News Archive


Dow, S&P 500 end at record highs; BoJ move adds fuel to rally


NEW YORK (Reuters) – The Dow and SP 500 ended at record highs on Friday and other indexes posted strong gains for a second week after the Bank of Japan’s surprise move to ramp up its stimulus program.

Major indexes also posted gains for the month, putting in a sharp recovery from their recent selloff that almost drove the SP 500 into correction territory. The benchmark index is now up 8.4 percent from its Oct. 15 low and up 9.2 percent for the year so far.

The Nasdaq finished at its highest since March 2000, while for the week the Dow rose 3.5 percent, its best percentage weekly gain since January 2013. The SP 500 posted its best two-week gain since December 2011.

The day’s gains were broad, with the benchmark SP 500 index posting 126 new 52-week highs and the Nasdaq recording 229 new highs. Shares of Exxon Mobil (XOM.N), up 2.4 percent at $96.71, and Chevron (CVX.N), up 2.3 percent at $1119.95, were among the biggest positives for the Dow and SP 500 after they reported stronger-than-expected results.

“The market technically went from violating moving averages to making new highs, and you get this surprise move out of the Bank of Japan, which is giving a little tailwind to the rally,” said Eric Kuby, chief investment officer at North Star Investment Management Corp. in Chicago.

The move by the Bank of Japan, whose board voted to accelerate purchases of Japanese government bonds while tripling its purchases of exchange-traded funds and real-estate investment trusts, comes just days after the Federal Reserve wound down its years-long package of incentives.

More stimulus globally could help the outlook for stocks, especially if the U.S. economy keeps improving and earnings keep growing, analysts said. Worries about the global economy and its impact on U.S. earnings, the spread of Ebola and slumping oil prices were largely behind the market’s recent selloff.

The majority of SP 500 companies are beating third-quarter earnings expectations so far. With results in from 70 percent of companies, 75.8 percent are reporting earnings above analysts’ expectations, according to Thomson Reuters data, well above the 63 percent average in the past 20 years.

The Dow Jones industrial average .DJI rose 195.1 points, or 1.13 percent, to 17,390.52, a record close. The Dow also hit an intraday record high of 17,395.54.

The SP 500 .SPX gained 23.4 points, or 1.17 percent, to 2,018.05, a record finish. It came within about a point of hitting an intraday record high. The Nasdaq Composite .IXIC added 64.60 points, or 1.41 percent, to 4,630.74.

For the week, the SP 500 was up 2.7 percent and the Nasdaq was up 3.3 percent. For the month, the Dow was up 2 percent, the SP 500 was up 2.3 percent and the Nasdaq was up 3 percent.

Among the day’s biggest percentage gains, shares of Expedia (EXPE.O) rose 5.3 percent to $84.97 a day after it reported results. GoPro (GPRO.O) shares jumped 13 percent to $77.10 after forecasting better-than-expected holiday quarter sales.

The largest decliner on the Nasdaq was Starbucks (SBUX.O), down 2.3 percent at $75.56, a day after it reported results.

About 8.3 billion shares changed hands on U.S. exchanges, compared with the 7.8 billion average for the month to date, according to data from BATS Global Markets.

Advancing issues outnumbered declining ones on the NYSE by 2,363 to 717, for a 3.30-to-1 ratio on the upside; on the Nasdaq, 1,921 issues rose and 816 fell for a 2.35-to-1 ratio favoring advancers.

(Editing by Chizu Nomiyama, James Dalgleish, Leslie Adler, Chris Reese, Meredith Mazzilli and Andrew Hay)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/8-fWUgAU1_8/story01.htm

Canada willing to take action against U.S. over meat labeling


TORONTO (Reuters) – Canada will pursue “any and all remedies” to pressure the United States to drop regulations on meat labeling that Canada considers discriminatory, the country’s trade minister said on Friday.

Ed Fast, Canada’s international trade minister, declined to elaborate on any deadlines for further action.

“We have made it very clear that this is a blatant violation of WTO rules, and that we will certainly pursue any and all remedies that we have available to us,” Fast told Reuters after talks with U.S. and Mexican counterparts in Toronto on Friday.

The United States faces potential trade sanctions from Canada and Mexico after the World Trade Organization ruled on Oct. 20 that it had failed to bring its meat labeling regulations fully in line with international fair trading rules. The U.S. regulations require retailers such as grocery stores to list the country of origin on meat.

Fast said progress in the dispute was incremental, but that Canada was hopeful the United States will “actually now make sincere efforts to eliminate the discriminatory nature of these labeling requirements.”

