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Pence Wealth Management Financial Markets Report

US FINANCIAL MARKET

  • U.S. stocks fluctuated at the open, after the Dow Jones Industrial Average rose to a record yesterday, as investors dissected corporate earnings and data showing an unexpected gain in jobless claims and higher consumer spending.

o    The S&P 500 posted a 0.6 % gain in April for a third monthly advance, as better-than-estimated economic data and corporate results offset escalating tensions between the U.S. and Russia over Ukraine.

o    75 % of the 350 companies that have reported earnings have beaten estimates for profit, while 52 % topped revenue projections, according to data compiled by Bloomberg.

  • MasterCard profit rises as more people use cards. The company’s net income rose to $870 million for the first quarter from $766 million a year earlier. Net revenue rose about 14 % to $2.18 billion.

o    MasterCard’s worldwide purchase volume increased 10 % on a local currency basis to $759 billion. Purchase volumes in the United States rose 9 % to $268 billion from a year earlier.

o    MasterCard made no mention of any impact from Russia in its statement on Thursday.

  • Viacom quarterly profit rises 4 %. Viacom, which owns cable networks MTV and Comedy Central and Paramount Pictures, also said it would buy British public service broadcaster Channel 5 Broadcasting Ltd for 450 million pounds ($760 million).

o    Net income rose to $502 million in the quarter from $481 million a year earlier. Revenue rose to $3.17 billion from $3.14 billion for the quarter ended March.

  • Yelp’s revenue surges as mobile advertising grows. Yelp’s revenue reported a better-than-expected 66 % jump in quarterly revenue due to higher revenue from local advertising on mobile devices.

o    Revenue rose to $76.4 million from $46.1 million.

o    Yelp’s net loss narrowed to $2.6 million in the first quarter from $4.8 million a year earlier.

o    According to Google Analytics, Yelp’s average monthly mobile unique visitors grew 52 % to about 61 million in the first quarter.

  • Whirlpool reported first quarter sales of $4.36 billion, surpassing analysts’ estimates, as sales increased in March after soft demand in January and February caused by “extreme weather.”

o    The world’s largest maker of home appliances reported a first-quarter net profit of $160 million down from $252 million a year earlier when it took a tax credit last year.

  • ExxonMobil profits declines less than expected due to higher natural gas price. The world’s largest publicly traded oil company reported first-quarter net income of $9.10 billion compared with $9.50 billion in the year-ago quarter.

o    Revenue declined 1.5 % to $106.8 billion.

o    Total production fell about 6 % to 4.2 million barrels of oil equivalent per day (boed), which is roughly 5 % of world’s daily production.

  • ConocoPhillips profit flat, beats estimates on higher prices and output. The company earned a profit of $2.1 billion.
  • Avon first-quarter revenue falls 11.1 %to $2.18 billion.
  • Bombardier revenue misses estimates as aerospace drags. Canadian company delivered a total of 56 aircraft in the quarter, compared to 53 a year earlier. Total revenue rose about 2 % to $4.35 billion, but fell short of the average analyst estimate of $4.58 billion. Bombardier Aerospace’s backlog totaled $38.5 billion, higher than the $37.3 billion at the end of December.
  • Discounts help T-Mobile add more customers. T-Mobile US added a net 2.4 million customers in the first quarter, up from 579,000 a year earlier. Revenue rose 47 % to $6.88 billion boosted by discounts and promotions that have disrupted an industry dominated by Verizon and AT&T.
  • AT&T has approached DirecTV about takeover, the WSJ reported. A deal would likely be worth at least $40 billion, DirecTV’s current market capitalization, the newspaper said.
  • Sprint is meeting with banks to work out funding for its bid for smaller rival T-Mobile US. T-Mobile has a market cap of $23.52 billion.
  • New Boeing jets hold key to more than half of future sales. Boeing said it expects to finish flight testing its stretched 787-9 Dreamliner in the next two months and deliver it around mid-year.

o    Boeing is fiercely competing with new models from European rival Airbus to capture its share of a world jetliner market estimated at $4.8 trillion over the next 20 years.

  • Ford and Chrysler reported April U.S. sales that missed estimates while GM, helped by truck deliveries, reported results that exceeded projections.

o    Ford reported U.S. sales that decreased 0.8 % to 210,355.

o    Chrysler reported sales of 178,652, a 14 % gain.

o    GM, the nation’s largest automaker, reported sales of 254,076 in April, a 6.9 % gain.

o    Ford names fields Next CEO when Mulally retires July 1.

