Stock market live updates: Dow up 70, airlines & chips rebound, Cramer's take - CNBC

Visitors wearing masks walk past Shanghai Disney Resort, that will be closed during the Chinese Lunar New Year holiday following the outbreak of a new coronavirus, in Shanghai, China January 24, 2020.

Aly Song | Reuters

This is a live blog. Check back for updates.

9:51 am: Stocks off their highs

Stocks couldn't follow through on the strong open. News that the CDC was advising Americans avoid travel to China is not helping the market's attempted rebound. 3M down nearly 5% is also holding back the market. The Dow was up 119 points at its high and is up 95 points now. On the positive side, market breadth is healthy with advancers outpacing decliners on the NYSE by nearly 3-to-1.  —Melloy

9:47 am: JPMorgan boosts Q4 GDP to 1.7% after durable goods report

JP Morgan economists said they boosted their forecast for fourth quarter GDP growth to 1.7% from 1.6%, after an upside surprise in inventories in the December durable goods report.Durable goods was a mixed bag. Headline orders rose 2.4% and were better than expected. But Boeing took a bite out of orders, with nondefense aircraft down 75% in December, at the lowest level since 2009. But the government made up for it with a surge in defense aircraft orders, which were up almost 170%.The government releases Q4 GDP data on Thursday. -Domm

9:33 am: Dow climbs 100 points at the open

The Dow rose 100 points at the open, while the S&P 500 and Nasdaq Composite were also higher, rebounding from a big sell-off Monday. However, 3M and Harley-Davidson fell 2.6% and 4.1%, respectively, on disappointing quarterly results, capping the gains in the broad market. The Dow as last up about 70 points. —Li

9:20 am: Monday's sell-off did not have unusual volume

The Dow plunged more than 450 points Monday on heightened coronavirus fears, suffering its biggest one-day fall since October and wiping out the average's gains for the year. However, the pullback was not on unusually heavy volume, perhaps suggesting less conviction, Matt Maley, chief market strategist at Miller Tabak, pointed out. "The market gapped lower on the opening, so it was not forced lower by selling," said Maley. He noted the trading volumes were slightly more than 3 billion shares Monday, which was not a big jump from an average Monday. —Li

9:06 am: Harley-Davidson falls on earnings

Shares of the motorcycle company fell more than 6% in premarket trading on Tuesday after a big miss on revenue for its fourth quarter earnings. Harley-Davidson reported revenue of $874.1 million, falling short of estimates of $920.1 million, according to Refinitiv. The company also issued weaker-than-expected revenue guidance for the new year. Harley-Davidson expects to post sales between $4.53 billion and $4.66 billion in 2020, while analysts forecast annual revenue of $4.65 billion. 2020 is a "pivotal year" in the transformation of the company as it tries to "build the next generation of Harley-Davidson riders," the company said. Earnings per share came in a 20 cents, topping estimates of 9 cents per share. -Fitzgerald

8:50 am: China ETFs in correction territory

Some of the largest funds that track the performance of Chinese stocks closed in correction territory on Monday as fears over the impact the coronavirus could have on business grew. Major exchange-traded funds including the iShares China Large-Cap ETF and the iShares MSCI China ETF closed down 11.5% and 10% from their respective 52-week highs on Monday. The MSCI China fund's dive into correction comes just days after it hit a 52-week high on Jan. 13. — Franck

8:32 am: 3M drops on disappointing earnings, new round of job cuts

Shares of 3M are down more than 2% in the premarket after the manufacturing giant posted weaker-than-forecast results for the previous quarter. The company posted a profit of $1.95 per share on revenue of $8.11 billion, both of which are below analyst expectations. Investors also sold the stock after the company announced a new round of job cuts. Shares of 3M are the second-worst performers in the Dow over the past 12 months. They are down more than 9% in that time. —Imbert

8:30 am: BorgWarner acquiring Delphi Technologies

Shares of auto supplier Delphi Technologies jumped more than 15% in Tuesday's premarket trading after BorgWarner announced that it will acquire the company in an all-stock transaction valued at $3.3 billion. A press release said that the acquisition will strengthen BorgWarner's "power electronics products, capabilities and scale." Delphi Technologies was one of two companies spun out of Delphi Automotive in 2017. The other was Aptiv, which focuses on tech systems in cars. — Stevens

