Health care IPOs are running at a brisk pace. Just halfway through the year, health care offerings this year are close to passing the 38 health care IPOs in all of 2017, says research firm Ipreo.
Shares of Crinetics Pharmaceuticals ( CRNX) popped 44% on its first day of trading Wednesday. The company raised $102 million pricing an upsized 6 million shares at 17. Shares closed Thursday at 22.66, down 7.5%.
The company is developing drugs for rare endocrine diseases and endocrine-related tumors.
Among other health care IPOs Thursday, Constellation Pharmaceuticals ( CNST), a developer of cancer treatments, priced 4 million shares at 15. Shares closed at 11.50, down 23,3%.
Medical technology company Establishment Labs ( ESTA) priced an upsized 3.7 million share offering at 18. Shares closed at 24.75, up 37.5%.
More companies went public in the second quarter than any other reporting period in the past three years. That could lay the groundwork for a group of tech "unicorns" (a startup valued at more than $1 billion) to come galloping out of the forest for an initial public offering over the next year or so.
Chipmaker Skyworks Solutions ( SWKS) late Thursday beat analyst views for its fiscal third quarter, sending its shares surging in extended trading.
Skyworks earned an adjusted $1.64 a share on sales of $894.3 million in the quarter ended June 29. Analysts expected $1.60 a share on sales of $889 million. In the year-earlier period, Skyworks earned $1.57 a share on sales of $901 million.
Skyworks shares jumped 4% in after-hours trading on the stock market today. During the regular session, shares rose 0.4% to 102.48.
The Woburn, Mass.-based company makes analog chips for automotive, broadband, cellular infrastructure, connected home, industrial, medical, military, smartphone, tablet and wearable markets. Skyworks is a major supplier of chips for Apple's ( AAPL) iPhone smartphones.
Internet Of Things, 5G Seen As Sales Drivers
"Skyworks exceeded June-quarter expectations driven by our broadening market reach, solid execution and resilient business model," Chief Executive Liam Griffin said in a news release.
He added, "We are gaining first-mover advantage across Internet of Things and rapidly emerging 5G applications with our Sky5 platform."
For the current quarter, Skyworks expects to earn an adjusted $1.91 a share on sales of $1 billion. Wall Street was modeling Skyworks to earn $1.87 a share on sales of $996 million.
"For the fourth fiscal quarter of 2018, we expect revenue to be up 11% to 13% sequentially as design win momentum transitions to volume production," Chief Financial Officer Kris Sennesael said in a press statement.
PTC Therapeutics ( PTCT) stock spiked late Thursday after the biotech company said it plans to acquire gene therapy player Agilis Biotherapeutics.
In after-hours action on the stock market today, PTC stock rocketed 9.4%, after closing up 4.5%, at 36.55.
Late Thursday, PTC said it would pay $50 million upfront and $150 million in PTC common stock to buy the privately held biotech company. Agilis is working on four gene therapy programs and plans to file an application for approval of a rare-disease drug in 2019.
Acquiring Agilis in a transaction expected to close in the third quarter significantly expands PTC's pipeline. PTC has drugs approved to treat Duchenne muscular dystrophy. The firm's potential spinal muscular atrophy treatment is also grabbing a lot of interest.
"The addition of the gene therapy platform transforms PTC and aligns with our vision of being a leader in the treatment of rare disorders," Chief Executive Stuart Peltz said in a written statement.
Agilis' lead gene therapy candidate treats a rare disorder known as aromatic L-amino acid decarboxylase deficiency, or AADC deficiency. In severe forms of the disease, patients are unable to develop any motor control resulting in breathing, feeding and swallowing problems.
Rivaling Biogen, Ionis
Also Thursday, Credit Suisse analyst Martin Auster initiated coverage of PTC stock with an outperform rating and a 49 price target. He sees PTC's Biogen ( BIIB)-rivaling spinal muscular atrophy treatment as a potential "superstar."
SMA drugs are getting a lot of attention. Biogen and Ionis Pharmaceuticals ( IONS) make the only approved SMA treatment, Spinraza. But Novartis ( NVS) acquired AveXis to further develop its gene therapy and PTC is working on an oral SMA treatment.
Auster suggested Spinraza's leadership in SMA drugs could be coming to an end. PTC's spinal muscular atrophy treatment, dubbed risdiplam, helps patients generate a key protein.
Risdiplam is taken orally, whereas Spinraza is administered via an injection in the spinal canal. Patients on Spinraza initially receive a series of loading doses before moving to an injection every four months. Sales of Spinraza have slowed as more patients have moved to maintenance therapy.
SMA Drugs At Forefront
Auster expects risdiplam to "largely supplant Spinraza's current market leadership and position it as the best option for patients unable to receive gene therapy," he said. "We also see risdiplam as a potential option for patients receiving gene therapy who experience waning (effectiveness) or an incomplete response."
He models a $3 billion opportunity for risdiplam. The biotech company partners with Roche ( RHHBY) on the spinal muscular atrophy treatment. Under the agreement, PTC receives royalties on sales.
Meanwhile, the biotech company's approved drugs are facing competitive concerns — but those seem to already be baked into PTC stock. Sales of Translarna, a Duchenne muscular dystrophy treatment in Europe, will peak at $250 million in 2021, Auster predicted.
Auster expects Emflaza, a Duchenne muscular dystrophy treatment in the U.S., to peak in 2022. In 2024, he expects sales to decline after Emflaza loses regulatory exclusivity, he said. However, these challenges "will be overshadowed by SMA upside potential," he said.
General Electric ( GE) is developing engine technology for the Air Force to enable an array of new weapons on a future 6th-generation fighter that would follow Lockheed Martin's ( LMT) 5th-generation jets, the F-22 and F-35.
For several years, both GE and United Technologies' ( UTX) Pratt & Whitney unit have been working with the Air Force Research Laboratory on adaptive cycle engines (ACE). Unlike the fixed-airflow engines powering today's military aircraft, ACE promises to enable automatic switching between high-thrust mode for maximum power and high-efficiency mode for fuel savings, based on the pilot's mission.
GE has been developing the ACE for an eventual upgrade to the F-35's engines. Those are currently sourced solely from Pratt & Whitney. But the Air Force awarded a $437 million contract modification last month to GE for development work on an engine that powers a 6th-generation fighter.
"It will be a game changer in combat capability with unmatched improvements in range, thrust and heat dissipation capacity, critical to future mission requirements," said Dan McCormick, general manager of GE's Advanced Combat Engine Program, in a statement.
He later told IBD in an interview that he expects "design work to start very, very soon."
Lasers On 6th-Generation Fighter — And More
In addition to improved thrust and fuel efficiency, a key innovation planned for the ACE is a third cooling stream that will absorb and dissipate more heat produced by a jet, including from its engine and onboard systems.
GE Aviation estimates that three-stream technology will deliver a 60% improvement in heat absorption, allowing aircraft to accommodate more next-gen weapons technology.
McCormick said GE's ACE puts the 6th-generation fighter "in a position" to deploy laser weapons and "to do it at long range."
"But it goes well beyond the possibility of lasers," he added. "There are now radar and defensive systems — it really enables any heat-generating equipment to be added to the aircraft."
GE Rival Pratt & Whitney Sees F-35 Lasers
United Technologies' jet engine unit is developing a similar engine that will also support futuristic weapons.
In September 2017, Pratt & Whitney said its successful tests of an adaptive three-stream fan showed the engine architecture was suited for next-gen military combat aircraft.
It also is refining F-35 engine technology with more power and thermal management capability to allow use of "directed energy weapons and other advanced offensive and defensive systems."
6th-Generation Fighter: More Power, More Targets
GE's technology is still at the prototype stage but it sees a 50% improvement in loiter time for its ACE, allowing pilots to "persist" longer in areas of interest and conduct increasingly vital stealth missions. It also sees a 35% increase in range and a 25% reduction in fuel consumption.
Combined, that efficient fuel burn and higher thrust will enable military aircraft to go greater distances and engage more targets, according to GE.
Taiwan Semiconductor Manufacturing ( TSM), the world's largest contract chipmaker, on Thursday lowered its full-year sales outlook on a slowdown in demand for cryptocurrency mining and smartphones.
The company, known as TSMC, reported mixed second-quarter results. It earned 47 cents per U.S. share, a penny better than views, on in-line sales of $7.85 billion in the June quarter. On a year-over-year basis, earnings per share rose 9% while sales increased 12%.
"Our second-quarter business was mainly impacted by the mobile product seasonality, while the continuing strong demand from cryptocurrency mining and a more favorable currency exchange rate moderated the mobile softness," TSMC Chief Financial Officer Lora Ho said in a news release. "Moving into third-quarter 2018, we anticipate our business will benefit from new product launches using TSMC 7-nanometer technology while cryptocurrency mining demand will decrease from second quarter."
Chief Executive C.C. Wei said revenue growth in 2018 would be a high single-digit percentage, down from an already reduced earlier projection of 10%, Bloomberg reported.
TSMC Tech Bellwether
For the third quarter, TSMC forecast sales of $8.45 billion to $8.55 billion, below Wall Street's target of $8.62 billion.
Taiwan Semiconductor Manufacturing is seen as a bellwether for the tech industry. It makes chips for companies like Apple ( AAPL), Nvidia ( NVDA) and Qualcomm ( QCOM).
TSMC also cut its capital spending plans for this year to $10 billion to $10.5 billion from as much as $12 billion previously. That is likely bad news for chip equipment makers like Applied Materials ( AMAT) and ASML Holding ( ASML) that supply gear to the foundry, Bloomberg said.
TSMC shares jumped 3.6% to 39.81 on the stock market today. The company's U.S. shares hit an all-time high of 46.57 on Jan. 23.
Software giant Microsoft ( MSFT) late Thursday beat Wall Street's estimates for its fiscal fourth quarter ended June 30, giving its stock a boost in extended trading.
Microsoft earned an adjusted $1.13 a share on sales of $30.1 billion in the June quarter. Analysts expected the company to earn $1.08 a share on sales of $29.21 billion. The results translated to year-over-year growth of 7% in earnings per share and 17% in revenue.
Microsoft stock rose 0.7% in after-hours trading on the stock market today. During the regular session, Microsoft stock fell 0.7% to 104.40.
The Redmond, Wash.-based company credited gains in its cloud computing services for the better-than-expected results. Its cloud offerings include Azure infrastructure services, Office 365 productivity software and Dynamics enterprise software.
"Our early investments in the intelligent cloud and intelligent edge are paying off, and we will continue to expand our reach in large and growing markets with differentiated innovation," Microsoft Chief Executive Satya Nadella said in a news release.
Commercial Cloud Revenue Up 53%
Microsoft's commercial cloud revenue rose 53% year over year to $6.9 billion in the June quarter.
Of its three business units, Microsoft's Intelligent Cloud segment was the fastest growing, with revenue up 23% to $9.6 billion. The segment includes server products and Azure cloud services.
Microsoft's Productivity and Business Processes unit posted revenue of $9.7 billion, up 13%. The unit includes commercial and consumer Office software, as well as LinkedIn and Dynamics.
The company's More Personal Computing unit saw revenue increase 17% to $10.8 billion. The segment includes Windows software, Surface computers, Xbox video game hardware and software, and internet search advertising.
Microsoft did not give September-quarter guidance in its earnings news release.
Intuitive Surgical ( ISRG) stock popped late Thursday after the surgical robotics player crushed Wall Street's second-quarter expectations.
In after-hours trading on the stock market today, Intuitive jumped 4.3%, after ending the regular session down 1.3% at 521.29.
For the second quarter, Intuitive reported adjusted income of $2.76 a share, up 38%, to beat analyst expectations for $2.47 per share. Sales of $909 million grew 19.8% and topped the consensus of analysts polled by Zacks Investment Research for $868 million.
The number of procedures completed by Intuitive's da Vinci surgical systems rose 18% year over year, driven by growth in U.S. general surgery and worldwide urologic procedures, the company said in a press release.
Surgical Robotics Growing
"We are pleased with our customers' increased use of da Vinci in the second quarter and the financial results that follow," Chief Executive Gary Guthart said in a written statement.
During the quarter, Intuitive shipped 220 da Vinci systems, almost a third more than it sent out in the year-earlier period. That also included 44 systems shipped under operating leases, up from 27 in the year-earlier period. Sales of systems grew 25% to $277 million.
Revenue from instruments and accessories for da Vinci systems increased about 20% to $476 million. Intuitive noted that was driven by the increased number of procedures. Service revenue grew 11% to $156 million.
The quarter also included several new Food and Drug Administration clearances for Intuitive products. Earlier this month, the FDA cleared the company's new 60-millimeter single-patient use stapler.
Already under pressure following a disappointing quarterly report, Netflix ( NFLX) stock fell again Thursday on news that retail giant Walmart ( WMT) could soon enter the subscription streaming video market.
Netflix stock sank 2.9% to close at 364.23 on the stock market today. The stock is now trading below its 50-day moving average, a key technical support level. It hit a record high of 423.21 on June 21. Its shares fell earlier this week after the company late Monday reported fewer-than-expected new subscribers in the June quarter.
Netflix discussed heightened competitive environment in internet video in its second-quarter letter to shareholders on Monday. The next day, The Information reported that Walmart was considering a subscription video-on-demand service with a target price of $8 a month to rival that of Netflix. Walmart also is considering a free, advertising-supported streaming video service, according to reports.
Entertainment trade publication Variety reported Thursday that Walmart is planning to offer a low-cost subscription video-on-demand service in the fourth quarter. Walmart is looking to undercut Netflix and Amazon ( AMZN) Prime Video on pricing, Variety said. The Vudu-branded service would include both licensed TV shows and movies, as well as original productions.
Netflix Lists Streaming Rivals
Netflix named Alphabet ( GOOGL)-owned YouTube as its leading global rival. It also cited Amazon, Apple ( AAPL), AT&T ( T)-owned HBO and Walt Disney ( DIS).
"Each of these firms has unique content and is striving to find the best creators from around the world to entertain its viewers," Netflix management said. "We believe that consumer appetite for great content is broad and that there is room for multiple parties to have attractive offerings."
Apple and Disney have yet to launch their direct-to-consumer video services. Both are due to begin next year.
News of the potential rivalry with Walmart came after Netflix reported it added 5.2 million subscribers in the second quarter. It missed its own forecast for 6.2 million made in mid-April. Netflix subscribers at the end of the June quarter stood at 130.1 million worldwide. It also disappointed with its guidance for new subscribers in the current quarter.
Tesla stock was hit with a downgrade, to sell from hold on Thursday, by a Wall Street analyst who thinks the electric-car maker will hit several tough roadblocks.
Needham analyst Rajvindra Gill expects those roadblocks to include slower sales of the Tesla ( TSLA) Model S and X. There's also expiration of federal tax credits, continued cash burn and an unsustainable capital structure.
"We are downgrading Tesla to a sell from hold as we believe Tesla stock is still overvalued despite it falling 16% from its peak set in June 2017," Gill wrote in a research note to clients.
Shares of Tesla closed at 320.23, down 1.1% on the stock market today. Tesla stock hit a record high of 389.99 about one year ago. It also has a high volume of short-sellers, people who essentially place a bet that the stock will fall. Short-sellers are an irritant to Tesla Chief Executive Elon Musk.
Also setting up to broadside Tesla is the expiration of the $7,500 tax credit for electric vehicles. That, plus extended wait times, count among the reasons for Model 3 cancellations and requests for returns on $1,000 reservation deposits. Buyers are requesting returns at a rate faster than people are placing deposits, and the pace of return requests is accelerating.
Tesla's Cash Burn
Gill also said Model 3 deliveries "were underwhelming in our view, and require a big stretch to achieve 5,000 a week on a sustainable basis." Building 5,000 Model 3s per week is necessary for the company to reach profitability, Musk has said.
These anticipated troubles with the Model 3 will also accelerate Tesla's cash burn, which is a major issue for the company. At the end of the most recent quarter Tesla had cash of $2.8 billion and total debt of $10.8 billion.
"We would highlight that nearly one-third of cash holdings, or $920 million, are customer deposits," Gill wrote. "And if refunds are accelerating at a faster rate than deposits, we could see the cash burn accelerate even faster than we anticipated."
He added, "Our current projections are that Tesla will continue to burn free cash flow into most of 2020, and that assumes (capital expenditure) remains relatively flat."
Tesla will also be facing an onslaught of competitors in the SUV and luxury markets, he said.
A Wall Street brokerage initiated coverage of four semiconductor stocks on Thursday, giving buy ratings to Microchip Technology ( MCHP) and ON Semiconductor ( ON).
Nomura Instinet set price targets of 110 on Microchip and 30 for ON Semiconductor. Microchip fell 1% to close at 94.80 on the stock market today. ON Semi slipped 0.9% to finish at 24.01. The firm also set neutral ratings on Analog Devices ( ADI) and Cree ( CREE).
The brokerage likes Microchip for its management's strong execution track record, market share gains and aggressive debt-deleveraging schedule.
"We see Microchip as a cross between the 'old' Broadcom ( AVGO) and Texas Instruments ( TXN)," Nomura analyst Krysten Sciacca said in a report to clients. "Microchip is a high-quality analog franchise, like TI, and has been active and successful in mergers and acquisitions, like Broadcom."
She added, "Microchip's strong management team is reminiscent of TI's high-quality leadership, and 'old' Broadcom's (i.e., pre CA acquisition) management team has had a stellar reputation in integrating acquired companies."
As for ON Semi, its exposure to the automotive and industrial chip segments is underappreciated by investors, Sciacca said.
"We estimate automotive/industrial will constitute 59% of ON's total sales in 2018, which bodes well for revenue growth," she said. "The company's 2020 financial targets will likely also prove conservative."
Elsewhere in the semiconductor sector, brokerage Cowen raised its price target on Integrated Device Technology ( IDTI).
Cowen analyst Karl Ackerman upped his target on IDT to 41 from 37. Shares rose 0.7% to close at 35.35 Thursday.
The company's memory-interface chip business is getting a lift from adoption of new server chips from Intel ( INTC) and Advanced Micro Devices ( AMD), Ackerman said in his note to clients.
"While most investors may be aware of IDT's content growth opportunity from the adoption of Intel's Purley server chip sets, we think the more interesting narrative for IDT that is just beginning to play out is the incremental content uplift from the adoption of AMD's Epyc server chip sets," he said.
Inphi Stock Hit With Downgrade
Brokerage B. Riley FBR on Thursday downgraded Inphi ( IPHI) stock to neutral from buy on valuation.
Inphi stock had risen about 40% through Wednesday since bottoming out in early February, analyst David Kang said. The share price is factoring in the expected recovery of the optical communications market.
Comcast ( CMCSA) stock climbed after the cable TV firm on Thursday dropped its takeover bid for 21st Century Fox ( FOXA), ending its battle with Walt Disney ( DIS) for Rupert Murdoch's media company. But a bidding war may continue for U.K. satellite TV broadcaster Sky.
Comcast said it will focus on acquiring a controlling interest in Sky. Fox owns a 39% stake in Sky. The ball is now in Disney's court on whether it or Fox will top Comcast's $34 billion bid for a controlling stake in Sky. Sky broadcasts in Europe and holds rights to major sports.
"Comcast does not intend to pursue further the acquisition of the Twenty-First Century Fox assets and, instead, will focus on our recommended offer for Sky," Brian Roberts, the cable TV firm's chairman and CEO, said in a statement.
Shares in the cable TV firm, which owns NBC Universal, gained 2.6% to close at 34.91 on the stock market today. Disney climbed 1.3% to 112.13. Fox fell a fraction to 46.65.
Vote Next Week
Disney has offered $71 billion in cash and stock for Fox, edging out the cable TV firm's $65 billion bid. Fox shareholders are expected to vote on Disney's bid July 27.
Disney is now allowed to negotiate directly with Comcast under its agreement with Fox.
Disney now has a clear path to acquiring Fox's film and TV studios, cable networks, and international TV business. Fox would retain its news channel and local TV stations.
Regulators will require Disney to divest Fox's regional sports networks.
E-Trade ( ETFC) earnings topped analyst estimates late Thursday, as the online brokerage followed strong results from rivals and tries to close in on a new buy point.
Estimates: E-Trade earnings were expected to vault 71% to 89 cents a share as revenue climbed 22% to $705 million, per Zacks.
Results: E-Trade earnings shot up 83% to 95 cents a share with revenue rising 23% to $710 million.
Stock: E-Trade stock were little changed in initial after-hours action. Shares closed down 3% at 61.21 on the stock market today, hitting resistance at their 50-day moving average as they work on a 66.56 flat-base buy point. Rival TD Ameritrade ( AMTD), which reports Monday, slid 1.4%. Charles Schwab ( SCHW) and Interactive Brokers ( IBKR), which reported strong results earlier this week, sank 2.5% and 4.1% respectively.
But its base is late stage and the basing action has mostly taken place below its 50-day moving average. Also, the RS line, which tracks a stock's performance against the S&P 500, peaked in May.
E-Trade earnings have a history of upside surprises, according to Zacks Investment Research. It surpassed analyst consensus in each of the trailing four quarters.
Improving margins are also expected to benefit E-Trade earnings. In fact, Interactive Brokers on Tuesday reported a 45% jump in net interest income for the latest quarter as bench mark interest rates increased from a year ago.
Enhancements to professional trading capabilities, including the acquisition of OptionsHouse in 2016, have helped the discount brokerage offer a better digital experience to customers, according to Zacks analysts.
E-Trade's derivative platform could, like Interactive's, benefit from higher commission revenue as customers traded more futures and options in a choppy quarter.
Canadian medical-pot producer Tilray ( TLRY) opened 36% higher at 23.05 on the Nasdaq after the first U.S. marijuana IPO priced shares late Wednesday at $17 each. Tilray stock closed at 22.17, up 30%.
Along with being the U.S.' first pure-play marijuana IPO, Tilray is the third marijuana stock to list on a major U.S. exchange. Canopy Growth ( CGC), which already traded in Canada under the ticker "WEED," first listed on the New York Stock Exchange in May.Cronos Group ( CRON), which also traded in Canada initially, first listed on the Nasdaq in February. But those listings were not technically IPOs.
The company filed a registration statement for the proposed offering in June and applied to list on the Nasdaq Global Select Market. An IPO could fund Tilray's global ambitions, particularly in the European Union and in Germany. Canopy Growth last month also pegged Germany as a market to watch.
$153 Million Marijuana IPO
Tilray last week said it would offer 9 million shares with an expected price range of $14-$16 apiece, an offering that could raise as much as $144 million.
Tilray sold 6.254 million shares at 17 a pop. The other 2.476 million shares — subordinate voting shares will be offered in Canada and other countries — at 22.45 Canadian dollars each. That will raise a combined $153 million.
Channel checks had indicated that the IPO was "multiple times oversubscribed," according to IPO Boutique.
Regulatory disclosures say the IPO would help fund the company's plans to expand cultivation resources, sales and marketing efforts. The IPO money could also go toward potential acquisitions and investments down the road.
According to a regulatory filing this month, Tilray aims to have around 886,000 square feet of worldwide production space by year-end. It has offices in Toronto, Berlin and Sydney, and cultivation facilities in Canada and Portugal. The company sells marijuana in 10 countries via subsidiaries and pharmaceutical distributors, the filing said. Privateer Holdings, a cannabis investment company in Seattle, owns Tilray.
Over the past several months, Canadian marijuana companies have had an easier time listing on U.S. exchanges, which don't necessarily exempt marijuana companies if their business is legal in the nation where they're based. Medical marijuana is already legal in Canada. Recreational legalization is set to kick in on Oct. 17.
As for U.S. companies, some have opted to go public in Canada via a deal known as a reverse takeover. MedMen, a large U.S. marijuana producer, went public in Canada in May via such a deal.
Banks Get Behind Marijuana Stocks
Cowen and BMO Capital Markets are serving as the book-runners for the proposed IPO. Support from financial firms like that aligns with a bigger trend: More banks have shown a willingness to embrace the industry in the U.S. despite marijuana being outlawed on a federal level.
The number of U.S. financial institutions that are working with the industry in some way increased roughly 29% between October 2016 and March of this year, according to New Frontier Data, a research firm focused on the cannabis industry. Most of those are state-chartered banks or credit unions, the firm said.
MedMen said in a filing this year that its banks "are fully aware of the nature of the company's business and continue to remain supportive of the company's growth plans."
Marijuana Stocks Eye Europe
Tilray said it expects the European Union to eventually become the world's biggest medical marijuana market. The company based that prediction on the availability of medical pot via government-subsidized health care in the region. Eleven of the 28 EU member nations, Tilray said, have OK'd the use of medical marijuana.
