News Archive


Nasdaq breaches 6,000 as earnings power Wall Street higher


NEW YORK The Nasdaq Composite stock index hit a record high on Tuesday, while the Dow and SP 500 brushed against recent peaks as strong earnings underscored the health of Corporate America.

The Dow Jones Industrial Average .DJI rose 232.23 points, or 1.12 percent, to 20,996.12, the SP 500 .SPX gained 14.46 points, or 0.61 percent, to 2,388.61 and the Nasdaq Composite .IXIC added 41.67 points, or 0.7 percent, to 6,025.49.


The Nasdaq closed above 6,000 for the first time, more than 17 years after first breaching 5,000.

(Reporting by Rodrigo Campos; Editing by James Dalgleish)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/LwgbDRdRxbw/us-usa-stocks-idUSKBN17R1D8

U.S. Supreme Court may limit where companies can be sued


WASHINGTON The U.S. Supreme Court on Tuesday appeared poised to clamp down on where corporations can be sued, a potential setback for plaintiffs’ lawyers who strive to bring cases in courts and locales they consider friendly.

The nine justices in two separate cases heard appeals of lower court rulings allowing out-of-state injury lawsuits against drug maker Bristol-Myers Squibb Co(BMY.N) and BNSF Railway CoBNISF.UL.

Companies and plaintiffs are engaged in a fight over where lawsuits seeking financial compensation for injuries should be filed. Companies typically can be sued in a state where they are headquartered or incorporated, as well as where they have significant ties. They want to curtail plaintiffs’ ability to “shop” for courts in states with laws conducive to such lawsuits.

Bristol-Myers was appealing a California Supreme Court ruling allowing that state’s courts to hear claims related to its blood-thinning medication Plavix even though most plaintiffs do not live in the state and the company is not based there.

Based on questions asked during the argument, the court’s conservative majority appeared to side with the companies’ view while its liberals wondered how it would be unfair to add out-of-state claims to a case that would proceed anyway.

Conservative Justice Anthony Kennedy expressed skepticism over California handling matters for residents of all other states.

“That’s a very patronizing view of federalism,” Kennedy told the plaintiffs’ lawyer, Thomas Goldstein. “California will tell Ohio, ‘Oh, don’t worry, Ohio, we’ll take care of you.'”

If suits involving out-of-state residents can be handled in every state, conservative Chief Justice John Roberts added, “I don’t see that it increases the efficiency at all.”

‘ALL OF THE ABOVE’

Liberal Justice Elena Kagan suggested Bristol-Myers did not want to face multiple trials in California specifically because of plaintiff-friendly juries or the possibility of punitive damages.

“All of the above,” the company’s lawyer Neal Katyal said, adding that it is harder to get cases thrown out of court before trial in California.

The underlying lawsuits filed in 2012 against Bristol-Myers and California-based drug distributor McKesson Corp involved 86 California residents and 575 non-Californians, alleging Plavix increased their risk of stroke, heart attack and internal bleeding.

The California Supreme Court ruled in August 2016 that it could preside over the Plavix case because Bristol-Myers Squibb conducted a national marketing campaign and sold nearly $1 billion of the drug in the state. Bristol-Myers is incorporated in Delaware and headquartered in New York.

The justices also appeared to be leaning toward Texas-based railroad BNSF. The company is appealing a 2015 Montana Supreme Court ruling allowing out-of-state residents to sue there over injuries occurring anywhere in BNSF’s nationwide network.

The case focused on a federal law concerning railroads, but Roberts seemed skeptical that a ruling siding with the plaintiffs would be limited to that context.

Roberts wondered whether other companies operating in multiple states including airlines and trucking companies could similarly be sued in states where they operate but are not based.

“How do you decide what other companies and industries are at home in Montana?” Roberts asked the plaintiffs’ lawyer.

Rulings in both cases are due by the end of June.

In an unusual twist, Justice Stephen Breyer’s cellphone rang shortly after the Bristol-Myers argument began, which he scrambled to turn off. Members of the public are forbidden from bringing electronic devices into the court’s chamber. A court spokeswoman called Breyer’s cellphone ringing an “oversight.”

(Reporting by Andrew Chung; Additional reporting by Lawrence Hurley; Editing by Will Dunham)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/Mjypuv3o3HA/us-usa-court-bristol-myers-idUSKBN17R26B

Wells Fargo board gets black eye in shareholder vote


PONTE VEDRA BEACH, Fla./BOSTON Wells Fargo Co (WFC.N) shareholders showed displeasure with the scandal-hit bank’s board on Tuesday, offering scant support for a dozen directors, including Chairman Stephen Sanger, in a vote capping a contentious annual meeting.

