Category: Stock Market News

U.S. tech companies continued to hoard the most cash of any sector in 2016, according to a Moody’s Investors Service report published Wednesday. Apple Inc. , Microsoft Corp. , Google , Cisco Inc. and Oracle Corp. led the pack with a combined total of $594 billion, the rating agency said in a new report. Apple alone held $246 billion, or 13.2% of the total corporate cashpile, up 12.8% from $216 billion in 2015. Overall, non-financial companies had $1.84 trillion in cash at year-end, up 9.2% from the year-earlier period. Overseas cash is about $1.3 trillion, or 70% of the total, said the report. The most cash-rich sectors are tech, health care, consumer products and energy with a combined $1.46 trillion, or 79% of the total. The tech sector had a combined $871 billion. “Offshore cash holdings will continue to grow absent tax reform,” said Moody’s.

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Shares of Morgan Stanley jumped 4% at the open Wednesday, after the bank posted better-than-expected earnings for the second quarter and better trading revenue than many of its peers. Morgan Stanley is the only one of the big U.S. banks to post stock-price gains after earnings so far this season. The stock has gained 11% in 2017, while the Financial Select Sector SPDR exchange-traded fund has gained 7% and the S&P 500 has gained 10%.

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The S&P 500, Nasdaq Composite traded in record territory shortly after the opening bell. But the gains on Wall Street were small as investors focused on a batch of mixed earnings reports. The S&P 500 was up by 4 points, or 0.2%, to 2,464.63. The Dow Jones Industrial Average was up fractionally at 21,581. The Nasdaq Composite index advanced 21 points, or 0.3%, to 6,368. Among early movers, Vertex Pharmaceuticals Inc. soared 23% after the drug company late Tuesday announced positive results from clinical studies of its cystic fibrosis treatments.

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Cray Inc. disclosed Wednesday it plans to cut 190 jobs, which is about 14% of its workforce, as part of a restructuring plan aimed at cutting costs by $25 million a year. The supercomputing company said in a filing with the Securities and Exchange Commission that the “vast majority” of the job cuts will be effective July 21. The cuts will affect “all organizations and major geographies” of the company. Cray said it expects to record restructuring charges of $10 million, most of which will be recorded during the third quarter. The stock, which was still inactive in premarket trade, has lost 8.7% year to date, while the SPDR Technology Select Sector ETF has run up 18% and the S&P 500 has gained 9.9%.

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Shares of Crown Castle International Corp. dropped 1.7% in premarket trade Wednesday, after the real estate investment trust announced a public offering of $3.25 billion worth of common shares, and $1.5 billion worth of convertible preferred stock. Based on Tuesday’s stock closing price of $96.64, the common share offering would represent about 33.6 million new shares, which would increase the shares outstanding by 9.2%. The company said it plans to grant the underwriters of the offering–Morgan Stanley, BofA Merrill Lynch and J.P. Morgan Securities–options to buy and additional $325 million of common stock and $150 million of convertible preferred stock. The company plans to use the proceeds from the offerings, as well as additional debt issuances, to finance the Lightower deal. Crown Castle announced late Tuesday a deal to buy LTS Group Holdings (Lightower) for $7.1 billion from Berkshire Partners, Pamlico Capital and other investors. Crown Castle’s stock has rallied 11% year to date through Tuesday, while the SPDR Real Estate Select Sector ETF has gained 4.8% and the S&P 500 has advanced 9.9%.

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Shares of PayPal Holdings Inc. fell 1% in premarket trade Wednesday, pulling back from the previous session’s record close, after the digital payments company was downgraded at SunTrust Robinson Humphrey, which cited concerns over valuation. The stock has rocketed 49% year to date through Tuesday, while rival Visa Inc.’s stock has climbed 25% and the S&P 500 has gained 9.9%. Analyst Andrew Jeffrey cut his rating to hold after being at buy since he started covering the stock two years ago. He kept his price target at $60, which is just 1.8% above Tuesday’s closing price of $58.96. Jeffrey said he believes there are a number of short-term tailwinds for the stock, including potential pricing increases, more partnerships and increasing adoption of its Choice and OneTouch services. “We believe these are materially priced in, however,” Jeffrey wrote in a note to clients. He said long-term competitive risks and uncertainties about the monetization of Venmo also balance the bullish outlook.

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Companies will no longer be able to charge British consumers an extra fee to use their credit card to make a payment, the U.K. government said Wednesday. The new rules, due to come into effect on Jan. 13, should put a stop to such surcharges, which can add 20% to the cost of an airline ticket or paying for takeout food, the Treasury Department said in a statement. The total value of these extra credit-card and debit-card charges in 2010 was 473 million pounds ($617 million), the Treasury said. “Rip-off charges have no place in a modern Britain and that’s why card charging in Britain is about to come to an end,” Stephen Barclay, economic secretary to the Treasury, said in the statement. The changes are being brought in to comply with a European Union directive, but go beyond its requirements by including payment services such as PayPal.

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Campbell Soup Co. affirmed its outlook for fiscal 2017, which ends July 30, for adjusted earnings-per-share of $3.04 to $3.09, which surround the FactSet consensus of $3.05. The soup and simple meals company said it still expects sales to be down 1% to flat from a year ago, while the FactSet consensus of $7.92 billion implies a 0.5% decline. The company, which is hosting its investor day Tuesday, said it expects to reach $310 million in annual cost savings by the end of the current fiscal year, and continues to expect to cut costs by $450 million a year by the end of fiscal 2020. The stock, which was still inactive in premarket trade, has tumbled 16% year to date, while the S&P 500 has gained 9.9%.

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United Continental Holdings Inc. shares fell 3.6% premarket Wednesday, after the company disappointed with its guidance for unit revenue for the third quarter. The airline said it expects passenger revenue per available seat mile, or PRASM, to range from down 1% to up 1%. “We expect the shares to be weak today given the disappointing 3Q17 PRASM guidance,” Cowen analyst Helane Becker wrote in a note. “Investors were estimating 3Q17 unit revenue would be flat to up 2%; our estimate was up 1.5%, so the guidance is disappointing.” The airline is expecting capacity of about 4% in the third quarter, and expects its average fuel price to be $1.56 to $1.61 per gallon and pre-tax margins to range from 12.5% to 14.5%. United also raised its guidance for capital expenditures in 2017 to a range of $4.6 billion to $4.8 billion. United said late Tuesday it earned $818 million, or $2.66 a share, in the quarter, compared with $1.78 a share in the year-ago period. Adjusted for one-time items, United said it earned $846 million, or $2.75 a share, compared with $2.61 a share a year ago. Revenue rose 6.4% to $10 billion in the quarter. Analysts polled by FactSet had expected adjusted earnings of $2.66 a share on sales of $9.97 billion. The company, under a cloud earlier this year after a passenger was forcibly removed from one of its flights after he refused to give up his seat, said it had implemented several changes in the quarter to improve customer experience, including reducing overbooking. Shares have gained 8% in 2017 through Tuesday, while the S&P 500 has gained 10%.

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Shares of International Business Machines Corp. dropped $5.30, or 3.4%, in premarket trade Wednesday in the wake of disappointing second-quarter results, pushing Dow industrials futures into negative territory while futures for the other major indexes gained. IBM’s stock price drop would have about 36 points off the Dow Jones Industrial Average’s price. E-mini Dow futures are down 10 points, while e-mini S&P 500 futures are up 1 point and e-mini Nasdaq 100 futures are up about 14 points. IBM’s stock is on track to open at the lowest level seen during regular session hours since Oct. 18, 2016.

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