1%, contracting for the sixth straight month, versus the September reading of 45.1%.
- 50 is the line separating expansion and contraction.
U.S. construction spending beats expectations on homebuilding
- U.S. construction spending increased more than expected in September as investment in homebuilding rose its highest level in nine months.
- The Commerce Department said on Friday construction spending rebounded 0.5%.
- Data for August was revised down to show construction outlays falling 0.3% instead of ticking up 0.1% as previously reported.
- Economists had forecast construction spending gaining 0.2% in September.
- Construction spending dropped 2.0% on a year-on-year basis in September.
Trump Decision Due on Foreign Car Tariffs
- Politics and the prospect of impeachment are emerging as potential roadblocks to threatened Trump administration tariffs on European and Asian auto imports.
- The White House has until Nov. 13 to decide whether to impose the levies, which President Trump first proposed last year in the event the U.S. can’t reach an accord with major trading partners including the European Union.
- Business groups and some of Mr. Trump’s fellow Republicans are warning that the tariffs—which are opposed by both foreign and domestic auto makers—couldn’t come at a worse time.
- As the 2020 election season begins, the 25% tariffs would jack up the price of import cars by about $6,875, according to the Center for Automotive Research.
- Besides angering car-buyers, the higher prices could dent sales, further straining auto makers that are already cutting jobs.
White House Backing Off Proposed Fuel-Efficiency Freeze
- The Trump administration is backing away from a plan to freeze tailpipe-emissions targets for new vehicles through 2025.
- The administration is now considering requiring a 1.5% annual increase in fleetwide fuel efficiency, using an industry measure that takes both gas mileage and emissions reductions into account, the people said.
- The target moves the number closer to the Obama-era rules calling for 5% gains but still provides auto makers with significant relief and would allow cars to emit more pollution.
EUROPE & WORLD
Global Factory Slowdown Takes Toll on Jobs
- Surveys of purchasing managers released Friday indicated the sector continued to cool in October, although there were some signs that the pace of contraction has started to level off.
- There were mixed signals from China, the world’s second-largest economy, where a measure of activity compiled by data firm IHS Markit pointed to an acceleration in growth, a day after an official measure pointed to a steeper decline in activity.
- Other surveys by IHS Markit signaled the end of a near four-year expansion of manufacturing activity in Vietnam, while Japan, Indonesia, Taiwan and Malaysia each reported declines in activity.
- India’s manufacturing sector continued to grow, but at the weakest pace in two years.
Alibaba Beats Earnings Expectations, Tops Revenue Forecast
- China’s Alibaba reported a better-than-expected 40% rise in second-quarter revenue on Friday, powered by strong growth in its e-commerce and cloud computing businesses.
- Total revenue rose to 119.02 billion yuan ($16.91 billion) in the second quarter from 85.15 billion yuan a year earlier.
- Analysts were expecting revenue of 116.8 billion yuan.
- Sales from the company’s e-commerce business rose about 40% to 101.22 billion yuan, while its cloud computing business posted a 64% jump in revenue to 9.29 billion yuan.
- The company had 785 million mobile monthly active users for the quarter, compared 666 million a year ago, while annual active consumers on the company’s China retail marketplaces rose to 693 million from 601 million a year ago.
- Net income rose to 72.54 billion yuan from 20.03 billion yuan a year earlier, due to a gain related to its 33% stake in Ant Financial.
Japan’s Sharp beats second-quarter profit expectations on laptop business
- Japan’s Sharp posted a profit that beat expectations and was its first rise in five quarters, driven by the strength in the laptop business it bought from Toshiba.
- Sharp, which makes sensors, camera modules and screens for Apple’s iPhones, posted an operating profit of 22.3 billion yen ($206.54 million) for the second quarter, up from 22.2 billion yen a year prior.
- That compared with a 19.65 billion yen estimate.
- Sharp, a unit of Taiwan’s Foxconn, maintained its profit forecast for the year ending March at 100 billion yen, versus a consensus estimate of 82.23 billion yen from 10 analysts.
China Pushes to Integrate Hong Kong Through Patriotic Education, Security Overhauls
- China plans to ramp up efforts to integrate Hong Kong with the mainland by strengthening patriotic education and retooling the city’s political and economic system, amid continuing protests against Beijing’s growing influence in the city.
- In a Friday briefing elaborating on policies issued by the Communist Party elite, a senior official said Beijing plans to refine its mechanisms for governing Hong Kong, such as by revamping how the city’s leader and other top officials are appointed and removed, as well as upgrading its safeguards for national security.
- Beijing will also support Hong Kong’s efforts to “strengthen law-enforcement capabilities” and inculcate in its youth a stronger sense of national identity and patriotism, as well as a deeper understanding of Chinese history and culture, said Shen Chunyao, a senior official at China’s parliament who oversees legislative work related to Hong Kong.
- Patriotic education and national-security overhauls have proved to be the most stubborn of issues that Beijing has failed to force through in Hong Kong since regaining sovereignty over the city in 1997.
China Is About to Switch On 5G. It’s Behind the U.S., but Not for Long.
- China plans to turn on its first 5G networks on Friday, setting up the country to leapfrog other nations in deploying the superfast cellular technology at the center of a technological arms race between China and the U.S.
- China’s three major state-owned wireless carriers, China Mobile, China Telecom and China Unicom, will open the country’s 5G network for public use in about 50 major cities, including Beijing and Shanghai, said Chen Zhaoxiong, vice minister of the Ministry of Industry and Information Technology on Thursday at a Beijing conference
- China already has more than 80,000 5G macro base stations, typically cellular towers with antennas and other hardware that beam wireless signals over wide areas, government officials said.
- They said China will end the year with about 130,000, while Bernstein Research estimates South Korea will be in second place with 75,000, followed by the U.S. with 10,000.
European Cloud Project Draws Backlash from U.S. Tech Giants
- Germany and France are introducing a government-backed project to develop European cloud infrastructure in an effort to help local providers compete with U.S. technology giants, which dominate the global cloud market.
- Amazon and Microsoft criticized the initiative announced this week, called Gaia-X, saying the project will restrict data services along national borders.
- Companies in Germany and France, the continent’s economic powerhouses, and in other European Union countries are concerned about depending on technology providers that must comply with the U.S. Cloud Act.
- The 2018 law requires American firms to provide law enforcement with customers’ personal data on request, even when the servers containing the information are abroad.
TODAY in HISTORY
- The Stamp Act, the first direct tax on the American colonies, went into effect. (1765)
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