Only three directors received more than 90 percent support from voting shareholders, a benchmark cited by Sanger as what would be the outcome of a normal vote. He received just 56 percent approval.

“Wells Fargo stockholders today have sent the entire Board a clear message of dissatisfaction,” Sanger said in a statement. “Let me assure you that the Board has heard that message, and we recognize there is still a great deal of work to do to rebuild the trust of stockholders, customers and employees.”

The meeting, which ran nearly three hours, was repeatedly interrupted by angry shareholders seeking answers about how and why thousands of bank employees were able to open 2.1 million fake accounts in customers’ names without their permission.

There was a brief recess after one shareholder made what Sanger called a “physical approach” toward a board member and was removed.

“You’re saying we’re out of order. Wells Fargo has been out of order for years!” said Bruce Marks, chief executive of Neighborhood Assistance Corporation of America, before being ejected.

Others were escorted out after ignoring pleas to simmer down from Sanger and Chief Executive Tim Sloan.

The directors who received weak support had faced negative recommendations from influential proxy adviser Institutional Shareholder Services (ISS), which argued they failed in their oversight duties.

Two directors, Federico Peña and Enrique Hernandez, received even less support than Sanger, at 54 percent and 53 percent, respectively. They chair board committees related to risk, finance or corporate responsibility. All but three directors received support of 80 percent or less.

The other three received 99 percent approval, and were recent additions: Sloan, who was named CEO in October after the scandal erupted, as well as Ronald Sargent and Karen Peetz, who were newly elected to the board this year.

At most SP 500 companies, director support averages around 95 percent of votes cast, according to pay consulting firm Semler Brossy.

Six Wells Fargo directors will reach a mandatory retirement age of 72 in the coming years and are expected to leave when they do, Sanger said. He will hit that mark next year, but would not say when he planned to retire.

The bank’s guidelines require that directors offer to resign if they fail to receive a majority of votes cast. But in practice, directors who receive less than 80 percent support should consider exiting the board, said Charles Elson, a University of Delaware expert on corporate governance.

“It’s a really strong signal from shareholders, and I think they need to immediately consider refreshing that board,” he said of Wells Fargo.

Wells Fargo’s board and management had said the steps taken to fix problems and punish employees responsible for abuses show there is now strong oversight, and that directors nominated deserved to be elected. But the public firestorm that hammered its shares last year and led to the resignation of then-Chairman and Chief Executive John Stumpf was not forgotten.

Sloan and Sanger reiterated those comments and apologized repeatedly to shareholders, customers and employees at the meeting on Tuesday.

“We are deeply sorry for letting you, our shareholders, down and letting down our customers, our team members and the communities that we do business in,” said Sloan. “You expect and deserve much more from us.”

Sanger tried to show patience as he was frequently interrupted, but struggled at times as speakers ignored his requests to follow the usual order of proceedings. “When I say I’m sorry … I think that speaks for all of the board,” he said at one point.

After investors had time to speak, Sloan and Sanger opened the floor to a general audience QA. Two borrowers gave emotional recountings of their ordeal with Wells Fargo’s mortgage operation, both breaking into tears. Management apologized and promised to personally look into their issues.

It was not clear how or whether the board will refashion itself in response to the vote.

Although shareholders sent a clear signal of dissatisfaction, some said it would not be wise to wipe out a nearly full slate of directors at once.

“We do want a core of directors left able to reconstitute the board,” said Anne Simpson, investment director of sustainability at Calpers, which opposed nine directors. “Simply declaring ‘off with their heads’ is not reasonable.”

(Reporting by Ross Kerber in Boston and Dan Freed; Editing by Lauren Tara LaCapra and Meredith Mazzilli)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/MvkBVxvu8EE/us-wells-fargo-accounts-meeting-idUSKBN17R0AM

McDonald’s profit beats as turnaround gains steam, shares at record high


McDonald’s Corp (MCD.N) reported a better-than-expected rise in quarterly profit and U.S. same-restaurant sales on lower costs, all-day breakfast, $1 drinks and promotions on its popular Big Macs, signaling the company’s plan to keep customers coming back to its restaurants has gained traction.

McDonald’s shares on Tuesday popped to an all-time high, jumping 5.3 percent to $141.31, after profit topped Wall Street’s estimate by 14 cents per share.