Canada has said it will ask the WTO to approve retaliatory actions against the United States. Last year, it released a list of numerous U.S. products, ranging from beef and pork to cherries and ketchup, that it may target for trade retaliation.

(Additional reporting by Rod Nickel in Winnipeg; Editing by Jeffrey Hodgson and Leslie Adler)

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Top U.S. oil companies see more pressure to clamp down on spending


HOUSTON (Reuters) – Top U.S. oil producers, which already were reining in spending before crude prices started to slip in June, are now looking to trim more fat from their budgets while reminding investors they must spend to grow.

Exxon Mobil Corp (XOM.N) on Friday it would keep its current spending plan intact, though it is about 15 percent less than 2013. ConocoPhillips (COP.N) said it will spend less money next year, and Chevron Corp (CVX.N) said it is looking for budget “flexibility.”

Crude oil prices have slumped 25 percent since June as global supplies grow and demand weakens.

Exxon, which sets budgets using a long-term horizon, still expects to spend a little bit less than $37 billion a year from 2015 to 2017, an executive told investors on Friday on a conference call.

“We always are mindful of what’s happening in the near future but I keep on pulling back that we are a long-term investor,” said Jeff Woodbury, Exxon’s head of investor relations.

Exxon tests projects “across the full range of economic parameters including price” to ensure favorable returns, he said.

The Irving, Texas company saw capital spending peak at $42.5 billion last year when it was advancing projects to deliver future production growth. Exxon has spent $28 billion so far this year, down 14 percent versus the first nine months of 2013.

ConocoPhillips, the largest independent oil and gas company, said on Thursday it plans to spend less than $16 billion next year, below the $16.7 billion it expects to spend in 2014.

“(Capital spending) is going to be lower because of the commodity price environment,” Jeff Sheets, ConocoPhillip’s chief financial officer said in an interview with Reuters. “We have the flexibility in our capital program to reduce it without giving up any opportunities.”

ConocoPhillips has room to slow spending on some exploration projects as well on some of its less developed projects in the Permian Basin, Western Canada and the Niobrara in Colorado, said Sheets.

Even with a 2015 smaller budget, ConocoPhillips still expects to grow its oil and gas output 3 percent to 5 percent. The company’s capital spending plan is due in December.

Chevron Corp (CVX.N), the second-largest oil producer behind Exxon, said Friday it was looking closely at discretionary versus nondiscretionary spending.

“Obviously we are having to have some top discussions around what do we think the price outlook is going to be, what do we think the cost structure is going to be,” said Pat Yarrington, Chevron’s CFO.

But she reminded investors that “we take a long-term view of prices because our investments last for decades.”

So far this year, Chevron has spent $25.7 billion. Last fall it forecast capital expenditures of $39.8 billion for this year.

Exxon and Chevron shares rose more than 1 percent on Friday after they reported third-quarter earnings that topped expectations thanks to higher refining profits.

(Additional reporting by Ernest Scheyder in Williston, North Dakota; Editing by Terry Wade)

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U.S. Fed awards most reverse repos in over four weeks


NEW YORK (Reuters) – The U.S. Federal Reserve awarded $186.28 billion in fixed-rate reverse repurchase agreements on Friday, the highest amount in more than four weeks, due to strong investor demand for ultra short-dated, risk-free assets at month-end.

The central bank has been testing them as a tool to drain cash from the financial system to achieve their interest rate target when it decides to tighten monetary policy.

At Friday’s operation, the Fed paid 72 bidders including Wall Street firms, money market funds and mortgage finance agencies an interest rate of 0.05 percent for them to borrow its Treasuries holdings until Monday.

This was the highest amount of fixed-rate reverse repos, commonly referred as RRPs, the Fed awarded since the $212.48 billion to 53 bidders on Oct. 1.

On Thursday, the Fed awarded $142.24 billion RRPs to 47 bidders at an interest rate of 0.05 percent.

(Reporting by Richard Leong; editing by Andrew Hay)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/V0Xo9nA3cXQ/story01.htm

Dollar General extends tender offer for Family Dollar shares again


(Reuters) – Dollar General Corp (DG.N) extended its tender offer for shares of Family Dollar Stores Inc (FDO.N) to Dec. 31, until after a shareholder vote that will decide the fate of a rival bid by Dollar Tree Inc (DLTR.O).

Dollar General had received offers for only about 4 million Family Dollar shares of a total 114 million outstanding shares as of Oct. 30, a day before the offer was to expire.

Dollar General’s perseverance to close a deal highlights its struggles in a weak economy where penny-pinching customers look for more discounts and deals.