Tilray said Germany was "the largest market opportunity in the European Union in the near term." Germany, which legalized medical marijuana last year, has a population and a GDP that are more than two times that of Canada's, Tilray said.
Canopy Growth CEO Bruce Linton last month also said that Germany would be "the market I would keep an eye on over the next 12 months in Europe."
A Walmart ( WMT) streaming service is reportedly in the works, and it's going to be branded under the retailer's Vudu entertainment arm, according to a new report from Variety.
Variety sources say the Vudu service is looking to launch in the fourth quarter of 2018, and would feature licensed and original TV and movie programming. But the initiative does not appear to be a certainty yet.
The Information first broke news on Tuesday that the nation's biggest retailer was mulling the creation of its own subscription streaming video service, citing people familiar with the matter.
Netflix ( NFLX), Amazon ( AMZN) Prime Video and Hulu are the main streaming entertainment competitors in the space. A Walmart streaming service would mark the birth of another retailer turned entertainment-service.
Amazon.com's video library comes with its annual $119 Prime membership, which costs $12.99 on a monthly basis. (It also offers a stand-alone subscription to just its Prime Video offerings.) Netflix costs anywhere from $7.99 a month for a basic plan to $13.99 a month for a premium subscription.
But a Walmart streaming service, if it comes to fruition, would reportedly be priced at only $8 a month.
Vudu is currently branded as an "online video store" that allows viewers to rent and purchase individual titles. It also sells the Vudu Spark streaming stick.
An on-demand streaming service would deepen Walmart's presence in an ultracompetitive space, with rivals to Netflix and Amazon making their own big moves.
Disney ( DIS) launched its ESPN+ streaming service earlier this year, and it is preparing for the 2019 debut of its own stand-alone, Disney-branded streaming service that will feature content from Marvel, Pixar and Lucasfilm.
Hulu, which is jointly owned by Disney and other media giants, has been expanding in original content, and Apple ( AAPL) is ramping up its video offerings as well.
But the Bentonville, Ark.-based megaretailer appears to be challenging Amazon from a number of different angles, aside from a potential Walmart streaming service.
On Tuesday, Walmart and Microsoft ( MSFT) announced a five-year partnership, in which the massive big-box retailer will use the tech giant's cloud services and productivity tools. Microsoft CEO Satya Nadella said both companies' rivalries with Amazon were "absolutely core" to the deal.
Collectively known as the FANG stocks, Facebook ( FB), Amazon.com ( AMZN), Netflix ( NFLX) and Google parent Alphabet ( GOOGL) are among the tech titans of our time.
X Facebook and Google alone capture the lion's share of all global online advertising, including in the fast-growing mobile format, while Amazon dominates e-commerce and cloud services with its Amazon Web Services business.
And although Netflix is facing increasing competition from Hulu and fellow FANG stocks — particularly Amazon and YouTube owner Google — its original programming and massive global expansion have cemented its leadership in the streaming industry.
Check this page regularly for ongoing coverage of the FANG stocks, including potential buy and sell signals.
Boeing ( BA) topped Airbus ( EADSY) in orders and commitments at the Farnborough Airshow, but many of both aerospace giants' orders came from mysterious unidentified customers.
Boeing wrapped up the show with $98.4 billion in orders and commitments for 673 commercial airplanes and $2.1 billion in commercial and defense services orders and agreements.
Airbus ended the premier airshow event for the year with 431 orders and commitments. A rumored AirAsia deal for 100 narrowbody jets would've helped close the gap but never materialized.
"Total orders were a little higher, but in the ballpark based on what we were looking at," Jeff Windau, senior equity analyst at Edward Jones, said.
Windau said that cargo and freighters were a bright spot at the show with Boeing racking up orders for its 777 and 747 freighter variants after orders lagged in 2017.
Boeing shares fell 1.4% to 355.33 on the stock market today. Airbus' U.S.-listed shares were down 0.4% at 31.01.
Farnborough Mystery Orders
Air Lease ( AL), General Electric's ( GE) Capital Aviation Services and United Airlines ( UAL) were among key customers that announced deals at the show. But many major deals came from unidentified customers, at a higher rate than usual for airshows.
Boeing announced an agreement Thursday with an unidentified customer for 100 737 Max airplanes. The list value was $11.7 billion. The aerospace giant also announced agreements for 15 787-9 Dreamliners valued at $4.2 billion with two undisclosed airlines. Airlines typically get discounts for large orders.
Airbus announced a deal for 10 A320neos, valued at $1.1 billion, to an unidentified customer. In the first three days of the airshow, Airbus hid the identity of customers in $24.4 billion orders and commitments.
Airbus' other big, unidentified orders from earlier in the show included 100 A320neos worth $11.5 billion, a preliminary deal with a leasing firm for 80 A320neos valued at $8.8 billion, and a commitment for six A330neos worth $1.6 billion.
Some of the undisclosed customers are Chinese carriers, sources told Bloomberg, as President Trump's trade war with China prompts companies to keep a lower profile.
"The world today is governed by the tweets we receive every morning from one side of the Atlantic," Eric Schulz, Airbus' top salesman, said at an investor presentation on Wednesday, according to Bloomberg. "So, you know that that is putting a lot of pressure within the airlines; it's putting a lot of pressure within the governments."
But Airbus did announce that China's Sichuan Airlines is buying 10 A350-900s in an order valued at $3.2 billion.
China is a major customer for the aerospace giants as more citizens enter the middle class and travel. Boeing sees estimated Chinese sales of $1.1 trillion over the next two decades, making China the first trillion-dollar aviation market.
Airbus and Boeing still announced the identity of several customers at Farnborough Thursday:
VietJet announced an outline deal for 50 A321neos, valued at $6.5 billion.
Malaysian low-cost carrier AirAsia expanded an existing A330neo order by 34 for an additional $10 billion. But an expected 100 narrowbody jet order hasn't yet materialized.
Hawaiian Airlines ( HA) finalized an order for 10 787-9 Dreamliners valued at $2.82 billion at list prices. The deal also included the purchase rights for 10 additional Dreamliners.
Boeing announced an agreement with Dubai's Novus Aviation Capital for up to four 777-300 extended range planes. The commitment is valued at $1.44 billion at list prices.
British Airways announced a commitment for three 777-300 extended range jets. The carrier will take the planes on a lease from a leasing company.
Nucor ( NUE) kicked off the steel earnings season by reporting a surge in second-quarter profit, thanks to a boost from Trump tariffs on steel imports. But after Nucor raised its earnings guidance in mid-June, the steelmaker fell just short of Wall Street's raised profit expectations on Thursday morning.
Nucor earnings vaulted 107% to $2.07 a share, as revenue grew 25% to $6.461 billion. Wall Street had expected earnings of $2.10 a share on revenue of $6.493 billion, according to Zacks Investment Research.
Nucor said it sees sustainable strength in steel markets and expects Q3 earnings to "further improve" on record earnings in Q2. Before the report, the consensus estimate was for $2.15 per share for the third quarter.
Nucor stock sank 1.4% to 64.68 on the stock market today. Shares rose 1.5% on Wednesday to 65.61, 7% below the 10-year high hit in early January. Since that time, Nucor stock has been consolidating. Its relative strength line, which tracks a stock's performance vs. the S&P 500 index, has been in a downtrend since late 2016.
Steel stocks have been stock market laggards. The Steel-Producers group is ranked 166 out of 197 industry groups based on price performance. Nucor stock is ranked No. 2 in the group by IBD Stock Checkup based on earnings, sales, margin and stock price trends. Steel Dynamics ( STLD) is ranked No. 1.
On Thursday, Steel Dynamics stock, U.S. Steel ( X) and AK Steel ( AKS) fell 2.6%, 2.2% and 1.6%, respectively.
The relative underperformance of steel stocks this year may reflect uncertainty over whether the 25% Trump tariff on steel imports is sustainable. The Trump tariffs are being challenged by trading partners at the World Trade Organization. The Trump administration initially granted exemptions from the steel tariffs to Canada, Mexico and the European Union, before reversing course on June 1. But those exemptions might be renewed if President Trump can win concessions on trade in autos and NAFTA rules.
Domino's Pizza ( DPZ) earnings topped estimates Thursday in the second quarter, but revenue and same-store sales fell short, sending shares down early.
Estimates: Earnings per share to jump 33% to $1.76, on revenue of $787 million, a 25% increase, according to Zacks Investment Research. Same-store sales systemwide are expected to notch a 7% gain, according to Consensus Metrix. International franchise same-store sales are seen up 5.3%.
Results: EPS of $1.84 on revenue of $779.4 million. Same-store sales grew 6.9% domestically and 4% internationally.
"Global retail sales remain strong as we see our franchisees building new stores, growing same-store sales and bringing customers back again and again," said CEO Ritch Allison in a statement. "Our second quarter was highlighted by yet another innovation in food delivery with the launch of Domino's HotSpots, of which there are now more than 200,000 across the United States."
Stephens analyst Will Slabaugh said he expected tax cuts and better weather to boost traffic across the overall restaurant sector.
But he said restaurants would need "a fairly balanced formula of explicit everyday value and improving quality" — two things sometimes at odds with each other in the fast-food business — to stay ahead.
Restaurant analyst Mark Kalinowski, of Kalinowski Equity Research, attributed Domino's earlier sales gains to several factors.
Among them: Its technological advantages over other pizza companies, as more customers order online and via their smartphones. He also cited a value deal the chain has had in place for nearly 10 years — two medium pizzas with two toppings for $5.99 apiece.
Papa John's Stumbles
Kalinowski, in listing off Domino's advantages, also noted "stumbles" by Papa John's.
Papa John's last week said they accepted founder John Schnatter's resignation as chairman of the board, after Forbes reported that he'd used a racial slur during a conference call in May. Schnatter apologized afterward.
The call, between Papa John's higher-ups and a marketing agency, was intended as a "role-playing exercise" to head off other potential PR problems for the company, Forbes said.
Forbes said Schnatter "apparently intended for the remarks to convey his antipathy to racism, but multiple individuals on the call found them to be offensive."
The Wall Street Journal, in separate stories this week, reported that Schnatter believed he was pressured unfairly to resign and that he'd discussed merging Papa John's with Wendy's[ticker symb=WEN].
Schnatter had already stepped down as CEO. That decision came after Schnatter, in November, criticized the NFL's handling of players taking a knee during the national anthem to protest abusive police conduct toward African Americans. Papa John's was an NFL sponsor at that time. The NFL and Papa John's later ended that deal.
"The NFL has hurt us," Schnatter said in November. "And more importantly, by not resolving the current debacle to the player and owners' satisfaction, NFL leadership has hurt Papa John's shareholders."
After spending nearly a decade wallowing in ultralow interest rates, JPMorgan Chase ( JPM), Bank of America ( BAC), Wells Fargo ( WFC) and the banking sector as a whole got a boost from Federal Reserve rate hikes and Donald Trump's win in November.
X A faster pace of tightening is expected as well as a rollback of post-financial crisis regulations, potentially adding momentum to lenders.
But challenges remain as much-anticipated tax reform looks less ambitious and cracks worsen in certain consumer markets, such as auto loans.
Meanwhile, international political volatility such as fallout from Brexit and the backlash against trade could lift activity at banks like JPMorgan, Goldman Sachs ( GS) and Morgan Stanley ( MS), but lending at banks with more international exposure like Citigroup ( C) could see headwinds.
Bookmark this page to stay on top of the latest bank stock and financial sector news.
TD Ameritrade Earns RS Rating UpgradeOn Thursday, TD Ameritrade received a positive adjustment to its Relative Strength (RS) Rating, from 66 to 74. When looking for the best stocks to buy and watch, one factor to watch... Read More
One minute Dow Jones industrial average component Merck ( MRK) might be doing battle with fellow drugmaker Bristol-Myers Squibb ( BMY) over drugs that can ward off cancer.
The next, biotech giants like Amgen ( AMGN) and Sanofi ( SNY) are tussling in court over the fate of cholesterol-busting drugs. Meanwhile, a company like Gilead Sciences ( GILD) might be raked over the coals in Congress for charging $1,000 a day to treat hepatitis.
It's a brave — and contentious — new world for pharmaceutical and biotechnology companies. It's a realm where science is trying to develop landmark medicines that cure cancer, hepatitis and other life-threatening illnesses.
All the while it does a delicate dance with Wall Street and regulators — balancing public health issues with the demands of shareholders. Investors will find it tricky to navigate the sector, as companies can rise and fall at the drop of a hat.
Bookmark this page to stay on top of the latest news in the biopharma sector.
U.S. shale companies like Diamondback Energy ( FANG), Continental Resources ( CLR) and EOG Resources ( EOG) are becoming the new swing producers for the global oil market, rising to compete with and take market share from the industry's traditional powerhouses, Saudi Arabia and Russia.
Meanwhile, even integrated energy giants Exxon Mobil ( XOM), Chevron ( CVX) and Royal Dutch Shell ( RDSA) are pouring more money into U.S. shale plays, especially the Permian Basin.
Watch for new technologies and efficiencies from U.S. producers as they try to get around price hikes from service providers Halliburton ( HAL) and Schlumberger ( SLB) as well as any additional OPEC attempts to slow shale's advance.
With a valuation near $19 billion and a business model that combines shopping with entertainment, China-based Pinduoduo is set to launch an initial public offering next week that looks to raise $1.5 billion.
The Pinduoduo IPO is expected to price July 25 and trade July 26 on the Nasdaq under the ticker PDD. The Shanghai-based company runs a popular e-commerce site it describes as "Costco meets Disneyland," combining value and entertainment.
"We have consciously built our platform to resemble a 'virtual bazaar' where buyers browse and explore a full spectrum of products on our platform while interacting with one another," the company said in the Pinduoduo IPO prospectus. The prospectus is under the name of holding company Walnut Street Group Holding.
Competitors include Alibaba ( BABA) and JD.com ( JD), the two largest e-commerce companies in China.
The Pinduoduo IPO set for this week is one of nine. Six are health care IPOs. Combined proceeds from the IPOs could top $4.1 billion. That makes it one of the most active weeks for IPOs this year.
Backers Include Tencent
The Pinduoduo IPO plans to raise $1.5 billion by offering 85.6 million American depositary shares. The price range is 16 to 19. Early investors in the company plan to purchase $500 million worth of shares in the offering, or 33% of the deal. That's typically a positive indicator.
Backers include China-based Tencent Holdings ( TCEHY), a leader in messaging, mobile payments and mobile gaming in China. The lead underwriters are Credit Suisse and Goldman Sachs.
In the first quarter, company revenue rose 36% from the year-ago quarter to $220.7 million. It posted a net loss of $32 million in that period.
Pinduoduo has a technology team with more than 700 engineers, it said.
The company founder is Zheng Huang, 38, who is chairman and chief executive. Huang is a serial entrepreneur who also was a software engineer and product manager at Google.
Its e-commerce site offers a wide range of products, including apparel, shoes, products for moms, furniture, household goods and electronics. It also sells food and beverages. Gross merchandise volume in 2017 exceeded $66 billion. At the end of March it had 295 million active buyers and 103 million active monthly mobile users.
Shares of Alibaba closed at 192.66, up 1.2%, on the stock market today. JD.com closed at 37.99, down 0.1%.
(Editor's Note: This story, originally published July 17, erroneously reported that Pinduoduo would price July 18 and start trading July 19. The new dates are July 25 and 26, respectively.)
Cannabis companies that sell both medicinal weed and recreational pot. Marijuana stocks to buy and watch. Marijuana mergers and acquisitions. Dispensary data analytics. Upcoming marijuana IPOs.
Those phrases have become increasingly common as marijuana legalization spreads across U.S. states and Canada. And investor interest in the industry continues to rise as leading pot players continue to chew away at legal barriers, where the federal government still outlaws cannabis.
Currently, nine states and Washington, D.C., have legalized recreational marijuana, while 29 states have legalized medical weed.
IPO Watch: Marijuana Stocks
Canadian pot producer Canopy Growth Corp. ( CGC) in May began trading on the New York Stock Exchange. The Canopy IPO followed the debut of Cronos Group ( CRON) on the Nasdaq in February. MedMen, a U.S. marijuana company valued at $1.65 billion, had its IPO in Canada in May as well. Still, the industry remains volatile, and inconsistent regulations could make expansion difficult.
Big money is pouring into the legal cannabis market, potentially steering more U.S. consumers toward weed. Struggling beer and tobacco companies are using that trend to find new business. One approach is to look for opportunities within the increasingly popular products in MedMen's stores. For example, the cannabis drinks stacked in a refrigerator near the corner, or the sleek vaping devices and tins of prerolled joints. Read More
XStay on top of the latest news, trends and stocks to watch across a wide range of industries, including banks and finance, airlines, energy, retail, biotech, semiconductors and more.
You'll also find ongoing analysis of the so-called FANG stocks — Facebook ( FB), Amazon.com ( AMZN), Netflix ( NFLX) and Google parent Alphabet ( GOOGL) — as well as the 30 components that make up the Dow Jones industrial average, including Apple ( AAPL), Boeing ( BA), Goldman Sachs ( GS) and Wal-Mart ( WMT).
Click the main titles below for more stories on each topic.
United Rentals Earnings Top, But Stock RetreatsUnited Rentals, the biggest equipment rental company, late Wednesday topped earnings and revenue estimates for a second straight quarter. But United Rentals stock fell in after-hours action. Estimates: United Rentals earnings are... Read More
Another biotech, Rubius Therapeutics ( RUBY), raised $241.5 million with its IPO that began trading Wednesday.
Rubius priced 10.5 million shares at 23. Rubius shares closed at 24.25, up 5%. The stock was up 10% earlier in the day.
Health Care IPOs At Brisk Pace
Health care IPOs are running at a brisk pace. Just halfway through the year, health care offerings this year are close to passing the 38 health care IPOs in all of 2017, says research firm Ipreo.
Thursday is a big day for IPO activity, with another four health care offerings planning to start trading that day.
One closely watched IPO will be Tilray ( TLRY), a Canadian medical-pot producer, which plans to list on the New York Stock Exchange under the ticker TLRY. It will be the first pure-play marijuana IPO on a major U.S. exchange.
Another IPO receiving above-average attention is Allakos ( ALLK). Its developing antibodies for allergic, inflammatory and proliferative diseases. It will offer 6 million shares at a price range of 17. Allakos will trade on the Nasdaq under the ticker ALLK.
Also coming is Replimune Group ( REPL), a developer of immunotherapy for the treatment of cancer. It will trade on the Nasdaq under the ticker REPL
Another is Constellation Pharmaceuticals ( CNST), a developer of cancer treatments. It will trade on the Nasdaq under the ticker CNST.
Medical technology company Establishment Labs ( ESTA) will trade on the Nasdaq under the ticker ESTA.
More companies went public in the second quarter than any other reporting period in the past three years, which could lay the groundwork for a group of tech "unicorns" to come galloping out of the forest for an initial public offering over the next year or so.
Amazon Prime Day wrapped up early Wednesday morning with the e-commerce giant calling the event its biggest shopping period ever as the stock hovered near a record high.
Amazon.com ( AMZN) said Prime Day offered more than 1 million deals and that Prime members purchased more than 100 million products. The biggest seller overall was the Amazon Fire TV Stick with Alexa Voice Remote, the company said. In the U.S. market, top sellers included the Instant Pot, a multifunctional slow cooker. Other popular products were the 23andMe DNA test kit and LifeStraw personal water filter.
This year's Amazon Prime Day intake surpassed its own sales for Cyber Monday, Black Friday and the 2017 Prime Day for a 36-hour period, the company said. That made it "once again the biggest shopping event in Amazon history," the e-commerce behemoth noted in a news release.
The company does not release specific sales figures for Amazon Prime Day, but analysts think sales will approach $3.4 billion. That compares with estimates of $2.4 billion in 2017, according to research firm Statista, and $1.52 billion the year before that.
Amazon said small- and medium-size businesses selling on its website far exceeded $1 billion in sales on Prime Day.
The online sales event is exclusively for members of the company's Amazon Prime loyalty program, where users pay $119 a year and receive free shipping, access to its video and music library, and many other perks. There are more than 100 million Amazon Prime members, who statistically buy more goods than nonmembers.
This year, "Amazon welcomed more new Prime members on July 16 than any previous day in Amazon history," it said.
Glitch At The Start
The 36-hour sale launched at 3 p.m. ET Monday and immediately ran into problems as an Amazon website glitch irritated users confused by the malfunction, which lasted more than two hours. Amazon did not specify what caused the website glitch.
This year, Amazon added an extra six hours to the event and added four countries to the sell-a-thon, including Australia and Singapore, totaling 17 countries. It also opened its doors 12 hours early with a limited sales event. That allowed customers to jump on select Amazon Prime Day deals that included its line of company-branded electronics.
Amazon shares closed at 1,842.92, down a fraction on the stock market today. Early in the session, Amazon stock hit a record high of 1,858.88.
EBay topped analyst views for second-quarter earnings late Wednesday, but shares initially fell after revenue missed and the company said it will end its partnership with Indian e-commerce company Flipkart.
EBay ( EBAY) reported revenue of $2.64 billion for the period ended June 30. It missed analyst estimates of $2.66 billion, but sales were up 9% from the year-ago quarter. Adjusted earnings were 53 cents, beating views for 51 cents.
Gross merchandise volume transacted on eBay sites totaled $23.6 billion in the quarter, up 10% from the year-ago period.
Shares of eBay were down 1.8%, near 37.20 during after-hours trading on the stock market today.
Sale Of Flipkart
The company also announced its intent to sell its holdings in Flipkart, an Indian e-commerce company. Following the close of the transaction, eBay will end its current strategic relationship with Flipkart.
EBay said it generated $372 million of operating cash flow and $188 million of free cash flow from continuing operations. It also repurchased approximately $1 billion of its common stock during the quarter.
EBay ended the period with 175 million global active buyers, up 4% from the year-ago quarter.
"As we look ahead to the second half of 2018, we expect acceleration in our core business and continued strong growth in earnings." said Devin Wenig, eBay chief executive, in prepared remarks.
Novartis ( NVS) still expects to hit its top-line guidance for 2018, even after following the lead of Dow Jones component Pfizer ( PFE) by halting plans for drug-price hikes as President Donald Trump irons out his health care blueprint.
On the stock market today, Novartis stock jumped 2.9%, to close at 80.96. Shares rose to a three-month high after the Swiss drugmaker's adjusted income and sales topped the consensus of analysts polled by Zacks Investment Research.
For the second quarter, Novartis reported core earnings of $1.29 per share on $13.16 billion in sales. Core earnings and sales grew 4% and 5%, respectively, on a constant-currency basis. Both metrics beat the consensus, which called for earnings of $1.27 a share on $12.73 billion in sales.
"We don't plan to take any further price increases in the United States for 2018," Chief Executive Vas Narasimhan said, according to Reuters. "Right now, in a very dynamic environment in the United States ... we view it as the prudent course."
Novartis Sales Drivers
Overall, Novartis' net drug prices for 2018 are "flat to declining," he said.
The drugmaker's ophthalmology unit, known as Alcon, was a bright spot in the quarter. Novartis upped guidance for Alcon to mid-single-digit growth for the year. The drugmaker is currently in the process of spinning off the eye devices business.
During the quarter, Alcon sales rose 5% on a constant-currency basis to $1.82 billion. Surgical growth was driven by implantable devices, including intraocular lenses. In vision care, strong sales of daily contact lenses were offset by declining sales of weekly and monthly lenses.
At the same time, sales of innovative medicines advanced 8% on a constant-currency basis to $8.88 billion. However, generic drug sales in its Sandoz business declined 2% to $2.46 billion.
The best growth in the quarter came from heart-disease drug Entresto. Sales of Entresto rose 113% to $239 million. Trailing, plaque psoriasis drug Cosentyx grew 40% to $701 million. Kymriah, Novartis' cancer treatment, brought in $16 million in sales. Kymriah belongs to a class of drugs called CAR-T.
Biosimilars — nearly identical copies of biologics — tacked on 34% growth to $363 million. The best sellers were copies of Roche's ( RHHBY) cancer drug Rituxan and Amgen's ( AMGN) arthritis and psoriasis drugs Enbrel in Europe, and Amgen's bone marrow stimulant Neupogen in the U.S.
IBM earnings for its second quarter beat the consensus estimates on the top and bottom lines, as the company continues to focus on new market opportunities stemming from a long and difficult business restructuring.