  • Amazon begins collecting Florida taxes of 6 % for internet sales as it builds two warehouses in the state. Amazon will collect as much as $80 million annually in levies.

o    Amazon now collects taxes in 21 states, including California, Texas and New York.

o    Researchers at Ohio State University published a paper last month that said sales dropped in states where Amazon added the charge.

  • Google unveils new advertising tools for marketers on YouTube.

o    Google is stepping up efforts to woo more dollars away from traditional television advertising as users increasingly watch videos online.

o    The new offering, called Google Preferred, packages the top 5 % of content on YouTube for 14 different areas.

o    Google Preferred covers video content in areas such as beauty, fashion, comedy, food and music.

o    Initial partners include Johnson & Johnson and Heineken, along with agency DigitasLBI, according to Robert Kyncl, head of content at Google.

US ECONOMY & POLITICS

  • ISM’s U.S. manufacturing growth accelerates in April. The Institute for Supply Management (ISM) said its index of national factory activity rose to 54.9 in April, up from 53.7 in March. It was the best reading since December. The report beat analyst expectations for a reading of 54.3.

o    Gains in the month came alongside a rebound in the employment subindex, which jumped more than expected to 54.7 from March’s 51.1, which had been the weakest since June 2013. Analysts were looking for a read of 52.8.

o    The forward-looking new orders index was unchanged at 55.1 while the production subindex slowed slightly, dropping to 55.7 in April from 55.9.

  • Markit’s U.S. April factory activity growth slows slightly. Markit said its final U.S. Manufacturing Purchasing Managers Index (PMI) was 55.4 in April, down slightly from 55.5 in March but even with last week’s preliminary read.

o    The employment subindex fell from to 53.7 from 53.9 in March.

o    The output component rose to 58.2 from 57.5. The new orders component also rose month-over-month.

  • Solid U.S. consumer spending jumps by most in five years.  Consumer spending increased 0.9 % after rising by 0.5 % in February. The median forecast of 77 economists in a Bloomberg survey called for a 0.6 % gain. When adjusted for inflation, consumer spending increased 0.7 % in March.

o    Consumer spending accounts for more than two-thirds of U.S. economic activity.

o    Spending on durable goods, including automobiles, surged 2.7 % after adjusting for inflation.

o    Spending on services also increased by a solid 0.7 %, reflecting increased demand for utilities and healthcare services.

o    Income increased 0.5 % in March, the biggest gain since August 2013, after rising 0.4 % in February.

  • The saving rate was 3.8 % in March, compared with 4.2 % the previous month. Wages and salaries increased 0.6 %, the most in four months.
  • Construction spending rises marginally in March. Construction spending increased 0.2 % to an annual rate of $942.5 billion.
  • Initial claims for state unemployment benefits increased 14,000 to a seasonally adjusted 344,000. Economists had forecast first-time applications for jobless benefits falling to 319,000.
  • Fed shows faith in U.S. economy with bond-buying reduction.

o    “Growth in economic activity has picked up recently, after having slowed sharply,” the Federal Open Market Committee (FOMC) said in a statement following a meeting in Washington. “Household spending appears to be rising more quickly.”

o    The Federal Reserve said it will keep reducing the pace of bond purchases as the economy shakes off the winter doldrums.

o    Going forward, the bond purchases will be split between $25 billion of Treasuries and $20 billion of mortgage-backed securities, a cut of $5 billion a month to each.

EUROPE & WORLD

  • China PMI steadies, but doesn’t dispel growth worries. The Purchasing Managers’ Index (PMI) rose to 50.4 in April from March’s 50.3, the National Bureau of Statistics said.
  • Sony slashes profit forecast again, a third time. Sony posted a net loss of 130 billion yen ($1.3 billion) in the 12 months ended March.

TODAY in HISTORY

  • The Act of Union joined England and Scotland to form Great Britain (1707)
  • The Empire State Building opened in New York City. At 102 stories, it would be the world’s tallest building for the next 41 years (1931)
  • The Soviet Union shot down an American U-2 reconnaissance plane over Soviet territory (1960)

Sources: Reuters, Bloomberg.

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. 

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