Two years into a turnaround under Chief Executive Steve Easterbrook, the company has slashed overhead, weeded out underperforming restaurants, introduced all-day breakfast and switched U.S. restaurants to chicken raised without human antibiotics. The moves re-charged the 60-year old chain that was losing business to rivals such as Wendy’s Co (WEN.O) and Burger King (QSR.TO).

“There was a lot of low hanging fruit … (that) set the table for him to rapidly come in and make a lot of changes,” said Trip Miller, managing partner at Gullane Capital Partners, which holds 20,000 McDonald’s shares.

Sales at U.S. restaurants open for more than 13 months rose 1.7 percent in the three months ended March 31, topping analysts’ call for a 1.3 percent increase, according to research firm Consensus Metrix.

U.S. restaurants, which drive more profit than any other market despite more than four straight years of traffic declines, are taking direct aim at Wendy’s with the introduction of cooked-to-order Quarter Pounders made from fresh beef.

The chain is also rolling out higher-end signature crafted sandwiches in the United States, where restaurant operators are hoping to increase convenience with mobile and kiosk ordering as well as delivery.

At least five brokerages have raised their price targets on McDonald’s stock since it began testing mobile ordering in Monterey and Salinas in Central California in March.

McDonald’s has since broadened that test to other markets including Chicago and Washington, D.C., Easterbrook said on a conference call with analysts.

McDonald’s and partner UberEats this quarter will offer delivery services in new U.S. markets after a successful test in Florida, Easterbrook said.

McDonald’s net income rose 8 percent to $1.21 billion, or $1.47 per share, handily beating analysts’ average estimate of $1.33, according to Thomson Reuters I/B/E/S.

Operating costs dropped nearly 12 percent.

Revenue fell 3.9 percent to $5.68 billion — the eleventh straight quarter of declines — mainly due to the sale of restaurants to franchisees as part of Easterbrook’s turnaround plan. Analysts had estimated revenue of $5.53 billion.

(Reporting by Richa Naidu in Bengaluru and Lisa Baertlein in Los Angeles; Editing by Shounak Dasgupta, Bernard Orr)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/fdPgtvQi188/us-mcdonalds-results-idUSKBN17R1FM

Toshiba to drop its auditor: Nikkei


Toshiba Corp (6502.T) has decided to drop its auditor PricewaterhouseCoopers (PwC) Aarata, which declined to approve the company’s full-year financial statement, the Nikkei financial daily reported.

The Japanese tech company is in the middle of a conflict with PwC Aarata over recent results and governance issues at Westinghouse Electric, its American nuclear subsidiary.

Massive cost overruns at four nuclear reactors being constructed by Westinghouse in the Southeastern United States have forced Toshiba to estimate a $9 billion annual net loss and take drastic measures.

PwC Aarata’s refusal to sign-off on Toshiba’s results has given the Tokyo Stock Exchange potential grounds for delisting the company.

The company is in talks with second-tier auditing firms with which it has no potential conflicts of interest, the Japanese newspaper reported.

(Reporting by Laharee Chatterjee in Bengaluru; Editing by Saumyadeb Chakrabarty)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/jMrveJ07-pQ/us-toshiba-auditors-idUSKBN17R2H0

Citi meeting protest prompts apology on pipeline finance steps


NEW YORK A brief, noisy protest by drum-beating young adults at Citigroup’s annual shareholder meeting on Tuesday evolved into an orderly exchange between an older tribal woman and the bank’s two top executives, who conceded it had approved investments in a North Dakota pipeline too quickly.

“We wish we could have a do-over on this,” Chairman Mike O’Neill said after hearing from Casey Camp-Horinek, a council woman for the Ponca Nation. She asked the executives to pardon the disruption from younger protesters who were concerned about environmental damage from the pipeline and shale oil.

Citigroup is one of four lead banks in a group of 17 which have provided project financing for the Dakota Access Pipeline. The pipeline crosses land of the Standing Rock Sioux whose members are concerned about possible ground water contamination if the pipeline breaks.

In January, U.S. President Donald Trump signed orders smoothing the path for the pipeline in a move to expand energy infrastructure and roll back key Obama administration environmental actions.

Chief Executive Mike Corbat said Citigroup had not given enough early consideration to the concerns of the indigenous people. But now, he said, Citigroup could do more to protect the environment by keeping its investments.

“We made the decision that we are a better force for good at the table than away from the table,” Corbat said. “We don’t think it is the right thing to simply sell these and walk away.”