After the market close Wednesday, IBM ( IBM) reported revenue of $20 billion. That beat the consensus estimate of $19.9 billion and was up 4% from the year-ago quarter. It was the third quarter in a row of revenue growth, after a long series of quarterly declines.
The company reported adjusted earnings of $3.08 per share, beating analyst estimates of $3.04, up 3.7% from the year-ago quarter.
The business units IBM continues to build on, which it calls Strategic Imperatives, are cloud computing, data analytics, mobile services, social technologies and security. Last year, these businesses tallied $37.7 billion in revenue, representing 47% of total IBM sales. As reported by IBM, revenue from Strategic Imperatives over the last 12 months totaled $39 billion, up 15% from the same period a year ago.
"While it's been an arduous, never-ending turnaround story at IBM with patience wearing thin among investors, the combination of massive cost-cutting, a myriad of sales force changes, significant investments in AI, and focus on driving Big Data, cloud and analytics sales is starting to resonate with helping the company slowly start to turn the corner with clear challenges still ahead," GBH Insights analyst Daniel Ives wrote in a note to clients.
Ives has a rating of attractive on IBM stock with a price target of 180.
IBM Earnings Highlights
IBM earnings should show Strategic Imperatives reaching $40 billion in 2018, more than 40% of revenue, the company said.
"More clients are engaging IBM on their journey to the cloud, and deploying IBM Cloud, Watson AI, analytics, blockchain and security solutions," Ginni Rometty, IBM chief executive, said in prepared remarks.
IBM shares were up less than 1%, near 145.75 during after-hours trading on the stock market today. IBM stock hit a 15-month high of 171.13 on Jan. 18.
Semiconductor equipment maker ASML Holding ( ASML) on Wednesday beat Wall Street's targets for sales and earnings in the second quarter, sending its stock higher.
ASML stock jumped 6.6% to close at 217.90 on the stock market today. In intraday trading Wednesday, it hit an all-time high of 218.48.
The Netherlands-based company earned $1.63 a share on sales of $3.27 billion in the June quarter. Analysts expected ASML to earn $1.42 a share on sales of $3.05 billion. Its results translated to year-over-year growth of 38% in earnings per share and 43% in sales.
For the current quarter, ASML forecast sales of $3.19 billion, up 11% year over year. Analysts were modeling $3.27 billion. The Dutch company expects a gross profit margin of 47.5%, topping the estimate for 44.9%.
EUV System Sales Rising
ASML's second-quarter results were aided by higher-than-expected sales of extreme ultraviolet lithography systems. EUV machines can etch smaller circuits while increasing capacity and speed compared with previous technologies.
It shipped four EUV systems last quarter, one more than forecast, as logic chip customers prepare to ramp next-node devices starting later this year, ASML Chief Executive Peter Wennink said in a news release.
ASML Holding is on track to supply 20 EUV systems this year and at least 30 systems in 2019, he said.
"After an excellent first half of 2018, we expect the second half to be stronger, with improved profitability and continued growth from Q3 to Q4," Wennink said.
Price-Target Hike For ASML Stock
RBC Capital Markets analyst Mitch Steves raised his price target on ASML to 240 from 235 on the news. He reiterated his outperform rating on the stock.
"ASML reported a solid quarter and guide driven by higher than expected EUV shipments and DUV (deep ultraviolet) demand," Steves said. "Importantly, the company is messaging that some customer push-outs (we believe Samsung) were offset by pull-ins from other companies helping alleviate memory-related concerns in the semi-cap space."
Investment bank Goldman Sachs soured on Broadcom ( AVGO) on Wednesday, cutting its rating on the chipmaker to neutral from buy. It cited rising "strategic uncertainty" at the company following its planned purchase of enterprise software firm CA Technologies ( CA).
Goldman analyst Toshiya Hari slashed his 12-month price target on Broadcom stock to 220 from 300. Broadcom rose 0.2% to 208.78 on the stock market today.
Investors are wondering how much Broadcom plans to diversify into the software business after its CA purchase, Hari said in a report. Broadcom announced the $18.9 billion deal last week.
Investors also want to know if Broadcom's move was based on diminished expectations for its core semiconductor business, he said. Broadcom could be losing market share to Qorvo ( QRVO) in the radio-frequency-chip space, he said.
"Management will need to provide greater clarity on its forward strategy," Hari said.
Ichor Price Target Cut
Elsewhere in the chip sector, RBC Capital Markets cut its price target on semiconductor equipment stock Ichor Holdings ( ICHR) to reflect near-term headwinds in the industry.
RBC analyst Amit Daryanani lowered his target to 33 from 40, but kept his outperform rating on the stock. Ichor shares dropped 1.5% to 20.46 on Wednesday.
Ichor likely will be impacted by delayed purchases of DRAM memory-chip production equipment by Samsung. Price declines in Nand memory chips also could dampen near-term capital equipment spending, Daryanani said.
On Monday, Evercore ISI analyst C.J. Muse cut his price targets on several major chip equipment vendors. He lowered his target on Applied Materials ( AMAT) to 65 from 75. He cut his target on KLA-Tencor ( KLAC) to 120 from 125 and on Lam Research ( LRCX) to 240 from 300.
On Wednesday, Applied Materials rose 2.1% to 48.28. KLA-Tencor climbed 4.1% to 110.23. Lam advanced 2.3% to 181.32.
"In semiconductor equipment, we continue to view the current shipment pause as only temporary," Muse said in a report. "Investors are taking a wait-and-see approach into this earnings cycle for the whole semiconductor production equipment group."
Texas Instruments Stock Down On CEO Ouster
Meanwhile, Texas Instruments stock fell Wednesday after the chipmaker announced late Tuesday that it had replaced its chief executive under a cloud of scandal.
Texas Instruments ( TXN) forced out CEO Brian Crutcher after just six weeks in the job for violating the company's code of ethics with his personal behavior. The company did not provide specifics on his misconduct.
The board of directors replaced him with Chairman Rich Templeton, who had served as CEO for 14 years until June when he was succeeded by Crutcher.
"We find Crutcher's departure as disturbing given he is the third CEO in the semiconductor industry over the last month ousted for conduct reasons (Brian Krzanich at Intel ( INTC) and Ron Black at Rambus ( RMBS) are the others)," CFRA analyst Angelo Zino said in a note to clients. Templeton's return as CEO should ease investor concerns, he said.
Templeton's return should be a positive for the stock, said Jefferies analyst Mark Lipacis.
"Templeton led the transformation of TI to an analog and embedded processing powerhouse, as well as to a best-in-class generator of cash flow and returner of capital to shareholders," Lipacis said in a report. "Most consider him one of the top CEOs in the history of the industry."
Lipacis reiterated his buy rating on Texas Instruments stock with a price target of 150. Texas Instruments stock dipped a fraction to 115.68 on Wednesday.
United Rentals ( URI), the biggest equipment rental company, late Wednesday topped earnings and revenue estimates for a second straight quarter. But United Rentals stock fell in after-hours action.
Estimates: United Rentals earnings are expected to rocket 48% to $3.50 a share as sales power up 13% to $1.8 billion. That's according to Zacks Investment Research.
Results: United Rentals earnings shot up to $3.85 a share. Revenue rose 19% to $1.89 billion.
Outlook: Excluding a pending takeover, United Rentals raised the midpoint of its full-year revenue target to $7.6 billion from $7.45 billion. Its EBITDA target midpoint edged up to $3.725 billion from $3.675 billion.
Stock: United Rentals stock fell 2.6% in early after-hours action. Shares had closed up 2.1% at 155.34 on the stock market today. Equipment maker Caterpillar ( CAT) rose 1.6%, and John Deere ( DE) added 0.9%.
This year, United Rentals stock has been whipsawing, and is currently trading underneath its 50- and 200-day lines. Its relative strength line, which tracks a stock's performance vs. the S&P 500 index, is also down for the year.
The S&P 500 stock supplies earthmovers, forklifts and other heavy equipment. Its customers range from construction companies to municipalities. One of its key rivals is London-based Ashstead Group, which operates in the U.S. as Sunbelt Rentals.
United Rentals focuses on the domestic market and can weather U.S.-China trade war tensions better than flashier names on the Dow Jones industrial average such as Caterpillar, some say.
United Rentals and Ashstead enjoy a competitive advantage, carrying a significantly higher number of products vs. smaller peers, according to Melius Research.
"Our confidence extends to both our immediate operating environment and the durability of the cycle," Kneeland said in a statement. "Virtually all indicators point to market growth, which supports our reaffirming our outlook for the year."
Abbott Laboratories ( ABT) stock hit its highest point in two decades Wednesday and narrowly broke out after topping Wall Street's quarterly expectations and raising its own outlook for 2018.
On the stock market today, Abbott stock jumped 3.1%, to 64.75. The stock narrowly topped a buy point at 64.70 out of a flat base. Abbott shares advanced as high as 65.50, touching their highest point since at least 1995.
But the medtech player lost steam in its cardiac rhythm management and neuromodulation units. Abbott likely ceded share to Medtronic ( MDT) and Boston Scientific ( BSX) in those businesses, Needham analyst Mike Matson said in a note to clients.
"Compared with the first quarter, Abbott's medical devices growth slowed while diagnostics growth improved in the second quarter," he said. "In medical devices, it appears that Abbott lost share in cardiac rhythm management and neuromodulation, and gained share in electrophysiology."
Medical Devices Mixed
For the quarter, Abbott reported adjusted profit of 73 cents a share on $7.77 billion in sales. On a constant currency basis, sales grew 8%. Adjusted profit grew 17.7%. Both metrics beat the average analyst view for adjusted profit of 71 cents a share on $7.73 billion in sales.
The strongest growth came from Abbott's established pharmaceuticals business, which only sells outside the U.S. Established pharma generated $1.13 billion in sales, rising 12.3%. That was close to analysts' model for $1.14 billion, BMO Capital Markets analyst Joanne Wuensch said in a note to clients.
Medical device sales advanced 8.2% to $2.89 billion, beating expectations by 2.5%, Evercore analyst Vijay Kumar said in his report to clients. But that slowed from 9.4% growth last quarter, Needham's Matson said. Abbott said it expects to see high single-digit growth in medical device sales in the third quarter.
Under the medical devices hat, cardiac rhythm management and vascular sales declined a respective 4% and 0.3%. Matson believes Abbott likely lost cardiac rhythm management share to Boston and Medtronic "likely due to competitor product launches and a replacement headwind."
Neuromodulation grew 5.8% to $222 million, but that lagged views by about $20 million and slowed from 18.8% growth last quarter. But Abbott believes its cardiac rhythm management sales could improve to be flat for the year and sees neuromodulation business returning to market growth.
Diabetes Unit Strong
Diabetes care helped partially offset those tough spots, surging 33.6% to $470 million. Sales of electrophysiology devices grew 21.6% to $428 million. That beat the consensus for $406 million as growth accelerated from 18.6% in the first quarter, Matson said.
"It appears that Abbott gained share from competitors," he said.
Diagnostics sales rose 6.6% to $1.87 billion. The best growth came from core laboratory sales, which advanced 7.7%. Meanwhile, nutrition sales generated $1.86 billion, growing 6.4%. In the pediatric unit, Abbott noted strength in several Asian countries and Latin America.
Nutrition sales beat expectations by 2.4%, Evercore's Kumar said. Diagnostics sales missed by 1.3%.
For the year, Abbott raised guidance for adjusted earnings to $2.85-$2.91 per share. At the midpoint, that topped the consensus of analysts polled by Zacks Investment Research by two pennies. Third-quarter guidance for 73-75 cents lagged by 1 cent at the midpoint.
Aluminum giant Alcoa ( AA) topped Q2 forecasts after the close Wednesday but trimmed its guidance due in part to President Trump's tariffs on steel and aluminum.
Estimates: Wall Street sees EPS erupting by 115% to $1.33, as revenue swells 24% to $3.555 billion, according to Zacks Investment Research.
Results: EPS of $1.52 on revenue of $3.58 billion. Alcoa incurred $15 million of costs for tariffs on imports from its foreign operations for U.S. sale. Alcoa's imports were primarily from Canada
Outlook: Adjusted full-year EBITDA is now seen at $3 billion-$3.2 billion, down from a prior view of $3.5 billion-$3.7 billion. Management said the cut "reflects current market prices, tariffs on imported aluminum, increased energy costs, and some operational impacts."
"Uncertainty continues to exist in the global supply chain due to U.S. tariffs and ongoing alumina supply disruptions in the Atlantic region," the company said in a statement.
Stock: Alcoa fell 5% late. Shares closed down 0.1% at 47.96 on the stock market today, hitting resistance at their converged 50- and 200-day averages. The stock is currently regrouping after an attempted April 14 breakout from a 13-week cup base failed.
Alcoa's relative strength line has been choppy, however it is down on its position at the start of the year and its high in for the year on April 20.
Alcoa, which should be a Trump tariff winner, reported 22% EPS growth in its most recent report. Sales growth came in at 16%. However, its fundamentals remain below par. Its IBD Composite Rating is a poor 41, while its Relative Strength Rating is a dire 37.
The company is the world's sixth largest producer of aluminum.
It was spun off from Arconic ( ARNC), which produces high-end performance materials for the aerospace, automotive and construction sectors.
Trump Tariffs Take Effect
Wall Street was rattled back in May after the Trump administration levied a 25% tariff on steel and a 10% tariff on aluminum imports. U.S. trade partners swiftly retaliated.
The EU imposed 25% tariffs on $3.3 billion worth of U.S. imports starting June 22. Mexico imposed tariffs on pork bellies, apples, grapes, cheeses and flat steel. Canada also imposed tariffs on U.S. steel, aluminum and other products.
South Korea was the first country to be granted a permanent exemption from the steel tariff. Australia, Brazil, and Argentina have also been given exemptions.
European antitrust regulators hit Google parent Alphabet ( GOOGL) with a record $5 billion fine on Wednesday, charging that the internet giant has used its Android mobile phone operating system to bully smartphone makers.
The company said it will appeal the fine in European Union courts.
"Today's decision rejects the business model that supports Android, which has created more choice for everyone, not less. We intend to appeal," Google Chief Executive Sundar Pichai wrote in a blo g.
Google stock slipped a fraction to close at 1,212.91 on the stock market today. Google stock ventured into positive ground for most of the trading day.
"This fine is within the range of expectations and well-telegraphed to the market," said Brian White, an analyst at Monness, Crespi, Hardt & Co., in a report.
Funds On Hand
Though Google is appealing, the cash-rich internet giant has enough funds on hand to pay the fine.
"Google has $105 billion in net cash on its balance sheet," said Mark Mahaney, a RBC Capital analyst in a report. "So after this fine, Google will have $100 billion. That's a lot."
The EU hit Google with a $2.7 billion penalty last year. At that time, Europe's regulators said Google skewed search results. They claimed it did so to benefit its own shopping-search service vs. those of rivals. Google has paid the $2.7 billion fine.
The EU on Wednesday gave Google 90 days to stop what it called "illegal practices" on contracts with handset manufacturers that push Google services in front of users.
"The (EU) decision ignores the fact that Android phones compete with (Apple ( AAPL)) iOS phones, something that 89% of respondents to the commission's own market survey confirmed," Pichai said in the blog. "It also misses just how much choice Android provides to thousands of phone makers and mobile network operators who build and sell Android devices; to millions of app developers around the world who have built their businesses with Android; and billions of consumers who can now afford and use cutting-edge Android smartphones."
Did Google Bully Smartphone Makers?
European regulators say Google has forced smartphone makers to pre-install its suite of apps in order to gain access to the Google Play store. Google's actions reduce the incentives for manufacturers to install competing apps, the EU said.
"From a debundling impact perspective on the business, we expect minimal impact as the consumer is likely to just simply download the apps for Google's services if and when they get new Android phones — much as they already do when they get new (Apple) iPhones," said Stephen Ju, a Credit Suisse analyst in a report.
The U.S. Federal Trade Commission in 2013 ended a Google probe after the internet search giant agreed to voluntarily change its business practices.
After the closing bell, American Express ( AXP) earnings kicked off reports from the major credit card companies. American Express stock was closing in on a buy point by the close, but shares are sinking late on a revenue miss.
American Express Earnings
Estimates: American Express earnings should rise 24.5% to $1.83 a share on 21% revenue growth to $10.05 billion, according to Zacks Investment Research.
Results: EPS of $1.84 on revenue of $10.002 billion.
Stock: Shares of the Dow Jones component are falling 3.2% after closing the regular session up 1.8% to 102.98 in the stock market today. At the close, American Express stock was nearing a 103.34 entry point as it builds a second-stage flat base. But its relative strength line, which tracks a stock's performance vs. the S&P 500 index, has lagged since late April and hasn't made much headway since late 2017.
Shares have broken support at their 50-day and 200-day lines several times in 2018, but American Express stock is now back above both key levels.
In late June, the Supreme Court tossed out a lawsuit that alleged American Express suppressed competition by stopping retailers from nudging customers to use credit cards with lower merchant fees.
More Credit Card Earnings
Capital One ( COF) reports earnings on Thursday. Visa ( V), a Dow Jones stock like AmEx, and Mastercard ( MA) are on tap next week.
Capital One stock rose 1.2%. It's reclaimed its 50-day and 200-day lines recently but is well off its Jan. 24 peak.
Visa stock climbed 0.9%, hitting a new high. Mastercard rose 1%.
U.S. weekly oil production hit a new milestone last week, according to the Energy Department on Wednesday, and domestic crude stockpiles unexpectedly rose.
The Energy Information Administration said U.S. output hit 11 million barrels per day last week, after holding at 10.9 million bpd for the prior five weeks. Just five months ago, domestic production topped 10 million bpd.
But production data from the lower 48 states appears to be getting rounded off in recent weeks, meaning actual output may be slightly below 11 million bpd.
Crude stockpiles rose by 5.8 million barrels. Gasoline supplies fell by 3.2 million barrels. Analysts polled by S&P Global expected a 3 million-barrel drop in crude stockpiles and a 1 million-barrel drop in gasoline supplies.
Late Tuesday, the American Petroleum Institute reported a 629,000-barrel increase in U.S. crude supplies. The industry group saw gasoline stockpiles up by 425,000 barrels.
U.S. crude reversed higher to settle up 1% at $68.76 a barrel. Brent rallied 1% to $72.90 per barrel.
EOG Resources ( EOG) fell 0.6% to 123.58, trying to regain its 128.13 buy point. Marathon Oil ( MRO) rose 1.55% but fell into sell territory after diving on Monday.
U.S. Oil Production Rivals
The U.S. still trails Russia in oil production but is closing the gap. Russian oil output rose to 11.19 million bpd during July 1-4 from 11.06 million bpd in June, a source familiar with the data told Reuters.
But the U.S. had already topped Saudi Arabia, which reported that it pumped nearly 10.5 million bpd last month, up from just more than 10 million bpd in May. Data from independent sources cited in OPEC's monthly report showed a slightly smaller build to just more than 10.4 million bpd.
United Airlines ( UAL) executives on Wednesday stressed that the carrier's financial targets were "absolute" following strong second-quarter earnings released late Tuesday, as investors gauge whether they should steer clear of airline stocks amid rising fuel prices but strong travel demand.
When asked during the second-quarter conference call why investors are reluctant to buy airline stocks, United Airlines President Scott Kirby said that historically the airlines did a "poor job" of meeting long-term financial targets.
United Airlines Outlook: This Time Is Different
"I think if we, as an industry, have a history of putting out targets that we don't meet," he said, "how can we expect investors to take those at face value and to trust them?"
The carrier, in adopting what Kirby said was a "no excuses" mentality, said it had made a commitment to hit its 2020 earnings-per-share target of $11 to $13 in 2020.
"We're going to meet our numbers," he said. "We're going to move heaven and earth. And sometimes that means making hard decisions. But we take those as real commitments."
After scores of bankruptcies since deregulation 40 years ago, consolidation a decade ago, and concerns about overexpansion, analysts have wondered whether anything is truly different about the airline industry today. United management said those firmer commitments, along with the carrier's domestic expansion plan, were what was different this time.
United Airlines Stock Rebounds
Not every analyst shared that optimism, with one noting that margins have dipped since United Airlines laid out longer-term financial targets in 2016. But investors, for now, are buying it.
Shares spiked 8.8% to 79 in the stock market today, hitting a 52-week high intraday. United Airlines stock broke out past a 75.63 entry on the handle of a saucer base.
Other airline stocks followed. Delta Air Lines ( DAL), which faced similar questions during its earnings call last week, jumped 3.25%. American Airlines ( AAL), which warned on Q2 earnings last week, gained 2.65%. Southwest ( LUV) rose 1.3%.
United Airlines Earnings Top
United Airlines late Tuesday raised its full-year earnings-per-share outlook. For the third quarter, it forecast another gain for unit revenue, with unit costs flat to down a little. Second-quarter earnings and revenue came in above expectations.
"Really very nice and good," read the headline of a Stifel research note on Tuesday. The note later added, "What more could you want?"
The carrier also revised lower its full-year outlook for flight capacity. Kirby on Wednesday said that was "just the result of higher fuel prices."
In a slide presentation on Wednesday, United Airlines said that "higher yield" and "commercial and operational initiatives" were "expected to offset" higher fuel costs.
United in January announced plans to offer more connecting flights into smaller cities from its hubs in Chicago, Denver and Houston. The plan, the company argues, will help it regain lost customers, reclaim relevance and tap markets where it can charge more to fly.
That expansion, coupled with some strong words for low-cost competitors, left investors petrified. United's stock crashed 11% after it announced the plans. But on Wednesday, United Airlines' stock had essentially recouped all the losses it suffered since.
Airline Stocks Vs. Rising Fuel Costs
Higher fuel prices and U.S. threats of a trade war have hurt airline stocks this year, even as the economy and travel demand remain strong.
As with Delta, United downplayed the impact of a more intense trade war with China. United said it hadn't seen "any impact" on bookings in either (premium or economy) cabin.
"United is the largest U.S. carrier between China and the U.S., with just under 5% of their total capacity in the market," Cowen analysts said in a research note last week. "As a result, United would be the one U.S. airline to see the largest impact of any fallout from weakening demand in the region."
United also said it planned to add flights to Guam. North Korea's threats to attack the island territory last year kept more travelers away.
VietJet announced it's buying 100 more Boeing ( BA) 737 Max jets Wednesday at the Farnborough Airshow, where Boeing is beating Airbus ( EADSY) in orders.
The low-cost carrier signed a memorandum of understanding for 80 737 Max 10s and 20 737 Max 8s. The deal is valued at over $12.7 billion at list prices. In 2016, VietJet finalized an order for 100 737 Max 8 airplanes.
Later Wednesday, Boeing said it received commitments from four unnamed customers for a total of 93 737 Max jets worth $11 billion at list prices. One of the carriers is buying 40 of the high-capacity version of the 737 Max 8.
So far during the air show, Boeing has received orders and commitments of more than $70 billion at list prices, while Airbus has orders and commitments worth $52 billion at list prices. But many of those deals aren't finalized and airlines typically get discounts on large orders.
Boeing shares climbed 0.9% to 360.23 on the stock market today. Airbus' U.S.-listed shares dipped 1% to 31.14 but remain in buy range.
Air Force One Deal
Late Tuesday, the Pentagon officially awarded Boeing a $3.9 billion fixed-price contract to replace the two Air Force One jets. The jets are two Boeing 747-8s and are expected to be completed by December 2024.
The fixed-price contract had been a major sticking point during negotiations. The Air Force wanted to sign a fixed-price contract that would make Boeing responsible for any extra costs.
In December 2016, then President-elect Trump tweeted that "costs are out of control" at over $4 billion and threatened to cancel the order.
To save money, the Air Force agreed last year to buy two 747-8s that had already been built but never delivered because the intended customer, a Russian airline, went bankrupt.
Trump said the new jets would be painted "red, white and blue, which I think is appropriate," replacing the current light blue and white color scheme.
Here's a look at how the big banks' trading results stacked up.
Morgan Stanley: Fixed-income trading revenue climbed 12%to $1.39 billion, and stock-trading revenue rose 15% to $2.47 billion.
Goldman Sachs: Fixed-income revenue surged 45% to $1.68 billion, while equities revenue was flat at $1.89 billion. Goldman Sachs reported earnings on Tuesday.
JPMorgan Chase: Fixed-income revenue rose 12% to $3.5 billion, aided by a rebound in commodities from weakness a year ago. Equities revenue jumped 24% to $2 billion. The bank saw a decent level of market volatility during the quarter, management said.
