Wall Street gets lift from strong earnings at end of rough month

(Reuters) – The S&P 500 and the Nasdaq were on track to post their first two-day gain this month on Wednesday, as Facebook (FB.O) led a slew of encouraging earnings reports that boosted sentiment at the end of a tumultuous October for global markets.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., October 30, 2018. REUTERS/Brendan McDermid

Shares of Facebook Inc (FB.O) jumped 6.2 percent after the social media giant eased investor concerns by forecasting that margins would stop shrinking after 2019 as costs from scandals ease up.

Facebook reported a second-straight quarter of record-low user growth, confirming fears of slowing growth, but analysts said the results were not as bad as feared.

That brought some relief to the so-called FANG group of high-growth internet stocks. Amazon.com Inc (AMZN.O) rose 4.1 percent, Netflix Inc (NFLX.O) climbed 6.8 percent and Google-parent Alphabet Inc (GOOGL.O) gained 3.9 percent.

The S&P technology index .SPLRCT rose 2.22 percent, leading gains among the major S&P indexes, while the S&P communication services index .SPLRCL jumped 2.46 percent.

“Some continuation of yesterday’s strength with pretty good results in the last hour, so this momentum is expected to continue today,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

“There is more comfort right now at least and less anxiety since we’re finishing out the month.”

The FANG group and Apple Inc (AAPL.O) have led the slide on Wall Street this month, which has left the S&P 500 and Dow Industrials with barely any gains for the year, fanned by concerns over trade, higher borrowing and wage costs, fears of corporate earnings peaking and a host of geopolitical worries.

The S&P 500 closing is set to lock near-7 percent loss for October, its worst monthly performance in over seven years.

At 9:56 a.m. ET, the Dow Jones Industrial Average .DJI was up 276.97 points, or 1.11 percent, at 25,151.61, the S&P 500 .SPX was up 34.55 points, or 1.29 percent, at 2,717.18. The Nasdaq Composite .IXIC was up 146.67 points, or 2.05 percent, at 7,308.32.

The ADP national employment report showed private payrolls increased by 227,000 this month, the highest rise since February. It comes ahead of the more comprehensive non-farm payrolls report on Friday.

But data also showed U.S. labor costs accelerated in the third quarter as wages for both private and government workers surged amid tightening labor market conditions.

Strong earnings reports from companies including General Motors Co (GM.N), Yum Brands Inc (YUM.N) and Estee Lauder Cos Inc (EL.N), all of which have a fair share of exposure to China, also boosted sentiment.

General Motors jumped 6.9 percent after the carmaker’s robust quarterly results and forecast.

Yum Brands was up 2.7 percent and Yum China Holdings Inc (YUMC.N) rose 14.1 percent as strong KFC sales drove results.

Estee Lauder gained 7.2 percent after the cosmetics maker said strong demand in Asia boosted quarterly results and full-year profit outlook.

Defensive sectors were the only decliners, with the S&P consumer staples index .SPLRCS falling 1.26 percent, dragged down by losses in Kellogg CO (K.N).

Kellogg fell 8 percent after cutting its full-year profit outlook due to higher advertising and distribution costs.

Advancing issues outnumbered decliners by a 2.54-to-1 ratio on the NYSE and by a 2.97-to-1 ratio on the Nasdaq.

The S&P index recorded six new 52-week highs and two new lows, while the Nasdaq recorded 17 new highs and 35 new lows.

Reporting by Shreyashi Sanyal in Bengaluru; Additional reporting by Shruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila

JEFFREY LIPTON in BARBADOS – http://feeds.reuters.com/~r/reuters/businessNews/~3/97J24zLDetU/wall-street-gets-lift-from-strong-earnings-at-end-of-rough-month-idUSKCN1N51NL

US STOCKS-Wall Street gets lift from strong earnings at end of rough month

(Reuters) – The S&P 500 and the Nasdaq were on track to post their first two-day gain this month on Wednesday, as Facebook (FB.O) led a slew of encouraging earnings reports that boosted sentiment at the end of a tumultuous October for global markets.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., October 30, 2018. REUTERS/Brendan McDermid

Shares of Facebook Inc (FB.O) jumped 6.2 percent after the social media giant eased investor concerns by forecasting that margins would stop shrinking after 2019 as costs from scandals ease up.

