US FINANCIAL MARKET
- U.S. stocks opened lower on Wednesday, pressured by weak results from Caterpillar and amid concern over tightening financial conditions in China.
- American Realty Capital Properties said that it would buy Cole Real Estate Investments for $11.2 billion to create the largest net-lease real estate investment trust (REIT) in the US. American Realty said it would offer 1.0929 of its shares or $13.82 in cash for each Cole share. The stock offer is valued at $14.59 per Cole share, representing a premium of 14 % to Cole’s Tuesday close.
- Net-lease REITs have been attracting investors as tenants pick up most of the operating costs and the properties are leased for long periods, performing like a high-dividend bond.
- Corning agreed to buy partner Samsung Display’s 43% stake in their liquid crystal display (LCD) venture, giving the South Korean company a direct stake in itself as competition in the smartphone and tablet market heats up. The deal entails Samsung Display taking $1.9 billion in new convertible preferred shares. Samsung Display will also buy an additional $400 million worth of the new convertible Corning shares, eventually making it Corning’s biggest shareholder, with about 7.4% of the company. The company also announced a $2 billion share buyback and said it had signed a 10-year supply agreement with Samsung.
- Boeing reported a 12 % jump in profit, handily beating estimates, and raised its full-year forecast, sending its shares up more than 5 % at the open. Revenue increased 11 % to $22.13 billion. Commercial sales increased 15 % to $14 billion, with deliveries up 14 % to 170 aircraft, while defense grew 3 % to $8.05 billion. Net income rose to $1.16 billion compared with $1.03 billion. Boeing raised its full-year core earnings forecast to between $6.50 and $6.65 a share from a previous outlook of $6.20 to $6.40. Monthly Dreamliner output will increase to 12 in 2016, up from a goal of 10 by the end of 2013, and reach 14 planes by decade’s end, Boeing said today.
- Northrop Grumman, maker of Global Hawk unmanned planes, reported sharply higher-than-expected third-quarter earnings despite a slight drop in sales, and raised its forecast for full-year sales. Net income climbed 8.3 % to $497 million from $459 million a year earlier. Revenue declined 2.6 % to $6.11 billion in the quarter, exceeding the average estimate of $5.95 billion.
- Caterpillar posted a lower-than-expected quarterly profit and cut its full-year forecast yet again as weak demand from mining customers continued to bedevil the heavy equipment maker. Caterpillar reported a third-quarter profit of $946 million, down from $1.7 billion a year earlier. Total sales and revenue fell 18 % to $13.4 billion.
- Norfolk Southern, the second-largest U.S. eastern railroad, posted a third-quarter profit that topped analysts’ estimates because of rising shipments of steel, fracking sand and farm products. Net income jumped 20 % to $482 million. Sales climbed 4.9 % to $2.8 billion, and shipment volumes increased 4 %, Norfolk Southern said.
- Canadian National Railway said it will split its stock and plans a C$1.4 billion ($1.36 billion) buyback after posting a third-quarter profit that beat analysts’ estimates. Canadian National’s results benefited from a jump in petroleum and chemicals revenue and gains in sales from intermodal freight. The company said it will split its stock 2-for-1 and buy back as many as 15 million shares, or 4.1 %, of the outstanding total, in the next year.
- Canadian Pacific Railway joined larger rival Canadian National Railway in reporting third-quarter profit that beat analysts’ estimates as the companies improved efficiency and got a boost from oil shipments. Net income jumped 45 % to C$324 million ($312.7 million). Revenue increased 5.7 % to C$1.53 billion.
- Both companies benefited from growing demand to haul crude oil while bolstering operating ratio, a measure of railroad efficiency that compares expenses to revenue. After Canadian National yesterday reported a 17 % increase in petroleum and chemicals sales, Canadian Pacific disclosed the same gain in industrials and consumer products revenue — a category that includes crude shipments. Canadian Pacific’s operating ratio improved to a record 65.9 % in the third quarter from 74.1 % a year earlier. Canadian National yesterday reported an operating ratio of 59.8 %, North America’s most efficient carrier.