Citigroup: Fixed- income revenue slipped 6% to $3.08 billion, and equities revenue climbed 19% to $864 million.
Bank of America: Fixed-income revenue rose 2% to $2.3 billion, and equities revenue jumped 17% to $1.3 billion.
In 2016, the U.K.'s vote to get divorced from the European Union, and President Trump's election, roiled markets, keeping banks' trading desks busy. With the absence of those surprises last year, trading desks weren't as busy and revenue was subdued.
This year, bank analysts and investors have been preoccupied with a trade war, Federal Reserve rate hikes, and the flattening yield curve.
Target ( TGT) said its one-day sale Tuesday resulted in its "highest single day of traffic and sales of 2018." The retailer hosted its sale, no doubt deliberately, on the same day as the bulk of the 36-hour Amazon ( AMZN) Prime Day shopping event.
Which promoted Target products sold like hotcakes? Among them: Graco brand baby products, Dyson vacuums, the Instant Pot pressure cooker, Project 62 armchairs, Harry's Razors, Target private-label home products, and Google Chromecast and other Google ( GOOGL) products.
From Target and Amazon's accounts, shoppers appeared to be out in full force Tuesday. Amazon said that Prime Day 2018 sales "surpassed Cyber Monday, Black Friday and the previous Prime Day, when comparing 36-hour periods, making this once again the biggest shopping event in Amazon history."
Amazon Prime members bought more than 100 million products on Prime Day, with the Fire TV stick (with Alexa voice remote) and Echo Dot at the top of best-sellers list. (Amazon, too, said the Instant Pot was a big seller, by the way.)
Amazon said it got more Amazon Prime membership sign-ups on July 16, when Prime Day started, than on any other day ever.
There's no telling if Amazon Prime Day website troubles helped lift Target's one-day sale. But Moody's analyst Charlie O'Shea said the glitches on Amazon's end had "minimal impact on the sales success of the annual event, with our view that given Amazon's prodigious spending, it is safe to say that any day compared to the prior year should be much better from a sales perspective, with the continuing challenge for the company driving margin and profitability in its retail business."
Target stock fell 0.5% to 76.86 on the stock market today, not far from a 79.69 flat-base entry. Amazon stock dipped 1.01 to 1,842.92 after hitting a record high intraday.
Berkshire Hathaway ( BRKB) late Tuesday ditched a cap on buybacks of its own stock, allowing chairman and CEO Warren Buffett to use the company's giant cash hoard to reward shareholders as he continues to hunt for a sizable acquisition. Berkshire Hathaway stock spiked higher on Wednesday.
The Berkshire board of directors amended the share-repurchase program so that buybacks can be made at any time that both Buffett and Vice Chair Charlie Munger believe that the repurchase price is below Berkshire's intrinsic value, which would be "conservatively determined."
Berkshire's earlier policy required repurchase price to not exceed 1.2 times book value per share. Book value is a company's total assets minus intangible assets and liabilities.
The conglomerate will still hold at least $20 billion of cash, cash equivalents and U.S. Treasury bills. But Berkshire currently holds a pile of cash more than five times that amount, at $109 billion. That's pressured Buffett to put the money to use.
B-class shares of Berkshire Hathaway vaulted 5.3% to 200.51, on the stock market today, reclaiming the 50- and 200-day moving averages. Berkshire stock hit a record 217.62 on Jan. 29, but its relative strength line hasn't made much headway for the past decade.
Berkshire Stock Buybacks
A famously value-oriented investor, Buffett has struggled to find an attractively priced acquisition for his sprawling portfolio of companies that spans everything from insurance company Geico to See's Candies. Absent a big and splashy new deal, Buffett has been loading up on Apple ( AAPL) stock.
The 87-year-old Buffett started a buyback program in 2011 after avoiding repurchases and dividends for decades.
He reportedly prefers to see excess cash reinvested to grow businesses.
Berkshire will not initiate any share buybacks under the amended policy until it releases second-quarter earnings, set for Aug. 3.
Cathy Seifert, an equity analyst at CFRA, called the Berkshire board action a "vote of confidence" in a stock they see as undervalued, but cautioned it's also an admission of an acquisition strategy that "really has fumbled."
One example is last year's failed bid for electric utility Oncor, which was instead bought by Sempra Energy ( SRE).
She noted Berkshire competes with private equity firms in a crowded M&A market, tying recent acquisition stumbles to the Berkshire stock's flat year-to-date performance, along with valuation concerns and a "mixed fundamental picture" for many of Berkshire's largest businesses including insurance.
CFRA has a neutral rating on Berkshire stock and finds it fairly valued.
General Electric ( GE) reports Friday before the open, the first GE earnings report since the industrial conglomerate unveiled a dramatic restructuring plan in June.
At this early stage in GE's turnaround strategy, analysts have set a low bar for earnings and revenue expectations.
Aside from GE earnings, investors are likely to focus on profit guidance, the dividend and its three core businesses, as the conglomerate shrinks dramatically in the coming years.
Both the company and its shareholders are hoping for signs of a turnaround, after a tumultuous year that saw major hits to profits and the dividend; nasty surprises about special charges and regulatory probes; and a previously unthinkable but bold move to cut seven industrial segments down to three.
Shares of GE edged up 0.6% at 13.75 on the stock market today. They have been basing around the 50-day moving average. Fellow industrial conglomerate United Technologies ( UTX) climbed 1.2%, and Honeywell ( HON), which also reports Friday, rose a fraction.
Here is what to watch when the Boston-based company reports:
GE Earnings Guidance
Analysts expect EPS of 18 cents and revenue of $29.823 billion for the second quarter, according to Zacks Investment Research. Both mark declines from year-ago levels.
For now, official guidance for full-year 2018 EPS is $1-$1.07. But the company has warned profits are tracking toward the lower end of that range, while the Zacks analyst consensus estimate pegs 2018 EPS at 96 cents.
Continued weakness in GE's core power market and accounting changes have led to multiple warnings of a guidance cut for 2018, sooner or later.
GE's latest portfolio moves, including the decision to jettison health care and exit Baker Hughes ( BHGE), are seen as dilutive to future earnings too.
In June, Cowen analysts wrote they found the company's assertion that "it will be able to backfill the lost EBITDA via growth, reduced restructuring spend, and greater cost control" implausible.
For JPMorgan analyst Steve Tusa, GE's new strategic plan confirmed his thesis of an eventual cut to the overall GE dividend payout ratio.
He noted loss in earnings and free cash flow from the Baker Hughes and health care divestitures.
"With restructuring to be included in the numbers starting in 2019, the headline EPS, along with absolute FCF (to the GE shareholder), is likely to be much lower overall, both not supportive of the current dividend payout" of 48 cents a shares, he wrote in June, reiterating a prior dividend warning.
Fears of a further GE dividend cut have persisted since the company halved its annual dividend in November last year. The yield is currently 3.5%.
3 Industrial Segments
The three industrial segments that GE plans to focus on in the future are power, aviation and renewable energy.
That will heighten scrutiny of those businesses.
In aviation, GE expects next-gen Leap engine deliveries to ramp up to 1,100-1,200 in 2018, but higher shipments could dent margins, as happened in the first-quarter report.
In power, GE could see some signs of stabilization though the market continues to be tough, experts say.
U.S. economic expansion rolled along and labor markets tightened in June and early July, even as Trump trade war tariffs and threats heightened concern among manufacturers and boosted some producer prices, the Federal Reserve's Beige Book survey showed.
The central bank's Beige Book economic report, based on anecdotal information collected by the 12 regional Fed banks through July 9, said 10 of the districts reported "moderate or modest" growth.
"Manufacturers in all districts expressed concern about tariffs and in many districts reported higher prices and supply disruptions that they attributed to the new trade policies," according to the report, released Wednesday in Washington. "All districts reported that labor markets were tight and many said that the inability to find workers constrained growth."
Trump Trade War Concerns
The report reflected growing anxiety among American companies over the potential impact of trade disputes initiated by President Donald Trump. The levies helped lift lumber and metals prices, though there was only a "slight to moderate" passing along of those costs to consumers.
Pricing pressures are expected to intensify further in some districts, according to the Beige Book. In others, they will continue at a modest to moderate pace.
The U.S. has slapped tariffs on steel and aluminum shipments from trade partners, and targeted $34 billion in Chinese imports, with another $16 billion to follow soon. China, the European Union and others have retaliated with duties on American exports.
Fed Chairman Jerome Powell on Tuesday told lawmakers that protectionism can hurt economic growth and potentially undermine wages.
"In general, countries that have remained open to trade, that haven't erected barriers including tariffs, have grown faster. They've had higher incomes, higher productivity," he said in testimony before the Senate Banking Committee. "Countries that have gone in a more protectionist direction have done worse."
He repeated some of those concerns Wednesday in testimony to the House Financial Services Committee.
Deutsche Bank economist Torsten Slok wrote in a note to clients Wednesday that an economic slowdown caused by trade disputes is "the most important downside risk to rates, equities and the dollar over the coming months."
Tighter Labor Markets
The rising input costs are among the many increased expenses facing companies, according to the Fed's regional survey. Most districts said employers had difficulty finding qualified workers, with some districts saying firms were paying more to attract and retain workers. Wage gains were described as modest to moderate.
Some companies are responding to labor shortages by partnering with schools, making temporary workers permanent, adding hours and strengthening retention efforts, the survey showed. Six districts said trucking capacity was stretched because of driver shortages.
The report adds to the evidence the Fed is analyzing to maintain its current path of gradual interest-rate increases, pointing toward one or two additional hikes this year. The policy-making Federal Open Market Committee has already lifted borrowing costs twice in 2018 and next gathers July 31 and Aug. 1 in Washington.
U.S. unemployment dipped to 3.8% in May, matching its lowest level since 1969, before ticking up to 4% in June. Wages, however, have continued to rise only moderately, with year-on-year gains in hourly earnings hitting 2.7% in June.
The U.S. economy grew at a 2% annual rate in the first quarter and that pace is expected to double to 4% in the second quarter, according to analysts surveyed by Bloomberg.
Chip stocks range from giants like Intel ( INTC), Qualcomm ( QCOM) and Taiwan Semiconductor ( TSM) down to lesser-known names like Qorvo ( QRVO) and Microchip Technology ( MCHP), providing the underpinnings for all types of devices, from giant servers down to smartphones.
The chipmakers power much of the world's technology, making it possible for loved ones to talk face-to-face from across an ocean or for Wall Street to move billions of dollars in the blink of an eye.
Never has the sector been more competitive, with more than 750 companies vying globally to build the insides of the next hot device or power future megacomputers. Investors will find it tricky to navigate the sector.
Bookmark this page to stay on top of the latest news on chip stocks and the semiconductor sector as a whole.
Morgan Stanley ( MS) is putting Ted Pick in charge of the firm's investment bank with momentum in his favor.
The business posted the biggest second-quarter revenue increase on Wall Street Wednesday, and the firm's trading operation topped analysts' estimates. That drove a 39% jump in earnings that was also better than expected.
Chief Executive Officer James Gorman named Pick, 49, head of the banking and trading division earlier this month after he led the equities business to a top rating for the past four years and helped turn around the fixed-income unit. The firm was the only one to post double-digit increases in both trading businesses for the second quarter and led the mergers league table for the first half.
Large banks benefited from market turmoil and interest-rate increases during the first half, with Goldman Sachs ( GS), JPMorgan Chase ( JPM) and Bank of America ( BAC) all posting better-than-anticipated fixed-income gains.
In wealth-management, revenue rose 4% to $4.33 billion as client assets surpassed $2.4 trillion, Morgan Stanley said in a statement.
Shares of the company advanced 3.3% to $50.81 in early trading at 7:18 a.m. in New York.
Morgan Stanley Earnings, Other Highlights
Per-share earnings were $1.30, beating the $1.11 estimate of 21 analysts surveyed by Bloomberg.
Stock-trading revenue rose 15% to $2.47 billion, compared with a $2.3 billion estimate of eight analysts surveyed by Bloomberg.
Fixed-income trading climbed 12%to $1.39 billion.
Investment banking generated $1.7 billion, above the $1.42 billion estimate, helped by both merger and equity-underwriting fee gains.
The chief executive of Texas Instruments ( TXN) resigned late Tuesday due to violations of the company's code of conduct, sending the chipmaker's shares lower in extended trading.
Brian Crutcher resigned as president, CEO and member of the Texas Instruments board. The board named Chairman Rich Templeton as president and CEO on an ongoing, indefinite basis. He will continue to serve as chairman. Templeton's appointment is not temporary, and the board is not searching for a replacement, the company said.
The violations against Crutcher were related to personal behavior and not related to company strategy, operations or financial reporting, TI said in a news release.
"For decades, our company's core values and code of conduct have been foundational to how we operate and behave, and we have no tolerance for violations of our code of conduct," Mark Blinn, lead director of the TI board, said in a written statement.
Follows Intel CEO Departure
The resignation comes a month after the chief executive of chipmaker Intel ( INTC) resigned after an investigation revealed that he had an improper relationship with an Intel employee.
Texas Instruments also reported second-quarter revenue of $4.02 billion, up 9% from the same quarter a year ago. It said earnings per share were $1.37, excluding a discrete tax benefit of 3 cents a share. Wall Street was modeling earnings per share of $1.31 on sales of $3.96 billion in the June quarter.
The Dallas-based company will provide full second-quarter results and third-quarter guidance on July 24.
TI stock dipped 1.5% in after-hours trading on the stock market today. During the regular session, shares rose 1.1% to 115.80.
United Airlines ( UAL) on Tuesday raised its profit outlook for this year, even as higher fuel costs siphon away airline profits, and the carrier's second-quarter earnings and sales beat expectations.
The carrier said it expected full-year earnings per share of $7.25-$8.75, with the midpoint of $8.00 above consensus estimates for $7.70. In May, the carrier said it expected earnings per share of $7.00-$8.50.
"We delivered great financial results and strong operational performance in the second quarter despite the significant headwind of higher fuel prices," CEO Oscar Munoz said in a statement.
"These results are the strongest evidence yet that our strategic growth plan is working, and we are well positioned to carry our momentum into the second half of the year," he continued.
United Airlines' second-quarter earnings per share of $3.23 topped expectations for $3.07. Revenue of $10.78 billion came in ahead of estimates for $10.702 billion. Unit revenue, a key industry figure, rose 2.8%.
The carrier also forecast a third-quarter unit revenue increase of 4%-6%. United Airlines expects pretax margins of 8%-10% in the third quarter. The company expects third-quarter capacity growth of 4.5%-5.5%.
Shares jumped 3.3% after hours in the stock market today. Delta Air Lines ( DAL) rose 1.2%. American Airlines ( AAL) gained 1%.3. United will hold its conference call to discuss Q2 earnings on Wednesday.
Rising Fuel Hits Airline Stocks
United is expanding its domestic flight network to smaller cities — an attempt by the airline to regain market share and relevance.
The plans, announced in January, caused a meltdown among airline investors. But Barclays analyst Brandon Oglenski, in a research note last month, said that those worries might be "overstated given what appears to be pent-up demand in smaller connecting markets."
Airline stocks have been pressured lower this year as higher fuel costs threaten to bite into industry profits. Some analysts have also wondered whether a trade war could dampen corporate travel demand as companies shy away from spending. Analysts are also looking for any signs that airlines might shrink their flight schedules in the latter half of the year in response.
Doing so would limit the total number of available seats and flights, thereby possibly pushing up the ticket prices for the ones still left. That, the airlines reason, would help push sales and profits higher, albeit while charging customers more to fly.
United on Tuesday forecast full-year capacity growth of 4.5%-5%. In April, the carrier forecast a range of 4.5%-5.5%.
Delta, in reporting second-quarter earnings last week, said it would pare back its fall flight schedule due to the rise in jet-fuel costs. Management said it would continue to adjust its schedules in areas where they can't pass on fuel costs to customers.
Trade War Concerns
For now, travel demand has been strong across most of the industry. Delta also said it was "not seeing any signs" that a trade war was harming demand.
But United, Cowen analysts noted, has more flights going to and from China than other U.S. carriers. Thus, the carrier would be "the one U.S. airline to see the largest impact of any fallout from weakening demand in the region," they said.
The Trump administration last week unveiled plans to set 10% tariffs on $200 billion worth of Chinese products. Those duties would take hold following a review that begins in August. Still, analysts say the overcrowded Asia-Pacific region has improved, benefiting the carrier.
On top of fuel costs, United Airlines has also contended with executive turnover. The carrier in May said that Gerry Laderman had been named acting CFO, after Andrew Levy "decided to leave" the company.
United Airlines Gets New Aircraft
United Airlines on Monday also announced purchase orders for 25 Embraer E-175 aircraft — smaller aircraft that seat up to 88 people and are designed for shorter flights. Those jets will replace older aircraft flown by United Express.
In addition, United announced orders for four Boeing ( BA) 787-9 Dreamliner jets, part of its plans to replace larger jets used for longer flights. The jets will come with United's Polaris business-class seats.
A new startup airline in the U.S. on Tuesday also announced a memorandum of understanding to take delivery of 60 Airbus ( EADSY) single-aisle A220-300 jets starting in 2021. The new airline is backed by investors led by JetBlue ( JBLU) founder David Needham. The agreement was announced at the Farnborough Airshow.
The A220-300 seats up to 160 passengers. The jet, Airbus says, offers travelers "the comfort of a widebody aircraft in a single-aisle cabin."
JetBlue last week inked a similar agreement for 60 A220-300s.
CSX ( CSX) earnings easily topped second-quarter estimates amid solid revenue growth and improving operating efficiency. The strong results from the first big rail operator to report this earnings season are a good sign for the industry and economy. CSX stock jumped toward a buy point.
Peers Union Pacific ( UNP) and Kansas City Southern ( KSU) report later in the week.
Estimates: Analysts on average expect CSX earnings to rise 34% to 86 cents a share on a 2% revenue rise to $2.99 billion, according to Zacks Investment Research.
Results: CSX earnings leapt 58% to $1.01 a share. Revenue climbed 6% to $3.1 billion. CSX touted a record operating ratio.
"While we remain in the early stages of the transformation I am more confident this exceptional team can deliver on our longer term outlook," said CEO James Foote.
Foote has backed his predecessor Hunter Harrison's "precision railroading" model, which aims at optimizing assets and increasing efficiencies. Harrison, a railroad legend and turnaround expert, died in December 2017, months into CSX's turnaround plan.
Stock: CSX stock jumped 3.2% in after-hours action. Shares closed up 0.7% to 64.44 on the stock market today, closing just below its 50-day line.
President Donald Trump recently moved to impose tariffs on foreign metal, raising the price of steel by 25% and aluminum by 10%.
In March, CEO Jim Foote had told CNBC that the burden of higher steel tariffs would eventually be passed onto customers. CSX uses steel in its rails, rail cars and locomotives. Foote saw the North American Free Trade Agreement as a bigger concern, as Trump presses for big changes to the trade pact with Canada and Mexico. Rail operators ship a lot of goods across North America.
Trump this month announced tariffs on $34 billion worth of Chinese goods, with Beijing responding in kind. Trump has threatened to vastly expand China tariffs. That could affect rail shipments as fewer Chinese goods reach West Coast ports. Meanwhile, Trump has mulled imposing big new auto tariffs, hitting European automakers shipping to the U.S.
CSX will likely report intermodal revenue growth for Q2. Its intermodal segment serves major markets east of the Mississippi River, transporting consumer goods in containers through a network of more than 50 terminals.
But analysts expected weak demand to continue to weigh on coal freight revenue.
On the upside, some new trucking mandates have seen some shippers shift to rail over trucks.
The Florida-based rail giant easily topped first-quarter estimates, sending CSX stock up 7.9% the following session.
Interactive Brokers ( IBKR) reported strong earnings after the close, after rival online brokerage Charles Schwab ( SCHW) early Tuesday posted quarterly results that narrowly topped estimates.
Estimates: Earnings are likely to vault 66% to 53 cents a share as revenue climbs 13% to $437 million, according to Zacks Investment Research.
Results: EPS of 58 cents on revenue of $445 million. Electronic brokerage revenue rose 32.6% to $443 million. Customer equity grew 29% to $134.7 billion, and customer debits increased 27% to $28.8 billion. Accounts swelled by 27% to 542,000, and total daily average revenue trades climbed 19% to 797,000.
Net interest income grew 45% as average customer credit and margin loan balances as well as benchmark interest rates increased from a year ago. Commission revenue rose 16% on higher customer volumes in futures and options trading.
Stock: Shares rallied 1.5% late after closing up 3.2% at 645.69 on the stock market today to test the 200-day moving average. They peaked at 80.32 in May and now sit well below the downward-sloping 50-day line.
Charles Schwab earnings soared 54% to 60 cents a share, with revenue jumping 17% to $2.486 billion. Analysts had expected Schwab earnings of 58 cents a share on revenue of $2.478 billion, according to Zacks Investment Research.
Core net new assets rose 16% to $53.4 billion in Q2. Investors opened 384,000 new accounts.
Schwab shares rallied 3.6% to finish at 52.88, retaking their 200-day moving average.
Rival Online Brokers
E-Trade Financial ( ETFC), a rival online broker to both and an IBD 50 stock, reports Thursday.
E-Trade stock rose 1.7% to 60.92 it works on a flat base with a 66.56 buy point.
TD Ameritrade ( AMTD), which reports Monday, climbed 2.3% to 56.73. TD Ameritrade stock has been finding support at its 200-day line and is working on a 63.11 entry.
Salesforce.com's ( CRM) purchase of Datorama is expected to boost its digital marketing strategy versus Adobe Systems ( ADBE), Oracle ( ORCL) and SAP ( SAP) as the enterprise software maker steps up acquisitions.
Salesforce.com acquired Datorama for a reported $800 million on Monday. The Datorama deal follows Salesforce.com's acquisition of MuleSoft for $6.5 billion in March.
The Datorama purchase dovetails with Salesforce.com's purchase of marketing specialist Krux in 2016.
Datorama's marketing intelligence and analytics platform is used by some 3,000 customers globally. Customers include IBM ( IBM) and Ticketmaster.
Salesforce.com bought Krux for $700 million. Krux's data management platform is now part of the company's Marketing Cloud software. Salesforce.com is among the leaders in cloud computing stocks.
Salesforce Building Marketing Cloud
"We believe this (Datorama) deal makes strategic sense as an extension of Salesforce's marketing cloud and see a large opportunity for it to work together with Krux," said Alex Zukin, analyst at Piper Jaffray in a report to clients.
Brad Zelnick, analyst at Credit Suisse, estimates that Datorama has annual revenue in a range of $25 million to $50 million.
"This acquisition adds to Saleforce's competitive positioning helping it to better compete with Adobe, Oracle and SAP," he said in his note to clients.
Prior to the MuleSoft deal, the company had slowed its pace of acquisitions. A flurry of deals in 2016 raised concerns over its core business strength.
A New Acquisition Spree?
Salesforce.com spent $4.6 billion on acquisitions in 2016. They included e-commerce platform Demandware, Krux, business analytics platform BeyondCore, and startup Quip.
The software maker's stock was up a fraction to close at 147.02 on the stock market today. Salesforce.com stock dipped after its March 20 acquisition of MuleSoft. Some analysts questioned the premium paid.
Shares in the enterprise software maker consolidated, then rose to a new all-time high in July. Salesforce.com stock has shot up 64% from a year ago.
Goldman Sachs ( GS) on Tuesday beat second-quarter earnings forecasts and said that CEO Lloyd Blankfein would leave that post on Sept. 30 and be replaced by President and Co-Chief Operating Officer David Solomon.
The bank said that Blankfein would retire as chairman and CEO. He has held those positions since 2006. Since then, the bank has weathered the aftermath of a financial crisis and recession, but not without damage to its reputation. Blankfein will retire from the firm and as chairman of the board at the end of the year.
Solomon will take over as CEO on Oct. 1 and join the company's board on that date.
Goldman Sachs Earnings Top
The bank's second-quarter earnings per share of $5.98 sailed past forecasts for $4.67. Revenue of $9.4 billion also easily beat expectations for $8.7 billion.
Fixed-income, currency and commodities trading revenue jumped 45% to $1.68 billion, while equities trading revenue was flat at $1.89 billion. Investment banking revenue grew 18% to $2.05 billion. Investing and lending revenue climbed 23% to $1.94 billion. Investment management revenue rallied 20% to $1.84 billion.