8:28 am: United Technologies shares slip in face of climbing 737 Max costs

United Technologies delivered fourth-quarter earnings of $1.94 a share, better than the $1.84 analysts surveyed by FactSet expected. But shares slipped 1.3% in premarket trading as United reported its aerospace division would face "an estimated headwind of approximately $550 to $600 million resulting from the 737 MAX" in 2020. The industrials giant also told shareholders it would forecast year ahead earnings and cash flow once its acquisition of Raytheon is complete. —Sheetz

8:26 am: Suppliers warn Apple coronavirus could impact iPhone production

Despite Apple's plans to ramp up iPhone production in the first half of 2020, its suppliers are warning that the rapid pace of production could be derailed by the outbreak of the coronavirus in China's Hubei Province, the Nikkei Asian Review reported Tuesday.Apple has asked its Asian suppliers to make up to 80 million iPhones in the first half comprised of 65 million of its older iPhones and up to 15 million of a less-expensive model it plans to unveil in March, according to the report. However, the mass production that's scheduled to begin in late February might be delayed due to the virus outbreak, the Nikkei reported.Apple is set to report first-quarter earnings Tuesday afternoon after the closing bell. Shares were up 1.1% in premarket trading. —Franck

8:19 am: Portion of yield curve briefly inverts

The 3-month Treasury bill yield was briefly higher than the 10-year yield in the early morning hours New York time.
The coronavirus has set off a stampede into 10-year Treasurys as investors seek a safe haven, and the yield touched a low of 1.57%. It was at 1.63% as stock futures rebound Tuesday morning from Monday's selling. The inversion of the yield curve is sometimes an ominous sign of a coming recession, but the yield curve had inverted last year and steepened again as investors were cheered by improved trade relations between the U.S. and China. —Domm

8:17 am: Chip stocks rally after Huawei gets limited access to UK's 5G networks

8:12 am: Coronavirus-related names rebound with the broad market

Travel companies affected by the deadly coronavirus are bouncing back along with the broad market after a deep sell-off since last week. Shares of Wynn Resorts, one of the hotel and casino stocks that took the hardest hit because of its Macau exposure, are up nearly 2% in premarket. Airlines Delta and United Airlines both climbed almost 1%, while Carnival Cruise Lines also rebounded 1.2%. —Li

8:10 am: Stock futures rise as Wall Street tries to rebound from worst day in more than 3 months

Wall Street is trying to rebound from its worst session since October, with U.S. stock futures trading higher. Dow Jones Industrial Average futures are up more than 140 points, while S&P 500 and Nasdaq 100 futures pointed to solid opening gains. On Monday, the Dow dropped more than 450 points and wiped out its gains for the year as coronavirus fears deepened. But while futures pointed to a decent start, not everyone is ready to look past the coronavirus fallout. CNBC's Jim Cramer said in a tweet: "I wouldn't trust the market until the future are down, perhaps dramatically to flush out those who think the virus is unstoppable." —Imbert

—With reporting from Tom Franck, Michael Sheetz, Pippa Stevens, Maggie Fitzgerald, John Melloy.

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2020-01-28 13:15:00Z
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Services in spotlight after Apple stock market value hits $1.4 trillion - Reuters

SAN FRANCISCO (Reuters) - When Apple Inc (AAPL.O) posts quarterly results on Tuesday, investors will be looking for fresh evidence the iPhone maker should be treated as a producer of high-margin, subscription services after its stock market value touched $1.4 trillion and its earnings multiple trades at decade highs.

FILE PHOTO: The Apple Inc. logo is seen hanging at the entrance to the Apple store on 5th Avenue in Manhattan, New York, U.S., October 16, 2019. REUTERS/Mike Segar/File Photo

The Cupertino, California corporation’s stock has doubled over the past year, even as iPhone sales contract along with the rest of the global smartphone market. Fueling its stellar run has been Chief Executive Tim Cook’s push to turn Apple’s loyal client base into a source of steady services revenue, including streaming video and a credit card launched last year with Goldman Sachs (GS.N).