Facebook reported a second-straight quarter of record-low user growth, confirming fears of slowing growth, but analysts said the results were not as bad as feared.

That brought some relief to the so-called FANG group of high-growth internet stocks. Amazon.com Inc (AMZN.O) rose 4.1 percent, Netflix Inc (NFLX.O) climbed 6.8 percent and Google-parent Alphabet Inc (GOOGL.O) gained 3.9 percent.

The S&P technology index .SPLRCT rose 2.22 percent, leading gains among the major S&P indexes, while the S&P communication services index .SPLRCL jumped 2.46 percent.

“Some continuation of yesterday’s strength with pretty good results in the last hour, so this momentum is expected to continue today,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

“There is more comfort right now at least and less anxiety since we’re finishing out the month.”

The FANG group and Apple Inc (AAPL.O) have led the slide on Wall Street this month, which has left the S&P 500 and Dow Industrials with barely any gains for the year, fanned by concerns over trade, higher borrowing and wage costs, fears of corporate earnings peaking and a host of geopolitical worries.

The S&P 500 closing is set to lock near-7 percent loss for October, its worst monthly performance in over seven years.

At 9:56 a.m. ET, the Dow Jones Industrial Average .DJI was up 276.97 points, or 1.11 percent, at 25,151.61, the S&P 500 .SPX was up 34.55 points, or 1.29 percent, at 2,717.18. The Nasdaq Composite .IXIC was up 146.67 points, or 2.05 percent, at 7,308.32.

The ADP national employment report showed private payrolls increased by 227,000 this month, the highest rise since February. It comes ahead of the more comprehensive non-farm payrolls report on Friday.

But data also showed U.S. labor costs accelerated in the third quarter as wages for both private and government workers surged amid tightening labor market conditions.

Strong earnings reports from companies including General Motors Co (GM.N), Yum Brands Inc (YUM.N) and Estee Lauder Cos Inc (EL.N), all of which have a fair share of exposure to China, also boosted sentiment.

General Motors jumped 6.9 percent after the carmaker’s robust quarterly results and forecast.

Yum Brands was up 2.7 percent and Yum China Holdings Inc (YUMC.N) rose 14.1 percent as strong KFC sales drove results.

Estee Lauder gained 7.2 percent after the cosmetics maker said strong demand in Asia boosted quarterly results and full-year profit outlook.

Defensive sectors were the only decliners, with the S&P consumer staples index .SPLRCS falling 1.26 percent, dragged down by losses in Kellogg CO (K.N).

Kellogg fell 8 percent after cutting its full-year profit outlook due to higher advertising and distribution costs.

Advancing issues outnumbered decliners by a 2.54-to-1 ratio on the NYSE and by a 2.97-to-1 ratio on the Nasdaq.

The S&P index recorded six new 52-week highs and two new lows, while the Nasdaq recorded 17 new highs and 35 new lows.

Reporting by Shreyashi Sanyal in Bengaluru; Additional reporting by Shruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila

JEFFREY LIPTON in BARBADOS – http://feeds.reuters.com/~r/reuters/companyNews/~3/KduxaJQLcGY/us-stocks-wall-street-gets-lift-from-strong-earnings-at-end-of-rough-month-idUSL3N1XB5YF

Vietcombank gains preliminary agreements to open U.S. office

Men withdraw money from an ATM at a branch of Vietcombank in Hanoi, Vietnam April 22, 2016. REUTERS/Kham/File photo

HANOI (Reuters) – Vietcombank VCB.HM has made a significant step in becoming the first Vietnamese bank to open a representative office in the United States, it said on Wednesday.

The move by Vietnam’s biggest bank by market value comes as diplomatic ties between Communist Vietnam and former war enemy United States are on the rise and is part of a push to expand internationally as it aims for a place among the world’s top 300 banking and financial groups.

Vietcombank has obtained approval from the U.S. Federal Reserve and an agreement in principle from the New York State Department of Financial Services to open a representative office in New York City, it said on its website.

The State Bank of Vietnam, the country’s central bank, owns 77 percent of Vietcombank. Japan’s Mizuho Bank [MZFGAE.UL] is the second biggest investor with a 15 percent stake.

