S&P 500 and other major indexes rose slightly through Thursday, etching new record highs. Wal-Mart soared as investors increasingly see the discount giant giving Amazon (AMZN) a run for its money while other retailers falter. JPMorgan Chase (JPM), CitigroupC but charge-offs other issues stocks back. Delta (DAL) offered solid Q3 earnings and guidance, while other carriers gave some upbeat Q3 figures. AT&T (T) crashed as reported more pay-TV losses, signaling woes for media companies generally.
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Stocks Trade At Record Highs
The S&P 500 index, Nasdaq 100 were just above break-even through Thursday, with the Dow industrials up modestly, with all three indexes continuing to hit record highs. Wal-Mart boomed even as retailers continued to tumble on warnings, analyst downgrades and Amazon speculation. Nvidia made yet another advance on its new A.I. moves into autonomous vehicles. Delta Air Lines kicked off airline earnings as the big carriers seem to be regaining altitude.
Wal-Mart Soars As Investors Hail Online Sales
Wal-Mart (WMT) announced a $20 billion buyback program and said it sees fiscal 2019 net sales rising 3% as e-commerce sales soar 40%. For the current fiscal year, Wal-Mart sees earnings per share of $4.30-$4.40. The discount giant sees 5% EPS growth in fiscal 2019. Wal-Mart also plans to add 1,000 online grocery locations in current U.S. stores as it looks to take on Amazon (AMZN) and Target (TGT). During its investor day call, Wal-Mart signaled that it wouldn’t hike wages like Target.
Wal-Mart shares surged 9% so far this week, blasting out past a buy point even as many retail stocks and groups struggled.
Wal-Mart Breaks Out On Buyback, Bullish Online Sales Forecast
Banking Giants Top Q3 Views, Raise Card Reserves
JPMorgan Chase (JPM), Bank of America (BAC) and Citigroup (C) reported better-than-expected earnings and revenue despite ongoing trading woes on Wall Street. JPMorgan said it sees trading remaining weak in the fourth quarter. JPMorgan, Bank of America and Citigroup all raised reserves for credit cards, which have seen higher delinquencies in recent months. Wells Fargo (WFC) reported mixed results, with revenue and net interest margin falling short. Wells Fargo tumbled Friday as shares of the other big banks pulled back somewhat during the week.
AT&T Woes Suggest 1 Million Cut The Cord In Q3
Cable TV companies and media stocks sold off on renewed worries that pay-TV cord-cutting is accelerating after AT&T preannounced Q3 financial numbers, including the loss of 90,000 video subscribers. AT&T actually lost 390,000 pay-TV customers, but added 300,000 internet video subscribers, partially offsetting the loss. UBS estimated that the pay-TV industry will lose about 1 million subscribers in the third quarter compared with 325,000 in the same quarter last year. It’s a worry for media companies because they garner per-subscriber programming fees. Shares in AT&T fell below the “collar” in its proposed acquisition of media giant Time Warner (TWX). If AT&T stock is below 37.41 a share when the deal closes, Time Warner shareholders stand to get more AT&T stock for each share of their company that they now hold.
Cable, internet and content giant Comcast (CMCSA) lost 3.9% on Thursday to a nine-month low. Viacom (VIAB) skidded 2.5% to an eight-year low.
AT&T Fallout: Pay TV Industry Could Lose 1 Million Subscribers
Clouds Parting For Big Three Airlines?
Delta Air Lines (DAL) kicked off third-quarter earnings for the industry group, beating estimates and giving solid Q4 unit revenue guidance. Earlier in the week, American Airlines (AAL) and United Airlines (UAL) raised their outlooks for Q3 unit revenue. In total, the figures from the big three indicated to analysts that airfare pricing was improving, following concerns in recent months about the impact of a series of hurricanes and the fare war between United and Spirit Airlines (SAVE). Southwest (LUV) also said it would begin service to Hawaii within the next two years, likely meaning more competition for Hawaiian Airlines parent Hawaiian Holdings (HA).
Delta Air Lines Sees Turnaround In Crucial, Highly Competitive Market
Say Aloha To Another Airfare Price War
Nvidia Jumps On Self-Driving Car Advances
Graphics-chip maker Nvidia (NVDA) touted its expertise in making the brains for self-driving vehicles at a conference in Germany. It unveiled an artificial intelligence computer for fully autonomous vehicles, which is already being used by more than 25 companies to develop driverless taxis. It also announced that German logistics giant Deutsche Post DHL Group is deploying a test fleet of self-driving delivery trucks next year using Nvidia technology. Nvidia stock climbed 5.4% through Thursday, hitting a new high.
