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US FINANCIAL MARKET

U.S. Stocks Slide at the Open as Exxon, Whole Foods Fall on Results

  • U.S. stocks slumped in a broad decline on Thursday.
  • Weak U.S. data contributed to the bearish tone as jobless claims rose more than expected in the latest week, and the Chicago Purchasing Managers Index (PMI) unexpectedly fell in July to its lowest since June 2013.
  • The CBOE Volatility index (VIX) rose 8.3 % to 14.44, well under its historical average of 20.
  • Portugal’s Banco Espirito Santo slumped almost 40 % to an all-time low as its hopes of raising capital without state aid suffered a major blow after massive losses.
  • Exxon reported worldwide oil and natural gas production declined to the lowest level in almost five years.
  • Whole Foods dropped 5.8 % after lowering its 2014 revenue forecast.
  • Kraft declined 3.3 %.
  • Yum! Brands slid 6.3 %. The owner of Pizza Hut and KFC said it cut ties with meat supplier OSI Group globally after previously saying it would stop using it China, Australia and the U.S.
  • Global equities fell amid weaker-than-projected earnings from Europe and Asia. Samsung’s results pushed technology stocks lower.
  • Argentina missed a deadline yesterday to pay $539 million in interest after two full days of negotiations in New York failed to produce an accord with creditors from its last default in 2001.

Exxon Falls after Reporting Lowest Output in Five Years

  • The company’s oil and gas output decreased 5.7 % to the equivalent of 3.84 million barrels a day.
  • Exxon had been expected to post output equivalent to 3.96 million barrels, based on six analysts’ estimates.
  • Crude output dropped from Exxon wells in Europe and Asia while gas production faltered in every region in which the company does business, except Africa and the South Pacific.
  • Net income climbed 28 % to $8.78 billion from $6.86 billion a year earlier.

MasterCard profit rises 10 % as card usage grows

  • The company’s net income rose to $931 million from $848 million a year earlier.
  • Revenue rose 13.4 % to $2.38 billion.
  • MasterCard’s worldwide purchase volume increased 12.5 % in local currency terms to $821 billion.

Samsung Electronics downbeat on third quarter prospects as profits slide

  • For April-June, Samsung said operating profit fell 24.6 % annually to 7.2 trillion won ($7.03 billion), matching its guidance. It was the third straight quarter of profit decline.
  • Profit for the mobile division fell to 4.42 trillion won from 6.28 trillion won a year ago, also the lowest in two years.
  • Samsung’s second-quarter global smartphone market share slipped to 25.2 % from 32.3 % a year ago, underscoring its troubles.

Weak demand for video services weighs on Time Warner Cable

  • Time Warner Cable reported a lower-than-expected quarterly profit.
  • The second-largest U.S. cable operator lost more video subscribers in the quarter compared with the previous quarter.
  • It lost 152,000 net residential video customers in the quarter.
  • Demand for its broadband services, however, remained strong. The company added 67,000 residential high-speed data subscribers.
  • Net income rose to $499 million from $481 million a year earlier.
  • Revenue rose 3.2 % to $5.73 billion.

Soccer World Cup helps DirecTV net more subscribers

  • The No.1 U.S. satellite TV provider, reported quarterly revenue above analysts’ estimates as the soccer World Cup helped it add subscribers in Latin America and prices increased in the United States.
  • The company added 543,000 subscribers in Latin America, its largest growth area. It had added 165,000 a year earlier in the market.
  • Average revenue per user in the United States rose by 4.6 % to $103.26.
  • U.S. net subscriber disconnections fell to 34,000 from 84,000.
  • Net income rose to $806 million from $660 million a year earlier.
  • Revenue increased to $8.11 billion from $7.70 billion.

ConocoPhillips second-quarter profit slightly higher; output rises

  • The largest U.S. independent oil and gas company reported a quarterly profit that just beat Wall Street expectations, helped by an increase in oil and gas production.
  • The Houston company’s oil and natural gas output from continuing operations was 1.56 million barrels oil equivalent per day (boed) in the quarter, up from 1.51 million boed a year earlier.
  • Income totaled $2.08 billion, compared with $2.05 billion in the year-ago period.

