US FINANCIAL MARKET
Stocks Pare Gains at the Open; Treasuries Drop, Metals Rise After GDP
- Consumer spending and business investment helped the U.S. economy rebound more than forecast in the second quarter.
- GDP rose at a 4 % annualized rate after shrinking 2.1 % from January through March.
- Twitter soared 22 % after results topped forecasts and the company boosted its annual sales forecast.
- Amgen rallied 5.4 % after saying it will cut jobs and close plants.
- Standard & Poor’s 500 Index profits have increased 11 % so far, the most since 2011.
- The U.S. equity benchmark has gained 7.1 % in 2014, extending last year’s 30 % rally, the biggest since 1997.
Twitter Tops Quarterly Estimates for Sales, User Growth
- The microblogging company’s active membership in the quarter reached 271 million, with year-over-year growth at 24 %, compared with 25 % in the prior period.
- That exceeded analysts’ projections of 267 million monthly active users for the quarter.
- Sales more than doubled to $312.2 million, exceeding the $282.8 million average estimate.
- Twitter’s net loss widened to $144.6 million, or 24 cents a share, from $42 million a year earlier. Excluding some items, the company reported a 2 cent profit, compared with the 1 cent loss estimated by analysts.
- People viewed their Twitter timelines more often, with 173 billion views, up from 157 billion in the prior quarter.
- Mobile advertising was 81 % of total ad revenue in the second quarter.
- For the current quarter, Twitter said revenue will be $330 million to $340 million, exceeding analysts’ average estimate of $323.1 million.
- The company raised its full-year sales forecast to $1.31 billion to $1.33 billion, up from an April projection of $1.2 billion to $1.25 billion.
DreamWorks Animation Falls on Loss; SEC Probes Write-down
- The independent cartoon-movie studio posted a second-quarter loss and said securities regulators are investigating a write-down. The shares fell the most in five months.
- The U.S. SEC is looking into how the company wrote down its “Turbo” inventory, without being more specific.
- The company also posted a larger-than-projected quarterly loss and sales that fell short of analysts’ forecasts.
- Sales tumbled 43 % from a year earlier to $122.3 million, missing forecasts of $139.4 million.
- The studio’s current theatrical film, “How to Train Your Dragon 2,” has generated $424.6 million in worldwide box office sales, a sum that’s shared with theaters and the company’s distributor, 21st Century Fox.
Software to Power F-35 Running as Much as 14 Months Late
- The projected delay to September 2017 concerns the final version needed to provide full combat capability for Air Force.
- Software is crucial to delivering on the promised capabilities of the F-35, operating its advanced navigation, communications and targeting systems. Each plane will have more than 8 million lines of code once deployed.
- Cost estimates for the $398.6 billion F-35 program have climbed 71 % in inflation-adjusted dollars since the Pentagon signed its initial contract with Lockheed in 2001.
Airbus Says Some A380s on Order May Not Be Delivered
- Customers that have ordered superjumbos yet remain undecided about actually taking them.
- While the A380 can hold more than 800 passengers, and was originally marketed as a plane that could comfortably accommodate 555 in three classes.
- The A380 has one very faithful customer in Emirates, the Gulf carrier that has ordered a total of 140 planes.
American Tower to Acquire Global Tower in $3.3 Billion Deal
- The biggest operator of cellular towers in the U.S. agreed to acquire the parent company of rival Global Tower Partners for about $3.3 billion.
- The deal brings American Tower about 5,400 U.S. towers and the management rights to more than 9,000 additional sites. Including debt, the purchase price is about $4.8 billion.
Amgen Says It Will Cut More Than 2,400 Jobs Worldwide
- The world’s biggest biotechnology company by sales reported second-quarter earnings that beat analysts’ estimates and raised its profit estimate for the year.
- Net income rose 23 % to $1.55 billion from $1.26 billion a year earlier.
- Revenue increased 11 % to $5.18 billion.
- The higher-than-expected earnings were driven by sales of Enbrel, the company’s top drug for arthritis, which increased 7 % to $1.24 billion, beating analysts’ projections of $1.14 billion.
- The company also raised its 2014 earnings forecast.