Dollar stores have been a popular choice for such customers, but rising competition from mass retailers such as Wal-Mart Stores Inc (WMT.N) and Target Corp (TGT.N) opening small-format stores has intensified pressure on them to merge.

Dollar General, the biggest U.S. discount chain, turned hostile and took its $80-per-share bid for Family Dollar directly to shareholders after being spurned twice over anti-trust concerns.

Family Dollar instead opted for a lower cash-and-stock deal from Dollar Tree Inc (DLTR.O) of $74.50 per share, on which it will hold a shareholder vote on Dec. 11.

Stifel Nicolaus Co analyst Taylor Labarr said Dollar General’s decision to extend the tender offer was to allow Family Dollar shareholders time to make a decision after the special meeting.

“They (Dollar General) extended the offer through the end of the year, that covers them through the shareholder vote, which I think is the key thing,” Labarr said.

“It’s giving cover for FDO shareholders to reject the Dollar Tree deal and still be able to tender for the offer with Dollar General,” he added.

Dollar General and Family Dollar’s shares were largely unchanged in afternoon trading. Dollar Tree shares were up 1.9 percent at $60.71. Earlier in the day, its shares rose as much as 2 percent to a record high of $61.00.

(Reporting by Siddharth Cavale in Bangalore; Editing by Tresa Sherin Morera)

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Argentina default spreads to Par bonds, risking payment demands


BUENOS AIRES/NEW YORK (Reuters) – Argentina’s debt default spread to its Par bonds on Friday after the country failed to complete an interest payment, raising the risk that creditors could demand that the country’s cash-strapped government immediately repay all of its debt.

Argentina deposited a $161 million payment with a newly appointed local trustee last month to try to circumvent U.S. court orders for it to settle with “holdout” investors. The holdouts are suing to get full repayment of bonds from a 2002 default before holders that accepted the terms of a debt restructuring get paid by the government.

But Par bondholders could not collect the $161 million payment due to legal and technical hurdles, and the 30-day grace period since the coupon was originally due expired at midnight Thursday.

Argentina’s economy ministry has not said whether any bondholders have come forward to collect.

Argentina had already defaulted in July on its discount notes, but holders of the Par bonds might be more likely to claim accelerated payment of the principal because the Par bonds are trading at a steeper discount to their original value.

Demands for accelerated payment could leave Argentina facing claims of up to $30 billion, more than it holds in foreign reserves.

DOWNGRADE

Fitch Ratings weighed in on Friday by cutting Argentina’s foreign law Par bonds to the rock bottom level of “D”, for Default.

“The only exchanged foreign currency bond under foreign law that remains performing is the Global17 bond, which has a coupon payment scheduled for Dec. 2,” the credit ratings agency said in a statement.

Sources owning Argentine debt say other creditors have approached them about forming a group to accelerate payment. The move would require the backing of investors holding at least 25 percent of the nominal amount of any single bond series.

“We were asked in very theoretical terms what our thoughts were on acceleration,” said one source. “It was something intermediated by an investment bank. The shop leading the offer did not want to be identified.”

Analysts say many investors will be hesitant about such a move as it could mean costly litigation with an uncertain outcome. It could also trigger a balance of payments crisis and further damage Argentina’s ailing economy, making an eventual payment even more difficult.

Those talking of acceleration may simply be sounding out options or putting pressure on Argentina to reach a deal with the holdout funds that rejected restructuring following its 2002 default and are seeking full repayment of their bonds.

Argentine cabinet chief Jorge Capitanich said on Thursday that instead of accelerating, those bondholders who accepted steep writedowns in 2005 and 2010 debt swaps should sue U.S. District Judge Griesa for blocking interest payments.

“The person violating the law is the judge and not Argentina, which is fulfilling its obligations to pay its sovereign debt,” he told reporters.

Some creditors fear acceleration would simply prevent a solution to the dispute with the holdouts, which would unblock interest payments.

“We are keeping our options open and not siding with anyone in an acceleration effort,” said one investor who requested anonymity. “Our interest is not to be an obstacle to a deal that can settle this all after Jan. 1.”

Argentina says it cannot reach a deal with holdouts until the year-end expiration of the so-called RUFO clause, which prevents it from paying them better terms than those taken by bondholders who accepted writedowns in 2005 and 2010.

“I have heard from a number of Par holders that they will consider what their next move will be after the expiration of RUFO next year,” said a source at a fund holding Argentine debt.

The default will meanwhile continue to be a drag on the economy, Fitch said.

“Economic conditions have deteriorated significantly in 2014, with GDP expected to post a 1.9 percent contraction this year,” said Fitch analyst Santiago Mosquera.

