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)
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