US FINANCIAL MARKET
U.S. Stocks Fall broadly at the Open Second Day on Valuations before Earnings
- Both the S&P 500 and the Dow retreated from records yesterday amid speculation the Fed will raise interest rates sooner than expected.
- The Fed will release minutes from its June meeting tomorrow.
- Officials are debating the timing for the first increase in the main interest rate since 2006.
- Policy makers have kept their target for overnight lending between banks in a range of zero to 0.25 % since December 2008.
- In Europe, signs the economic recovery is losing momentum sent stocks lower for a third day. U.K. manufacturing unexpectedly slumped the most in 16 months in May and German exports contracted more than estimated.
- Profit for S&P 500 members probably climbed 5 % in the three months through June, while sales rose 3 %, according to analyst estimates compiled by Bloomberg.
- Three rounds of monetary stimulus from the Fed and better-than-forecast corporate earnings have driven the S&P 500 up more than 190 % from a low reached in March 2009.
- The U.S. equity index is trading at 16.7 times the projected earnings of its members, near its highest valuation since the end of 2009 and higher than the five-year average of 14.3.
AbbVie Raises Offer for Shire to $51.5 Billion
- AbbVie increased the offer by about 11 % to 51.15 pounds a share in cash and stock.
- Buying Shire would allow AbbVie to have its tax domicile in the U.K., which has a lower tax rate than the U.S.
Samsung Sees Phone Rebound After Earnings Miss Estimates
- Operating income fell about 24 % to 7.2 trillion won ($7.1 billion), compared with the 8.1 trillion-won average of analyst estimates.
- Sales were about 52 trillion won in the quarter. That compares with the 53.2 trillion-won average estimates.
- Samsung’s telecommunications unit generates more than 70 % of earnings.
- While smartphones drove Samsung to record profits last year, the market is maturing.
- The company’s total smartphone shipments slid to 78 million units in the second quarter from 87.5 million units sold in the first quarter.
- Research firm IDC predicts global shipments growth will slow to 19.3 % this year from 39.2 % in 2013.
Tesla sued in China for trademark infringement
- A Chinese businessman, Zhan Baosheng, registered the “Tesla” trademark before the U.S. company came to China, is now taking Tesla to court, demanding that it stop all sales and marketing activities in China, shut down showrooms and supercharging facilities and pay him 23.9 million yuan ($3.85 million) in compensation.
- Apple was embroiled in a similar case for years before reaching a $60 million deal last year for the rights to use the iPad trademark in China.
VW brand sales up 1.1 % to 514,900 cars in June
- Six-month deliveries at VW’s largest division by sales were up 3.8 % at 3.07 million cars.
BMW brand auto sales up 7.3 % in June on China, U.S.
- BMW sales increased 7.3 % in June to 164,214 autos.
- BMW’s six-month deliveries were up 10.2 % at 886,347 cars.
Samsung, Intel, Dell team up on standards for connected gadgets
- The new Open Interconnect Consortium aims to establish how smart devices work together in a trend increasingly called the Internet of Things.
Most F-35 engines inspected; U.S. contract talks on hold for now
- Most of the 97 Lockheed Martin F-35 fighter jets grounded last week have been inspected, and officials hope to wrap up the remaining inspections.
- The U.S. military last week ordered a fleetwide grounding of the F-35 Joint Strike Fighter after the engine on an Air Force F-35 A-model jet broke apart and caught fire as a pilot was preparing to take off from Eglin Air Force Base in Florida.
US ECONOMY & POLITICS
U.S. small business confidence edges lower, still near six-year high
- The NFIB Small Business Optimism Index fell 1.6 points to 95 last month.
Job Openings Rise in May
- JOLTS job openings was 4.635 million for May, more than median forecast of 4.35 million.
EUROPE & WORLD
Japan Investors Sell German Bunds, Buy Record Amount French Debt
- Investors sold 1.05 trillion yen ($10.3 billion) of bunds in May.
- They boosted holdings of French sovereign bonds by 1.86 trillion yen and added 731.6 billion yen of U.S. Treasuries and 129.2 billion of Australian securities.
U.K. Manufacturing Unexpectedly Slumps Most in 16 Months
- Factory output plunged 1.3 % from April, the most since January 2013 and the first decline in six months.
Japan current account surplus improves in May, outlook dim
- The surplus was 522.8 billion yen ($5.14 billion), more than the median forecast for a 403.6 billion yen surplus.
- In April, the surplus was 187.4 billion yen.
- Exports rose 2.0 %. Imports fell 0.4 %.
- The current account data also highlighted the need to stimulate domestic demand and the services sector as exports are no longer enough to drive economic growth.
TODAY in HISTORY
- The first public reading of the Declaration of Independence was given in Philadelphia, Pa (1776)
- Vermont became the first colony to abolish slavery (1777)
- The Wall Street Journal began publication (1889)
- General Douglas MacArthur was named commander-in-chief of the United Nations forces in Korea (1950)
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