“As Vietnam becomes more attractive to U.S. investors, Vietcombank’s representative office … will be an extended arm for Vietcombank in the United States to support business development in this very potential market,” it said, adding that it aims to obtain a license and open a New York office as soon as possible.

The representative office would liaise with prospective clients and banks in the United States and engage in other non-transactional activities such as analysis of the banking and financial services market.

The United States is now one of Vietnam’s top trading partners and is expected by some analysts to benefit from the continuing U.S.-China trade conflict, offering an alternative investment and trade destination.

Reporting by Mai Nguyen; Editing by David Goodman

JEFFREY LIPTON in BARBADOS – http://feeds.reuters.com/~r/reuters/companyNews/~3/_Wxj_CRJHKE/vietcombank-gains-preliminary-agreements-to-open-u-s-office-idUSL3N1XB5TO

Walmart India to spend $500 mln to open 47 stores – report

Customers shop at a Walmart India’s Best Price Modern Wholesale store in Jammu May 8, 2018. REUTERS/Mukesh Gupta

(Reuters) – Walmart Inc’s (WMT.N) India unit will invest about $500 million to open 47 stores in the country by 2022, CNBC-TV18 reported here on Wednesday, citing the Press Trust of India news agency.

“We are planning to take the total number of stores to 70 by 2022,” Krish Iyer, chief executive officer of Walmart India, was quoted as saying in the report.

“That is the plan and we will also have e-commerce space in all the stores.”

Earlier this year, the U.S retail giant acquired about 77 percent stake in Indian e-commerce firm Flipkart for roughly $16 billion, in one of the biggest foreign investments.

Reporting By Arnab Paul in Bengaluru; Editing by Maju Samuel

JEFFREY LIPTON in BARBADOS – http://feeds.reuters.com/~r/reuters/companyNews/~3/piEexdLBRk4/walmart-india-to-spend-500-mln-to-open-47-stores-report-idUSL3N1XB5YY

Spruce Point sees dim future for Dollarama, share price drops

BOSTON (Reuters) – Spruce Point Capital Management, which focuses on in-depth research of companies’ vulnerabilities, sees room for Dollarama Inc’s (DOL.TO) stock price to tumble roughly 40 percent after the Canadian retailer raised prices and fewer customers are shopping at its stores.

“Spruce Point believes Dollarama is a ‘strong sell’ with an approximately 40 percent downside risk,” Ben Axler, who runs the hedge fund, said at an investment conference on Tuesday, according to a person familiar with his presentation. He examined the company’s products, pricing and what he called “troublesome management and governance red flags.”

Axler presented the idea at the Robin Hood Investors Conference in New York and on Wednesday he released a report detailing the company’s problems.

“Dollarama is now a broken growth story that will fail to hit its lofty long-term growth targets,” the report said, adding that the share price could drop to C$24.60 per share. It fell nearly 4 percent to trade at C$36.92 shortly after the open.

Axler is one of a handful of so-called short activists, investment managers who often spend months researching a company and then publicize the information to convince others that the stock will fall a lot. Dollarama’s stock price has already dropped 21 percent in the last six months.

Dollarama is no longer a true dollar store after a series of price hikes that have taken a bite out of store traffic, Axler said.

Lyla Radmanovich, a Dollarama spokeswoman, said she was not aware of the presentation and declined to comment on “speculation regarding our stock price.”

Axler also pointed to what he called “questionable accounting practices” noting that the company made money through its currency hedges over the last years because sales are in Canadian dollars while most purchases are linked to the U.S. dollar. Those benefits have been erased, he said, but “management reports that gross margins have effectively remained flat through this period.”

More competition, higher labor costs, rising transportation costs and the lapsing currency hedge benefit could all chip away at the company’s profitability, he predicted.

Axler’s brand of short activism has found favor with investors recently as his fund, which invests $169 million, returned 18 percent after fees so far this year, according to an investor note.

For funds that pursue this type of research-heavy shorting strategy, Axler said, recent market volatility is a plus. “Investors are looking for differentiated research especially and they are now searching for uncorrelated investments.”