Camp-Horinek thanked the men for listening and spoke with them and Corbat’s wife, Donna, after the meeting.

O’Neill and Corbat had waited quietly during the drumbeating and resumed the meeting after the protesters walked out peacefully after an interruption of less than 10 minutes.

Wells Fargo Co’s (WFC.N) shareholder meeting, which was held at the same time in Florida, resulted in repeated interruptions.

That meeting went into a brief recess after a shareholder made what Chairman Stephen Sanger called a “physical approach” toward a board member and was removed.

At the Citigroup meeting in New York, shareholders overwhelmingly voted in favor of the company’s annual compensation of executives and sided with directors in rejecting a call for a special study of breaking up the big bank. In the so-called “say-on-pay” referendum, more than 95 percent of votes were cast to approve 2016 compensation awards, according to a preliminary count announced by the company. Only about 2.5 percent of votes favored a breakup study of the bank, which is the fourth biggest in the United States by assets.

The compensation endorsement was far stronger than the 63.6 percent approval at the 2016 annual meeting. Directors, disappointed that support was so weak last year, reviewed compensation practices and made changes after meeting with institutional investors and proxy voting advisory firms.

(Reporting by David Henry in New York; Editing by Richard Chang)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/ZzC34529sYg/us-citigroup-shareholder-meeting-idUSKBN17R20Y

Consumer confidence slips; new home sales hit eight-month high


WASHINGTON U.S. consumer confidence fell from a more than 16-year high in April, but a surge in new home sales to an eight-month high last month suggested underlying strength in the economy despite an apparent sharp slowdown in growth in the first quarter.

The economy’s healthy fundamentals were also underscored by other data on Tuesday showing the biggest year-on-year increase in house prices in 2-1/2 years in February. Though consumer confidence slipped this month, it remained at a very high level and many households expected to buy big-ticket items like cars.

That would suggest an acceleration in consumer spending after a slowdown that likely helped restrain economic growth at the start of the of the year.

“The housing market continues to look quite good. Consumers also have more jobs and are getting higher wages, so they will likely increase their spending this year,” said Gus Faucher, chief economist at PNC Financial Services Group in Pittsburgh.

The Conference Board said its consumer confidence index fell to 120.3 this month from 124.9 in March, which was the highest reading since December 2000. The index in April was the second highest reading since 2000.

Consumers’ assessment of labor market conditions were slightly less favorable than in March. Still, the survey’s so-called labor market differential, derived from data about respondents who think jobs are hard to get and those who think jobs are plentiful, was the second-highest since 2001.

That measure closely correlates to the unemployment rate in the Labor Department’s employment report. The survey also showed increases in the number of consumers planning to buy major appliances.

The dip in confidence is likely related to last month’s failed attempt by Republicans in the House of Representatives to pass legislation to repeal the Affordable Care Act, the 2010 healthcare restructuring popularly known as Obamacare.

That failure stirred concerns in financial markets about the difficulties the Trump administration might have in implementing other policies, including its plan to cut taxes.

“Consumer confidence is starting to reflect the realities of governing, not the hopes that the swamp will be drained,” said Joel Naroff, chief economist at Naroff Economic Advisors inHolland, Pennsylvania. “The failure to implement any real policy changes has made people a little more uncertain about what will actually get done.”

U.S. financial markets were little moved by the data as investors focused on other issues, including negotiations for a short-term spending deal to avert a shutdown of the U.S. government early on Saturday.

The dollar fell to a 5-1/2-month low against the euro. U.S. stocks were trading sharply higher, with the Nasdaq Composite .IXIC hitting the 6,000 mark for the first time. U.S. Treasury prices fell.

STRONG HOUSING MARKET

In a separate report on Tuesday, the Commerce Department said new home sales jumped 5.8 percent to a seasonally adjusted annual rate of 621,00 units last month, the highest level since July 2016. New home sales were up 15.6 percent compared to March 2016. They have now increased for three straight months.

A tightening labor market, marked by a 4.5 percent unemployment rate, is boosting employment opportunities for young Americans and helping to support the housing market.

The strength of the housing market suggests that signs of a sharp moderation in economic growth in the first quarter are an aberration.

The Atlanta Federal Reserve is forecasting gross domestic product rising at a 0.5 percent annualized rate in the first quarter after increasing at a 2.1 percent pace in the fourth quarter. The government will publish its advance first-quarter GDP estimate on Friday.