“We anticipate the economy will contract even further, by 2.6 percent in 2015, if Argentina fails to clear the default before presidential elections are held in October next year,” Mosquera added.

(Additional reporting by Davide Scigliuzzo with IFR in New York and Hugh Bronstein and Hernan Nessi in Buenos Aires; Editing by Kieran Murray,; Lisa Von Ahn and Peter Galloway)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/JYru2induRc/story01.htm

Daimler buys into Agusta as motorbike and car tech converge


FRANKFURT (Reuters) – Daimler AG (DAIGn.DE) will buy 25 percent of Italian motorcycle maker MV Agusta IPO-MVAG.MI – the latest sign that motorbike and car technologies are converging, driven by a push to lower emissions and improve safety.

Daimler said on Friday it would buy the stake via its Mercedes-AMG performance cars unit and take a seat on the board at Agusta – a legendary name in the sport of motorcycling, having won at least 75 world championship rider and constructor titles.

It did not disclose the financial terms and said it was part of a broader cooperation deal between high-end brands Mercedes and Agusta which would mainly focus on marketing and sales.

Buying into Agusta gives Stuttgart-based Daimler access to high-performance, lightweight technology, including three-cylinder engines developed for Italian superbikes.

Daimler says Agusta’s motorbike engines are unlikely to be used in its Mercedes passenger cars any time soon – however tougher anti-pollution rules have increased interest among carmakers in the lightweight construction technology and compact engines, which could be used as “range extender” add-ons to complement electric engines in hybrid vehicles.

The Daimler deal follows moves by rival automakers to add superbike technology to high-end German sportscars, known for their solid build quality but also their thirst for fuel in an era of tighter anti-pollution rules.

In 2012 Volkswagen (VOWG_p.DE), which owns the Lamborghini, Bentley and Bugatti brands, bought Italian motorcycle maker Ducati for 860 million euros. At the Paris Motor Show this year, VW unveiled the high-tech XL Sport car equipped with a 200 horsepower two-cylinder Ducati engine.

“FINAL FRONTIER”

Famed race car engineer Gordon Murray – who put a motorbike engine in a sportscar known as the Rocket in 1992 and also designed the three-seater McLaren F1 – said motorcycle engines could be adapted to work in certain cars.

“Bike engines are ahead of cars in terms of their weight. And for the car industry shedding weight is the final frontier.”

Motorcyle makers are also ahead of the car industry in terms of the way they use plastics, rather than metal for structural parts, Murray told Reuters. “With bike makers suffering from lower production volumes it makes sense to work with a large car maker which has resources,” he said.

Motorbike makers can also benefit from safety technology used in cars. Anti-lock braking systems (ABS), which have been standard in all new cars for decades, will become compulsory for motorbikes in the European Union in 2016.

KTM, which last year acquired the Husqvarna brand from BMW, even launched its own sportscar, the X-Bow, in 2008.

Daimler’s push to expand its motorcycle know-how follows a move by regulators to punish makers of large heavy cars with powerful engines.

In February, the European Parliament voted to limit emissions of carbon dioxide to 95 grams per kilometer (g/km) as an average across all new cars sold in the European Union from 2020, up from an existing limit of 130 grams.

As part of an aggressive push to lower emissions, Daimler earlier this month announced it would introduce 10 new hybrid vehicles by 2017.

Rival BMW (BMWG.DE) already uses a three-cylinder engine to power the i8 hybrid, currently one of the most high-profile sportscar models in the Bavarian automaker’s range. BMW also makes superbikes.

REBIRTH

MV Agusta largely disappeared in the 1970s and its rebirth in 1992 under motorcycle entrepreneur Claudio Castiglioni and renowned designer Massimo Tamburini created the F4 superbike, one of which belonged to King Juan Carlos of Spain and was loaned out to the Guggenheim Museum for an exhibit.

In the past 10 years, however, the brand has repeatedly come under financial duress and gone through several owners that included Harley-Davidson (HOG.N) and Malaysian state-owned carmaker Proton. It was bought back in 2010 by Castiglioni shortly before he died, and is now run by his son.

The motorcycle maker, with 260 employees at its headquarters on the shore of Lago di Varese in northern Italy, has a product portfolio of three- and four-cylinder models ranging from 675 to 1100 cubic centimeters engine displacement.

Tobias Moers, chief executive of Mercedes-AMG, said: “In MV Agusta, we have found the perfect two-wheel partner for Mercedes-AMG. The partnership provides us with an entry into a world of additional high-performance enthusiasts.”

