US FINANCIAL MARKET
U.S. Stocks Open amid Bank Earnings and Portugal Debt
- Wall St. is flat, but Internet names support NASDAQ. Amazon up 4.2 percent and eBay up 2.4 percent.
- Whirlpool rose 1.9 percent after the company agreed to buy 66.8 percent of voting stock of Italy’s Indesit Company for about $1.03 billion.
- The S&P 500 is valued at 18 times reported earnings, the highest level since 2011.
- Wells Fargo fell 1.3 percent after reporting per-share earnings that did not rise for the first time in 18 quarters.
- Fastenal sank 5.6 percent after sales fell short of analysts’ estimates.
- Lorillard jumped 4.8 percent after Reynolds American Inc. said it’s in talks to buy the cigarette maker.
- More than 140 companies in the S&P 500, including Citigroup, JPMorgan, Goldman Sachs, and Johnson & Johnson, will report quarterly results between now and July 23
Wells Fargo reports slight profit rise, says economy improving
- The world’s most valuable bank said profit increased 3.8 percent on lower credit costs even as the lender’s per-share earnings failed to top the preceding quarter’s for the first time since 2009.
- Net income for the second quarter advanced to $5.73 billion from $5.52 billion a year earlier.
- Revenue fell 1.5 percent to $21.1 billion from a year earlier.
- Wells Fargo accounted for about 28 percent of U.S. home loans in the first quarter of 2012.
- Wells Fargo lent $47 billion in home loans, down from $112 billion a year earlier but up from $36 billion in the first quarter.
- Income from mortgage banking fell 39 percent to $1.7 billion compared with the second quarter of 2013.
- The bank had $30 billion of mortgage applications in the pipeline at quarter-end, up from $27 billion at the end of the first quarter.
Amazon Seeks FAA Permission to Test its Drones Outdoors
- Amazon asked aviation regulators for permission to expand testing its deliver packages by drone outside its research laboratory.
- The company wants to deliver packages weighing less than 5 pounds (2.3 kilograms) with unmanned aircraft capable of reaching speeds of more than 50 miles (80 kilometers) an hour.
- Amazon says 86 percent of its deliveries are light enough to be made by its proposed drones, allowing for faster service to customers.
Reynolds American Confirms Discussions to Buy Lorillard
- Together, Reynolds and Lorillard have a market value of about $56 billion and annual sales of more than $13 billion.
- British American Tobacco owns 42 percent of Reynolds.
- If the three companies reach an agreement, Lorillard’s biggest brand, Newport, would join Camel as the combined company moves to compete with Altria, whose brands account for more than half of the U.S. retail cigarette market.
- Altria’s Marlboro by itself has market share in the U.S. of about 44 percent.
BMWs Made in America Surge as Biggest Auto Export
- BMW started auto assembly in South Carolina 20 years ago today.
- Pushed by spiraling energy costs and tightening labor rules in Germany, BMW will have poured additional $7.3 billion into the site once the latest expansion is completed in two years.
- Auto workers in the U.S. are about 47 percent cheaper to employ than their counterparts in Germany, according to data from the Berlin-based VDA auto lobby.
- The factory, which will employ 8,800 people by 2016, is already the biggest exporter of U.S.-made cars to markets outside North America, beating any facility run by GM, Ford or Chrysler as well as the entire state of Michigan.
Chrysler to recall 900,000 SUVs to fix mirror wiring
- Some 2011-2014 models of Jeep Grand Cherokee and Dodge Durango will be recalled.
U.S. sues Amazon over purchases by kids using mobile apps
- The U.S. government sued Amazon.com on Thursday for allowing children to collectively run up millions of dollars in purchases on the credit cards of their unsuspecting parents.
- The FTC settled a similar case with Apple in January. Apple agreed to refund to customers at least $32.5 million in unauthorized charges made by children.
- The FTC complaint cited “Tap Zoo” and “Ice Age Village” in which children manage a zoo or an ancient town.
Microsoft CEO signals change, defers talk on job cuts
- Nadella said he would address detailed organizational and financial issues for the company’s new financial year.
- He described Microsoft as a “productivity and platform company” focused on mobile and cloud computing, a subtle advance on Ballmer’s reinvention of Microsoft as a “devices and services” company.
Pimco’s Gross Cuts U.S. Government-Related Debt Holdings in June
- The proportion of U.S. government-related debt in the $225 billion Total Return Fund was 47 percent last month.
- That compared with 50 percent the previous month, which was the highest level since 54 percent in July 2010.
Carl Icahn says ‘time to be cautious’ on U.S. stocks
- Billionaire activist investor said “While we are having a great year, I am being very selective about the companies I purchase.”
US ECONOMY & POLITICS
Obama and corporate giants announce plan to boost suppliers
- President Barack Obama is enlisting several major U.S. and multinational companies to draw attention to an initiative aimed at helping small businesses expand and hire workers.
- The president will meet on Friday with representatives of household name firms such as Apple, AT&T, Coca Cola, and Johnson & Johnson to spotlight the corporate giants’ pledge to pay their smaller suppliers within 15 days.
- Other firms attending the White House event include CVS, FedEx, IBM, Lockheed Martin, Honda, Toyota, Rolls Royce, and Walgreens.
- Frustrated by a legislative stalemate with the Republican-led House of Representatives, Obama has vowed to act unilaterally when he can to achieve his agenda.
Fed’s Fischer sees little benefit in breaking up too-big banks
- The Federal Reserve’s new vice chair all but dismissed the idea of breaking up the largest U.S. banks, saying on Thursday it is unclear that such a complex task would help stabilize the country’s financial system.
- Stanley Fischer also floated the idea of adding a financial stability mandate to all of the U.S. regulators under the umbrella of the Financial Stability Oversight Council (FSOC).
U.S. wholesale inventories rise, point to rebound in second-quarter GDP
- Wholesale inventories increased 0.5 percent from a month earlier.
- Inventories are a key component of GDP changes.
- A sharp slowdown in the pace of restocking by businesses helped to sink economic growth in the first quarter.
EUROPE & WORLD
Portugal’s PM tries to soothe investors; BES says can cover any losses
- Banco Espirito Santo sought to reassure investors by revealing its exposure to related companies after a missed payment on short-term debt by a member of the Portuguese group roiled global markets.
- The bank provided the update after a parent company, Espirito Santo International missed payments on commercial paper.
- Portugal’s regulator banned short selling of Banco Espirito Santo shares until the end of today.
British banks paying $2 billion for swaps mis-selling: regulator
- Britain’s banks are in the process of paying out 1.2 billion pounds ($2 billion) to compensate small businesses that were mis-sold complex interest rate hedging products.
- The figure represents about a third of the 3.75 billion pounds set aside by Britain’s four biggest banks.
TODAY in HISTORY
- Pope Clement VII excommunicated England’s King Henry VIII (1533)
- Former vice president Aaron Burr fatally wounded former secretary of the treasury Alexander Hamilton in a duel. Hamilton died the following afternoon (1804)
- The Rev. Dr. Martin Luther King, Jr., was posthumously awarded the Presidential Medal of Freedom for his work to advance civil rights (1977)
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