"Solid performance across all of our major businesses drove the strongest first-half returns in nine years," Blankfein said in the company's earnings release. "With a healthy economic backdrop and deep client franchises, the firm is well-positioned to invest in attractive opportunities to meet the needs of our clients and continue to generate earnings growth."
Shares finished 0.2% lower at 231.02 on the stock market today. Rival Morgan Stanley ( MS), which reports earnings on Wednesday, rose 0.6%.
The results come less than a month after the Federal Reserve restricted the payout plans of both investment banks after financial figures they submitted for annual stress tests fell below Fed targets. The Fed opted not to fail the banks regardless, instead giving them a "conditional" pass.
Prior to Solomon's current positions, which he has held since 2016, he was Goldman's global co-head of the investment banking division. Blankfein will accept the title of senior chairman after retiring, the bank said.
"Our firm has demonstrated great resiliency and strength over the last 12 years," Blankfein said in a statement. "I've never been more optimistic about our ability to serve our clients effectively and generate industry-leading returns."
But during that time, Morgan Stanley built up a strong wealth management business. In 2017, Goldman's trading desk struggled amid low market volatility compared to a 2016 dominated by Brexit and President Trump's election. Goldman has launched a consumer lending business, but that business is expected to remain small compared to its other operations.
The announcement on Tuesday follows months of speculation this year that Blankfein was preparing to hand over his executive duties to someone else. The Wall Street Journal reported in March that Blankfein was preparing for his departure from Goldman.
Bank Stocks Still Not Great
Goldman's results follow earnings from big banks Bank of America ( BAC), JPMorgan Chase ( JPM), Citigroup ( C) and Wells Fargo ( WFC).
Bank stocks got a lift on Monday on Bank of America earnings. The estimate-beating second-quarter results, along with cost cuts, helped part the clouds for investors, who have been worried about slow loan growth and the long-term prospects of the U.S. economy.
Still, BofA said it had yet to see acceleration in loan growth overall, instead characterizing growth as "consistent." CFO Paul Donofrio, during the company's earnings call, said customers might respond differently, near-term, as tax cuts and a good economy add to their financial cushion.
"Some may pay down debt from tax savings or repatriation," he said. "But some are going to invest and borrow."
JPMorgan Chase reported second-quarter earnings Friday. During its second-quarter earnings conference call, CEO Jamie Dimon and CFO Marianne Lake said they had yet to see any cracks forming in the economy.
They said President Trump's trade threats had yet to affect business decisions. But they also said that tax cuts had yet to offer any significant boost to loan growth.
Two Wall Street analysts on Tuesday raised their price targets on Microsoft ( MSFT) stock ahead of the company's fiscal fourth-quarter earnings report, due after the market close Thursday.
Raymond James analyst Michael Turits reiterated his strong buy rating on Microsoft and upped his price target to 124 from 110. Piper Jaffray analyst Alex Zukin maintained his overweight rating on Microsoft and raised his target to 123 from 115.
Microsoft stock rose 1% to close at 105.95 on the stock market today. In intraday trading, it notched a record high of 106.50.
Turits said he has increased confidence in Microsoft's outlook based on strong PC shipments and positive feedback from cloud computing customers.
Positive Sign: PC Shipments Up
Personal computer shipments increased for the first time in six years last quarter, growing 1.4% year over year, research firm Gartner said. That bodes well for Windows operating system sales as well as Office 365 uptake, Turits said.
Large cloud customers and systems integrators have indicated strong sales of Microsoft's Azure infrastructure services, he said.
Azure and Amazon ( AMZN) Web Services have emerged as "near duopoly leaders" in infrastructure- and platform-as-a-service offerings, Turits said.
Microsoft's cloud offerings are gaining steam, Zukin said.
"We believe the quarter will be characterized by strategic deal signings for Azure and a continuation of trends for Office 365," he said. "We expect the combination to support outperformance in both the Intelligent Cloud and Productivity and Business Processes units."
Wall Street expects the software giant to show its fastest sales growth in four years when it posts June-quarter results. Analysts forecast Microsoft to earn $1.07 a share on sales of $29.21 billion, according to Zacks Investment Research. That would translate to year-over-year growth of 9% in earnings per share and 25% in sales. Earnings per share are seen decelerating after five straight quarters of double-digit percentage gains.
Cornerstone OnDemand ( CSOD) stock rose as an analyst upgraded the company ahead of its earnings report due Aug. 7.
Piper Jaffray's Alex Zukin upgraded Cornerstone to overweight from neutral. The analyst hiked the company's price target to 60 from 46.
Cornerstone sells human capital management software that helps companies recruit and retain employees. It has a subscription-based, software-as-a-service business model.
"This is a multiquarter call and that while checks suggest that Q2 was significantly improved from a new business perspective relative to (a year ago), the big payoffs are likely to come in the Q3 and Q4 periods as pipelines for strategic deals remain full," Zukin said in a report to clients.
Santa Monica, Calif.-based Cornerstone belongs to the Computer-Software Specialty Enterprise group. It's ranked No. 20 out of 197 industry groups. Cornerstone has an IBD Composite Rating of 97 out of a possible 99. The company's stock has gained 56% in 2018.
Ultimate's Acquisition Targets ServiceNow
Ultimate Software Group ( UTLI) on Tuesday announced the acquisition of human resources, service delivery vendor PeopleDoc for about $300 million. Weston, Fla.-based Ultimate specializes in HCM SaaS — human-capital management software as a service.
The acquisition "puts Ultimate in direct competition with ServiceNow's HR service management offering," William Blair analyst Justin Furby said in his note to clients.
Shares in Ultimate climbed 1% to 284.66 on Tuesday. The software stock generally trades in low volume.
ServiceNow rose 1.1% to 191.20. Both Ultimate and ServiceNow belong to the Computer-Software Enterprise group, which ranks No. 4 out of the 197 industry groups.
European antitrust regulators could hit Google-parent Alphabet ( GOOGL) with a second multibillion dollar fine as soon as Wednesday over its mobile phone operating system, a news report said Tuesday.
The Android investigation will likely result in a larger fine than last year, Bloomberg reported. The cash-rich internet giant can easily pay the fine. But some observers say the EU's scrutiny could prompt the U.S. to take a closer look at Google's business practices.
The European Union has been probing Google's Android mobile phone operating system. EU regulators could require the internet company to unbundle its Android software from internet search products as well as impose a fine.
The EU last year levied a record $2.7 billion fine on the internet company. The EU said Google skewed search results to benefit its own shopping search service vs. those of rivals.
Google Android Market Power
The EU says Google has forced smartphone makers to pre-install its suite of apps in order to gain access to the Google Play store. At minimum, the EU could require Google to allow more competing apps to be preloaded on Android-equipped phones. A long-shot scenario is that the EU could seek to break up Alphabet.
Some observers say the case has parallels to the U.S. antitrust case against Microsoft ( MSFT) in the 1990s.
Scott Cleland, head of the consultancy Precursor Group in Washington, D.C., says U.S. regulators could have a strong case.
"The reasons that a potential U.S. v. Alphabet antitrust case would be stronger than the successful U.S. v. Microsoft case are: a stronger precedent; a much fuller and more developed record of evidence; vastly broader monopolization and destroyed competition; and more and broader consumer harms," he said in a blog on Monday.
U.S. Vs. Europe Antitrust Law
Michael Nathanson, analyst at MoffettNathanson, says EU antitrust laws differ from the U.S. He says EU rules focus on protecting competitors with the assumption that consumers will benefit. U.S. antitrust laws more directly focus on consumer harm, he said in a 2017 report.
The Federal Trade Commission in 2013 ended a Google probe after the internet search giant agreed to voluntary changes to its business practices.
The internet company rose 1.4% to 1,213.08 on the stock market today. Google stock has climbed 21% from a year ago. The gain has come despite investor concern over increased regulatory pressure on antitrust and data privacy issues.
Google, though, has underperformed when compared with Amazon.com ( AMZN), Facebook ( FB) and Netflix ( NFLX). They're also closely watched "FANG" technology stocks.
RBC Capital Markets analyst Glenn Novarro had called for pharmaceutical sales growth to slow in the second quarter, following 7.5% organic growth in the first quarter. But worldwide sales of pharmaceuticals rose 11% organically to $10.35 billion, beating his view for $9.86 billion.
"Based on the prescription trends in the U.S. for major brands, we were expecting a deceleration in pharma growth," he said. "However, U.S. sales for several brands, including Simponi, Stelara, Zytiga and Uptravi exceeded our estimates and led to a significant revenue beat."
Total sales of $20.83 billion grew 10.6% year over year. That beat the consensus of analysts polled by Zacks Investment Research for $20.25 billion. Adjusted income of $2.10 per share rose 14.8%, beating analysts' average view by 4 cents.
Medical Device Sales
J&J Chief Executive Alex Gorsky cited double-digit pharmaceutical growth and acceleration in medical devices for the second-quarter outperformance. Sales of medical devices tacked on 2.9% organic growth in the quarter to $6.97 billion. Novarro had called for $6.93 billion in sales.
Trends in medical devices should benefit Stryker ( SYK), Intuitive Surgical ( ISRG) and Medtronic ( MDT), Evercore analyst Vijay Kumar said in a note. Diabetes and orthopedic devices sales lagged the consensus by 2.6% and 1%, respectively.
Stryker will benefit from competitive pressure facing J&J's knee devices in the U.S. Advanced surgery sales were flat sequentially, but some devices in the segment grew slightly, signaling that Intuitive's U.S. procedures could top. Trends in general surgery may bode well for Medtronic.
Consumer segment sales, though, grew just 0.9% organically to $3.5 billion, missing the model of RBC analyst Novarro for $3.62 billion. Beauty product sales lagged while baby and wound care revenue topped expectations. In the U.S., sales decreased 0.7%.
For the year, J&J guided to sales of $80.5 billion to $81.3 billion, below the consensus for $81.66 billion. Adjusted income is expected to come in at $8.07-$8.17 per share, which lagged analysts' views by a penny at the midpoint.
Highflying stock Netflix ( NFLX) got its wings clipped Tuesday after the internet television network posted disappointing subscriber numbers for the second quarter and guided below Wall Street's third-quarter views.
Netflix stock fell more than 14% to 344 at one point but pared those losses near the close. Shares ended the regular trading session down 5.2% to 379.48 on the stock market today. Just a few days ago it was trading near record-high territory. It reached a recent high of 419.77 last Wednesday. That's just below its all-time high of 423.21, notched on June 21.
Late Monday, Netflix reported adding 5.2 million new subscribers in the June quarter, 1 million less than its forecast. Netflix management blamed seasonal trends for its shortfall and said its business remains healthy.
"The key question is whether or not the slowdown in Q2 and expected slowdown in Q3 is just a temporary slowdown," Deutsche Bank analyst Bryan Kraft said in a report to clients. Growth could reaccelerate in the fourth quarter when Netflix releases a host of big titles, he said.
However, the current softness in subscriber growth could be "more indicative of Netflix reaching a flatter part of the overall demand curve," he said. Kraft lowered his rating on Netflix stock to hold from buy and cut his price target to 350 from 360.
At least 12 Wall Street brokerages cut their price targets or ratings on Netflix stock after the earnings report. However, five firms raised their targets, sensing a buying opportunity in a top internet stock.
Netflix Stock Priced For Perfection?
Heading into the earnings report, Netflix stock had risen 109% year to date, so shares were priced for perfection, analysts said.
"We view this reset as healthy and not the end of this strong, global, secular growth story," Monness analyst Brian White said in his note to clients. He reiterated his buy rating, but trimmed his price target to 430 from 460.
Oppenheimer analyst Jason Helfstein blamed the subscriber miss on a lack of hit new shows in the quarter. He also cited viewership disruption from the FIFA World Cup. He maintained his outperform rating and price target of 370.
Netflix's disappointing second-quarter report is a "near-term gut punch to the Netflix bull thesis," GBH Insights analyst Daniel Ives said in his report. He reiterated his highly attractive rating on Netflix stock with a price target of 500.
"We believe this is a speed bump rather than the start of a negative subscriber trend for Netflix as the streaming market and content arms race continues to be a major tailwind for the company over the next 12 to 18 months," he said.
Several Bullish Reports
Bernstein analyst Todd Juenger said it was only a matter of time before Netflix disappointed with its quarterly results. The company had posted at least five straight upbeat quarters.
"Frustrated bears may be enjoying some long-awaited schadenfreude," Juenger said in his note. But to bet against Netflix in the face of a huge global market opportunity would be "a brave move," he said. Juenger kept his outperform rating on Netflix and raised his price target to 434 from 372.
Wells Fargo analyst Ken Sena also took a contrarian approach. He upped his price target to 385 from 370 and stuck with his outperform rating.
BMO Capital Markets upgraded Netflix stock to outperform from market perform with a price target of 400. The firm noted that it has been "far too conservative" on the stock.
Longtime Netflix bear Michael Pachter, an analyst with Wedbush Securities, said Netflix's subscriber miss suggests slowing growth for the streaming video leader. He reiterated his underperform rating and 12-month price target of 125.
"We expect content acquisition spending to trigger substantial cash burn for many years," he said in a report.
In a webcast, Netflix management touted their Emmy nominations and slate of upcoming TV series and movies.
Last week, Netflix earned the most Emmy nominations of any network, breaking HBO's 17-year run. It garnered 112 nominations across 40 different scripted and unscripted shows.
Netflix earned 85 cents a share on sales of $3.91 billion in the June quarter. Analysts expected it to earn 79 cents a share on sales of $3.94 billion for the period.
For the current quarter, Netflix expects to earn 68 cents a share on sales of $3.99 billion. Wall Street was modeling for Netflix to earn 73 cents a share on sales of $4.13 billion in the third quarter.
Walmart ( WMT) and Microsoft ( MSFT) have inked a five-year partnership that makes the tech giant the "preferred and strategic cloud provider" to the nation's largest brick-and-mortar retailer. A common enemy reportedly drove them together.
Microsoft CEO Satya Nadella told the Wall Street Journal that both companies' rivalry with Amazon.com ( AMZN) is "absolutely core" to the new partnership.
"How do we get more leverage as two organizations that have depth and breadth and investment to be able to outrun our respective competition," he told the media outlet.
Walmart competes with Amazon's on all retail fronts, challenging Amazon's seemingly ubiquitous e-commerce presence.
It is looking to leverage its acquisition of Jet.com into more urban, affluent consumers, is forging ahead into the online grocery wars, and has redesigned its website in a bid to expand its appeal. Walmart is still the No. 1 apparel retailer in the country, but Amazon has risen to second place in recent years.
Microsoft's cloud services lag Amazon Web Services. AWS had a 33% share of the cloud infrastructure market vs. Azure's 13%, according to CNBC in April, citing Synergy Research Group. The partnership gives Azure a massive new client.
Walmart said it will use machine learning, artificial intelligence and data platform solutions for a "wide range of external customer-facing services and internal business applications." The retailer's use of Microsoft 365 aims to improve productivity among Walmart associates.
A "significant portion" of Walmart.com and SamsClub.com will move to Azure, including a "cloud-powered checkout," said the companies in a news release
They also plan to use machine learning to route supply trucks and connect HVAC and refrigeration units in order to save energy in stores.
"Whether it's combined with our agile cloud platform or leveraging machine learning and artificial intelligence to work smarter, we believe Microsoft will be a strong partner in driving our ability to innovate even further and faster," said Walmart CEO Doug McMillon in a statement Tuesday.
Fabless semiconductor firm Mellanox Technologies ( MLNX) late Tuesday easily topped estimates for the second quarter, sending its shares higher in extended trading.
Mellanox earned an adjusted $1.25 a share on sales of $268.5 million in the June quarter. Analysts expected the company to earn $1.09 a share on sales of $263.7 million. In the year-earlier quarter, Mellanox earned 44 cents a share on sales of $212 million.
Its shares rose 2% in after-hours trading on the stock market today. During the regular session, the stock climbed 0.9% to 84.70.
Mellanox supplies ethernet and InfiniBand interconnect systems for data center servers and storage. Its technology helps increase data center efficiency by speeding throughput and reducing latency. The company is based in Sunnyvale, Calif., and Yokneam, Israel.
Third-Quarter Sales Target Tops
It guided to third-quarter revenue of $270 million to $280 million. It didn't give a specific target for earnings per share. Wall Street was modeling Mellanox to earn an adjusted $1.12 a share on sales of $270 million. In the year-earlier period, it earned 71 cents a share on sales of $226 million.
"Our strong revenue growth reflects years of investment in 25 gigabit per second and above ethernet and InfiniBand technologies," Chief Executive Eyal Waldman said in a news release. "Our record profitability demonstrates the leverage we are producing in the business by focusing our investments in the right products."
He added, "We continue to see strong traction with our 25 gigabit per second and above solutions as they become the preferred solution of choice in hyperscale, cloud, high performance computing, artificial intelligence, storage, financial services and other markets across the globe."
For the full year, Mellanox Technologies expects sales of $1.075 billion, based on the midpoint of its guidance. Analysts had been targeting $1.06 billion.
The U.S. shale industry will achieve positive free cash flow for the first time ever this year, the International Energy Agency predicted, raising hopes that investors will receive bigger dividends and buybacks.
As oil prices have shot up since last year, the IEA said in its World Energy Investment 2018 report that the U.S. shale industry has almost halved its break-even price.
Flush with cash, shale industry leaders like EOG Resources ( EOG) and Pioneer Natural Resources ( PXD) have hiked dividends recently, while Diamondback Energy ( FANG) began paying a dividend for the first time.
With more cash coming from their own organic operations, shale companies don't have to raise as much money via bank loans or stock issuance on capital markets.
"The United States shale industry is at a turning point after a long period of operating on a fragile financial basis," IEA Executive Director Fatih Birol said in a press release. "The industry appears on track to achieve positive free cash flow for the first time ever this year, turning into a more mature and financially solid industry while production is growing at its fastest pace ever."
IEA estimates a record increase in U.S. light tight oil production to 1.3 million barrels a day in 2018.
According to the report, shale industry companies have a tough decision to make. They will have to either honor commitments to focus on near-term profitability, or increase spending and output growth to take advantage of higher prices.
While recent indications point to the former, some shale industry operators are continuing to spend more than they generate. However, some independent players are increasing dividend payments and share-buyback programs.
Low Investment To Hit Future Supply
Traditional shale industry players aren't the only ones getting in on the shale boom. The IEA report also said investment by oil majors in shale projects is set to triple from 2016 levels to 18% of total oil spending in 2018.
But investment in conventional oil projects, responsible for the bulk of global supply, remains subdued, the oil watchdog warned.
It said investment in new conventional capacity will plunge in 2018 to about one-third of the total. This is a multiyear low that is causing concern over the long-term adequacy of supply.
After stumbling out of the gate on its biggest e-commerce event of the year, Amazon.com ( AMZN) said Tuesday that sales for its Amazon Prime Day are outpacing last year's numbers despite a glitch on the company's website during the first few hours of the event.
At Monday's official opening of Prime Day, Amazon customers struggled to cash in on deals during the first three hours. Website glitches irritated shoppers who then mocked the company on Twitter ( TWTR).
Amazon did not specify what caused the website glitch, except to toss in a glib sentence inside a promotional news release.
"It wasn't all a walk in the (dog) park, we had a ruff start," Amazon said, referencing the photos of dogs that people sometimes see when a website search falters. "In the first ten hours Prime Day sales grew faster, year-over-year, than the first ten hours last year."
It's the fourth year in a row that the company has held Amazon Prime Day.
Amazon Prime Day Deals
The company did not release sales figures for Amazon Prime Day, but analysts think they'll approach $3.4 billion. Amazon called last year's event its biggest sales day ever.
This year's event is expected to pass last year's in sales, in large part because Prime Day this year is six hours longer than last year, in addition to starting 12 hours earlier for some items.
The 36-hour event covering all product categories officially kicked off at 3 p.m. ET Monday, with the company saying it will have more than 1 million Amazon Prime deals. That's up from more than 100,000 two years ago.
Similar to last year, the top-selling items included Amazon-branded products such as the Echo Dot and its Fire tablet. The company also reported brisk sales of the multiuse cooker called Instant Pot.
Boeing ( BA) and rival Airbus ( EADSY) continued to see strong demand for their narrow-body passenger jets at the Farnborough Airshow on Tuesday.
Air Lease ( AL) announced orders and commitments for up to 78 Boeing airplanes, including 75 737 Max 8s and three 787-9 Dreamliners. The deal is valued at $9.6 billion at current list prices, but airlines typically get a discount for large orders.
Meanwhile, Airbus announced an unnamed, existing customer had signed a memorandum of understanding for 75 A320neos and 25 A321neos. At list prices, the deal is worth $11.5 billion.
Airbus also confirmed an order for 60 A220-300 jets valued at $5.4 billion to investors led by JetBlue ( JBLU) founder David Neeleman, who is looking to start a new carrier.
Here is some of the other dealmaking going on at Farnborough Tuesday:
GE Capital Aviation Services agreed to 20 firms orders of Boeing 737-800 converted freighters with an option for 15 more.
Russia's Volga-Dnepr Group and CargoLogicHolding signed a letter of intent for 29 Boeing 777 freighters and confirmed an order for five 747-8 freighters.
Aviation Capital Group announced an order for 20 737 Max 8 jets valued at $2.3 billion.
Airbus announced an order for eight A350-900s in a deal valued at $2.6 billion. But the aerospace giant didn't disclose the customer.
Boeing stock rose 0.2% at 356.88 on the stock market today, working on a flat-base buy point of 374.58. Airbus stock advanced 0.5% to 31.47, remaining in buy range.
$15 Trillion Forecast
Boeing raised its 20-year industrywide outlook for new commercial airplane demand by 4.1% to 42,730. The airplanes themselves are valued at $6.3 trillion, but Boeing sees a total market of $15 trillion when services are included.
The narrow-body market is seen growing fastest with expected demand for 31,360 new aircraft, valued at $3.5 trillion, up 6.1% from last year. Airlines in China and Southeast Asia as well as emerging low-cost carriers make up the bulk of demand.
On the widebody side, Boeing sees demand for 8,070 new airplanes valued at nearly $2.5 trillion as airlines look for more fuel-efficient replacements.
Forty-four of the new airplanes over the next 20 years will be needed to replace older jets. More than 900 planes currently in operation are over 25 years old.
As regulators grow more concerned about integrating drones into air traffic control, Boeing ( BA) thinks blockchain and artificial intelligence can offer a solution.
At the Farnborough Airshow on Tuesday, Boeing announced that it's creating Boeing NeXt to focus on autonomous flight and advanced propulsion systems and is working with SparkCognition "to use artificial intelligence and blockchain technologies to track unmanned air vehicles in flight."
Boeing's Horizon X Venture arm invested $32.2 million in SparkCognition last year.
"Estimated by some analysts at $3 trillion, the urban aerial mobility opportunity will lead to the creation of the largest new market in our lifetimes," said Amir Husain, founder and CEO of SparkCognition, in a news release.
Blockchain, the technology behind cryptocurrencies like Bitcoin, is like a giant, shared ledger for keeping track of transactions. The transactions are recorded instantly.
The proposed system would work by creating designated aerial lanes tracking drones as they fly. The technology could also be used to track package delivery and for other applications.
In an earlier interview with IBD, Accenture said that 86% of the aerospace industry planned to integrate blockchain into their systems within the next three years. The technology could be especially useful in preventing counterfeit parts, a major issue in the sector.
Earlier this year, rival Airbus created a new Urban Air Mobility division as it looks to take on Silicon Valley and other aerospace competitors in the flying taxi business.
Boeing has its own interest in flying taxis as well and recently bought drone maker Aurora Flight Sciences, which is also working with ride-sharing app Uber to create autonomous flying taxis.
Other big names are taking an interest in the flying taxi space. Uber is working with Textron's ( TXT) Bell and Brazil's Embraer ( ERJ) to build its own on-demand "flying car." Larry Page, the founder of Alphabet ( GOOGL), is backing the startup Kitty Hawk.
International Game Technology ( IGT) has got in on the New Jersey sports betting boom by teaming up with fantasy sports provider FanDuel.
Slot machine giant IGT will act as FanDuel's sports betting platform provider. FanDuel opened a sports book over the weekend at the Meadowlands Racetrack in New Jersey.
Their combined offering will provide self-service kiosks and other retail services. There will also be FanDuel Sportsbook-branded online and mobile wagering.
IGT stock climbed 0.9% to 24.63 on the stock market today., but hit resistance at the 50-day moving average. Among other gambling stocks, Leisure-Gaming/Equip Group leader Churchill Downs ( CHDN), which runs the Kentucky Derby and is getting into broader sports betting, climbed 0.3%. Fellow domestic-focused Boyd Gaming ( BYD) rose about 1% while Penn National Gaming ( PENN) was down 0.6%.