- Eli Lilly reported better-than-expected quarterly earnings, helped by cost cuts and a big price increase for Cymbalta. The company reported a third-quarter profit of $1.20 billion, down from $1.33 billion a year earlier. Company sales rose 6 % to $5.78 billion, slightly above Wall Street expectations of $5.76 billion.
- Bristol-Myers Squibb reported better-than-expected quarterly earnings. The company said it earned $692 million in the third quarter. That compared with a loss of $711 million in the year-earlier period. Global revenue rose 9 % to $4.07 billion, topping Wall Street expectations of $3.99 billion.
- US Airways Group reported higher-than-expected third-quarter profit as increased ticket prices bolstered revenue. Net income fell to $216 million from $245 million a year earlier. Revenue climbed 9 % to $3.86 billion.
- Billionaire investor Carl Icahn has cashed in big on Netflix, taking advantage of a 457 % gain in its shares since he bought more than 9 % of the streaming video company only 14 months ago. Icahn is booking profits of between $700 million and $800 million on the 3 million shares he sold in the 12 days beginning on October 10.
- Apple on Tuesday offered free upgrades for life on its operating system and business software, and unveiled thinner iPads and faster Mac computers ahead of a competitive holiday shopping season. The debut of the one-pound iPad Air and MacBook Pro with sharper ‘retina’ display repeats a pattern of recent launches with improvements in existing lines rather than totally new products.
- T-Mobile US plans to offer free data downloads of up to 200 megabytes per month to customers who buy the latest Apple iPad, as the No. 4 US mobile service tries to lure cost-conscious customers away from its bigger rivals.
- Pricing at AT&T and Sprint will start at $14.99 per month for iPad data use, while Verizon Wireless will kick off its iPad data service at $20 per month, Apple said on Tuesday.
- Twitter has obtained a $1 billion credit line ahead of its initial public offering, the company disclosed Tuesday in an amended investor prospectus. Goldman Sachs, Morgan Stanley, JP Morgan, Bank of America Merrill Lynch and Deutsche Bank were involved in arranging the credit deal.
US ECONOMY & POLITICS
- U.S. house prices rose 8.5 % in the year through August, extending gains even as higher mortgage rates cut into demand for real estate. Prices climbed 0.3 % on a seasonally adjusted basis from July, the Federal Housing Finance Agency (FHFA) said today.
- Import prices rose 0.2% in September (vs. consensus +0.2%), pushed up by a 0.8% increase in petroleum import prices. Ex-food and energy, import prices were flat on the month.
- Construction spending―including both residential and nonresidential categories―rose 0.6% in August (vs. consensus +0.4%).
EUROPE & WORLD
- Concerns over tighter Chinese monetary policy and worries a new check-up of euro zone banks could prove costly for its weaker members halted a rally spurred by hopes of extended U.S. stimulus.
- China’s short-term money market rates jumped on Wednesday on worries Beijing may tighten policy to curb rising price pressures. Consumer price inflation in China is at a 7-month high while house prices rose the most in nearly three years in September.
- The European Central Bank said it will use stricter rules when stress testing banks’ balance sheets next year than it will to study their assets, as it seeks to prove its credentials as the region’s financial supervisor.
- Inflation fears heightened in Asia on Wednesday as price pressures in Australia intensified and as China’s short-term interest rates shot higher on concerns the central bank may soon tighten liquidity.
- Australia’s quarterly headline inflation sped up to a much higher than expected 1.2 % in the third quarter from 0.4 % in the second.
- In Singapore, September consumer prices rose a less-than-expected 1.6 %, but the central bank warned that core inflation would move higher over the next few quarters.
- South Africa’s inflation rate fell to within the central bank’s target range from a four-year high as lower fuel prices eased transport costs in September. Inflation decelerated to 6 % from 6.4 % in August. Consumer prices increased 0.5 % in the month.
TODAY in HISTORY
- 25,000 women marched in New York City, demanding the right to vote (1915)
- The United Nations General Assembly convened in New York for the first time (1946)
- A suicide truck-bombing at Beirut International airport in Lebanon killed 241 U.S. Marines and sailors (1983)
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.