Also supporting Apple’s stock is excitement around an eventual pickup in iPhone demand with the rollout of 5G wireless technology, and low interest rates that have broadly helped Wall Street.

Shares of Apple fell 2.9% on Monday from record highs as fears about the economic fallout of the coronavirus outbreak in China hit Wall Street. Analysts on Apple’s quarterly earnings call after the bell on Tuesday will listen for comments concerning the impact on its manufacturing operations in China.Apple’s market capitalization briefly exceeded $1.4 trillion last Wednesday for the first time, but it has yet to end a session at that level. Some investors worry that Apple’s rally, and surging earnings multiple, may have become overextended.

“The run-up in the stock is a concern, and I wouldn’t be surprised if we see a bit of a pullback in the near future,” said People’s United Advisors chief equity strategist John Conlon, who added that Apple’s services business has become his main reason for owning stock.

Following its recent rally, Apple’s stock is trading at the equivalent of 23 times expected earnings, its highest multiple since 2010, according to Refinitiv. Apple’s average PE over the past decade was about 14, lagging other high-growth companies with recurring revenue and reflecting its singular dependence on iPhones sales and reliance on persuading consumers to upgrade their phones year after year. 

Salesforce.com (CRM.N) and Netflix (NFLX.O), which rely on recurring revenue, are trading at over 55 times expected earnings. Tech hardware sellers Intel (INTC.O) and Cisco Systems (CSCO.O) are at about 14 times expected earnings.

Apple is on track to reach a goal to double its 2016 services revenue to $48.7 billion by the end of fiscal 2020 as it focuses on selling high-margin subscriptions to its user base. Many investors envision an increasingly rosy future for its earnings, a trend reflected in its soaring earnings multiple.

Adding to existing services including cloud storage, the App Store and music, Apple last year launched an ambitious video streaming service, along with its credit card, a subscription news app and a videogame service.

Apple has also increased the emphasis on its AppleCare, its extended warranty program. For example, the iPhone’s “settings” now includes reminders encouraging people to buy or renew their AppleCare plans.

In the September quarter, Apple said its services revenue hit $12.51 billion, topping analysts expectations of $12.15 billion. Services accounted for 20% of total revenue in that quarter, up from 17% in the same quarter the year before.

Apple also gave cost of sales data showing gross margins for its services segment rose to 64% from a 61% a year earlier. That is far more generous than Apple’s overall gross margin of around 38% in recent years.

Still, for a business segment getting the most attention from Wall Street, Apple provides limited details. Apple’s quarterly reports break out sales of iPhones, Macs and iPads, but a breakdown of results from products falling within the services category so far has not been released.

Apple’s recent strong stock performance has been perpetuated by fund managers buying its shares in order to avoid underperforming their benchmarks, a trend that could reverse when the recent rally ends, Cowen analyst Krish Sankar wrote in a client note last week.

For the fiscal first quarter, which ended in December, analysts on average expect services revenue to jump 19.7% to $13.0 billion, according to Refinitiv.

Overall quarterly revenue is expected to rise 5.0% to $88.5 billion, with adjusted net income inching up 1.5% to $20.3 billion and earnings per share of $4.55.

Reporting by Noel Randewich, additional reporting by Stephen Nellis; Editing by Tom Brown

Our Standards:The Thomson Reuters Trust Principles.

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2020-01-28 12:04:00Z
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Airbus agrees to settle corruption probes with U.S., France, UK - Reuters

PARIS (Reuters) - Airbus (AIR.PA) has agreed in principle to a settlement with French, British and U.S. authorities over an investigation into allegations of bribery and corruption, it said on Tuesday.

The European planemaker has been investigated by French and British authorities for suspected corruption over jet sales dating back over a decade. It has also faced U.S. investigations over suspected violations of export controls.

Airbus, which dominates with U.S. rival Boeing (BA.N) the commercial airliner market, said it could not comment on precise details regarding its talks with authorities, including how much it expected to pay out in the settlements. Some press reports suggested a figure of around 3 billion euros ($3.3 billion).

