US: Stocks rise on oil jump, Facebook profits  

PHOTO: AFP

JAN 29, 20167:00 AM

[NEW YORK] Wall Street stocks rose solidly on Thursday with petroleum-linked shares jumping on higher oil prices and strong Facebook earnings lifting other large technology companies.

The Dow Jones Industrial Average gained 125.18 points (0.79 per cent) at 16,069.64.

The broad-based S&P 500 climbed 10.41 (0.55 per cent) to 1,893.36, while the tech-rich Nasdaq Composite Index advanced 38.51 (0.86 per cent) to 4,506.68.

Oil prices rose on news of potential talks between Russia and OPEC producers to cut output, lifting beaten-down companies tied to the oil sector.

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Dow member ExxonMobil rose 2.3 per cent, while oil-services company Baker Hughes jumped 5.6 per cent despite reporting a US$1 billion loss for the fourth quarter.

Facebook surged 15.5 per cent after reporting that fourth-quarter profits more than doubled to US$1.6 billion as booming subscriber counts and higher revenues from online advertisers boosted results.

The Facebook results also provided a bounce to other growth-oriented tech names such as Netflix and Google parent Alphabet, which jumped a respective 3.6 per cent and 4.4 per cent.

Stocks were a bit choppy, with all three indices veering briefly into negative territory during the session.

Michael James, managing director of equity trading at Wedbush Securities, said market sentiment was mixed after Wednesday's Federal Reserve policy statement kept alive the odds of a March increase to interest rates.

"Even though the indices are up, there's still a negative overhang from the Fed not taking a March rate hike off the table," Mr James said.

Caterpillar climbed 4.7 per cent after forecasting earnings slightly better than expected in 2016 even as it reported a loss of US$87 million in the fourth quarter due to the commodity downturn.

Sports apparel maker Under Armour surged 22.6 per cent after beating fourth-quarter forecasts for earnings and revenues. Rival Nike rose 2.7 per cent.

Celgene tumbled 5.0 per cent after projecting first-quarter earnings of US$1.27 to US$1.30 per share, barely meeting analyst expectations for US$1.30 per share. Other biotech shares also fell, with Gilead Sciences losing 2.3 per cent and Biogen 2.7 per cent.

Ebay plummeted 12.5 per cent after projecting earnings and revenues below analyst expectations.

The market punished other companies that disappointed with earnings or outlooks: Abbott Laboratories, which makes nutrition and health care products, dropped 9.3 per cent; cloud-computing company ServiceNow slumped 15.7 per cent; and credit card company Discover Financial lost 8.0 per cent.

AFP

      

NYSE calls for coordination among exchanges to ease volatility

PHOTO: REUTERS

JAN 29, 20167:29 AM

[NEW YORK] The New York Stock Exchange on Thursday recommended reforms to the US equities market which it said could improve stability and prevent a repeat of the wild price swings seen on Aug 24 during a near-unprecedented bout of volatility.

The measures included a call for all US stock exchanges to modify and coordinate their policies on trading halts when securities prices move violently in a short time.

Such halts were first introduced after the 2010 flash crash when around US$1 trillion in paper value was temporarily wiped from US stock markets within minutes.

Many investors said the rules failed their first big test on Aug 24, when panic over the health of the Chinese economy hammered US stock futures prior to the market open, and then triggered a record intraday drop in the Dow Jones industrial average.

During the volatility on Aug 24 there were 1,278 halts compared to 39 on a typical day, NYSE, which is owned by Intercontinental Exchange Inc, said in its report.

Exchange-traded funds that track equities were hit especially hard, and most of the halts happened in the first hour of trading. The sporadic and rapid-fire halts led to confusion among some investors as to what was trading and questions whether they got prices worse than they should have.

NYSE said longer trading halts could be used to allow buy or sell imbalances to clear before the stocks reopen to prevent successive halts.

Another of its suggestions was that when a security is halted, all eligible trading interest be sent to the exchange where it is listed, creating a bigger pool of liquidity that allows for more accurate pricing.

Unlike other exchanges, which are nearly fully automated, NYSE uses people on its trading floor to open its stocks, a process it says gives it greater stability because the traders can intervene in ways that algorithms cannot.

But rivals say NYSE's use of humans rather than computers caused undue delays in opening some stocks and ETFs after they were halted, intensifying ETF pricing issues.

NYSE said it has already instituted changes on its own exchange to prevent further issues, but that it was now time for the industry to act together on market-wide reforms.

REUTERS

    
 

South Korea's December industrial output growth hits 3-month high

South Korea's industrial output in December rose more than expected and at its fastest pace in three months, data showed on Friday, providing some relief to those concerned about Asia's fourth-largest economy losing momentum. 

PHOTO: REUTERS

JAN 29, 20167:26 AM

[SEOUL] South Korea's industrial output in December rose more than expected and at its fastest pace in three months, data showed on Friday, providing some relief to those concerned about Asia's fourth-largest economy losing momentum.

Output rose by a seasonally adjusted 1.3 per cent in December on monthly terms, following a revised 2.1 per cent fall in November, Statistics Korea data showed. The revised November reading was unchanged from the preliminary report.

December's output growth was far better than a median 0.3 per cent rise tipped in a Reuters survey of 14 analysts, although forecasts ranged widely from a fall of 0.5 per cent to a 2.0 per cent gain.

On an annual basis, industrial output declined 1.9 per cent in December after a revised 0.1 per cent fall in November. The median Reuters poll forecast was for the output to have slipped 3.0 per cent in annual terms last month.

Statistics Korea's data also showed that service-sector output held steady in December from a month earlier, following a revised 0.3 per cent gain in November.

