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US FINANCIAL MARKET

U.S. Stocks Advance at the Open on Google While Bonds Fall With Gold

  • Google posted revenue that exceeded analysts’ estimates.
  • GE slipped 0.9 percent as profit matched estimates and the company moved forward with an IPO of its Synchrony Financial.
  • IBM fell after saying revenue dropped for a ninth quarter.
  • AbbVie was little changed after agreeing to buy Shire.
  • The S&P 500 had its biggest drop since April 10 as concern about the implications of escalating tension in Ukraine and the Middle East.
  • Malaysian Airlines jet went down over eastern Ukraine, killing all 298 people on board.
  • Israel began a ground operation in Gaza.
  • The Thomson Reuters/University of Michigan preliminary July index of consumer sentiment decreased to 81.3 from 82.5 the prior month.
  • Treasury 10-year yields climbed to 2.47 percent.
  • Gold, which climbed 1.3 percent yesterday for the biggest advance in four weeks.

Google Sales Top Estimates on Robust Ad Demand

  • Revenue was $12.7 billion. That topped the average projection of analysts for $12.3 billion.
  • Net income rose to $3.42 billion from $3.23 billion a year earlier.
  • The average price for an ad declined 6 percent as smartphones encourage users to bypass Google’s search services and instead go directly to applications to find information.
  • The number of clicks on ads on YouTube, search and other Google sites increased 33 percent in the latest quarter, making up for a decline in ad prices.
  • In the mobile-ad market, prices on smartphones were 57 percent lower than those on desktop computers.
  • Google’s operating expenses, other than the cost of revenue, climbed 25 percent during the quarter to $5.58 billion.
  • The company ramped up hiring during the quarter, adding more than 2,000 employees, pushing headcount to more than 52,000.

GE Profit Matches Estimates as Synchrony IPO Set for July

  • Profit climbed 8 percent from a year earlier to $3.9 billion.
  • Quarterly revenue rose to $36.23 billion, up 3.4 percent from a year ago. Analysts estimated sales of $36.3 billion.
  • GE’s profit margin for its industrial businesses, a closely watched barometer by Wall Street, expanded 0.2 percentage point to 15.5 percent.
  • GE’s backlog of equipment and services rose in every segment, up 10 percent overall, to a total of $246 billion.

IBM’s Nine-Quarter Sales Slump Overshadows Cloud Growth

  • Second-quarter revenue dropped 2 percent from a year earlier to $24.4 billion.
  • Net income climbed to $4.1 billion from $3.2 billion a year earlier.
  • IBM’s contract signings for services — an indicator of expected future revenue — fell 33 percent from a year earlier to $11 billion.
  • IBM ended the quarter with $9.7 billion in cash on hand, little changed from the last quarter.

Kansas City Southern revenue beats on grain, automobile shipments

  • Total revenue rose 12 percent to $649.7 million. Analysts had expected revenue of $645.1 million.
  • Net income jumped to $129.8 million from $15.4 million a year earlier. The year-ago quarter included debt retirement costs of $111.4 million.
  • Revenue from grain shipments rose 33 percent while it increased 25 percent in automotive.
  • KSU operates on a unique, north-south route in central U.S. and derives half of its annual revenue from cross-border business with Mexico.
  • Exports from the United States to Mexico rose 6 percent in the first five months of 2014 while imports increased 3 percent.

Honeywell Tops Profit Estimates on Factory-Gear Demand

  • Honeywell beat analysts’ second-quarter profit estimates, boosted by rising demand for factory automation equipment, and raised the lower end of its full-year forecast.
  • Honeywell is benefiting from U.S. industrial output that expanded at a 5.5 percent annual rate last quarter.
  • The company also is tapping an energy boom in the U.S. on increasing hydraulic fracturing, or fracking, for oil and gas in shale formations.
  • Sales rose 5.8 percent to $10.25 billion, beating the $10.18 billion average estimate.

Johnson Controls revenue rises on higher demand from China

  • Johnson Controls reported a 3 percent rise in quarterly revenue, as demand rose for its car seats.
  • Demand in Johnson Controls’ automotive business, its largest was driven mainly by China, which contributed about 32 percent to the division’s third-quarter revenue of $5.7 billion.
  • Total revenue rose to $10.8 billion from $10.5 billion, a year earlier.

Rebounding North America boosts Schlumberger revenue

  • Schlumberger, the world’s largest oilfield services company, reported better-than-expected second quarter revenue as drilling activity picked up in North America.
  • North America revenue jumped 16 percent to $3.89 billion from a year earlier.
  • Schlumberger has the lowest exposure to North America among the big four oilfield service providers, which include Halliburton and Baker Hughes.
  • International markets brought in about two-thirds of Schlumberger’s quarterly revenue.
  • Total revenue rose 8 percent to $12.05 billion.
  • Net income fell by nearly a quarter to about $1.60 billion from $2.10 billion. The company recorded $205 million settlement charges.

Amazon Starts $9.99-a-Month Service for Unlimited E-Books

  • Amazon introduced a $9.99-a-month service for unlimited Kindle e-book downloads.
  • Kindle Unlimited includes more than 600,000 Kindle books and thousands of audiobooks from Audible.

AbbVie to Buy Shire for $54.8 Billion in Tax Inversion

  • Shire holders will receive cash and stock valued at 52.48 pounds a share.
  • The price is 53 percent above Shire’s closing level on May 2, before AbbVie made its first takeover proposal.
  • AbbVie becomes the latest U.S. health company to move abroad amid a record period of pharmaceutical deals.

US ECONOMY & POLITICS

Leading Economic Indicators Index in U.S. Increased 0.3% in June

  • The Conference Board’s gauge, a measure of the outlook for the next three to six months, increased 0.3 percent after a revised gain of 0.7 percent in May.
  • The median forecast of 49 economists surveyed by Bloomberg called for a 0.5 percent advance.

U.S. consumer sentiment dips in preliminary July reading

  • The Thomson Reuters/University of Michigan’s preliminary July reading on the overall index on consumer sentiment came in at 81.3, below both the consensus analyst expectation of 83 and the final June read of 82.5.
  • The survey’s barometer of current economic conditions rose to 97.1 from 96.6, compared with a forecast of 97.0.
  • The survey’s gauge of consumer expectations slipped for a third straight month, to 71.1 from 73.5. The subindex was below an expected 74.0.

EUROPE & WORLD

Russian-Made Missile Hit Malaysian Jet, U.S. Officials Say

  • A Russian-made air-defense missile appears to have hit the Malaysian Airline plane that crashed in Ukraine, according to U.S. military and intelligence officials.
  • Evidence so far indicates that the plane was struck by a weapons system known as the SA-11 or Buk, according to four officials.
  • It’s not clear who fired the missile at the airliner.

Netanyahu Orders Military to Ready Wider Gaza Incursion

  • Israeli soldiers, backed by tanks, heavy artillery, aircraft and warships, moved into the Hamas-controlled enclave late yesterday after 2,100 air strikes over 10 days failed to quash barrages of rockets fired from Gaza at Israel.
  • More than 260 Palestinians, including dozens of children, and two Israelis have been killed since fighting intensified last week.

TODAY in HISTORY

  • A great fire began that ultimately destroyed most of Rome. The emperor Nero blamed it on Christians and began the first Roman persecution of them (64)
  • President Harry S. Truman signed the Presidential Succession Act (1947)
  • 14-year-old Romanian gymnast Nadia Comaneci earned the first perfect score, a ten, at the Olympics and went on to score six more tens and win three gold medals (1976)

 

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. Sources: Reuters, Bloomberg.

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