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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)

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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