Diageo Sees Emerging-Market Rebound as 2014 Growth Slows

  • The world’s biggest distiller expects improvement in emerging-market performance after lackluster sales in regions such as Asia weighed on revenue growth.
  • Organic sales rose 0.4 % in the last 12 months.

L-3 Communications fires four for misconduct in aerospace unit

  • L-3 Communications said it fired four employees as part of an ongoing internal review that revealed overstatement of net sales and deferred cost overruns in the company’s aerospace business.
  • L-3 reported preliminary sales of $3.02 billion for the second quarter.
  • The company also cut its 2014 operating margin forecast for the aerospace systems business to 9.0-9.2 % from 10.6-10.8 %.

Target Chooses Former Pepsi Executive Cornell as Next CEO

  • Cornell, the first Target CEO chosen from outside the company, takes over a retailer struggling to right itself after a data breach in the holiday shopping season hurt its standing with customers while a bungled expansion in Canada has led to falling profit.
  • Target’s profit has fallen for six straight quarters, also hurt by weaker demand from American consumers who have remained cautious about spending during the economy’s shaky recovery.

Yelp turns profitable as small businesses drive growth

  • The company reported a net income of $2.7 million in the second quarter, compared with a loss of $878,000 a year earlier.
  • Revenue rose 61.4 % to $88.8 million.
  • Monthly unique visitors rose 27% to 138 million.

Snapchat Facebook Snub Looks Smart as Alibaba Mulls Stake

  • A year after rebuffing a $3 billion takeover proposal from Mark Zuckerberg, Snapchat is in talks to raise money from Alibaba.
  • The valuation being considered is about $10 billion.
  • More than 700 million disappearing “snaps” are sent per day.

Tinder May Reach $75 million a Year in Earnings, IAC Says

  • IAC, which runs dating sites such as Match.com and OKCupid within its Match Group business, is trying to keep its edge in online dating.

Bank of America Said to Near Mortgage Deal after Raising Offer

  • Bank of America is nearing a settlement with the U.S. Justice Department after raising its proposed offer to resolve probes into its sale of mortgage-backed bonds in the run-up to the financial crisis.
  • Potential terms have ranged from $13 billion to $17 billion.
  • The company, under CEO Brian T. Moynihan, has booked more than $55 billion in expenses tied to home loans, mostly linked to the disastrous 2008 takeover of subprime lender Countrywide Financial.
  • In a separate matter, the bank was also ordered today to pay $1.3 billion in penalties for defective mortgage loans that Countrywide sold to Fannie Mae and Freddie Mac before the crisis.

Boeing to make longest 787-10 Dreamliner exclusively in South Carolina

  • Boeing said it will build its biggest Dreamliner, the 787-10, exclusively at its South Carolina plant in North Charleston, a move that marked the continuing evolution of Boeing’s production strategy for its flagship jet.
  • The newest and longest of three 787 models, the 787-10 also is eagerly awaited by airlines seeking its increased seating.
  • Final assembly of the 787-10 is due to begin in 2017.
  • The plane will carry 323 passengers, 33 % more than the 787-8 and 15 % more than 787-9, with significantly lower fuel consumption than current-generation jets of similar size.
  • The North Charleston line will continue to produce 787-8 and 787-9s, Boeing said.
  • The site also will increase production to five a month in 2016 from three a month currently.
  • Boeing plans to ramp up 787 production from 10 a month currently to 12 a month in 2016 and 14 a month by 2020.

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US ECONOMY & POLITICS

U.S. jobless claims up, wage growth starting to push higher

  • Initial claims for state unemployment benefits increased 23,000 to a seasonally adjusted 302,000 for the week.
  • The four-week average of claims, considered a better gauge of labor market trends as it irons out week-to-week volatility, fell 3,500 to 297,250, the lowest level since April 2006.
  • Wages and salaries, which account for 70 % of employment costs, increased 0.6 % in the second quarter.
  • That was the largest gain since the third quarter of 2008 and followed a 0.3 % rise in the first quarter.
  • Wages and salaries were up 1.8 % in the 12 months through June.