As for global casino giants, Las Vegas Sands ( LVS) rose 0.55%. Wynn Resorts ( WYNN) was off 0.6% while MGM Resorts International ( MGM) was up 0.4%.
FanDuel CEO Matt King said International Game Technology's offering was a key part of their growth strategy.
"When we evaluated sports betting platform provider partners in the U.S., IGT was the ideal choice, based on the Company's proven history in the space and the quality, reliability and flexibility of the sports betting technology that it has deployed for customers around the world," King said in a press release.
IGT Senior Vice President Enrico Drago said the partnership will create a reliable "world-class" sports betting experience in New Jersey.
"As sports betting in the U.S. continues to evolve, IGT is prepared to address the needs of its partners through proven solutions and technologies that can be deployed today to advance sports betting across land-based and mobile platforms," Drago said in a press release.
At the moment only two casinos offer the service in New Jersey, the Borgata and Ocean Resort. In addition the Monmouth Park and Meadowlands horse tracks provide sports gambling.
Horse racing giant Churchill Downs was first out the gate in the race to get in on sports gambling in New Jersey. The Kentucky Derby operator sealed a partnership with Golden Nugget Atlantic City back in May to enter real-money online gaming and sports wagering markets there.
New Jersey regulators have received a further five applications from gaming companies looking to offer sports betting before the NFL season kicks off in September.
Caesars Entertainment ( CZR) has applied for permission to offer in-person betting at Harrah's casino and at Bally's casino. The latter would also service the adjacent Caesars casino. Caesars Entertainment is also seeking to offer mobile sports betting.
There are 14 potential sports betting licensees. These are made up of the nine Atlantic City casinos, three functioning racetracks and the sites of two former tracks. The state has yet to hear from three potential applicants
Sports betting raked in $16.4 million during the first two weeks it was offered in June.
Dow Jones component UnitedHealth ( UNH) earnings topped second-quarter estimates early Tuesday while the nation's largest insurer matched Wall Street expectations for revenue.
Estimates: Analysts expected UnitedHealth earnings of $3.04 a share on revenue of $56.09 billion, according to Zacks Investment Research.
Results: Second-quarter UnitedHealth earnings rose 28% to $3.14 a share as revenue grew 12% to $56.09 billion. That EPS growth matched Q1's pace while revenue growth slowed slightly after three quarters of gradual acceleration. Premium revenue slightly missed some estimates.
Outlook: UnitedHealth increased its 2018 EPS guidance to a range of $12.50 to $12.75 a share. In April, the company gave guidance of $12.40 to $12.65 per share. That 10-cent increase reflects Q2's 10-cent beat, suggesting no change to UnitedHealth's forecast for the rest of the year.
Analysts had expected $12.62 full-year earnings prior to Tuesday's report.
Stock: UnitedHealth stock fell 2.6% to 250.34 in Tuesday's stock market trading. Shares fell as low as 246.27, briefly undercutting its 50-day line and a 249.27 cup-with-handle entry before finding support.
IBD'S TAKE:UnitedHealth is ranked No. 3 in the Medical-Managed Care group by IBD based on earnings, sales, margin and stock performance trends. Visit IBD Stock Checkup to see the other leaders in each category. The industry group is ranked No. 62 out of 197, which gives it a B+ grade.
UnitedHealth earnings are powered by the industry's most diversified set of health care assets. In addition to its managed care division that has been seeing double-digit revenue growth from Medicare Advantage and Medicaid, its OptumHealth services unit served 91 million people at the start of the quarter. There's also OptumInsight, the health care technology and consulting business, and OptumRx, its prescription benefit management unit.
UnitedHealth's model combining managed care with prescription benefit management is about to be broadly copied. CVS Health ( CVS) is merging with Aetna ( AET) while Cigna ( CI) acquires pure-play PBM Express Scripts ( ESRX). Those marriages provide a degree of certainty to the PBM industry, which serves as the middleman between drugmakers and end customers.
The Trump administration's plan to cut prescription prices is focused on going after the middlemen, which is why it hasn't been a major impediment to the stocks of drugmakers. Meanwhile, Amazon is buying online pharmacy PillPack. That gives Amazon.com ( AMZN) a foothold in the $300 billion prescription drug industry.
Started in 1896 with 12 stocks, the Dow Jones industrial average (DJIA) now includes 30 of America's largest companies from a wide range of industries, including Apple ( AAPL), Exxon Mobil ( XOM), Intel ( INTC), Nike ( NKE) and Goldman Sachs ( GS).
XGeneral Electric ( GE), which had been the only remaining original Dow stock, was recently replaced by Walgreens Boots Alliance ( WBA).
In conjunction with the Nasdaq Composite and S&P 500, the Dow Jones index and the 30 Dow stocks serve as a bellwether for the general market and the American economy, helping investors gauge the current environment and future outlook.
Bookmark this page for ongoing coverage of Dow stocks and the benchmark index.
Scroll down to see a list of the 30 component stocks on the Dow Jones industrial average index.
Entrepreneurs start with a dream. Turning it into reality requires a series of concrete, carefully crafted goals.
To advance from an idea to a viable enterprise, you need a roadmap. A business plan provides that direction. It also offers a framework to follow through and a basis for measuring your progress.
Eager to attain your vision, it's tempting to plunge in without a rigorous plan. But taking a seat-of-your-pants approach adds to the risk. To write a business plan that guides your success:
Keep it simple. Fledgling entrepreneurs may assume a business plan should be a lengthy, data-laden document. But brevity and clarity can work to your advantage.
"Don't be intimidated," said Noah Parsons, chief operating officer of Palo Alto Software in Eugene, Ore. "We recommend a lean plan, a one-page outline of your business concept."
This succinct version starts with a vision statement and pinpoints the problem your business will solve, the potential market for your product or service, competitors and sales goals. Download a free template here.
Think like a customer. Among the key elements of your business plan is defining the problem that you'll solve. That's harder than it sounds. You not only need to identify a glaring issue that consumers face but also propose a creative, cost-effective way to address it.
"A lot of entrepreneurs think of the solutions that they're offering, instead of what problem does my widget solve for my customer," Parsons said. "You need to get inside the customer's head and know how you will make customers' lives better."
He suggests talking to potential customers, heeding their input and easing into your market. Rather than act on your assumptions, determine if your gut instinct is correct. Contact a sampling of would-be buyers to validate your hunch.
Reduce uncertainties. Some parts of a business plan involve predicting the future. How will competitors react to your pricing strategy? How many people will buy what you sell? To what extent will the cost of equipment or raw materials vary in the coming years?
While it's impossible to answer these and other questions with certainty, you can build a plan around conservative calculations. Use recent data, demographic trends and purchasing patterns to refine your estimates.
"Setting sales goals may seem like the hardest thing to do because there's a fear of getting it wrong," Parsons said. "New entrepreneurs have to be comfortable making their best guess."
Research what's next. Once your business is up and running, you'll begin to gain a clearer understanding of how to advance from startup to second-stage growth. At some point, you may want to draft a more detailed business plan that answers questions that potential investors and future employees will ask. Examples include fleshing out your target market, your sales and marketing strategy, and the evolving structure of your company.
"You'll want to have a management and operational plan," said Warren Daniel, regional director of the New Hampshire Small Business Development Center in Dover, N.H. "That changes with the economic cycles. In a growth period, it's harder to hire" so you'll need to think through how to recruit staffers in a tight labor market.
Keep updating. Treat your business plan as a work-in-progress. With each passing month, you'll want to review it and possibly rework it to reflect the myriad challenges that you'll confront.
"I look at a business plan as a living document," Daniel said. "As your business grows, it will change."
The spread between the two-year Treasury yield and 10-year Treasury yield has narrowed to just 24 basis points. That's the smallest gap since before the recession hit in 2007. That's down from an already-tight 42 basis points before the June 12-13 Fed meeting. For now, the Fed is eyeing another three hikes in 2019.
Morgan Stanley predicted last week that the Treasury yield curve will invert next year, a reliable precursor to recession. Yet so far, Powell and most other Fed policymakers are taking Treasury-yield-curve flattening in stride.
Yet it also appears that tighter Fed policy is putting downward pressure on long-term Treasuries. The two-year Treasury yield is up 7 basis points since June 12, the day before the Fed's statement. The 10-year yield is down 10 basis points since then.
Federal Reserve Is World's Central Bank
The Fed is the closest thing to a global central bank. Tighter Fed policy, higher short-term rates and a stronger dollar all tighten financial conditions in emerging markets, where companies often borrow in dollars.
This dampens the global growth outlook and puts downward pressure on global bond yields, creating more demand for U.S. long-term debt.
Meanwhile, higher short-term borrowing costs via the Fed weigh on U.S. multinationals' profits via a stronger dollar, squeeze bank lending margins and raise the cost of adjustable-rate mortgages.
With a lag, Fed policy will work to rein in the Trump boom. Yet as tighter monetary policy begins to bite in 2019, this year's big burst of federal tax-cut and spending stimulus will quickly level off.
This also may help explain the suddenness with which the Treasury yield curve has flattened. Looking out past 2019, the questions for the economy multiply. More and more economists are predicting recession in 2020 and the U.S. will have to reckon with unimaginable budget deficits.
It's worth remembering that last August, before the legislative push for tax cuts gathered steam, financial markets were pricing in just a single quarter-point Fed rate hike over the ensuing 12 months.
That might have been an overreaction to tame incoming inflation data. But 11 months and three rate hikes later, the Trump Fed is now penciling in five more rate hikes over the next year and a half — despite Trump trade wars breaking out all over.
Trump may have been better served by a Fed chief who was a big believer in supply-side tax cuts to boost business investment, speed up productivity growth and keep inflation in check. At the least, he might have picked a Phillips curve skeptic, questioning the historic links between lower unemployment and higher wage growth. Or he could have found someone who believes the forces of technology and globalization make a big bump in inflation extremely unlikely. Finally, he might have found someone who doesn't think the Fed should try to target asset prices.
Instead, the Trump Fed is using its usual playbook to meet an unprecedented challenge. The Treasury yield curve flattening should be a wake-up call, but risks will rise until Powell and other Fed policymakers answer the bell.
In a weekend note, UniCredit Group Chief Economist Erik Nielsen wrote of the "likely folly in dismissing the signal from a curve, which is on its way towards inversion."
"Historically, growth starts to slow about a year before recession in the U.S., and the Fed stops hiking around the same time," Nielsen wrote. "This makes me wonder if we'll get any Fed hikes at all in 2019!"
Bitcoin and blockchain technology have taken off as they gain more mainstream acceptance, from exchange operators like CME ( CME) and CBOE ( CBOE) to Wall Street investment banks and mobile payment company Square ( SQ). Other cryptocurrencies are also trying to become viable alternatives to traditional, government-issued money.
But prices have been volatile recently, and new currencies keep appearing, leaving individual investors wondering where they are headed next. Meanwhile, top banks like JPMorgan Chase ( JPM) are evaluating blockchain as a cheaper way to settle transactions.
The rise of blockchain technology may also threaten the dominance of FANG stocks — Facebook ( FB), Amazon.com ( AMZN), Netflix ( NFLX) and Google parent Alphabet ( GOOGL).
Oppenheimer analyst Tim Horan says, ""We believe that blockchain technology will be as important as the internet was to economic and social change in the past 25 years. With blockchain, the community of users owns and pays for the servers instead of having a centralized organization like the FANGs, driving better innovation." In response to this emerging revolution, Facebook launched its own blockchain division.
The retail landscape is rapidly changing, with Amazon ( AMZN) and other e-commerce sites upending traditional brick and mortar retailers such as Macy's ( M) and Target ( TGT).X
How do you keep track of the broad industry trends affecting retailers and restaurants, especially for the current and emerging leaders? IBD keeps all the key sector news here, from company earnings and expansions to monthly retail sales and features about the future of malls and online shopping.
Expect to find news on Home Depot ( HD), McDonald's ( MCD), Wal-Mart ( WMT), eBay ( EBAY) and General Motors ( GM) sales here. IBD will also highlight the best-performing retailers, including fundamental and technical analysis.
Federal Reserve Chairman Jerome Powell said the central bank will continue to gradually raise interest rates "for now'' to keep inflation near target amid a strong U.S. labor market.
The Federal Open Market Committee, the Fed panel that sets interest rates, "believes that — for now — the best way forward is to keep gradually raising the federal funds rate," Powell said in prepared testimony before the Senate Banking Committee.
"We are aware that, on the one hand, raising interest rates too slowly may lead to high inflation or financial market excesses," Powell said in the text of his remarks Tuesday. "On the other hand, if we raise rates too rapidly, the economy could weaken and inflation could run persistently below our objective.''
Powell addresses Congress with the underpinnings of the U.S. expansion looking solid. Unemployment stands close to an 18-year low and inflation is around the Fed's 2% target, though some sentiment indicators are starting to flash warning signs over escalating trade disputes. He will appear before the House Financial Services Committee on Wednesday.
Gradual Fed Rate Hike Pace
Officials in June signaled they plan to continue to raise rates at a gradual pace, penciling in two more quarter-point hikes for 2018. Powell's emphasis that gradual increases are the right path "for now'' may suggest the committee's debate about pausing those hikes once the rate gets closer to a level they consider neutral — neither adding stimulus nor hurting growth — is likely to intensify.
Powell listed four reasons why the job market will remain strong with inflation near the Fed's 2% target "over the next several years.''
Financial conditions remain favorable to growth, he said, and a stronger financial system is prepared to meet the credit needs of the economy.
"Federal tax and spending policies likely will continue to support the expansion,'' Powell said, and "the outlook for economic growth abroad remains solid despite greater uncertainties in several parts of the world.''
Powell also warned that it is "difficult to predict'' how trade tensions as well as "the size and timing of the economic effects of the recent changes in fiscal policy'' will shape the economic outlook. The risks of a weaker or stronger economy are "roughly balanced,'' he said.
The U.S. economy grew at a 2% annual rate in the first quarter and that pace is expected to double to 4% in the second quarter, according to analysts surveyed by Bloomberg.
Amid a hot labor market, employers added 1.3 million new jobs in the first six months of the year and gains are starting to expand more broadly. Unemployment for black people in May touched the lowest level on record.
Powell restated his intentions, announced at his June news conference, to explain the central bank's actions with "clear and open communication.''
"We owe you, and the public in general, clear explanations of what we are doing and why we are doing it,'' he told the Senate committee.
Powell, a former private-equity banker, was appointed Fed chairman by President Donald Trump and took office in February. He was initially put on the Board of Governors by Barack Obama in 2012.
Boeing ( BA) and Airbus ( EADSY) remain fierce competitors in commercial aviation as demand remains strong for passenger jets to serve growing middle classes in China, India and other emerging economies.
But the contest has been more lopsided in the midrange segment, forcing Boeing to develop a new jetliner and stem market-share losses to Airbus.
On the defense side, the Trump administration is expected to boost Pentagon spending but also press for cost savings in individual programs like Lockheed Martin's ( LMT) F-35, which is poised to see a major ramp-up in production soon. Northrop Grumman ( NOC) is building a new stealth bomber amid criticism that costs aren't transparent enough, while Boeing looks to keep a foothold in combat aircraft.
Bookmark this page to stay on top of the latest defense and aerospace sector news.
GE Engine For 6th-Gen Fighter To Support Lasers, Other New WeaponsGeneral Electric is developing engine technology for the Air Force to enable an array of new weapons on a future 6th-generation fighter that would follow Lockheed Martin's 5th-generation jets, the F-22 and F-35. For several years, both GE and United Technologies' Pratt & Whitney unit have been working with the Air Force Research Laboratory on adaptive... Read More
Boeing Crushes Airbus At Farnborough, But This Mystery DeepensBoeing topped Airbus in orders and commitments at the Farnborough Airshow, but many of both aerospace giants' orders came from mysterious unidentified customers. Boeing wrapped up the show with $98.4 billion in orders and commitments for 673 commercial airplanes and $2.1 billion in commercial and defense services orders and agreements. Airbus ended the premier airshow event... Read More
Flir Systems Hits 80-Plus Relative Strength Rating BenchmarkThe Relative Strength (RS) Rating for Flir Systems entered a new percentile Thursday, with a rise from 79 to 82. When looking for the best stocks to buy and watch, one factor to watch closely is relative price strength. This proprietary rating measures technical performance by using a 1 (worst) to 99 (best)... Read More
How Boeing Could Use Blockchain To Manage, Track DronesAs regulators grow more concerned about integrating drones into air traffic control, Boeing thinks blockchain and artificial intelligence can offer a solution. At the Farnborough Airshow on Tuesday, Boeing announced that it's creating Boeing NeXt to focus on autonomous flight and advanced propulsion systems and is working with SparkCognition "to use artificial intelligence and blockchain technologies... Read More
These 5 Dow Titans Are Near Buys After Forming Bullish BasesAs earnings season gets underway, several blue chip Dow Jones stocks are nearing buy points after building bullish bases. Apple, Boeing, American Express, Exxon Mobil and Home Depot could make strong gains in the coming weeks. Apple Stock Apple stock is closing in on another buy zone after building a five-week flat base.... Read More
Here's What GE Aviation Said About Supplying A Boeing '797' EngineGeneral Electric is feeling iffy about engine development for a highly anticipated, midrange Boeing 797, after the aerospace giant recently invited proposals from the world's top jet-engine makers. GE Aviation chief David Joyce remains doubtful that demand for the planned jet — dubbed by aviation watchers as the "797" — will justify development costs... Read More
U.S. Offers NATO Ally This Deal Amid Fears F-35 Secrets Are At RiskThe State Department is discussing a deal to sell Turkey Raytheon's Patriot missile-defense system after the NATO ally and F-35 partner bought a Russian S-400 system. U.S. Ambassador Tina Kaidanow, the acting assistant secretary of state for political-military affairs, told reporters during the Farnborough Airshow that government officials were in talks with Turkey over the Raytheon... Read More
Airbus Poised For Massive Asian Order At Farnborough; Boeing Announces DealsBoeing European rival Airbus announced $9.2 billion in orders from Asian carriers in the first major order announcement of the Farnborough Airshow on Monday and is reportedly near more massive deals with low-cost carriers in the region. Both Airbus stock and Boeing stock rose Monday morning as the aerospace giants announced orders. Taiwan's... Read More
Which stocks are millennial investors interested in? A look at Robinhood stock holdings by number of users on the platform offers a glimpse into the psyche of 20- and 30-something investors.
The average age of Robinhood's 4 million users is 31 years old, and the median age of users is 29, according to a company spokesperson, who provided Investor's Business Daily with an updated list of holdings at the end of June.
When we last checked in with the platform in January, millennial investors were most interested in Advanced Micro Devices ( AMD). Since then, AMD has lost its lead, tumbling to fifth place. Chesapeake Energy ( CHK) has fallen off the top 20 list entirely, replaced instead by Starbucks ( SBUX) at the tail end of the Robinhood stock rankings.
Now in the lead among millennial investors? Apple ( AAPL), which rose from second place to the No. 1 spot. Troubled General Electric ( GE), which just got ousted from the Dow Jones industrial average, climbed two spots to No. 2. Ford Motor ( F) remained in third place, while Microsoft ( MSFT) ascended to the top five.
Among the FANG stocks, Facebook ( FB) slipped a few places, while Netflix ( NFLX) made a formidable six-spot climb. Amazon.com ( AMZN), a pricey stock at around 1,700 per share, held on to the No. 15 spot, while slightly less expensive Google parent Alphabet ( GOOGL) has yet to appear on the list this calendar year, based on our two check-ins.
Investing apps like Robinhood, Acorns, Stash and Stockpile are gaining traction among millennial investors, thanks to their account minimums of $5 or less and free trades. Such moves are challenging traditional brokerages like E-Trade Financial ( ETFC), TD Ameritrade ( AMTD) and Charles Schwab ( SCHW), which have already cut trading fees amid a price war. Robinhood is also appealing to younger clients by offering cryptocurrency trading.
So, what other stocks are popular with millennial investors? Here are the midyear standings with Robinhood stock holdings, as of the end of June 2018, with a look at how they compare to the beginning of the year.
The Top 20 Robinhood Stock Holdings, By Users On The App
1. Apple (+1)
2. General Electric (+2)
4. Microsoft (+3)
5. Advanced Micro Devices (-4)
6. Fitbit (+2)
7. GoPro (-1)
8. Facebook (-3)
9. Twitter (+3)
10. Netflix (+6)
11. Snap (-2)
12. Bank of America (-2)
14. Tesla (-3)
16. Alibaba (-2)
17. Micron Technology
18. Disney (+1)
19. Square (-1)
20. Starbucks (new to top 20 list vs. January 2018)
Several studies back up that claim that women investing in stocks are better at it than men. One of the more commonly cited ones comes from Fidelity Investments, which analyzed over 8 million client accounts and found that women outperform men by 0.4%.
"At first glance this may appear to be a minor difference, but can have a significant impact over time," said the study, which was published in 2017.
Why are women investing more intelligently? Both the Fidelity and Barclays reports point to women investors' tendencies to 1) engage in less trading than men, and 2) buy and hold.
Fidelity also said that women investing in stocks are more averse to risk — an unsurprising find.
Perhaps more surprising: Shunning the stock market because of risk concerns can prevent you from taking advantage of the power of compound interest, but exercising a little more risk awareness once you actually are investing can work in your favor.
"Studies have shown men tend to be much more risk takers, when it comes to investing, to their own detriment because they trade too much," Bankrate Chief Financial Analyst Greg McBride told Investor's Business Daily. "Women tend to generate better returns because they don't trade as often and tend to hang in there."
Can the future really be female if an unspoken gender wealth gap keeps quietly eating away at women's futures? While women have been shown to outperform men at investing, they tend to shun the stock market for the deceptive safety of cash savings, leaving men to reap the gains — and keep a grip on the world's private wealth.
This disconnect between women and Wall Street runs deep. Hollywood portrayals only underscore the divide, from the chest-thumping boys' club in "The Wolf of Wall Street" to "Sex and the City" heroine Carrie Bradshaw. As she once said about investing, in a phrase that launched a thousand Etsy posters: "I like my money right where I can see it — hanging in my closet."
In the real world, millennial women in particular are financially vulnerable. The wage gap gets the bulk of the credit for this divide, but it's not the only factor at play. Not investing can amount to a gender wealth gap hundreds of thousands of dollars big over the course of a lifetime. And that can mean the difference between being in control of the future and being swept away by the undercurrent of daily expenses.
"One thing we realize more than ever these days is that money is power. And that if you don't have as much money as the guys do, it can put you in a tough position," says Sallie Krawcheck, CEO of investing platform Ellevest. "It can keep you in a job you don't want to do. It can keep you in a relationship you don't want to be in. It can keep you from taking that trip around the world, or starting the business you've been dreaming about."
Pay equity is part of the equation, compounded by the fact that women are more likely to pause their careers to raise children and take care of aging parents and spouses. Compared with a man with no workforce interruptions, the average woman cumulatively has earned $1.06 million less by the time she hits retirement age. That's an enormous wealth gap.
"Women, generally, we're leaning in to our careers and we're becoming much more comfortable around being ambitious professionally. But we're not having that same dynamic (with our money)," says Jennifer Barrett, a former CNBC personal finance editor and the current editor-in-chief of Grow, a web publication from micro-investing app Acorns. "It's to our detriment if we don't invest."
No matter where you look, the numbers are pretty straightforward: Compared with men, women are tepid about the stock market. Some 57% of women didn't invest a dime in 2017, vs. 44% of men, according to a recent Acorns study. If handed a thousand bucks, 2.5 times more men than women said they would put that money in stocks.
The wealth gap extends to retirement savings. Women also fall behind men in 401(k) participation and contribution, says the Transamerica Center for Retirement Studies. And a PNC Investments poll found that female millennials with investable assets had an average of $66,700 saved or invested for retirement vs. an average of $101,500 among men of the same age. (More broadly, the reality is bleaker: two-thirds of all working U.S. millennials aged 21 to 32 do not have anything saved for retirement at all, according to the National Institute of Retirement Security.)
Some women are already feeling the fear of missing out.
The Merrill Lynch/Age Wave study found that 41% of women said their greatest financial regret was not investing more of their money. That even trumps career, credit-card and lifestyle woes.
Thirty-year-old Caroline Rhoads, an account director at a marketing firm in Philadelphia, said Wall Street "seems very intimidating."