Reporting by Svea Herbst-Bayliss; Editing by Phil Berlowitz and Susan Thomas

JEFFREY LIPTON in BARBADOS – http://feeds.reuters.com/~r/news/wealth/~3/OHfeWwFzxZg/spruce-point-sees-dim-future-for-dollarama-share-price-drops-idUSKCN1N51H3

Sprint beats revenue and profit forecasts, shares rise

(Reuters) – Sprint Corp (S.N) beat Wall Street’s estimates for quarterly revenue, profit and overall net subscriber additions on Wednesday, driving shares in the No. 4 U.S. wireless carrier 9 percent higher in morning trading.

FILE PHOTO: The Sprint logo is displayed on a a screen on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., April 30, 2018. REUTERS/Brendan McDermid/File Photo

Sprint, which is awaiting regulatory approval to merge with bigger rival T-Mobile US Inc (TMUS.O), focused on increasing its revenue from devices such as tablets and smartwatches, and getting more customers for its higher-priced unlimited phone plans, Chief Executive Michel Combes said during an earnings call with analysts.

As customers add more devices other than phones, “it should reduce churn at the end of the day, because that means more devices per account,” Combes said.

Sprint reported net income attributable to the company of $196 million, or 5 cents per share, in the quarter ended Sept. 30, compared with a net loss of $48 million, or 1 cent per share, a year earlier.

Analysts were expecting the company to report a loss of 1 cent per share, according to Refinitiv data.

Sprint’s business seems to be stabilizing, Jonathan Chaplin, an analyst with NewStreet Research, said in a note, adding “if the deal [with T-Mobile] is approved, it will be far easier to integrate a business that is stable.”

Sprint added a net 109,000 subscribers who pay a monthly bill during the second quarter, down from 168,000 new subscribers at the same time last year.

Analysts on average had expected the company to lose a net 10,000 subscribers, according to research firm FactSet.

In July, Sprint revamped its unlimited wireless plans to include a basic and premium plan. Combes previously said the higher prices for those plans could affect future customer additions, as the carrier tries to balance growth with profitability.

Sprint fell short of estimates for it to add 22,000 net phone subscribers, instead losing 34,000 in the quarter as it battles the negative perception of its network quality compared to AT&T Inc (T.N) and Verizon Communications Inc (VZ.N).

Churn, or the rate of customer defections, among phone customers who pay a recurring bill, was 1.73 percent during the quarter, up from 1.59 percent in the same period last year.

Combes said Sprint expected the churn level to continue over the next several quarters, as customers who were on promotional pricing plans could leave after the offer ends.

Total operating revenue rose to $8.43 billion from $7.93 billion. Analysts had expected the company to report revenue of $7.97 billion.

Reporting by Akanksha Rana in Bengaluru and Sheila Dang in New York; Editing by Patrick Graham and Frances Kerry

JEFFREY LIPTON in BARBADOS – http://feeds.reuters.com/~r/reuters/businessNews/~3/HuPPS8S6ssU/sprint-beats-revenue-and-profit-forecasts-shares-rise-idUSKCN1N51MP

UPDATE 2-Sprint beats revenue and profit forecasts, shares rise

(Reuters) – Sprint Corp (S.N) beat Wall Street’s estimates for quarterly revenue, profit and overall net subscriber additions on Wednesday, driving shares in the No. 4 U.S. wireless carrier 9 percent higher in morning trading.

FILE PHOTO: The Sprint logo is displayed on a a screen on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., April 30, 2018. REUTERS/Brendan McDermid/File Photo

Sprint, which is awaiting regulatory approval to merge with bigger rival T-Mobile US Inc (TMUS.O), focused on increasing its revenue from devices such as tablets and smartwatches, and getting more customers for its higher-priced unlimited phone plans, Chief Executive Michel Combes said during an earnings call with analysts.

As customers add more devices other than phones, “it should reduce churn at the end of the day, because that means more devices per account,” Combes said.

Sprint reported net income attributable to the company of $196 million, or 5 cents per share, in the quarter ended Sept. 30, compared with a net loss of $48 million, or 1 cent per share, a year earlier.

Analysts were expecting the company to report a loss of 1 cent per share, according to Refinitiv data.