Sprint first-quarter revs top estimate as network upgrade progresses
- Revenue fell to $8.8 billion from $8.9 billion a year earlier, but beat the average analyst estimate of $8.7 billion.
- The company lost 181,000 contract subscribers, fewer than the average estimate of 293,000.
Amazon to invest $2 billion more in India as e-commerce race heats up
- Amazon said it will invest a further $2 billion in India just a day after the country’s largest e-tailer Flipkart attracted $1 billion of fresh funds, raising the stakes in a nascent but fast-growing e-commerce sector.
- Amazon and Flipkart are joined in India’s $13 billion e-commerce sector by marketplace Snapdeal, fashion e-tailer Jabong, and U.S. auctioneer eBay.
- Amazon makes its money in India by charging third-party suppliers to use its website to sell 17 million different products including books, electronics and clothing.
- Indian e-commerce is expanding at a compound annual growth rate of 34 %.
US ECONOMY & POLITICS
Economy in U.S. Grows More than Forecast
- GDP rose at a 4 % annualized rate, the most since the third quarter of 2013, after shrinking 2.1 % from January through March.
- The first-quarter reading was revised up from a previously reported 2.9 % drop.
- 2.5 increase in household consumption, which accounts for almost 70 % of the economy, exceeded the 1.9 % median forecast of economists. Purchases added 1.7 percentage points to growth.
- Purchases of durable goods, including autos, furniture and appliances and recreational vehicles, jumped at a 14 % annualized rate, the most since the third quarter of 2009.
- Corporate spending increased at a 5.9 % annualized rate after being little changed in the first quarter, contributing 0.9 percentage point to growth.
- Inventory accumulation also picked up, adding 1.7 percentage points to GDP growth. Stockpiles were rebuilt at a $93.4 billion annualized pace after a $35.2 billion annualized gain in the first quarter.
- Excluding inventories and trade, so-called final sales to domestic purchasers climbed at a 2.8 % rate, the biggest increase since the third quarter of 2011.
- Growth got a boost from the biggest gain in state and local government expenditures in five years. A widening trade gap subtracted 0.6 percentage point from growth.
ADP Says Companies in U.S. Boosted Payrolls by 218,000
- Companies added 218,000 workers in July, exceeding the average for the year and showing improving demand is bolstering the U.S. job market.
- Companies employing 500 or more workers added 41,000 jobs.
- Medium-sized businesses, with 50 to 499 employees, took on 92,000 workers and small companies increased payrolls by 84,000.
- A Labor Department report in two days is projected to show private payrolls climbed by 230,000 workers last month.
- Gains in consumer purchases and business investment helped the economy rebound more than forecast in the second quarter.
EUROPE & WORLD
Bayer Earnings Rise as New Drugs Offset Stronger Euro
- Earnings climbed 1 % to 2.22 billion euros ($2.95 billion).
- Bayer, one of the last remaining drug and chemical conglomerates, is leaning on its health unit for growth.
- Second-quarter health-care revenue increased 0.9 % to 4.85 billion euros.
Barclays Rises Most since May on Return to Profit
- Barclays’s second-quarter net income was 161 million pounds ($273 million) compared with a loss of 168 million pounds a year ago.
- The bank cut about 5,000 jobs this year, with half of them at the investment bank.
- At the investment bank, income dropped 18 % to 4.26 billion pounds, driven by a 22 % drop in markets revenue as fewer clients traded in cash equities, rates and currencies.
Euro touches eight-month low, European shares fall
- The euro fell to $1.3395, its lowest since November 2013.
- The ECB cut all its interest rates in June and promised up to 1 trillion euros in cheap long-term loans to banks from September.
TODAY in HISTORY
- The first legislative assembly in English North America convened in Jamestown, Va (1619)
- The U.S. city of Baltimore was founded (1729)
- The tenth modern Olympic Games opened in Los Angeles (1932)
- The phrase “In God We Trust” was adopted as the U.S. national motto (1956)
- President Lyndon Johnson signed the Medicare Bill into law (1965)
- Lisa Leslie became the first woman to dunk in a professional basketball game (2002)
- 620 million people were without power in India, the worst power outage in world history (2012)
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