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Wall Street edges lower as global growth fears resurface

22 Jan 19
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By Shreyashi Sanyal

Source https://www.reuters.com/article/us-usa-stocks/wall-street-edges-lower-as-global-growth-fears-resurface-idUSKCN1PG1G6

 

U.S. stocks fell on Tuesday, weighed by losses in the industrials and technology sectors, as fears of slowing global economic growth resurfaced after the International Monetary Fund trimmed its outlook in a week of heavy corporate earnings.

The gloomy IMF forecasts, released on Monday, predicted the global economy will grow at 3.5 percent in 2019 and 3.6 percent in 2020, down 0.2 and 0.1 percentage point, respectively, from last October’s forecasts.

The downgrades reflected weakness in Europe and came on the same day China released data that confirmed its slowest growth rate in 28 years due to faltering domestic demand and bruising U.S. tariffs.

Ten of the 11 major S&P 500 sectors were lower with industrials .SPLRCI and technology .SPLRCT down over 1 percent. Both sectors house companies with big exposure to overseas business, including in China.

Pressuring industrials the most were the 14 percent slide in shares of Stanley Black & Decker Inc (SWK.N) after the hand tools and hardware maker forecast 2019 profit below analysts’ estimates.

The S&P healthcare sector .SPXHC also fell 0.84 percent after Johnson & Johnson (JNJ.N) forecast 2019 sales below analysts’ expectations. Shares of the healthcare giant dropped 1.9 percent.

Chip stocks, which get a large portion of their revenue from China, also fell. The Philadelphia semiconductor index .SOX tumbled 2.32 percent.

“The larger concern is slowing global economic growth,” said Art Hogan, chief market strategist at National Securities in New York.

“The S&P 500 has more than half of its companies with businesses overseas, so an outlook like this is also going to impact the earnings of 2019 as well.”

At 10:02 a.m. ET the Dow Jones Industrial Average .DJI was down 166.65 points, or 0.67 percent, at 24,539.70, the S&P 500 .SPX was down 23.09 points, or 0.86 percent, at 2,647.62 and the Nasdaq Composite .IXIC was down 72.29 points, or 1.01 percent, at 7,084.94.

At least 12 percent of S&P 500 companies have reported earnings so far and analysts have lowered their fourth-quarter earnings forecast for S&P 500 companies to 14.1 percent year-over-year growth from 20.1 percent estimated on Oct. 1, according to IBES data from Refinitiv.

The energy sector .SPNY slipped 1.47 percent, as oil prices fell on worries of lower fuel demand from China, the world’s second largest consumer. [O/R]

Halliburton Co’s shares (HAL.N) fell 4.0 percent after the oilfield services company saw a slowdown in well completions in North America.

Despite the day’s drop, all the three major indexes were still holding gains above their 50-day moving average prices, a closely watched level of near-term momentum.

A strong rally in January fueled by hopes of a breakthrough in the U.S.-China trade talks and dovish comments from the Federal Reserve has set the benchmark S&P 500 index about 9.5 percent away from its record closing high it hit on September 20.

Arconic Inc shares (ARNC.N) slumped 16.9 percent after the aluminum products maker said it was no longer pursuing a sale.

EBay Inc (EBAY.O) jumped 8.9 percent after shareholder Elliott Management Corp urged the ecommerce platform to restructure and sell some businesses to double its market value in the next two years.

Shares of Travelers Cos Inc (TRV.N) rose 0.4 percent after the insurer reported a better-than-expected fourth-quarter profit, as growth in premiums and investment income offset catastrophe losses related to the California wildfires.

Declining issues outnumbered advancers for a 3.40-to-1 ratio on the NYSE and for a 2.62-to-1 ratio on the Nasdaq.

The S&P index recorded two new 52-week highs and one new low, while the Nasdaq recorded 12 new highs and 13 new lows.