Nevertheless, Airbus shares rose, as analysts and traders welcomed the fact that Airbus was managing to draw a line under the affair. The stock was up 2.3% in early trading.

“Airbus confirms that it has reached agreement in principle with the French Parquet National Financier (PNF), the U.K. Serious Fraud Office (SFO) and the U.S. authorities,” the Franco-German company said in a statement.

“These agreements are made in the context of investigations into allegations of bribery and corruption as well as compliance with the U.S. International Traffic in Arms Regulations (“ITAR”). They remain subject to approval by French and UK courts and the U.S. court and regulator,” it said.

Analysts at brokerage Jefferies welcomed the settlement, although they wrote in a note to clients that the reported cost of 3 billion euros was “toward the upper end of what we thought probable.”

A traders’ note from Bank of America (BofA) said the settlement removed a negative “overhang” on the stock.

Airbus had already fired more than 100 people over ethics and compliance issues as a result of its own probe into the corruption allegations.

FILE PHOTO: An Airbus A350 takes off at the aircraft builder's headquarters in Colomiers near Toulouse, France, September 27, 2019. REUTERS/Regis Duvignau

The investigations by British and French authorities began after Airbus drew the attention of regulators to inaccurate declarations it had made to Britain’s export credit finance agency over payments to sales agents. The SFO launched its probe in August 2016, followed seven months later by the PNF.

At the center of the case was a decades-old system of third-party agents or intermediaries run from a now-disbanded headquarters unit which at its height involved some 250 people across parts of the world and several hundreds of millions of euros of payments a year, sources familiar with the matter have said.

A German probe into Airbus for potential misuse of client documents is ongoing.

Reporting by Sudip Kar-Gupta; Editing by Jason Neely and Mark Potter

Our Standards:The Thomson Reuters Trust Principles.

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2020-01-28 06:51:00Z
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5 things to know before the stock market opens Monday - CNBC

1. Dow set to open over 400 points lower on coronavirus concerns

Traders work on the floor of the New York Stock Exchange (NYSE) on January 21, 2020 in New York City.

Spencer Platt | Getty Images

The Dow Jones Industrial Average is set to sink more than 400 points at Wall Street's open on Monday. U.S. stock futures were under severe pressure, following stock markets around the world lower, as China's coronavirus outbreak widens. On Friday, stocks had their worst day of 2020, which had gotten off to a roaring start after last year's near 29% gain for the S&P 500, the best annual performance for the index since 2013. Heading into Monday's trading, the Dow was on a four-session losing streak. Perceived safer investments such as bonds and gold were higher. Bond prices move inversely to yields, which were lower.

2. Cases of coronavirus in China soar with death toll at 81

A pedestrian walks in front of an electric quotation board displaying share prices of world bourses, including the Tokyo Stock Exchange (top C), along a street in Tokyo on January 27, 2020.

KAZUHIRO NOGI | AFP via Getty Images

Chinese health officials are reporting more than 2,800 confirmed cases of the fast-spreading coronavirus in China and 81 deaths. It was first identified in the city of Wuhan in Hubei province last month. Johnson & Johnson's chief scientific officer, Dr. Paul Stoffels, told CNBC on Monday that he believes the drugmaker can create a vaccine in the coming months but it may not get to market for a year. Several companies, including Walt Disney with its Shanghai Disney, are suspending operations until further notice during the normally festive weeklong Lunar New Year holiday to prevent the outbreak from spreading. Starbucks and McDonald's closed stores in Hubei province.

3. Could the coronavirus 'curveball' halt the stock market's rise?

Last week, billionaire investor Paul Tudor Jones warned that the "curveball" to derail the bull market in stocks could be the outbreak of the coronavirus. The hedge fund manager invoked "early 1999" as a touchstone for today's market environment, noting in particular the copious financial liquidity and low inflation energizing risk assets. However, as CNBC's Michael Santoli points out the Nasdaq 100, the heart of the market's leadership both now and then, currently fetches 28 times trailing earnings, compared with about 40 times two decades ago.