Giovanni Castiglioni, president and CEO of MV Agusta, said: “Mercedes-AMG will help MV Agusta to further expand globally and to accelerate our growth.”

Earlier this month, sources told Reuters that Daimler was in talks with MV Agusta about taking a stake.

The partnership is subject to the approval of the relevant authorities, expected to be granted in late November.

(Editing by Pravin Char)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/Fe9l6A1VaGA/story01.htm

AbbVie says strong results lessen need for big deal


(Reuters) – AbbVie, which this month abandoned its planned $55 billion purchase of Dublin drugmaker Shire (SHP.L), reported impressive quarterly earnings on demand for its Humira arthritis drug and said it could deliver strong long-term growth without rushing into another big merger attempt.

“The underlying growth prospects of AbbVie don’t require us to do a deal of that size,” AbbVie Chief Executive Richard Gonzalez said in conference call, but added the company was keen on smaller acquisitions, particularly of treatments involving rare diseases, cancer and hepatology.

AbbVie shares rose 3.5 percent to $63.35 in morning trading.

The Chicago drugmaker, which significantly boosted its full-year earnings forecast, said it had earned $506 million, or 31 cents per share, in the third quarter. That compared with $964 million, or 60 cents per share, a year earlier.

Excluding special items, including charges for the attempted Shire deal, AbbVie earned 89 cents per share. Analysts on average expected 77 cents, according to Thomson Reuters I/B/E/S.

Sales rose 7.8 percent to $5.02 billion, $200 million above forecasts.

“We see today’s results as reinforcing our view that AbbVie shares remain well-positioned heading into 2015,” said JPMorgan analyst Chris Schott. He said AbbVie could win U.S. marketing approval within weeks for a combination treatment for hepatitis C that may bolster earnings next year and beyond.

AbbVie, spun off early last year from Abbott Laboratories (ABT.N), is also testing treatments for cancer, Parkinson’s Disease, endometriosis and other diseases.

The company had hoped to buy Shire and locate the combined company in Britain to take advantage of the nation’s lower tax rate. But AbbVie walked away after tax law changes announced by the U.S. Treasury made the tax-inversion deal less attractive.

Sales of Humira, the world’s top-selling drug, jumped almost 18 percent to $3.26 billion. They accounted for 65 percent of total sales, underscoring the company’s need for other products to broaden its portfolio.

Gonzalez attributed Humira’s sales growth to the wide range of approved uses of the drug, including for Crohn’s disease and psoriasis, and because it is still being introduced in more countries 12 years after its U.S. launch.

Although Humira’s U.S. patent lapses in late 2016, AbbVie has said it will take years for other drugmakers to develop and win approval for their own generic versions.

A few other AbbVie brands showed strong growth in the quarter, including thyroid hormone replacement drug Synthroid, whose sales rose 24 percent to $200 million.

But others declined, including cholesterol treatments and AndroGel testosterone gel, whose sales have been hurt by safety concerns for the drug class.

AbbVie raised its 2014 profit forecast to between $3.25 and $3.27 per share from its prior view of $3.06 to $3.16.

(Reporting by Ransdell Pierson; Editing by Chizu Nomiyama, James Dalgleish and Lisa Von Ahn)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/xDOVqaFjYHs/story01.htm

Exxon, Chevron results boosted by refining as oil prices slip


(Reuters) – A surge in refining profits boosted quarterly results at Exxon Mobil Corp (XOM.N) and Chevron Corp (CVX.N), helping to offset declining oil and gas production and falling crude oil prices.

Both companies reported better-than-expected third-quarter profits on Friday, with executives touting the importance of owning massive refineries alongside oil and gas wells. Refining profits tend to rise when oil prices fall, though low prices dent the profitability of wells. Having both in a company stable can allow for a bit of insurance during price swings.

“Exxon Mobil’s quarterly results demonstrate the strength of our integrated business model,” Chief Executive Officer Rex Tillerson said in a statement after his company posted results.

Chevron, the second-largest U.S. oil producer after Exxon Mobil, said production sagged as new wells failed to offset declines at old wells. Still, the fall in crude oil prices in recent months – down about 25 percent since July – helped profit at the company’s refining unit jump nearly fourfold.

“It was a common theme for both companies,” said Brian Youngberg, an oil company analyst with Edward Jones in St. Louis. “Refining exceeded expectations and basically offset lower oil prices and the lack of production growth.”

Shares of Chevron dipped 0.1 percent to $117.18 while Exxon edged up 0.3 percent at $94.75.

(Reporting by Anna Driver in Houston and Ernest Scheyder; in Williston, North Dakota; Editing by Jeffrey Benkoe)

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