US FINANCIAL MARKET
WALL STREET OPENS HIGHER ON TRADE TRUCE HOPES
- The Dow Jones Industrial Average extended its recent rally Tuesday as investors grew hopeful that the U.S. and China will roll back tariffs as they work to clinch a partial trade deal.
- China is reviewing locations in the U.S. where President Xi Jinping would be willing to meet with President Donald Trump to sign a pact.
- The U.S. trade deficit narrowed in September as both imports and exports declined, a sign that a trade downturn that began last year is accelerating.
- Activity in the U.S. service sector grew at a faster pace in October than in September.
- The Institute for Supply Management’s (ISM) nonmanufacturing index was 54.7 in October versus 52.6 the prior month.
- Shares of software company Adobe climbed 2.3% after the company late Monday raised its fourth-quarter revenue target for its digital media segment.
- Uber shares fell 6.9% after the ride-hailing company posted another quarterly loss and forecast that it would reach profitability by the end of 2021.
- Although profits are on track to decline for a third consecutive quarter, more than three-quarters of the S&P 500 companies that have reported have beaten expectations, according to FactSet.
Adobe Stock Is Rising on Better-Than-Expected Guidance
- Net new annual recurring revenue for digital media will be $1.55 billion next fiscal year. Analysts projected $1.53 billion.
- Adobe also unveiled new software products Monday at the company’s annual Max conference in Los Angeles, including versions of Illustrator and Photoshop apps for Apple’s iPad.
- Profit will be $9.75 a share in fiscal 2020, Adobe said, compared with analysts’ estimates of $9.69.
- Revenue will be $13.15 billion, the company said. Analysts, on average, projected $13.14 billion.
- The software maker estimated that the total market for its products will grow to about $128 billion in 2022 from $108 billion a year ago. Most of that, $84 billion, represents marketing and customer experience software. The creative software industry would be worth $31 billion and the company’s Document Cloud would be part of a $13 billion market.
Uber Booked Another Quarterly Loss as Revenue Climbed
- Uber posted a large quarterly loss even as revenue climbed 30% as the ride-hailing company faces unrelenting challenges from competitors and regulators across the globe.
- Monthly active platform users, meaning those who ordered food or a ride one or more times during the quarter, was 103 million, up 26%. Analysts expected 107 million.
- Revenue climbed 30% to $3.8 billion from $2.9 billion in the same period a year ago.
- Analysts polled by FactSet on average projected revenue of $3.6 billion.
- Revenue from ridesharing segment increased 19% to $2.9 billion, while revenue from Uber Eats increased 64% to $645 million.
- Ridesharing accounts for 76% of Uber’s total revenue, while Uber Eats accounts for 17%
- Gross bookings, or total customer payments to Uber before payments to drivers and other fees or discounts, jumped 29% to $16.5 billion from the year-earlier period.
- Uber’s quarterly net loss of $1.2 billion was better than analysts expected.
- Adjusted loss for the third quarter widened to $585 million, compared with $485 million during the same period last year, but was still better than an average of analysts’ estimates of $808 million.
- Uber executives said the company would turn an adjusted profit in 2021. “We will be driving discipline across the company and only doing investments that we can afford,” said Chief Executive Officer Dara Khosrowshahi.
- Profitability may still be couple years away, but Uber ended the third quarter with about $12.7 billion in cash, suggesting plans to continue investing in growth.
Mylan tops profit estimates as newer drugs spur North America growth
- Mylan beat Wall Street estimates for third-quarter profit on Tuesday, as its biggest market, North America, benefited from launches of lung disease therapies Wixela and Yupelri.
- The company’s net earnings rose 7.4% to $189.8 million.
- Total revenue increased 3.5% to $2.96 billion, missing analysts’ estimates of $3.01 billion.
Kroger’s 2020 profit, same-store sales estimates top expectations
- In the face of growing competition in the U.S. grocery space, recently disrupted by online retail giant Amazon.com, Cincinnati-based Kroger has been slashing prices and boosting investments in technology to attract more shoppers.
- Under its two-year-old “Restock Kroger” program, the company has also been focusing on private-label brand display, rearranging store layouts and expanding services such as home delivery and self checkouts.
- The company forecast adjusted profit between $2.30 and $2.40 per share in 2020, and identical sales growth, excluding fuel, to be greater than 2.25%.