While the inventory of new homes on the market in March increased to the highest level since July 2009, it is less than half of what it was at its peak during the housing boom in 2006.

“The country needs a lot more new home construction to alleviate the supply shortage versus a rising pace of household formations in the past couple years and a recent shift back in favor of homeownership from renting,” said Ted Wieseman, an economist at Morgan Stanley in New York.

Tight housing stock is pushing up prices. A third report on Tuesday showed the SP CoreLogic Case-Shiller composite index of house prices in 20 metropolitan areas rose 5.9 percent in February from a year ago, the largest gain since July 2014, after advancing 5.7 percent in January.

(Reporting by Lucia Mutikani; Additional reporting by Dan Burns in New York; Editing by Paul Simao)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/2UYV2eszvWw/us-usa-economy-housing-idUSKBN17R1SO

3M raises 2017 profit forecast; first-quarter results top estimates


3M Co (MMM.N), which makes Scotch tape and Post-it notes, raised its 2017 profit forecast and reported better-than-expected quarterly results, helped by growth across its major businesses.

3M boosted its 2017 earnings forecast range to $8.70-$9.05 per share, from $8.45-$8.80. Analysts on average were expecting earnings of $8.63, according to Thomson Reuters I/B/E/S.

Saint-Paul, Minnesota-based 3M also said it now expects organic local-currency sales growth in the range of 2-5 percent, compared with its prior outlook of 1-3 percent.

Net income attributable to the company rose 3.8 percent to $1.32 billion, or $2.16 per share, in the first quarter ended March 31 from a year earlier.

3M, which gets more than 60 percent of its revenue from outside the United States, is reaping the benefits of restructuring its business through divestures and layoffs over the past year.

Net sales rose 3.7 percent to $7.69 billion.

Analysts on average had expected adjusted earnings of $2.06 per share and sales of $7.47 billion for the quarter.

Shares of the company were marginally up at $194.76 in early trading on Tuesday.

Up to Monday’s close, the stock had risen 15.2 percent in the past 12 months, compared with a 13.5 percent rise in the SP 500 index .SPX.

(Reporting by Arunima Banerjee and Shashwat Awasthi in Bengaluru; Editing by Anil D’Silva and Maju Samuel)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/Wd6l2H4S7uU/us-3m-results-idUSKBN17R1CS

Coca-Cola to cut 1,200 jobs, boosts savings target


Coca-Cola Co (KO.N) said on Tuesday it would cut about 1,200 jobs as the beverage maker expands its savings target amid falling demand for fizzy drinks globally.

Shares of the Dow component were up marginally at $43.39.

Coca-Cola and rival PepsiCo Inc’s (PEP.N) soda sales have taken a hit as consumers in North America and Europe increasingly shun sugary drinks.

Global soda sales fell 1 percent in the first quarter ended March 31, Coca-Cola said on Tuesday.

The Atlanta-based company said it was increasing its cost-cutting target by $800 million in annualized savings and now expects to save $3.8 billion by 2019.

The majority of the additional savings would come from the corporate job reductions, incoming Chief Executive James Quincey said on a post-earnings conference call.

The company, which also reported a smaller-than-expected quarterly profit, said it expects to reinvest at least half of the $800 million saved to mainly boost growth in its non-carbonated drink business.

“We are not too worried about this quarter’s miss,” RBC Capital Markets analyst Nik Modi wrote in a note.

“The important thing is that KO is raising its cost-saving estimates and we believe there is more to go.”

The job cuts would start in the second half of 2017 and carry into 2018, Coca-Cola said.

The company also forecast a smaller decline in 2017 adjusted profit than it had previously expected.

Coca-Cola said on Tuesday it expects full-year adjusted profit to fall 1-3 percent, compared with the 1-4 percent decline it forecast in February.

The company is offloading much of its low-margin bottling business to reduce expenses, but costs associated with the refranchising have been higher than expected, weighing on profit.

Coca-Cola said it recorded a charge of $84 million related to the refranchising in North America in the latest quarter.

Net income attributable to the company’s shareholders fell 20.3 percent to $1.18 billion, or 27 cents per share, from a year earlier.

Excluding items, the company earned 43 cents per share, missing analysts estimates by a cent, according to Thomson Reuters I/B/E/S.

Revenue fell 11.3 percent to $9.12 billion, declining for the eighth straight quarter.

(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Sriraj Kalluvila)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/EHlBx7KiWRM/us-coca-cola-results-idUSKBN17R18T