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US FINANCIAL MARKET

U.S. Stocks Fluctuate at the Open amid Ukraine Tension, Jobless Claim

  • Kohl’s added 4.2 % to a four-month high after quarterly results beat estimates.
  • Wal-Mart dropped 0.4 % after reporting stagnant same-store sales and lowering its profit forecast.
  • Cisco declined 2.9 % after forecasting little to no sales growth.
  • Equity futures and European stocks erased earlier losses after President Vladimir Putin said Russia will do everything it can to stop the conflict in eastern Ukraine.
  • Stocks had slumped after data showed the euro area’s recovery unexpectedly stalled in the second quarter after its three biggest economies failed to grow.
  • Data today showed applications for unemployment benefits in the U.S. rose more than forecast last week, interrupting a steady decline to pre-recession lows.
  • About 75 % of the S&P 500-listed companies that have posted results this season have beaten analysts’ estimates, while 65 % have exceeded sales projections.
  • Profit for members of the equity benchmark probably climbed 9.7 % in the second quarter, while sales increased 4.3 %.

Wal-Mart Cuts Profit Forecast Amid Slow Sales, Health Costs

  • The world’s largest retailer reported stagnant same-store sales and cut its earnings forecast for the year, hurt by higher health-care costs and slow traffic at its supercenters.
  • Earnings for the year will now be $4.90 to $5.15 a share, down from a previous range of as much as $5.45.
  • Wal-Mart cited higher U.S. health-care costs and increased spending in e-commerce, where it aims to challenge Amazon.com Inc.’s dominance.
  • The company sees health-care expenses growing by more than $500 million. Wal-Mart and its subsidiaries employ about 2.2 million people worldwide.
  • Second-quarter income fell 3.4 % to $3.92 billion from $4.06 billion a year earlier.
  • That matched the average analyst estimate.
  • Sales rose 2.8 % to $120.1 billion in the period, helped by e-commerce orders.

Cisco Cutting 6,000 Jobs as CEO Forecasts Stagnant Growth

  • Revenue fell 3 % to $47.1 billion in the fiscal year that ended July 26, the first decline in five years.
  • Revenue in the period that ended July 26 was $12.4 billion.
  • Sales in the quarter that ends in October will be $12.1 billion to $12.2 billion.
  • Net income in the fourth quarter fell to $2.25 billion from $2.27 billion a year earlier.

Kohl’s profit beats estimates as costs fall

  • Department store chain Kohl’s reported a better-than-expected quarterly profit as costs fell.
  • General and administrative costs fell about 2 % to $981 million in the second quarter. Cost of goods sold fell 1 %.
  • Net sales fell 1.1 % to $4.24 billion.
  • Kohl’s net income rose marginally to $232 million.

Biotechs lift Wall Street; Dow back in black for 2014

  • Surging biotech shares helped investors shrug off disappointing retail sales data.

Macy’s cuts same-store sales forecast, shares drop

  • Macy’s said it expects same-store sales to increase 1.5 % to 2 % for the full year.
  • Margins would be flat to slightly down for the rest of the year.
  • U.S. retail sales unexpectedly stalled in July.

Boeing breaks ground on wing factory for new 777X

  • The 1.3-million-square-foot composite wing center at the site of Boeing’s massive aircraft assembly operation should cement the company’s growth in Washington State for decades to come.
  • The previous generation of composite wings, used on Boeing’s 787 Dreamliner, are made by Mitsubishi in Nagoya, Japan.
  • The decision to build the wing in the U.S. marks a major shift in Boeing’s strategy.
  • The new wing factory will house three of the world’s largest autoclaves used for curing composite material. Each autoclave is large enough to hold two 737 fuselages.
  • The building will be occupied starting in 2016. The first 777X is due to be delivered in 2020.
  • The new jet, which carries a list price of up to $389 million and has garnered 286 orders, is expected to be 12 % more fuel efficient than the current 777.

UPS and FedEx get approval for express services in more Chinese cities

  • The U.S. companies had been waiting for permission to independently courier packages from businesses to consumers (B2C) via their entire Chinese networks, since a 2009 postal law largely restricted foreign firms to delivering packages from abroad.

Land Rover recalls 46,515 SUVs in U.S., Canada for air bag issue

  • There have been no reports of accidents or injuries relating to the issue in the US and Canada.

Deere posts lower quarterly profit, cuts full-year outlook

  • The world’s largest maker of farm equipment expects to earn $3.1 billion in fiscal 2014, down from its previous forecast of $3.3 billion.
  • The USDA predicted U.S. corn production will top the 14 billion-bushel mark for the first time ever this year.
  • It also said it expects the U.S. soybean crop to come in at a record of 3.82 billion bushels, up 16 %.

 

US ECONOMY & POLITICS

Jobless Claims in U.S. Rise to Highest Level in Six Weeks

  • Jobless claims climbed by 21,000 to 311,000.
  • The median forecast of 48 economists surveyed by Bloomberg called for 295,000.
  • The four-week average of claims increased to 295,750 from 293,750 in the prior week that was the lowest since 2006.
  • The number of people continuing to receive jobless benefits rose by 25,000 to 2.54 million in the week ended Aug. 2.
  • Employers added more than 200,000 workers to payrolls in July for a sixth straight month.

U.S. business inventories, sales rise in June

  • Inventories increased 0.4 % after rising 0.5 % in May.
  • The government said inventories added 1.66 percentage points to GDP growth, which expanded at a 4.0 % annual pace last quarter.

U.S. Fed seen moving slowly after first rate hike in second quarter 2015: Reuters poll

  • The U.S. Federal Reserve is expected to move in baby steps when it starts to bump up borrowing costs from a record low.
  • The latest survey showed that rates would be at 1.00 % at the end of next year, 2.25 % at the end of 2016 and 3.25 % a year after that.
  • The Fed sees 3.75 % as appropriate for the economy over the longer run.

SEC to examine alternative mutual funds : WSJ

  • The so-called funds “sweep” includes examinations of large investment firms such as BlackRock and AQR Capital Management, as also smaller firms that previously didn’t offer mutual funds.
  • BlackRock has launched seven alternative mutual funds aimed at penetrating the retail alternatives market.
  • Alternative mutual funds typically employ investment strategies that imitate those of hedge funds, such as investing in private debt or shorting assets, and command higher fees.

 

EUROPE & WORLD

Euro-Area Pickup Stalls as Big Economies Fail to Grow

  • The Ukraine crisis is weighing on European economies.
  • GDP was unchanged from the first quarter, when it increased 0.2 %.
  • Germany’s economy shrank 0.2 % in the second quarter, its first contraction since 2012, while France unexpectedly stagnated.
  • Italy succumbed to its third recession since 2008, with GDP falling 0.2 %.
  • The Spanish economy expanded at the fastest pace since 2007, and the Netherlands and Portugal returned to growth.
  • GDP also increased in Belgium, Estonia, Latvia, Lithuania, Austria, Slovakia and Finland.

China’s July economic data points to further softness

  • Accounting for roughly 15 % of China’s economy, the housing sector has faltered this year as prices and sales turned south, leading many analysts to warn that it poses the biggest risk to broader growth.
  • New construction fell 12.8 % in January-July.

 

TODAY in HISTORY

  • The Social Security Act became law (1935)
  • Japan surrendered to the United States, ending World War II (1945)
  • Pakistan became independent of British rule (1947)

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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