She has consulted a financial planner once, invested around $1,000 through a Robinhood account, and feels good about her 401(k) and financial future. But she invests conservatively, "because I feel like if I'm going to invest I need to know what I'm doing, and I don't."
Bridging the gender wealth gap through investing may seem abstract and distant, particularly for 20-something women mired in student debt, decades away from retirement. But there are serious consequences for not at least trying to get the ball rolling.
"In not being comfortable investing, what you're saying is you're not comfortable building wealth," says Barrett. And the gender gap there is "growing, not shrinking, even as women are earning more and closing the wage gap. We still have a gaping wealth gap."
If it's so important, why is there a dearth of female investors? What accounts for this wealth gap in the market? More than a couple of things, it turns out.
1. Wall Street's Not Trying To Attract Female Investors
Think back to "The Wolf of Wall Street" and Leonardo DiCaprio's testosterone-fueled, Martin Scorsese-directed yacht parties, filled with models and bottles. And earlier this year, an E-Trade Financial ( ETFC) ad showed men cavorting with bikini-clad women on a yacht. Who wouldn't want to be associated with that lifestyle?
"I can't help but equate Wall Street with the a**hole bros filling lower Manhattan bars most nights, who drink too much, act rudely toward women, and generally behave badly," wrote Refinery29's Work & Money Director Lindsey Stanberry in a 2016 story on how to invest. "Do I really want to put my hard-earned money in their hands? (No.)"
Ellevest's Krawcheck says the fact that the investing gender gap even exists "tells me that women are not being well served by the existing investing industry and by Wall Street."
She should know. Her Wall Street cred includes stints as the head of Merrill Lynch and Citigroup's ( C) wealth management divisions. Now she is a vocal proponent of something she calls "financial feminism," or wealth equality between men and women.
And no, the solution isn't slapping a bunch of pink labels on existing financial products. Of her days at the heavyweights, Krawcheck said efforts to appeal to female investors didn't consider their financial desires.
Ellevest's "gender-aware" investing algorithms, she says, consider key differences about women. Their salaries peak sooner than men's. They earn less over their lifetimes. They are more likely than men to outlive their resources.
So she aims to help investors reach their goals, not beat the market. Wall Street's obsession with outperforming the stock market indexes "leaves women completely cold," she says.
Female investors are more interested in reaching certain milestones, such as retiring at a certain income, buying a home or starting a business, she adds.
2. The Risk Factor For Female Investors
And she's quick to dismiss the notion that women's risk aversion toward stocks drives the investing gender gap and the wealth gap.
"It's not that she's risk averse, she's risk aware. And the industry has done a poor job explaining risk to her," said Krawcheck of female investors. "When she understands it, she's happy to take it."
But it's true that women are doing less with their money. Financial services startup SoFi found that men contribute 32% more to their investment accounts than women do, and tend to invest more aggressively.
Meanwhile, women are equally or more confident than men in paying bills and setting budgets. But they're far less confident about managing their investments, say Merrill Lynch/Age Wave researchers.
Maybe that's why female investors keep more of their money in cash. According to an oft-cited BlackRock study from 2015, female investors keep 68% of their portfolios in cash vs. men's 59%.
The apparent safety of a savings account, however, is deceptive. Over the long run, hoarding cash is a terrible way to increase net worth. Consider the math: Interest rates on savings are near zero while inflation is now 2%, which means that $1,000 in the bank today is objectively worth less in the future.
Additionally, it pays to take advantage of compounding interest.
Say you invest $500 tomorrow in a low-cost index fund that tracks the S&P 500. Then add 50 bucks to that account every month thereafter. Say it grows by an average 8% every year. (Over the last 90 years, the average yearly return for the S&P 500 has been 9.8%, even accounting for crashes.) In 30 years, a no-interest savings account would have grown to $18,500. Your investment in the stock market would have amassed $73,001.26.
3. Stock Market Distrust
Still, that's easier said than done for those who don't trust Wall Street. There's a whole generation of women and men who remain deeply distrustful of the stock market. Both the dot-com crash and the Great Recession blindsided them in their formative years.
"In a short period of time, they saw two recessions and two market meltdowns," says Bankrate Chief Financial Analyst Greg McBride. "Those memories are fresh. So a lot of (millennials) just never warmed up to equities and have taken a naturally risk-averse stance, detrimental though that may be to their long-term financial health."
Younger people prefer real estate and cash over the stock market, according to Bankrate surveys. And millennial women in particular are in a financially precarious position.
"Here's my concern, and it's heightened for millennial women," says McBride. "Millennials are going to have the biggest retirement savings burden in history," thanks to longer life spans, fewer pensions, more uncertainty around Social Security, and higher health costs than any generation before them. And holding on to safe-haven assets like gold, he says, is not going to cut it.
"To accumulate retirement savings, you need the power of compounding to do the heavy lifting."
Michelle Trejo, a 29-year-old quality assurance engineer in Los Angeles, says that her main vehicle for retirement is her 401(k), though she isn't sure how much she's contributing. Once she saves more money, she is looking to invest in real estate, and then potentially in the stock market.
"I wish I knew how to play (the stock market)," says Trejo, who has dabbled in cryptocurrencies, a far higher-risk investment than stocks. "I know there's a lot of money there. I just don't know how to get started."
4. Gender Gap In Cultural Messaging
Some experts venture that women get a one-sided directive about what to do with their money: Spend it.
"Generally speaking, if you look at who's spending money on clothes and keeping up with the trends," says Barrett, "it's not men. It's women."
Think about how many magazines or style blogs talk about buying "investment pieces": a classic necklace, a blazer that will never go out of style. An analysis from purse reseller Baghunter will have you believe that a Birkin bag from Hermes is a better purchase than gold. Of course, that assumes you hold on to the bag for 35 years and keep it in mint condition.
"When we talk about buying a handbag as an investment, it makes me cringe," said Barrett.
That mindset extends beyond the investing gender gap to the venture-capital world.
Men with wealth are encouraged to amass more wealth, said The Helm CEO and co-founder Lindsey Taylor Wood at the recent United State of Women conference. Her venture fund invests in female entrepreneurs.
"Their buddies are like, 'Get in on this deal, invest in this company, buy this stock,' " she said. By contrast, "women with wealth are invited to give their money away. 'Chair this gala, join this nonprofit, be on this board.' "
5. Women (And Parents) Don't Talk About Money
A notable 61% of women would rather chat about their own death (!) than talk about money, according to Merrill Lynch/Age Wave data.
"In our society, talking about money is pretty taboo for women; we learn this from childhood," says Ellevest's Krawcheck. "If you're not talking about money, how do you know what raise to ask for, or how to invest? The answer is: You don't. And women are the poorer for it."
That deep-rooted behavior is encoded early on. In fact, 63% of millennial women vs. 53% of their male peers learned from their parents about saving money at an early age, according to PNC Investments. But only 29% of those same women said their parents showed them how to grow wealth, vs. 37% of men.
"(There are the) stories that we tell ourselves and the stories that we've heard and internalize," says Acorns' Barrett, who is writing a book about the gender wealth gap. "That investing is hard, that you need to be wealthy to invest. Women in particular get that message a lot. And if you look at the research — even the way parents talk to their sons and daughters about money is different."
Kathy Mirescu, a 40-year-old director of product design, is far from the norm when it comes to enthusiasm for personal finance. It is a quality the Los Angeles resident learned from her mother, a self-taught commercial real estate investor with an accounting background who "was always looking for investment opportunities and would talk about them" openly with her three children.
"I just grew up not really thinking about it, until I became a lot older, and I started realizing that a lot of my friends, a lot of my peers, who are college educated — a lot of them have advanced degrees — didn't know a lot of the things that I just knew" about finance, said Mirescu.
She bought her own condo at just 29. The down payment came from cash and proceeds from the sale of blue chip stocks that her mother bought for her early on in life.
Now Mirescu wants to start an investing club that will help her friends and other women become more financially literate. "To just simply have a place where we all get in a room," she said, and "help each other set up Roth IRAs."
6. A Lack Of Big-Money Female Role Models
Acorns' survey found that 42% of women chose Oprah as the person they'd be most likely to take investing advice from. More than half of men chose Warren Buffett.
That likely speaks more to women's trust in Oprah than the gender wealth gap, says Barrett. But it also serves to highlight how few female investors are well known on Wall Street.
"If you think about really famous investors — can you think of a woman?" she said. "We don't have a lot of female role models." (According to the Merrill study, 45% of women don't have a financial role model, to be exact.)
Krawcheck, who took the stage at the United State of Women conference to hearty applause, is an emerging rock star in the realm of financial feminism. At the mention of the Ellevest founder, Mirescu starts "fan-girling." (Her words.)
She, too, sees money as a "feminist issue."
"It's about having choices, and money gives you the freedom to have choices," says Mirescu. "And choice is a linchpin of feminism."
Biogen's ( BIIB) Alzheimer's treatment needs to show only a 15% improvement over placebos to gain Food and Drug Administration approval, analysts said Monday.
Biogen and partner Eisai will present more details regarding their drug, called BAN2401, at the Alzheimer's Association International Conference on July 25. BAN2401 surprised analysts earlier this month after slowing progression in patients with early Alzheimer's disease.
"Bottom line — we think anywhere between 15%-20% placebo-adjusted treatment effect should be considered a win," Piper Jaffray analyst Christopher Raymond said in a report to clients. The results also could boost expectations for Biogen's other Alzheimer's treatment, aducanumab.
The results for BAN2401 in early July surprised analysts. In December, the drug failed to meet its goals at a 12-month analysis. But the final analysis at 18 months showed BAN2401 slowed clinical progression in 856 patients with an early form of Alzheimer's disease.
BAN2401 works in a similar fashion as Biogen's later-stage drug, aducanumab. Scientists theorize Alzheimer's disease results from the buildup of toxic plaque in the brain called beta-amyloid. Both drugs aim to remove that plaque.
Biogen and Eisai are expected to offer more specific details about the impact of BAN2401 on July 25. But the biotech companies haven't said what data they plan to release.
Researchers measured the impact of BAN2401 based on a new measure called Alzheimer's Disease Composite Score, or ADCOMS. Most Alzheimer's treatments, including aducanumab, are evaluated by a different metric known as Clinical Dementia Rating — Sum of Boxes, or CDR-SB.
Analysts disagree on whether ADCOMS is a sufficient measure for Alzheimer's treatments. Raymond notes that ADCOMS has shown increased sensitivity to capture the clinical decline in patients with an early form of Alzheimer's disease.
Evercore analyst Umer Raffat said ADCOMS comprises proven goals from other Alzheimer's disease studies. He likened it to Major Adverse Cardiac Events, or MACE. Cardiology treatments often aim to improve upon the likelihood of MACE in studies.
"It's just as novel as MACE is novel in cardiology," he said in a report. ADCOMS is "just a composite of other established endpoints."
Alzheimer's Disease Market
Like Raymond, Raffat said investors will likely look for BAN2401 to show a 15% improvement over the placebo. But he sees 25% as "very possible."
Piper Jaffray's Raymond doesn't expect much regulatory pushback for Alzheimer's treatments tests that use ADCOMS as their primary goal. The FDA has recently signaled "increasing flexibility" on using alternative goals in studies of Alzheimer's treatments.
"We think the focus will rightly be centered on CDR-SB (if provided) for aducanumab read-through as this is its Phase 3 primary endpoint," he said. "While we don't expect a statistically significant CDR-SB measure, we do think a positive trend should provide added comfort on aducanumab."
The release at AAIC will be important in proving the beta-amyloid theory of Alzheimer's treatments, Raymond said. But it could raise an intriguing question regarding whether both BAN2401 and aducanumab can coexist in the Alzheimer's disease market.
BAN2401 cuts risk in terms of safety, but it also likely has a lower impact on clinical decline.
"A lower-risk BAN2401 with correspondingly lower (effectiveness) could benefit a subset of patients district from those seeking a higher-risk/high (effectiveness) aducanumab," he said. "The sheer size of the market seems to support this potential."
Biotech companies Biogen ( BIIB) and Gilead Sciences ( GILD) will likely top Wall Street's second-quarter revenue expectations, while Regeneron Pharmaceuticals ( REGN) is at risk of a "significant" earnings miss, an analyst said Monday.
The second-quarter earnings season is set to kick off in earnest for biotech companies next week. Notable reports include Biogen, Alexion Pharmaceuticals ( ALXN) and Celgene ( CELG). The Street sees solid performances, but Leerink analyst Geoffrey Porges has "extreme caution."
Porges notes that the second quarter tends to be the strongest seasonally for biotech companies. This quarter captures an additional shipping day vs. the year-earlier period. However, drug price increases have been "especially sparse ( and controversial) midyear," he said in a report.
"This means that channel inventory may recover from first-quarter lows, but will not be boosted above usual levels in the second quarter," he said. "The currency tailwind that has supported ex-U.S. product sales has also significantly diminished this quarter."
Porges sees sales from Biogen, Gilead and biopharma AbbVie ( ABBV) as likely to beat the consensus. The best earnings performances among biotech companies could come from AbbVie and Gilead, he said. Biogen and Regeneron are most likely to come up short in earnings, he predicted.
Meanwhile, new drugs could provide upside. Amgen ( AMGN) is launching a migraine drug, Aimovig. Vertex Pharmaceuticals ( VRTX) and Gilead have new drugs in cystic fibrosis and HIV, respectively. Alexion's Soliris has a new use, and Biogen is launching Spinraza outside the U.S.
"Any of these products could meaningfully surprise and drive outperformance, provided sufficient revenue is incremental rather than cannibalizing other products," he said.
On the stock market today, shares of biotech companies sank 1.5%. The group is now ranked eighth out of 197 groups tracked by Investor's Business Daily. It rose two spots from last week — though it still lags the medical products group, which is holding strong in second place.
Amgen Facing Biosimilars
Biosimilars are aiming to chip away at Amgen's anemia drug Epogen and its bone marrow-stimulating drug Neupogen. Dow Jones component Pfizer ( PFE) gained approval to make a copy of Epogen. Novartis ( NVS) has a copycat of Neupogen. Blockbusters Neulasta and Enbrel are facing similar challenges.
"We expect to hear management address the heightening biosimilar competition against the company's (Epogen) and (Neupogen) franchises," Porges said. "We also expect management to comment on the trends in the immunology markets in the quarter."
Overall, Porges calls for Amgen to report $5.82 billion in sales, which is 2% above the consensus. But RBC Capital Markets analyst Kennen MacKay is slightly more bearish. He sees Amgen reporting $5.74 billion in sales, mostly in line with the consensus.
MacKay expects sales of arthritis and psoriasis drug Enbrel and bone marrow-stimulating drug Neulasta to come in light. Views for cholesterol drug Repatha are likely moderated, given rivalry from Regeneron. But he expects osteoporosis drug Prolia to continue to be "a positive growth story."
Regeneron Earnings Worries
Leerink's Porges expects Regeneron's sales to be 1.3% below the consensus. Though he notes the degree of the miss could be offset by better-than-expected partnership and collaboration revenue. He also calls for Regeneron's earnings per share to lag by 9.7%.
Regeneron won't be alone in its earnings disappointment, Porges predicted. He expects all of the large-cap biotech companies to report lower year-over-year growth in earnings per share vs. last year.
This "is a signal that new launches from growth companies such as Regeneron and Alexion are not delivering the impact that they were last year, or that the companies are still increasing operating expenses in line with, rather than slower than, top-line growth," he said.
RBC's MacKay notes that investor focus will remain on Dupixent, a treatment for eczema in adults. He sees $126 million in U.S. sales and $150 million in global sales. The consensus, on the other hand, calls for global Dupixent sales of $184 million to $194 million.
Alexion Could Beat
Investors will also focus on the trajectory for Alexion's drug, known as ALXN1210, analysts said. ALXN1210 is a next-generation version of Soliris, which treats two blood disorders and a neuromuscular condition. ALXN1210 is likely to gain approval in early 2019, Leerink's Porges said.
Alexion will need to convert patients from Soliris to ALX1210 to be successful, Credit Suisse analyst Martin Auster said in a report. He notes that investors will also look for commentary regarding Soliris' use in generalized myasthenia gravis, a neuromuscular disorder.
RBC's MacKay sees $846 million in second-quarter sales of Soliris. In generalized myasthenia gravis, he calls for sales of $41 million vs. the Street estimate for $28 million. Leerink's Porges models $856 million in worldwide Soliris sales.
Customers struggled to cash in on Amazon Prime Day deals at the official launch of the e-commerce behemoth's annual sale Monday afternoon as website glitches failed to take some site visitors to the main landing page site.
When Amazon.com ( AMZN) customers tried to reach the main Amazon Prime page they received an error or were unable to view deals, according to various reports. More than two hours into the official launch, which had started at 3 p.m. ET, the errors were continuing. The glitch prompted users to mock Amazon on Twitter with the hashtag "#fail."
Amazon seemed to be making progress on fixing the glitch around 4:45 p.m. ET but its user interface was different than originally presented. At 5 p.m. ET Amazon issued a statement on Twitter.
"Some customers are having difficulty shopping and we're working to resolve this issue quickly," the Amazon tweet said. It said many were shopping successfully but Amazon did not say when the matter would be fully resolved. The troubles for Amazon come on what traditionally has been its busiest shopping day of the year.
While Amazon ended Monday's regular session at 1,822.49, up 0.5% on the stock market today, in after-hours trading shares fell 1.4%, near 1,797.
Open 12 Hours Early
Amazon had opened its doors 12 hours early to online customers Monday morning, allowing them to jump on select Amazon Prime Day deals that included its line of company-branded electronics.
On its website Monday morning, Amazon offered early access to deals on its Echo line of smart speakers voiced by Alexa. The company also offered Amazon Prime Day deals on its Fire TV Stick, its recently introduced Fire TV Cube, the Amazon Fire and Kindle tablets, its 4K Fire TV and home security devices.
The 36-hour event covering all product categories officially kicks off at 3 p.m. ET Monday, with the company saying it will have more than 1 million Amazon Prime deals. That's up from more than 100,000 two years ago.
It's the fourth year in a row Amazon has held Prime Day. The most popular purchase last year was the Echo Dot. That's the low-end model of the Amazon Echo line of smart speakers. The Echo Dot on Monday mornings was priced at $30, or 40% off.
The online sales event is only for members of the company's Amazon Prime loyalty program. Annual membership costs $119 per year and with it they get an array of perks, such as free shipping and access to its video and music library. But non-Prime customers can still get in on the action by signing up for a free 30-day trial. Last year, Amazon said it collected "tens of millions" in new Prime memberships.
Amazon Prime Day Deals
Top deals, shopping tips and trends during peak shopping will be revealed live by online hosts, Amazon announced. Among the product categories Amazon is promoting are apparel, products for the home and kitchen, video games, sporting goods and outdoor products, and a wide array of electronics.
Amazon called last year's event its biggest sales day ever. It did not release revenue figures but did say revenue from Amazon Prime Day rose 60% from the previous year. Estimates from analysts are that this year's event will reach sales of about $3.4 billion. This year's event is expected to pass last year's in sales, in large part because Prime Day this year is six hours longer than last year, in addition to starting 12 hours earlier for some items.
Specials will also be linked to Amazon's Whole Foods Market in the form of extra discounts for grocery shoppers. In a move to get Prime members to try out its grocery delivery service, Prime Now, first-time users will get $10 off, and another $10 off a second delivery.
Internet television network Netflix ( NFLX) late Monday said it added 5.2 million subscribers in the second quarter, missing its forecast for 6.2 million made in mid-April. Netflix subscribers at the end of the June quarter stood at 130.1 million worldwide.
Netflix stock plunged 14% in after-hours trading to around 344.98 on the stock market today, a drop of more than 56 a share. During the regular session, Netflix stock rose 1.2% to 400.48.
"We had a strong but not stellar Q2," Netflix management said in a letter to shareholders. Growth in Netflix subscribers was roughly the same as in the year-earlier quarter.
Netflix earned 85 cents a share on sales of $3.91 billion in the June quarter. Analysts expected the company to earn 79 cents a share on sales of $3.94 billion for the period. In the year-earlier quarter, it earned 15 cents on sales of $2.79 billion.
Forecast On Netflix Subscribers Below Views
"Earnings, margins and revenue were all in-line with forecast and way up from prior year," the company said. "Internet video is growing globally and we are fortunate to be one of the leaders."
For the current quarter, Netflix subscribers now are expected to grow by 5 million, including 650,000 in the U.S. and 4.35 million in international markets.
It is forecasting earnings per share of 68 cents on sales of $3.99 billion in the September quarter, both below views. Wall Street was modeling for Netflix to earn 73 cents a share on sales of $4.13 billion in the third quarter. In the year-earlier quarter, Netflix earned 29 cents a share on sales of $2.98 billion.
A Wall Street analyst Monday raised the price target on Facebook on a view that various growth drivers such as Instagram will enable the social media giant to drive long-term revenue growth without a material lift in ad loads.
Credit Suisse analyst Stephen Ju raised his target on Facebook ( FB) to 265 from 240, with a rating of outperform.
Ju said a check with advertisers indicated a "modest deceleration" in ad budget growth overall. But that was offset by ad-budget growth for Instagram, the Facebook-owned mobile app for photo and video sharing. Facebook also saw strong growth from its premium video business, he wrote in a report to clients
The Facebook stock-price increase on Monday followed two on Friday. Jefferies analyst Brent Thill raised his price target to 240 from 215. And three of four FANG stocks got a price target bump. It followed a survey of ad buyers in which 40% said they'll boost ad spending above previous expectations for the rest of 2018.
The two FANG stocks receiving price-target increases in addition to Facebook were Amazon.com ( AMZN), and Google-owner Alphabet ( GOOGL)
Shares of Facebook closed almost flat, down marginally to 207.23 on the stock market today. Facebook stock also hit an intraday record on Monday of 208.72.
Facebook Ad Growth
The company is scheduled to report second-quarter earnings after the market close on July 25.
Ju estimates Instagram accounts for about 20% of spending on Facebook ads. That's up from 5% in the first quarter of 2017 and 15% in the fourth quarter.
"This indicates that Instagram revenue growth remains well into the triple digits, albeit coming from a lower base," Ju wrote. "Street models are too conservative and underestimate the long-term monetization potential of upcoming new products."
He said this includes Facebook Messenger and WhatsApp.
Tesla stock faltered Monday after Chairman Elon Musk's controversial tweets reached a new level over the weekend as he lashed out at a critic and called him a pedophile.
Musk's now-deleted post on Twitter came after British cave explorer Vern Unsworth blasted Musk's effort to help rescue 12 boys from a Thai cave last week. It adds to a long list of news-making tweets by the Tesla ( TSLA) chief.
Musk offered a "kid-size submarine" to help rescue the boys and their coach after they became trapped in a cave in northern Thailand. A Thai official said the equipment, built by Musk's Space Exploration Technologies, or SpaceX, wasn't practical and it wasn't used. Musk traveled to the site in Chiang Rai province, but the team was rescued by Thai divers with aid from an international group of volunteers.
Unsworth was a volunteer who played a key role in organizing the rescue. He said in an interview Friday with CNN that the submarine was "a PR stunt." Unsworth said Musk could "stick his submarine where it hurts." He added that it had "absolutely no chance of working."
'This British expat guy'
Over the weekend, Musk fired back in a series of tweets, without specifically naming Unsworth. The Tesla boss said he hadn't seen "this British expat guy" in the caves during the rescue. He said he saw only Thai military divers. Musk also said he would make a video to prove that the minisub could have helped in the rescue.
"Sorry pedo guy, you really did ask for it," he wrote.
Unsworth, asked about the tweets in a television interview, declined to say what he thought of Musk's comments.
"I'm not going to make any further comment about him, but I think people realize what sort of guy he is," he said. "It's not finished."
Unlike most executives, Musk doesn't hesitate to battle publicly with his detractors. He uses the social network to promote his companies and spar with short sellers who are betting against Tesla shares. He also needles journalists who question his businesses' prospects.
Shares in 21st Century Fox Entertainment ( FOXA) fell on Monday amid reports that Comcast ( CMCSA) could exit a bidding war versus Walt Disney ( DIS) for the media firm and instead focus on acquiring satellite TV broadcaster Sky.
Comcast ( CMCSA) could end its pursuit of Rupert Murdoch's Fox if the cable firm believes Sky can be bought, CNBC's website reported Monday. Comcast's NBCUniversal owns CNBC.
Comcast stock added 0.8% to close at 34.97 on the stock market today. Disney edged up 0.2% to 110.20. Fox fell 1.7% to 46.41.
