US FINANCIAL MARKET
- Stocks edged up at the open on Tuesday after data showed a dip in producer prices last month.
- Apple’s quarterly sales fail to excite investors. Apple’s China revenue climbed just 6 % even though two smartphone models hit store shelves in its second-largest market last month. Wall Street had hoped for a stronger beat on quarterly sales after the company predicted in September that its revenue and margins would come in at the high end of its own forecasts.
- Apple said it sold 33.8 million iPhones last quarter, roughly in line with expectations for 33 million to 36 million.
- It sold 14.1 million iPads during the quarter, up very slightly from 14 million in the year-ago quarter, and moved 4.6 million of its Mac computers, down from 4.9 million a year ago.
- Revenue was $37.5 billion, ahead of Wall Street’s average forecast of $36.8 billion. Apple also said revenue for the holiday quarter would be $55 billion to $58 billion, up 0.9 % to 6.4 %, from $54.5 billion a year earlier. Profit will be about the same as last year, based on Apple’s predictions for gross margins.
- Net Income was $7.5 billion with gross and net profit margins 37 % and 20 %, respectively.
- Apple ended the past quarter with $146.8 billion in cash and investments, up $100 million from the prior quarter. The company paid out $2.8 billion to shareholders in dividends in the quarter and bought back $5 billion of its own shares.
- Linn Energy released moderately positive quarterly results. Oil and gas production of 823 MMcfe per day was up 5% from 782 MMcfe/d for Q3 of 2012, up 5.5% from 780 MMcfe/d for Q2 of 2013 and above previous guidance for the quarter of 820 MMcfe/d.
- Pfizer reported better-than-expected third-quarter earnings. It earned $2.59 billion in the quarter. That compared with $3.21 billion in the year-earlier period. Global company sales fell 2 % to $12.64 billion, hurt by generic competition for cholesterol fighter Lipitor and other medicines. Wall Street had expected $12.7 billion.
- Johnson Controls moved to a profit in its fiscal fourth quarter, partly helped by a gain related to the sale of two businesses. It earned $105 million. A year ago it lost $8 million. Revenue increased 6 % to $11.05 billion from $10.39 billion as results improved across its segments. Wall Street called for $10.95 billion in revenue.
- Cummins, the U.S. maker of engines and other vehicle components, reported lower-than-expected quarterly profit. Cummins now expects full-year revenue to fall 3 % versus its previous forecast of revenue being flat in 2013. Shares are down more than 8 % in the morning trading. Cummins posted net income of $355 million up from $352 million last year. Sales in the quarter fell 1 % to $2.5 billion.
- Goodyear Tire & Rubber (GT) reported third quarter earnings of $166 million as revenue slipped to $5 billion.
- JetBlue Airways reported better-than-expected third-quarter earnings. Net income rose 58 %. It said that would expand flying through the rest of this year and order more planes. It earned $71 million, up from $45 million last year. Revenue rose 10 % to $1.44 billion, matching analyst estimates.
- J.C. Penney told investors for the third time in less than five weeks that sales trends are improving and reaffirmed its forecast calling for positive comparable-store sales results coming out of the third quarter.
US ECONOMY & POLITICS
- Headline retail sales declined 0.1% in September (vs. consensus Flat), entirely due to a 2.2% drop in motor vehicle and parts sales. Excluding autos, retail sales rose 0.4%. Core retail sales rose 0.5% on the month.
- The increase last month probably reflected sales of Apple’s new iPhone. While Americans bought smart phones, they cut back on automobile purchases, with sales at auto dealers falling 2.2 %, the biggest drop since October last year.
- The Labor Department said wholesale prices or Producer Price Index (PPI) dipped 0.1 % last month, the first decline since April, after advancing 0.3 % in August. In the 12 months through September, wholesale prices rose 0.3 %, the weakest reading since October 2009. That compared to a 1.4 % increase in August.
- The S&P/Case-Shiller house price index rose 0.93% (vs. consensus +0.65%) in August. By city, the largest gains were seen in Las Vegas (+2.3%), Los Angeles (+1.7%), and San Diego (+1.6%), generally consistent with the trend seen over the past year, in which states hardest hit by the housing bust recovered most strongly. Over the past twelve months, the index rose 12.8%, the fastest pace since 2006. Prices rose 29.2 % in Las Vegas and followed by a 25.4 % in San Francisco, yearly unadjusted basis.
- U.S. business inventories rose as expected in August, suggesting restocking could provide a lift to third-quarter economic growth. Inventories increased 0.3 % after rising 0.4 % in July. Inventories are a key component of GDP changes. Retail inventories, excluding autos – which go into the calculation of GDP – increased 0.3 % after advancing 0.8 % in July. Business sales rose 0.3 % in August after increasing 0.6 % the prior month.
- U.S. small business borrowing rose last month from a year earlier. The Thomson Reuters/PayNet Small Business Lending Index, which measures the volume of financing to small companies, registered 109.7 in September, down 6 % from August but up 16 % from the same month a year earlier.
EUROPE & WORLD
- UK’s Lloyds Banking Group’s underlying profit almost doubled in the latest quarter thanks to an improved interest margin and lower costs.
- Deutsche Bank posted a 98 % drop in quarterly pre-tax profit to 18 million euros ($24.81 million), below the lowest expectations, weighed by a fall in trading income and a 1.2 billion euros increase in litigation provisions. Unlike rivals Barclays and UBS, Deutsche Bank has not yet reached a settlement over Libor scandal.
- U.S. and European regulators ordered Dutch lender Rabobank to pay $1.07 billion to settle allegations over Libor scandal.
- Asia’s once-reliable export engine remains stalled two years into a global economic recovery, raising concerns about the region’s competitiveness and its ability to motor through the next tough time for emerging markets. Exports from seven of East Asia’s biggest exporters – Japan, China, South Korea, Taiwan, Thailand, Hong Kong and Singapore – grew by just 0.8 % in the third quarter.
- If exports fail to offset rising interest rates and ebbing global capital flows, economists say, Asia will have to rely on domestic demand to take up the slack – a difficult proposition given aging populations and other structural hurdles.
- Japan economy has slowly been losing market share in the United States. Japanese exports fell almost 11 % to $180.4 billion in the third quarter, leading Asia’s export decline. In local currency terms, Japanese exports climbed nearly 13 % in the quarter because of a sharply weaker yen over the past 12 months. But the volume of shipments was virtually flat.
TODAY in HISTORY
- William Penn arrived in Pennsylvania (1682)
- Mozart’s opera Don Giovanni debuted in Prague (1787)
- The Republic of Turkey was proclaimed under Mustafa Kemal Ataturk (1923)
- The New York Stock Exchange crashed on Black Tuesday, precipitating the Great Depression (1929)
- Israel invaded the Egyptian Sinai Peninsula during the Suez Canal crisis (1956)
- European leaders signed the European Union’s first constitution (2004)
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.