- Analysts are expecting the company to earn $2.30 per share in 2020 and report same-store sales growth of 1.99%.
Xerox to Sell Stake in Joint Venture to Fujifilm for About $2.3 Billion
- Xerox has agreed to sell its 25% stake in the venture, Fuji Xerox, to Fujifilm as part of a deal that will bring Xerox total proceeds of $2.3 billion, the companies said.
- Xerox has also agreed to sell a majority stake in a smaller joint venture to an affiliate of Fuji Xerox and extended the timeline of an agreement allowing Fujifilm to be a major supplier to Xerox, the companies said.
- Fuji Xerox, established in 1962, sells copiers and printers in the Asia-Pacific region. It generated revenue of roughly $9.3 billion in its most recent fiscal year.
Boeing’s MAX likely to return to European service in first-quarter: regulator
- Boeing’s grounded 737 MAX airliner is likely to return to service in Europe during the first quarter of 2020, the head of the European Union Aviation Safety Agency (EASA) said on Monday.
- While the European regulator expects to give its approval in January, preparations by national authorities and airlines may delay the resumption of commercial flights by up to another two months, EASA executive director Patrick Ky indicated.
US ECONOMY & POLITICS
U.S., China Consider Rolling Back Tariffs as Part of Initial Trade Deal
- “If there’s a deal, [removing] tariffs will be part of it,” a senior administration official said late Monday.
- The U.S. and China have agreed in principle to what President Trump has called the first of several phases of an accord to end the dispute that has penalized hundreds of billions of dollars of trade between the two countries.
U.S. Services Growth Exceeds Expectations in Broad Advance
- U.S. service industries expanded more than forecast in October after tumbling to a three-year low as measures of employment, orders and business activity improved, indicating stable but moderate growth in the biggest part of the economy.
- The non-manufacturing index rose to 54.7 from 52.6, an Institute for Supply Management survey showed Tuesday. The reading exceeded the median estimate of 53.5 in a Bloomberg survey of economists.
Trade Gap Narrowed in September as Imports Fell
- The trade deficit in goods and services shrank 4.7% in September from a month earlier to a seasonally adjusted $52.45 billion.
- The gap narrowed as imports fell 1.7% in September from August to $258.44 billion.
- Exports slid 0.9% to $205.99 billion.
California Mayors Join Campaign to Buy Out PG&E
- The idea, first floated last month by San Jose Mayor Sam Liccardo, is winning support from mayors and county commissioners who represent approximately one-quarter of the population served by PG&E’s utility subsidiary, Pacific Gas & Electric Co.
- The coalition plans to deliver a letter Tuesday to the California Public Utilities Commission and Gov. Gavin Newsom asking that such an option receive fair and full consideration before the state approves any bankruptcy reorganization plan. The company filed for chapter 11 protection in January, citing an estimated $30 billion in wildfire liabilities.
EUROPE & WORLD
Canada’s Trade Gap Narrows Less Than Forecast, Exports Drop
- The nation’s merchandise trade gap hit C$978 million ($744 million) in September, from a revised C$1.2 billion deficit in August.
- Both exports and imports fell in September.
- The weakness in the report is consistent with the view from the Bank of Canada that ongoing trade conflicts between the U.S. and China is hitting business investment in Canada and weighing on exports.
- Canada’s trade surplus with the U.S., its main trading partner, was largely unchanged in September as both exports and imports fell. The surplus decreased slightly to C$4.8 billion, from C$4.9 billion in August.
Rakuten sees $947 million loss from Lyft investment in latest quarter
- Japan’s Rakuten said on Tuesday it expects to take a 103 billion yen ($947 million) loss in the latest quarter on its investment in U.S. ride-hailing firm Lyft Inc.
- The stock has lost about 40% of its value since the company’s initial public offering in March.
TODAY in HISTORY
- The Gunpowder Plot to blow up the English Parliament failed. 1605
- George B. Selden of Rochester, N.Y., received the first U.S. patent for an automobile. 1895
- President Franklin D. Roosevelt won an unprecedented third term in office when he defeated Wendell L. Willkie. 1940
- The first black woman representative to serve in Congress, Shirley Chisholm, was elected. 1968
- At 45, George Foreman, became the oldest heavyweight champion when he knocked out Michael Moorer in the 10th round of their WBA fight in Las Vegas. 1994
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