US FINANCIAL MARKET
- U.S. stocks edged higher at the open on Friday, following the biggest rally since the first trading day of the year, as talks continued in Washington to end a fiscal stalemate that has shut down the government for days.
- JP Morgan Chase, the biggest U.S. bank by assets, reported a rare quarterly loss after incurring $9.2 billion in legal expenses, or $7.2 billion after taxes. JPMorgan posted a loss of $380 million. The bank disclosed that it has set aside $23 billion for settlements, fines and other legal expenses.
- Wells Fargo, the biggest U.S. mortgage lender, reported a 13% rise in third-quarter profit, but its mortgage banking income fell sharply as the refinancing boom began to fade. Net income rose to $5.32 billion, from $4.72 billion a year earlier. The bank made $80 billion in home loans, down from $139 billion a year earlier. Total revenue dipped to $20.5 billion from $21.2 billion a year earlier.
- Genesee & Wyoming’s September traffic almost doubled from a year ago after its acquisition of RailAmerica. Total traffic for the month was 155,540 carloads, compared with 79,239 carloads in September 2012.
- Safeway’s third-quarter net income fell 58%, hurt by a software impairment charge, higher theft and lower property gains. However, results beat expectations. Safeway also said that it plans to leave the Chicago market by early next year as it continues to narrow its focus and posted a sharply lower profit for the third quarter.
- Volkswagen’s nine-month sales topped 7 million vehicles for the first time as demand in China more than offset a decline in Europe. September sales in China were an estimated 15.4%.
- The U.S. government shutdown is making it harder for the State Department to review the Keystone XL pipeline permit process, which could delay President Barack Obama’s decision on the project.
- Consumers are increasingly turning to an unlikely source for home security – the cable company. A decline in prices for critical components such as cameras and wireless technology has lowered entrance barriers to the $13 billion home security market, traditionally the territory of players like ADT Corp. ADT CEO Naren Gursahaney said in an interview that he is in discussions with every pay TV company about potential partnerships.
- Top Analyst Upgrades and Downgrades:
- Chipotle (CMG) was raised to Buy from Neutral with a $525 fair value target by Janney Capital Markets.
- Johnson & Johnson (JNJ) was raised to Neutral from Sell by Goldman Sachs.
- Diageo (DEO) was raised to Outperform from Neutral by BNP Paribas.
- Safeway (SWY) was raised to Overweight from Neutral by J.P. Morgan.
- Corning (GLW) was downgraded to Neutral from Overweight at Piper Jaffray.
- Eli Lilly (LLY) was downgraded to Underperform from Hold by Jefferies.
- Intel (INTC) was downgraded to Neutral from Outperform at Macquarie.
- Merck (MRK) was downgraded to Hold from Buy at Jefferies.
US ECONOMY & POLITICS
- President Barack Obama and House Republican leaders were moving toward an agreement to extend the nation’s borrowing authority even as they remained at odds over terms for ending the partial government shutdown.
- The Thomson Reuters/University of Michigan Surveys of Consumers’ preliminary October consumer sentiment index fell to 75.2, its weakest level in nine months, from the final September figure of 77.5, and below expectations of a 76 reading. While the sentiment gauge declined for a third straight month, the size of the decrease was relatively small.
- The survey’s gauge of consumer expectations fell to 63.9, the lowest level so far this year. This compared with 67.8 in September and a forecast of 67.5.
- The index of current conditions edged up to 92.8 from 92.6 last month.
- The United States will become the world’s largest non‐OPEC oil producer next year – overtaking Russia - thanks to its shale oil boom. U.S. liquids production will average 11 million bpd in 2014 versus 10.86 million in Russia. Saudi Arabia is still the largest oil producer with 11.5 million.
EUROPE & WORLD
- China’s economic growth should exceed 7.5% this year, according to Chinese officials. After cooling in 12 of the past 14 quarters, China’s economy is finally showing signs of stabilization, helped in part by government measures to shore up growth, including lowering taxes for small firms and quickening infrastructure spending.
- China’s passenger-vehicle sales rose 21% in September to an eight-month high, as Japanese automakers rebounded from the consumer backlash sparked by a territorial dispute last year.
- Mexican industrial production unexpectedly contracted 0.7% in August from the year earlier as construction and mining activity tumbled.
- Canada’s jobless rate declined to 6.9% from 7.1% in August, the lowest since December 2008.
- India’s industrial output rose 0.6%, less than economists estimated in August.
TODAY in HISTORY
- A letter from Albert Einstein was delivered to President Franklin D. Roosevelt concerning the possibility of atomic weapons (1939)
- The first staffed Apollo mission, Apollo 7, was launched with astronauts Wally Schirra, Donn Fulton Eisele, and R. Walter Cunningham aboard (1968)
- Space shuttle Challenger astronaut, Kathryn Sullivan, became the first American woman to walk in space (1984)
Sources: Reuters, Yahoo Finance, Google Finance, Bloomberg, CNN Money.
This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S & P 500, are unmanaged and may not be invested into directly.