Disney has upped its offer for Fox to $71 billion, edging out Comcast's $65 billion bid. Disney added cash as part of its offer for Fox. Fox shareholders are expected to vote on Disney's bid July 27.
Under Disney's agreement with Fox, Disney can't negotiate with Comcast to divvy up Fox's assets. Fox owns a 39% stake in Sky.
Comcast's recent moves, though, could signal that it would be satisfied with control of Sky, says a UBS report. The cable firm on July 11 increased its offer for Sky to $34 billion, topping Fox's latest bid. Fox had raised its bid to $32.5 billion for the remaining portion of Sky that it doesn't own.
Appeal Could Hurt Comcast Stock
Several analysts, meanwhile, say the Department of Justice's appeal of a judge's ruling that let AT&T close its acquisition of Time Warner could be a setback for Comcast stock. Regulatory approval of so-called vertical mergers that combine media firms with pay-TV distributors could still face hurdles if the Justice Department prevails.
"We believe the appeal is unlikely to make the Fox board more enthusiastic about a Comcast counter offer unless it is significantly higher than the $45 per share top bid we estimate it can offer," said Frank Louthan, a Raymond James analyst, in a report.
Disney's bid now stands at $38 a share.
"The likelihood of Comcast's ability to secure Fox/Sky is diminishing day by day," said Amy Yong, a Macquarie analyst in a report on July 13.
Blair Levin, a New Street Research analyst, says the timing of the appeal could help Disney. But the cable TV firm could still end up with Sky, he added in a report.
The cable TV firm and Disney are fighting over Fox's film and TV studios, cable networks, and international TV business. Fox would retain its news channel and local TV stations. Regulators could force either Disney or the cable TV firm to divest Fox's regional sports networks.
General Electric ( GE) is feeling iffy about engine development for a highly anticipated, midrange Boeing ( BA) 797, after the aerospace giant recently invited proposals from the world's top jet-engine makers.
GE Aviation chief David Joyce remains doubtful that demand for the planned jet — dubbed by aviation watchers as the "797" — will justify development costs for a new engine, especially since Boeing has yet to decide on using an exclusive engine maker vs. involving competing suppliers, according to Bloomberg.
"We're still wrestling with what the size of the market is," Joyce said at the Farnborough Airshow, taking place this week outside London.
Boeing has been under pressure to develop the 797 as an answer to the popular Airbus ( EADSY) A320neo.
Boeing is looking for a 797 engine that would burn 25% less fuel per pound of thrust vs. the engines on the 757, sources told Air Current last month, and sought proposals from engine makers CFM International, a GE-Safran joint venture, United Technologies' ( UTX) Pratt & Whitney and the U.K.'s Rolls-Royce.
GE's lukewarm response to the 797 also comes as jet engine makers have had trouble meeting increasingly aggressive production targets from Boeing and Airbus. In May, reports said GE was behind on plans for a record hike in Leap engine output, while Rolls-Royce joined Pratt & Whitney in reporting technical engine issues that grounded airplanes.
Shares of GE edged up 0.1% in the stock market today as they continue to test the 50-day moving average. Boeing popped 1.5%, United Technologies sank 0.4%. Airbus dropped 0.1% following a breakout in low volume last week.
GE Aviation: 'Transition Point'
Reports also said Joyce expects to book more than $15 billion in orders and commitments at Farnborough, after unveiling engine and service deals with China's Yunnan Hongtu Airlines, Arkia Israeli Airlines and Ethiopian Airlines.
GE announced Saturday that orders for CFM jet engines have surpassed 1,370 so far in 2018. That includes 65 CFM56 engines and 1,306 Leap engines — the advanced, fuel-efficient successor to the CFM56 engine family.
The company added that it is on track to deliver more than 2,100 CFM56 and Leap engines this year, and is "closing the delivery gap" with customers. The Leap powers the Airbus A320neo family and the new Boeing 737 Max.
"July 2018 marks the transition point where CFM will be building more Leap engines than CFM56 engine," it said in a statement. "The Leap production rate will nearly double to more than 2,000 engines by 2020."
The State Department is discussing a deal to sell Turkey Raytheon's ( RTN) Patriot missile-defense system after the NATO ally and F-35 partner bought a Russian S-400 system.
U.S. Ambassador Tina Kaidanow, the acting assistant secretary of state for political-military affairs, told reporters during the Farnborough Airshow that government officials were in talks with Turkey over the Raytheon system but didn't say if talks were happening at the air show.
Allies needed to "understand the real serious downside of these acquisitions" like the S-400 and that she hope allies would "look instead to our systems and put interoperability first," she said.
While Kaidanow didn't mention the F-35, the Patriot negotiations come as Congress voted to block sales of Lockheed Martin's ( LMT) F-35 to Turkey over Ankara's decision to buy Russia's S-400.
Pentagon officials worry that Russia could gain access to the F-35's secrets if the fifth-generation fighter is sold to Turkey as Ankara forms closer ties with Russia in the Syria war.
If such intelligence were to leak, it could render the F-35 vulnerable to the Russian air-defense system.
The S-400 represents a unique threat to the U.S. because of its ability to detect incoming aircraft from longer ranges. Its radar can spot a fourth-generation fighter — like Lockheed's F-16 or Boeing's ( BA) F-15 and F/A-18 — before the fighter's radar can pick up the air-defense system.
For now, Lockheed's F-35 and F-22 as well as the Northrop Grumman ( NOC) B-2 bomber are seen as the only aircraft effective against the S-400 due to their stealth capabilities.
Raytheon stock dipped 0.1% to 199.61 on the stock market today. Lockheed stock rose 0.2% at 319.05. Northrop lost 0.4%.
"Turkey has to decide if they are going to be in the NATO alliance and more specifically whether or not they are interested in being on this side of the integrated air defense system as opposed to Russia's," said Tom Karako, a senior fellow and missile defense analyst at CSIS.
He added that Turkey benefits from NATO's air defenses as the U.S. and other allies have deployed Patriot systems to its southern border with Syria.
"They are playing both sides, so we'll see where they come out," Karako said. "They were playing footsie with the Chinese just a couple of years ago on the FT-2000. That ended up falling through."
Frank Rose, former assistant secretary of state for arms control and a current senior fellow at the Brookings Institution, said Turkey's S-400 deal is less about the capabilities of the Russian vs. the U.S. systems, noting the Patriot have been proven in combat while the S-400 hasn't.
Instead, the deal is more Turkish President Recep Tayyip Erdogan "trying to snuggle up to Putin," he said.
"Turkey is a NATO member and there they should want an interoperable system like patriot that can plug into the NATO system," he said. "With the S-400, it's difficult to do it in interoperability and secondly the U.S. isn't going to allow Turkey to plug into NATO system for obvious security reasons."
Meanwhile, Kaidanow said that she doesn't see trade friction affecting defense sales.
"Decisions companies make on a lot of this isn't on short-term trade," she said. Rather they are "dictated by a set of concerns driven by strategic partnerships."
President Trump blasted NATO allies last week over defense spending and has imposed tariffs on Canada and the European Union, among other top trading partners.
Oil stocks were hit after Treasury Secretary Steven Mnuchin said the U.S. will consider issuing waivers on reimposed Iran sanctions, sending crude oil futures sharply lower.
Exxon Mobil ( XOM) fell 1% on the stock market today, but it's still above its 50-day line. Among other oil majors, Chevron ( CVX) dropped 0.85%, ConocoPhillips ( COP) lost 2%, Total ( TOT) 0.6%, and BP ( BP) 1.65%.
Among U.S. shale plays, Marathon Oil ( MRO) tumbled 6.7%, diving below its 50-day line and triggering a sell rule from a short-lived breakout attempt last week. EOG Resources ( EOG) slid 0.9%, still holding within its recent consolidation.
U.S. crude prices sank 4.2% to settle at $68.06 a barrel. Brent crude, the international benchmark, dived 4.6% to end at $71.84 a barrel.
Treasury Secretary Mnuchin said that the U.S. may issue waivers to some countries that need time to wind down their Iranian oil imports.
"We want people to reduce oil purchases to zero, but in certain cases if people can't do that overnight, we'll consider exceptions," Mnuchin told reporters Friday. His comments were embargoed for release on Monday.
The Trump administration wants nations to cut all imports of Iranian oil starting in November, when the U.S. reimposes sanctions vs. Tehran.
The renewed sanctions follow President Trump's decision to withdraw from the 2015 nuclear deal agreed to between Iran, the permanent members of the United Nations Security Council and the European Union.
Mnuchin said he plans to meet with counterparts from developed and developing countries at the G-20 finance ministers' meeting in Buenos Aires on July 19-22.
The sanctions are likely to be a hot topic of discussion at the summit.
Still A Total Recall?
Total was the first oil company to announce that it is pulling out of Iran. The French oil major said it would not be able to continue its South Pars 11 gas development project and will unwind all operations in Iran before Nov. 4 unless it's granted a waiver by the U.S. government. It remains to be seen whether it could be granted a waiver.
A secondary sanction would be a major loss for the company. It said more than 90% of Total's financial operation comes from U.S. banks. In addition, U.S. assets account for over $10 billion of capital employed.
Total assured investors that leaving Iran wouldn't impact its production-growth targets.
Boeing ( BA) European rival Airbus ( EADSY) announced $9.2 billion in orders from Asian carriers in the first major order announcement of the Farnborough Airshow on Monday and is reportedly near more massive deals with low-cost carriers in the region. Both Airbus stock and Boeing stock rose Monday morning as the aerospace giants announced orders.
Taiwan's StarLux Airlines announced that it would buy 12 A350-1000 aircraft and five A350-900s in a deal valued at $6 billion at list prices. But airlines typically get significant discounts for large orders.
China's Sichuan Airlines is buying 10 A350-900s in an order valued at $3.2 billion.
Airbus reportedly has $29 billion in total deals with Asian carriers in the works, sources told Bloomberg, including a $23 billion order for AirAsia. The report said that part of the AirAsia deal could be announced at the air show.
Airbus U.S.-listed shares closed down less than 0.1% at 31.32 on the stock market today. Airbus stock is still in range from a 30.68 buy point. Boeing stock climbed 1.5% to 356.10. The Dow Jones component reclaimed its 50-day line on Friday and is moving toward a 374.58 flat-base buy point.
Farnborough could also be huge for Airbus' newly named A220, formerly the Bombardier ( BDRBF) C Series.
JetBlue ( JBLU) founder David Neeleman and a group of investors are reportedly interested in buying 60 A220 aircraft, according to Bloomberg.
The order wouldn't include JetBlue and could be another sign that Neeleman is seriously mulling another low-cost carrier in the U.S. The deal would also give a huge boost to the once-struggling line of narrow-body jets.
Last week, JetBlue announced an order for 60 A220-300s valued at $60 billion at current list prices.
Airbus took a majority stake in Bombardier's C Series business in October, in the hopes that the European aerospace giant would use its global reach to improve slow sales.
Key Farnborough Airshow Orders For Boeing, Airbus
Boeing and Jet Airways also finalized an $8.8 billion order for 75 737 Max jets that the Indian carrier disclosed last month.
Goshawk Aviation Limited, an Irish lessor, announced an order for 20 Boeing 737 Max airplanes valued at $2.3 billion at list prices.
Qatar Airways finalized an order with Boeing for five 777 freighters. The deal is valued at $1.7 billion at list prices and was announced as a commitment in April, according to Boeing.
United Airlines ( UAL) announced an order for four more 787-9 airplanes, valued at $1.1 billion at list prices. The deal had previously been listed as unidentified on Boeing's orders and deliveries website. United Air also will buy 25 Embraer ( ERJ) E-175 jets worth $1.2 billion. That comes on the heels of the Boeing-Embraer deal, in which Boeing will take an 80% stake in the Brazilian aerospace firm's commercial jet business. Embraer stock climbed 2.6% intraday.
Romanian Air Transport, Tarom, announced an order for five 737 Max 8 airplanes, valued at $586 million at list prices. The deal was previously listed as unidentified.
Jackson Square Aviation announced an order for 30 737 Max airplanes valued at $3.5 billion at list prices. The order had been previously listed as unidentified.
DHL announced an order for 14 Boeing 777 freighters and purchase rights for seven additional freighters, valued at $4.7 billion at list prices. Boeing said a portion of the order was previously unidentified on its orders-and-deliveries website.
Brazilian low-cost carrier GOL Airlines announced it would order 15 more 737 Max 8 airplanes and would convert 30 current 737 Max airplane orders into 737 Max 10 orders.
The Pentagon and Lockheed Martin ( LMT) tentatively agreed on the largest F-35 production contract to date, delivering a $13 billion boost to the defense contractor.
The "handshake deal" reached on Sunday was for the 11th F-35 production lot, which includes 141 of the fifth-generation fighters. That's up from 90 aircraft under the 10th lot and 57 under the ninth. Lockheed expects to hit full-rate production of 160 jets per year by 2023.
Under the latest deal, the price of the Air Force's F-35A model fell 6% from the last Pentagon order in February 2017, to $89 million per plane, according to Reuters. The Pentagon is aiming to get the cost per jet of the conventional takeoff and landing model to $80 million by 2020.
Lockheed shares rose 0.2% to 319.05 on the stock market today. Northrop Grumman ( NOC), a major F-35 subcontractor, was down 0.4%. United Technologies ( UTX), which makes the F-35's engines, slid 0.4% as well.
The F-35 is key to Lockheed's growth and accounts for 25% of total revenue. During the first-quarter earnings conference call in April, Lockheed CFO Bruce Tanner said the F-35 program's revenue will grow at a faster rate than the corporation's overall top line throughout the end of the decade and possibly beyond that.
But even as the procurement costs are going down, defense officials are pressuring Lockheed to find ways to lower the expected life-cycle expenses of the fleet, which will cost about $1.1 trillion to operate and maintain through 2077, Bloomberg reported earlier this year.
Meanwhile, the F-35 is getting more firepower. Raytheon's ( RTN) StormBreaker bomb is in operational testing, the company announced at the Farnborough Airshow Monday.
The small-diameter bomb for use in adverse weather will be fielded on Boeing ( BA) F-15s before being integrated in into the F-35 by 2022.
Raytheon shares rose 0.4% to 200.48. Boeing jumped 1.2% to 355.03.
Apple's ( AAPL) fast-growing services business could account for nearly a third of revenue and over half of profit for the company by 2025, a Wall Street analyst said Monday.
RBC Capital Markets analyst Amit Daryanani says Apple's services could generate about 30% of revenue in eight years. That translates to 50%-plus profit.
Its services today include the App Store, AppleCare, iCloud, iTunes, Apple Music, Apple Pay and Texture digital magazines. Apple reportedly is planning to offer a subscription video-on-demand service next year. Apple's services business accounted for 15% of total company sales in the March quarter.
"Services is on track to become a roughly $50 billion business by 2020, and we think Apple eventually transforms from a device to a services company," he said. "By 2025, we could see Apple looking at iPhones as merely a means of expanding the installed base with the real monetization being done via services."
Apple Services Business 10 Years Old
Apple's services business launched 10 years ago with the App Store. Since then, a generation of young consumers has grown up using the iPhone and other iOS devices, Daryanani said.
"In 2025, for people who grew up with iOS devices, Apple could have data on every app they ever installed, every song they listened to, every flight they took, every restaurant they visited, every book they read, everything they purchased, (as well as) their academic record, their health statistics, their family background and potentially much more," he said. "Now imagine the power of AI trained on this data."
Apple could use artificial intelligence to leverage what it knows about its users to provide "personalized and highly curated services," he said.
Daryanani reiterated his outperform rating on Apple stock with a price target of 210. If Apple starts getting valued like an internet services company it could receive a higher valuation, he said. That would suggest a stock price of about 225, he said.
Arconic ( ARNC) signed its largest supply contract ever with longtime partner Boeing ( BA), after news that the performance materials company is a takeover target.
Arconic will supply aluminum sheet and plate for all plane models produced by Boeing Commercial Airplanes, which is ramping up 737 production. Boeing also awarded Arconic new business for the supply of structural plate tied to carbon-fiber platforms such as the 787 and 777X.
Financial terms weren't disclosed.
The news follows a Wall Street Journal report Friday that Arconic has drawn takeover interest from private-equity firms, including Apollo Global Management. With typical premiums, the unconfirmed deal could mean the Alcoa ( AA) spinoff clears $10 billion in a sale.
Shares of Arconic surged 10.5% to 19.20 on the stock market today. They have plunged in 2018 amid leadership changes, threats of steel and aluminum tariffs, higher commodity prices and last year's Grenfell Tower fire fatalities in London. Boeing climbed 1.5%, rallying further above the 50-day moving average, and Alcoa added 0.3%.
The new Arconic-Boeing agreement expands a partnership on "wing skins" on airplanes, fuselage skins and wing ribs.
The deal harnesses Arconic's new Very Thick Plate Stretcher (VTPS) solutions, which can stretch the thickest aluminum plate in the world for aerospace applications, including composite wings.
"One of the challenges composite wing makers face as the wings get larger is maintaining their structural strength and stiffness," the company said. "Aluminum plate from Arconic's stretcher enables aircraft manufacturers to address that issue. As a result, demand for thick aluminum plate is growing, particularly as larger composite wings, made with monolithic thick plate wing ribs, increases."
And in a separate, third announcement, it touted the commercial availability of an advanced titanium alloy for "higher temperature applications in next-generation aero engines and adjacent structures."
Arconic's aerospace business, its largest and fastest-growing, generated revenue of more than $5 billion in 2017.
Bank of America ( BAC) on Monday reported second-quarter earnings that topped estimates, helped by gains in its consumer banking and Wall Street trading arms.
Estimates: Earnings per share of 57 cents, up 24%, as revenue slips 2% to $22.472 billion.
Results: Bank of America earnings climbed to 64 cents a share. Revenue dipped to $22.6 billion. Fixed income, currencies and commodities revenue rose 2% to $2.3 billion, and equities revenue jumped 17% to $1.3 billion.
Consumer banking revenue climbed 8% to $9.2 billion as loans grew 7% to $281 billion and deposits were up 5% at $688 billion..
Stock: Shares rose 4.2% to 29.78 on the stock market today, nearing their converging 50- and 200-day averages.
JPMorgan ( JPM) climbed 4%. Citigroup ( C) rose 3.7%. Wells Fargo ( WFC) was up 2.9%. Those three banks reported second-quarter earnings on Friday. Shares of all three banks, along with BofA, finished lower Friday.
Goldman Sachs ( GS) picked up 2.2%. Morgan Stanley ( MS) gained 1.7%. Those investment banks report this week.
JPMorgan on Friday said President Trump's pugilism on trade had not significantly affected loan growth or business decisions. Management also said it could take time before the Trump tax cuts turned into greater business borrowing.
And JPMorgan said it saw no signs of a coming recession, as some investors do, in the flattening of the yield curve, which measures the difference on rates of short-term and long-term government debt.
Streaming video platform Roku ( ROKU) is adding wireless TV speakers to its hardware lineup, which today consists of set-top boxes and dongles for accessing internet television services.
The Los Gatos, Calif.-based company announced the new product on Monday. The Roku speakers will sell for $199.99 when they go on sale in late October. But Roku is offering discounts for customers who preorder them, starting at $149.99.
Roku saw a need for premium audio speakers, said Chas Smith, who oversees the company's hardware division. As TVs have gotten thinner, their built-in speakers have gotten worse, he said.
However, the new Roku speakers work only with TVs running the company's smart TV operating system. Those sets are sold under such brands as TCL, RCA, Sharp, Hitachi and Hisense. Roku TVs accounted for one out of every four smart TVs sold in the U.S. in the first quarter.
Roku decided to do a pair of wireless speakers instead of a soundbar because two speakers offer better stereo sound quality, Smith said.
Enhances Entertainment Experience
"Adding great audio dramatically enhances the way people experience their favorite entertainment," Roku Chief Executive Anthony Wood said in a news release. "With Roku TV Wireless Speakers, we're able to offer our customers a simple and affordable way to further immerse themselves into the TV, movies and music they love, while providing them with a better whole home entertainment experience."
The Roku speakers come with two remote controls. They include a handheld remote and a tabletop remote, both with voice controls.
Roku's streaming video platform is a popular way for TV viewers to access content from such services as Netflix ( NFLX), Amazon.com ( AMZN), Hulu and Alphabet's ( GOOGL) YouTube.
The company's new speakers likely will see limited uptake because they work only with Roku TVs, William Blair analyst Ralph Schackart said in a report. They do not work with Roku players and sticks or other smart TVs.
"We view this product as a way to further drive engagement between Roku and its existing account holders, rather than a tool to acquire new customers and accounts," he said.
Shares in Arista Networks ( ANET) and Cisco Systems ( CSCO) rebounded Monday amid recent speculation that Amazon.com ( AMZN) may dive into their networking gear market. One analyst said Amazon may seek a cloud computing partner rather than a rivalry with suppliers.
A report that Amazon's cloud computing unit could sell home-grown data switches to business customers sent down shares in Cisco, Arista and Juniper on Friday. On Monday, Cisco stock bounced back 1.7% to close at 42.50 on the stock market today. Arista climbed 1.6% to 270.84. Juniper Networks ( JNPR) was unchanged at 27.86.
One possibility is that the e-commerce behemoth could be interested in selling networking gear only to its cloud customers rather than companies generally, analysts say. Amazon Web Services is the largest provider of cloud services. Its customers rent computing resources via internet connections.
"We believe AWS isn't a direct competitive threat to the incumbent networking vendors, but there could be a broader hybrid cloud strategy at play," UBS analyst Tejas Venkatesh said in a report to clients Monday. "Every cloud vendor is partnering to address hybrid cloud: Google with Cisco and Nutanix ( NTNX), Microsoft Azure with Cisco, Hewlett Packard Enterprise ( HPE) and others. And, AWS with Red Hat ( RHT) and VMware ( VMW)."
AWS as well as Facebook ( FB), Microsoft ( MSFT) and Alphabet's ( GOOGL) Google develop their own computing hardware for high-performance data centers that provide cloud services. The data centers are packed with computer servers.
One goal of the cloud companies is creating hybrid infrastructure that links private corporate data centers and shared, web-based facilities. To do that, Google and Microsoft have partnered with tech hardware and software companies.
Amazon Looking To Partner?
Amazon could be next, says Venkatesh. He says Amazon's networking gear uses Cumulus or internal software. Startup Cumulus is a rival of Arista. Amazon lowers costs by running its software on "white box" hardware provided by Asian suppliers, he says.
If Amazon jumps into the networking market, Juniper Networks has the most to worry about. Meanwhile, two analysts see Cisco and Arista as better positioned near-term.
"Ultimately, we believe Juniper is most exposed to this development, while Cisco and Arista Networks are in better position to compete given their solid switching products, strong customer following and installed bases," Credit Suisse analyst Sami Badri said in his note to clients.
Juniper Most At Risk?
Piper Jaffray analyst James Fish agrees.
"The most at-risk vendor in our view is Juniper due to its exposure to Amazon as a customer, the growing amount of switching revenue, and the differentiation of its products still remaining on hardware over software," he said in a report. "Cisco is most at risk longer-term, but the ongoing transition likely limits this risk."
Arista Networks reports earnings on Aug. 2. Arista ranks No. 26 in the IBD 50 roster of fast-growing companies. Arista stock has been consolidating with a technical buy point of 311.77.
Cisco stock has dipped below its 50-day-moving average, a bearish sign. Amazon rose 0.8% to 1,827.67. Amazon stock has surged nearly 80% from a year ago.
Telecom isn't a high earnings- or revenue-growth sector, even though wireless and broadband services are "must-haves" for U.S. consumers. Stocks often run up on merger and acquisition speculation, while tougher regulation can be a worry.
X Big cap telecom stocks such as AT&T ( T) and Verizon Communications ( VZ) have attractive dividends. And, telecom stocks are sometimes viewed as a safe haven when stock markets turn volatile.
T-Mobile US ( TMUS) has grabbed subscriber and revenue market share amid speculation it'll be part of wireless industry consolidation. Comcast ( CMCSA)'s institutional ownership has been rising as it delivers growth from broadband services and media arm NBCUniversal.
Bookmark this page to stay on top of companies such as Charter Communications ( CHTR), Sprint ( S), Dish Network ( DISH), and CenturyLink ( CTL). Also note that telecom developments often impact media stocks such as Walt Disney ( DIS), Discovery Communications ( DISCA) and 21st Century Fox Entertainment ( FOX).