Crude Holds Key Level As Supplies Fall
Crude futures remained above $50 a barrel as U.S. stockpiles fell for a third straight week. Inventories fell by 2.7 million barrels, according to the Energy Information Administration, far more than the 400,000 barrel decline analysts expected,. Domestic production fell to 9.48 million barrels per day from 9.56 million in the week prior. The International Energy Agency predicted OPEC will continue its supply cut after the current deal expires in March. But the agency said that the cartel’s output rose by 100,000 bpd last month. The IEA kept its demand forecast unchanged and still sees 2017 demand growth of 1.6% or 1.6 million barrels per day this year and demand growth of 1.4% or 1.4 million bpd in 2018. Saudi Arabia said it would export 7% less crude by sea next month.
U.S. Oil Inventories, Production Drop; IEA Sees More OPEC Cuts
Amazon Continues To Cast Shadow Over Drug Dispensers
Express Scripts (ESRX) announced that it would buy eviCore healthcare, a privately held medical benefit management services company, for $3.6 billion as a way for the pharmacy benefits manager to diversify amid reports that Amazon (AMZN) is reportedly close to entering online pharmaceutical sales. Express Scripts tumbled 7.5% so far this week after losing 2.6% on Oct. 6 on the Amazon speculation. CVS Health (CVS), which is a drug store operator and PBM, sank 4.1%. Walgreens Boots Alliance (WBA) skidded 5.7%.
Domino’s Pizza Falls Despite Earnings Beat
Earnings hit $1.27 a share with revenue rising to $643.6 million, both better than expected. Same-store sales rose 8.4%, also above views. But shares fell 3.9% on Thursday. EPS beat estimates thanks to an accounting change. And comps, though above Wall Street consensus, was far below the 13.8% gain of a year earlier.
Domino’s Q3 Earnings, Helped By Accounting Change, Flop On Wall St.
Honeywell To Spin Off Noncore Assets
Honeywell confirmed that it will spin off its home and ADI global distribution business and transportation systems into two companies worth a combined $7.5 billion. That confirms Monday reports of a noncore asset spinoff. Honeywell will keep its aerospace holdings, despite calls by activist investor Third Point to divest it. Honeywell shares edged lower through Thursday.
News In Brief
Pfizer (PFE) said Tuesday it’s considering selling or spinning off its over-the-counter business which includes Advil, Centrum and personal care items like ChapStick and Anbesol, a pain-relieving gel for toothaches. A decision isn’t expected until 2018.
Women’s apparel chain J. Jill (JILL) issued a big profit warning sending shares of the recent IPO crashing 51% Thursday. Retailers sold off that day, with J.C. Penney (JCP) hitting an all-time low and Ulta Beauty (ULTA) and Williams-Sonoma (WSM) rocked by analyst downgrades.
Procter & Gamble (PG) narrowly won a proxy fight vs. activist investor Nelson Peltz, who had been fighting for a board seat to press for a strategic shift to more-innovative brands and fewer corporate divisions. Trian Fund had taken a $3.5 billion stake in P&G earlier this year.
AnaptysBio (ANAB) skyrocketed 101% to a record high on Tuesday after its eczema drug appeared to outperform Regeneron Pharmaceuticals’ and Sanofi’s potential blockbuster eczema drug, Dupixent, in a Phase 2 trial. At day 15, nine of 12 patients with moderate-to-severe eczema saw a 50% improvement in their symptoms.
Chip-equipment maker Ichor Holdings (ICHR) said it has entered into a “substantial agreement to produce liquid delivery systems for one of its key customers.” It did not identify the customer. Ichor stock surged nearly 19% through Thursday to an all-time high.
Apple (AAPL) inked its first major internet television deal by signing acclaimed director and producer Steven Spielberg to make new episodes of his 1980s anthology show “Amazing Stories.”
Barracuda Networks (CUDA) sold off after posting in-line fiscal Q2 earnings as bears pounced on a lower customer renewal rate on subscriptions as well as the security software maker’s reiteration of fiscal 2018 revenue guidance.