REUTERS

    
 

GM deceived buyers of used cars subject to recalls, FTC says

General Motors Co and two car dealers settled US claims that they touted rigorous inspection of used cars, yet were selling vehicles that had been subject to safety recalls and hadn't been repaired. 

PHOTO: REUTERS

JAN 29, 20167:37 AM

[WASHINGTON] General Motors Co and two car dealers settled US claims that they touted rigorous inspection of used cars, yet were selling vehicles that had been subject to safety recalls and hadn't been repaired.

GM marketed used cars at local dealerships that had open recalls for defects related to ignition switches, power steering, braking and airbag deployment without disclosing the problems, the Federal Trade Commission said in a statement Thursday.

"Companies touting the comprehensiveness of their vehicle inspections need to be straight with consumers about safety-related recalls, which can raise major safety concerns," said Jessica Rich, the head of the FTC's consumer protection unit. Ms Rich said on a phone call with reporters that the agency would continue to monitor car dealers' ads. "We do hope these actions send a message to the market as a whole."

Besides GM, the FTC also settled claims against Jim Koons Management, which has 15 dealerships in the mid-Atlantic region, and Lithia Motors, which has more than 100 stores in the West and Midwest.

"We made changes to our certified pre-owned marketing program last year to address the FTC's concerns and we are pleased with the proposed resolution of the matter," said GM spokesman Jim Cain.

Under the settlement, which remains in effect for 20 years, Detroit-based GM and the dealers are prohibited from misrepresenting material facts about the safety of used cars they advertise. They must also inform customers that their vehicles may have an open recall. Although the settlement didn't include monetary penalties, going forward each violation of the FTC's orders can result in a fine of up to US$16,000. 

The FTC's Rich said for a large company with many customers, multiple violations could end up being "a very large number."

Auto dealers aren't required by law to fix safety defects before selling a car. Legislation to make that mandatory was backed by the Obama administration but opposed by the dealers' trade association and not included in the recently passed measure setting US transportation policy for the next five years.

Jim Koons Management said in a statement that it's not aware of a single customer complaint about its advertising.

"We strongly believe we have fully complied with the letter and spirit of the law," the company said. "It has been our policy for many years to rigorously inspect our used vehicles and make recall repairs when possible." A representative of Lithia Motors didn't respond to a request for comment. Shares of Lithia Motors, based in Medford, Oregon, fell 3.9 per cent to US$73.79.

The National Highway Traffic Safety Administration has called on all auto dealers to voluntarily refrain from selling used cars with unrepaired safety defects.

"The Department of Transportation has asked Congress to require used-car dealers to repair vehicles under a safety recall before delivering those vehicles to customers, which would mirror the requirement to remedy new cars before sale," Mark Rosekind, administrator of the National Highway Traffic Safety Administration, said Jan 21 at the Washington Auto Show. "The department continues to believe this is the right approach."

Dealers have argued that a complete ban on the sale of used cars with open safety recalls would be damaging to consumers because it would reduce the value of their trade-ins. They've also said only a small fraction of safety recalls order consumers to stop driving, and that consumers are capable of assessing the risk from a particular safety defect.

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Amazon delivers big profit boost, but misses forecast

US online giant Amazon on Thursday reported profits doubled in the past quarter, as it attracted more customers with video and other services, but the results missed Wall Street forecasts. 

PHOTO: REUTERS

JAN 29, 20166:52 AM

[SAN FRANCISCO] US online giant Amazon on Thursday reported profits doubled in the past quarter, as it attracted more customers with video and other services, but the results missed Wall Street forecasts.

Amazon shares slid 11 per cent to US$565.19 in after-hours trade on the results, which showed a fourth-quarter profit of US$482 million, up from a US$214 million profit a year earlier.

The results marked the third consecutive quarterly profit for the company, which is a heavyweight in online retail as well as cloud computing, and more recently streaming video.

Overall revenue jumped 22 per cent from a year ago to US$35.7 billion.

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Amazon, which earned a reputation for making little or no profit as it gained market share, managed an annual profit for 2015 of US$596 million.

Revenues were up 20 per cent for the year, at US$107 billion.

"Twenty years ago, I was driving the packages to the post office myself and hoping we might one day afford a forklift," said chief executive Jeff Bezos, who founded the company in 1994.

"This year, we pass US$100 billion in annual sales and serve 300 million customers. And still, measured by the dynamism we see everywhere in the marketplace and by the ever-expanding opportunities we see to invent on behalf of customers, it feels every bit like Day One."

Amazon has made Mr Bezos into one of the world's wealthiest individuals, with a fortune estimated at some US$50 billion, and he has since created his own space company called Blue Origin, and purchased the Washington Post newspaper.

The company has not offered details on its revenue from its Amazon Prime membership service, which offers free delivery and a variety of other services, or its own Kindle and Fire devices.

But it has broken down the finances from its cloud computing unit called Amazon Web Services: It took in US$2.4 billion in revenue in the quarter and US$7.9 billion for the year, accounting for an operating profit of US$687 million in the quarter and US$1.9 billion for the year.

The research firm Consumer Intelligence Research Partners estimates that Amazon Prime now has 54 million US members, spending on average about US$1,100 per year - much more than the US$600 per year spent by non-members.

Amazon offered no detailed numbers but said worldwide paid Prime memberships increased 51 per cent last year, growing by 47 per cent in the US and "even faster outside the US."

Those who subscribe get access to much of Amazon's video streaming library for free as well as music and other content.

Amazon's Mozart In The Jungle programme received two Golden Globes earlier this month, only a year after the company scored its first win ever at the Globes for the original programme Transparent.

AFP