Shares of eBay surge as Elliott Management reveals $1.4 billion stake, recommends portfolio review

22 Jan 19
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By Michael Sheetz

Source https://www.cnbc.com/2019/01/22/ebay-shares-surge-on-elliott-management-1point4-billion-stake.html

 

SAN JOSE, CA – JANUARY 22: A sign is posted in front of the eBay headquarters on January 22, 2014 in San Jose, California. eBay Inc. will report fourth quarter earnings today after the closing bell. (Photo by Justin Sullivan/Getty Images)

Activist hedge fund Elliott Management announced a $1.4 billion stake in eBay in a letter to the e-commerce company’s board on Tuesday.

Elliott’s stake, which represents more than 4 percent of eBay’s shares, comes with an extensive letter of recommendations for the company’s future. The fund’s “Enhance eBay Plan” suggests the company spin off StubHub as well was eBay’s “portfolio of Classifieds properties,” as Elliott said the assets “are worth meaningfully more than the value currently being ascribed to them as part of eBay.”

Shares of eBay surged 9.5 percent in trading from Friday’s close of $31 a share.

Elliott also said eBay should focus on “revitalizing Marketplace,” clean up “an inefficient organizational structure” and stabilize the company’s leadership, which “has suffered an alarming degree of turnover recently.”

The fund estimates that its “Enhancing eBay Plan” would nearly double eBay’s value to $55 a share by the end of next year, even without spinning off the StubHub and Classifieds businesses.

Elliot Management has about $34 billion in assets under management, according to the fund’s website.

Huawei chairman warns of end to global ‘partnerships’

22 Jan 19
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By Joe Miller

Source https://www.bbc.com/news/business-46963971

 

The chairman of Chinese tech giant Huawei has warned his company could withdraw from the US and the UK if it continues to face restrictions.

Huawei has been under scrutiny by Western governments, which fear its products could be used for spying.

Speaking at the World Economic Forum, in Davos, Mr Liang Hua said his firm might transfer technology to countries “where we are welcomed”.

He also stressed that Huawei follows regulations wherever it operates.

Huawei makes smartphones but is also a world leader in telecoms infrastructure, in particular the next generation of mobile phone networks, known as 5G.

But concern about the security of its technology has been growing, particularly in the US, UK, Canada, Australia and Germany.

Security concerns

The company is banned from bidding for government contracts in the US, where intelligence services have raised questions about Huawei founder Ren Zhengfei’s links to China’s ruling Communist Party.

Last month, BT confirmed that Huawei equipment was being removed from a communication system being developed for the UK’s emergency services.

Meanwhile, Germany is considering blocking the firm from its next generation mobile phone network.

Huawei has always maintained that it is a private company, owned by its employees, with no ties to the Chinese government.

The company’s top executives rarely give interviews, but a number of journalists were invited to ask questions of Mr Liang on the sidelines of the World Economic Forum in Davos.

Mr Liang told them that if the company faced further hurdles to doing business in some countries, “we would transfer the technology partnership to countries where we are welcomed and where we can have collaboration with”.

While he would not be drawn on whether Huawei could leave the UK, Mr Liang stressed that it would be up to British consumers to decide if they wanted to use the company’s technology, before adding, that the “UK is the market that advocates openness and also free trade”.

Mr Liang said anyone concerned would be “welcome” to inspect the firm’s laboratories in China.

Even as the the storm surrounding Huawei continues to rage, Mr Liang’s message was simple – the company’s products would speak for themselves.

“We will focus on providing value by offering the high bandwidth ultra low latency and high connectivity [products] to out customers,” he said.

In December, Meng Wanzhou, the daughter of the founder of Huawei, was arrested in Canada and faces extradition to the United States over accusations the company flouted US sanctions against Iran.

Mr Liang called for a “quick conclusion” to the case, so that Ms Meng could regain “her personal freedom”.

He also reiterated the company’s claim that the detention of two Canadian nationals in China, seen by many as retaliation for the arrest of Ms Meng, “has no relation with Huawei”.