Fed Sees Labor-Market Slack Even After Unemployment Rate Dropped

  • Yellen believes the nation’s 6.1 % unemployment rate overstates the health of the jobs market, but she warned earlier this month that a rate hike could come “sooner and be more rapid than currently envisioned” if labor markets continued to improve more quickly than anticipated.
  • The Fed Chair Janet Yellen has emphasized as reasons for maintaining more than five years of near-zero rates.
  • The FOMC repeated it’s likely to reduce bond buying in “further measured steps” and to keep interest rates low for a “considerable time” after ending purchases.
  • Policy makers continued to trim the asset purchases that have pumped up the Fed’s balance sheet to a record $4.41 trillion.
  • They tapered monthly bond buying to $25 billion in their sixth consecutive $10-billion cut, staying on pace to end the purchase program in October.

 

EUROPE & WORLD

S&P cuts Argentina’s credit rating further as talks drag on

  • Standard & Poor’s on Wednesday cut its credit rating on Argentina’s foreign-currency sovereign debt to “selective default” even as talks between officials from Latin America’s No. 3 economy and a group of holdout creditors continued in New York.
  • S&P said that in its opinion, Argentina has now failed to make a $539 million payment due on its discount bonds due in 2033.
  • The payment, originally due on June 30, was subject to a 30-day grace period, which expires at the end of Wednesday.

Sony Rides PS4 Sales, Web-Slinger to Surprise Profit

  • Sony posted a surprise first-quarter profit.
  • The company posted net income of 26.8 billion yen ($261 million) in the quarter.
  • The game unit posted profit of 4.3 billion yen, reversing a loss of 16.4 billion yen a year earlier.
  • The movie division posted a profit of 7.8 billion yen, more than double results from a year earlier.
  • Sony’s mobile products unit posted a loss of 2.7 billion yen, compared with a profit of 12.6 billion yen a year earlier.
  • Sony accounted for 3.2 % of global smartphone shipments in the March quarter.

Siemens Beats Estimates as Revamp Starts to Pay Off

  • Income from continuing operations rose 36 % to 1.4 billion euros ($1.9 billion).
  • Sales declined 3.7 % to 17.9 billion euros.
  • Profit at Siemens’s industry sector jumped 51 % to 548 million euros, while falling 5.8 % at the energy sector to 405 million euros and dropping 13 % in health-care.
  • The infrastructure and cities sector reported a 350 million-euro profit after a 23 million-euro loss a year earlier.

Sanofi Raises Profit Forecast on Diabetes, Orphan Drugs

  • France’s biggest drug-maker’s sales in the quarter increased 0.9 % to 8.08 billion euros.
  • Second-quarter profit climbed to 1.54 billion euros ($2.06 billion) from 1.48 billion euros a year earlier.

VW Profit Beats Estimates on Higher Earnings at Audi

  • Europe’s largest automaker, reported second-quarter profit that beat analysts’ forecasts as growth at the Audi luxury division helped offset a decline at its namesake brand.
  • Earnings before interest and taxes slipped 3.1 % to 3.33 billion euros ($4.46 billion).
  • Robust sales growth in China and rising demand for Audi vehicles are keeping VW on track to exceed 10 million annual deliveries worldwide for the first time in 2014, four years earlier than initially anticipated.

 

TODAY in HISTORY

  • Columbus arrived at the island of Trinidad (1498)
  • The Marquis de Lafayette became a major-general in the American Continental Army (1777)
  • The first U.S. patent was issued to Samuel Hopkins of Vermont for a process of making fertilizer (1790)
  • Mount Godwin-Austen (K2), the world’s second-highest peak, was climbed for the first time, by an Italian team led by Ardito Desio (1954)
  • The U.S. space probe Ranger 7 transmitted pictures of the Moon’s surface (1964)

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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