4. Bolton is a wild card in Trump's impeachment trial

Democrats are stepping up their calls for former national security advisor John Bolton to testify at President Donald Trump's impeachment trial. This comes after an explosive report alleged that in Bolton's unpublished book he said Trump personally tied aid for Ukraine to an investigation of the Bidens. Trump in a tweet just after midnight denied saying that.

In a rare Saturday session in the Senate, Trump's legal team started to lay out its defense of the president at his impeachment trial. The president's defense continues Monday.

5. Iowa caucuses next week then the New Hampshire primary

2020 Democratic presidential candidates, from left, Tom Steyer, co-founder of NextGen Climate Action Committee, Senator Elizabeth Warren, a Democrat from Massachusetts, Former U.S. Vice President Joe Biden, Senator Bernie Sanders, an independent from Vermont, Pete Buttigieg, former mayor of South Bend, and Senator Amy Klobuchar, a Democrat from Minnesota, stand on stage ahead of the Democratic presidential debate in Des Moines, Iowa, U.S., on Tuesday, Jan. 14, 2020.

Daniel Acker | Bloomberg | Getty Images

— The Associated Press contributed to this report.

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2020-01-27 13:23:00Z
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AbbVie-Allergan $63 billion deal aided by Nestle, AstraZeneca buys - Reuters

ZURICH (Reuters) - U.S. drugmaker AbbVie’s (ABBV.N) $63 billion tie-up with Allergan (AGN.N) is getting help from Nestle (NESN.S) and AstraZeneca (AZN.L) buying up products the Irish-domiciled company is shedding to placate regulators.

FILE PHOTO: The Allergan logo is seen in this photo illustration November 23, 2015. To match special report USA-FDA/CASES REUTERS/Thomas White

AbbVie is swallowing Allergan to give it control of the lucrative wrinkle treatment Botox and to diversify a portfolio heavily dependent on its $19-billion-per-year arthritis drug Humira, the world’s best-selling medicine that is advancing toward U.S. patent expiration.

Swiss food group Nestle bulked up its medical nutrition business with Allergan’s Zenpep, a product with 2018 sales of $237 million which treats people whose pancreases do not provide enough enzymes to digest fats, proteins and sugars.

Nestle did not give financial details, but analysts from Zuercher Kantonalbank estimated the takeover could have cost the Vevey, Switzerland-based company more than $1 billion.

Meanwhile, AstraZeneca is regaining rights to brazikumab, Allergan’s experimental drug against Crohn’s Disease and ulcerative colitis. The European Commission said this month the immunology medicine must be divested because of the risk its development would be halted after AbbVie’s takeover because of competing medicines.

“These definitive agreements represent significant progress toward the completion of our acquisition of Allergan,” Richard Gonzalez, AbbVie’s chairman and chief executive, said.

With regulators wary of the deal’s anti-competitive potential, rivals are getting a chance to stock their own product shelves.

Nestle Chief Executive Mark Schneider, who also gets Allergan’s Viokace, another pancreatic enzyme product, in Monday’s deal, is bulking up on nutrition products that combine properties of medicine and food as the Swiss company expands in areas where growth may outpace its mainstream food business.

“This is a significant opportunity for our business in the United States,” Greg Behar, head of Nestle Health Science, said in a statement.

AstraZeneca’s pact for brazikumab marks a return of the inflammation medicine to the British drugmaker’s portfolio. In 2016, Astra had struck a licensing deal with Allergan worth up to $1.5 billion for the medicine.

With its return to AstraZeneca, Allergan has agreed to fund development costs for brazikumab in Crohn’s disease and ulcerative colitis, including the creation of a companion diagnostic, AstraZeneca said in a separate statement.

“This agreement creates an opportunity for us to complete the full development program and bring this potential new treatment option to patients as quickly as possible,” Mene Pangalos, Astra’s biopharmaceuticals research head.

Even if Allergan must foot the development bill, analysts appeared underwhelmed, in part because AbbVie’s Skyrizi, or risankizumab, a similar medicine, has a head start.

“This could be another autoimmune product to add to Astra’s portfolio, although it will be somewhat late to the market,” Liberum’s Alistair Campbell wrote in a note to investors.

Reporting by John Miller in Zurich and Ludwig Burger in Frankfurt; Editing by Alexander Smith

Our Standards:The Thomson Reuters Trust Principles.