Sprint’s business seems to be stabilizing, Jonathan Chaplin, an analyst with NewStreet Research, said in a note, adding “if the deal [with T-Mobile] is approved, it will be far easier to integrate a business that is stable.”

Sprint added a net 109,000 subscribers who pay a monthly bill during the second quarter, down from 168,000 new subscribers at the same time last year.

Analysts on average had expected the company to lose a net 10,000 subscribers, according to research firm FactSet.

In July, Sprint revamped its unlimited wireless plans to include a basic and premium plan. Combes previously said the higher prices for those plans could affect future customer additions, as the carrier tries to balance growth with profitability.

Sprint fell short of estimates for it to add 22,000 net phone subscribers, instead losing 34,000 in the quarter as it battles the negative perception of its network quality compared to AT&T Inc (T.N) and Verizon Communications Inc (VZ.N).

Churn, or the rate of customer defections, among phone customers who pay a recurring bill, was 1.73 percent during the quarter, up from 1.59 percent in the same period last year.

Combes said Sprint expected the churn level to continue over the next several quarters, as customers who were on promotional pricing plans could leave after the offer ends.

Total operating revenue rose to $8.43 billion from $7.93 billion. Analysts had expected the company to report revenue of $7.97 billion.

Reporting by Akanksha Rana in Bengaluru and Sheila Dang in New York; Editing by Patrick Graham and Frances Kerry

JEFFREY LIPTON in BARBADOS – http://feeds.reuters.com/~r/reuters/companyNews/~3/AM_JGpYu3Ic/update-2-sprint-beats-revenue-and-profit-forecasts-shares-rise-idUSL3N1XB5AO

GM offering buyouts to cut North American salaried staff

FILE PHOTO: The GM logo is seen at the General Motors Lansing Grand River Assembly Plant in Lansing, Michigan October 26, 2015. REUTERS/Rebecca Cook/File Photo

DETROIT (Reuters) – General Motors Co (GM.N) said on Wednesday it plans to cut its North American salaried workforce, starting with voluntary buyout offers but resorting to layoffs if necessary.

The Detroit automaker began notifying employees of the cost-cutting move as it reported third quarter profits that beat Wall Street estimates. GM, however, has had to cut its forecast for automotive cash flow, and for the first nine months of 2018 has burned $300 million in cash in its core auto operations, as costs for steel and other commodities have risen.

In a statement, the automaker said it will consider involuntary layoffs “after we see the results of the voluntary program and other cost reduction efforts.” Rival Ford Motor Co (F.N) has also said it plans to cut its salaried staff.

Reporting By Joe White; Editing by Nick Zieminski

JEFFREY LIPTON in BARBADOS – http://feeds.reuters.com/~r/reuters/businessNews/~3/UXuvcYH35NQ/gm-offering-buyouts-to-cut-north-american-salaried-staff-idUSKCN1N521H

U.S. Federal Reserve unveils proposal to ease regulations for larger banks

FILE PHOTO: The Federal Reserve building is pictured in Washington, DC, U.S., August 22, 2018. REUTERS/Chris Wattie/File Photo/File Photo

WASHINGTON (Reuters) – The U.S. Federal Reserve unveiled a proposal Wednesday that would ease regulations for banks with less than $700 billion in assets.

PNC Financial Corp (PNC.N), Capital One Financial Corp (COF.N), Charles Schwab (SCHW.N), and U.S. Bancorp (USB.N) would enjoy reduced liquidity and compliance requirements under the proposal, which the Fed board is set to vote on Wednesday morning. Several smaller banks would see further reduced regulation as laid out in a bank deregulation law Congress passed in May.

The proposal establishes four tiers of regulation for banks with over $100 billion in assets, as central bank seeks to tailor rules for larger firms. The proposal would reserve the strictest rules for U.S. globally systemic banks, and step down requirements for smaller and less complex firms.

Reporting by Pete Schroeder; Editing by Chizu Nomiyama

JEFFREY LIPTON in BARBADOS – http://feeds.reuters.com/~r/reuters/companyNews/~3/pS8AuJCsNOk/u-s-federal-reserve-unveils-proposal-to-ease-regulations-for-larger-banks-idUSL2N1XB0SM