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2020-01-27 09:27:00Z
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India in renewed push to sell Air India, puts entire stake on the block - Yahoo News

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India in renewed push to sell Air India, puts entire stake on the block

An Air India Airbus A320neo plane takes off in Colomiers near Toulouse

By Aftab Ahmed and Aditi Shah

NEW DELHI (Reuters) - The government said on Monday it plans to sell its entire interest in Air India Ltd, in a renewed push to sell the airline after an attempt to auction a majority stake almost two years ago failed to draw any bids.

A document released on Monday showed March 17 as the deadline for submission of initial expressions of interest, and that any bidder must assume liabilities including 232.87 billion rupees ($3.28 billion) in debt.

Substantial ownership and effective control of the airline must remain with an Indian entity, the government also said.

The potential sale of an airline kept aloft by a $4.2 billion 10-year bailout in 2012 comes as the government divests of money-losing assets to manage the fiscal deficit.

The latest offer should garner significant response partly because it involves a clean exit by the government, said CAPA aviation consultancy India head Kapil Kaul.

"As the entire debt excluding aircraft debt is taken out of the deal, it signals a very determined effort to exit Air India to allow taxpayers' funds be utilised for the government's social agenda," said Kaul.

The government in 2018 to sell 76% of Air India and offload about $5.1 billion of its debt, with terms including the retention of all employees.

InterGlobe Aviation Ltd's <INGL.NS> IndiGo and Jet Airways Ltd <JET.NS> - which has since collapsed - initially showed interest but opted out after the terms were disclosed.

Steel-to-autos conglomerate Tata Group, widely viewed as a potential suitor for Air India, also decided not to bid after deeming the terms too onerous, sources told Reuters at the time.

A successful bidder would win control of Air India's 4,400 domestic and 1,800 international landing and parking slots at Indian airports, as well as 900 slots at airports overseas.

It would also get 100% of low-cost arm Air India Express and 50% of AISATS, which provides cargo and ground handling services at major Indian airports, the bid document showed.

The buyer would also have to provide 3% of the value of the airline's equity as stock options for permanent employees.

Air India has about 9,400 permanent employees and 3,600 fixed-term contract staff - including 1,850 pilots and 4,600 cabin crew - with benefits such as discount air tickets and pensions.

Its employees protested against the 2018 sale attempt, and it was not immediately clear if they would also resist the latest effort. The government said it will provide details on safeguarding employee interests in its final bid document.

A spokesman for the airline's employee union did not have immediate comment.

(Reporting by Aditi Shah and Aftab Ahmed; Writing by Euan Rocha; Editing by Muralikumar Anantharaman and Christopher Cushing)

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2020-01-27 07:41:15Z
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Boeing 777X: World’s largest twin-engine jet completes first flight - BBC News

Boeing has successfully completed the first test flight of the world's largest twin-engined plane, the 777X.

It comes as the firm attempts to boost its image after its 737 Max plane was grounded last year following two fatal crashes that killed 346 people.

The flight took off near Seattle and lasted four hours. Two attempts were called off this week due to high winds.

Further tests are needed before the aircraft enters service with Emirates next year.

• Victims' families slam report into 737 Max crashes

The 252-foot-long passenger plane had been due to launch this year but has been delayed by some technical difficulties.

The 777X is a larger and more efficient version of Boeing's successful 777 mini-jumbo. Standout features include folding wingtips and the world's largest commercial engines.

"It represents the great things we can do as a company," said 777X marketing director Wendy Sowers.

Boeing says it has sold 309 of the plane - worth more than $442 million each at list prices.

The plane will go head-to-head with the Airbus A350-1000 which seats about 360 passengers.

Boeing has been in crisis since the 737 Max crashes, which occurred within five months of each other - first in Indonesia in October 2018 and then in Ethiopia last March.

It is facing multiple investigations amid accusations that it sacrificed safety as it rushed to get its jets to customers. It is attempting to have the plane re-approved for flight.

The grounding of the 737 Max, which had been Boeing's best-selling plane, is estimated to have already cost Boeing more than $9bn.

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2020-01-26 13:20:23Z
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