foxex: The Phase Down

The Market Sum | Insight after the bell

By Caleb Silver, Editor in Chief

Thursday's Headlines

1. Global Markets Surge on U.S.-China Agreement to Phase Out Tariffs

2. The DJIA Posts Yet Another Record High

3. Online Travel Stocks Dive as Search Results Decline

4. The EU is Looking into Apple Pay

Markets Closed

Dow
27,674.80 +0.66%

S&P
3,085.18 +0.27%

Nasdaq
8,434.52 +0.28%

VIX
12.73 +0.87%

Bitcoin
$9,247.86 -0.98%

US 10-Yr Yield
1.93 +6.17%

Image: Getty Images

Markets Today

Global markets surged on news that the U.S. and China trade representatives have agreed to phase out existing tariffs as part of the first phase of a trade agreement. China's Commerce Ministry said that both sides had agreed to simultaneously cancel some existing tariffs on one another's goods as the two economic powers work towards a broader agreement. That agreement may take longer than expected, however, as Reuters reported yesterday that a meeting between President Trump and President Xi may be delayed until at least December.

The DJIA closed at yet another record high, up 0.66% on the news, as industrial giants like Boeing and Caterpillar climbed over 1.4%. The DJIA is now up close to 6.5% in the past three months as the trade winds have been blowing in a positive direction.

chart courtesy YCHARTS

Headlines:

Bond Yields for U.S. Treasuries spiked today as investors rotated out of fixed income and into stocks on trade news hopes. The yield on the 10-year U.S. Treasury rose from 1.81% yesterday to 1.93% today. Yields move inversely to price.
Disney reported a revenue beat but an earnings miss, unless you're looking at adjusted numbers, in which case they had an earnings beat. Its media networks segment revenue rose even before the launch of Disney's streaming service.
Amazon and Disney have agreed to a deal wherein Amazon Fire TV will carry Disney+ programming, according to the WSJ. This partnership allows Amazon's Fire TV to feature popular properties like The Simpsons, Frozen, and Star Wars.
Electronic cigarette maker JUUL announced it would halt sales of its mint flavor, which account for 70% of its U.S. sales. The move comes ahead of anticipated regulations from the FDA which will likely ban all flavored e-cigarettes.
OPEC and several other countries allied with the cartel are considering further production cuts to bolster crude oil prices, which have fallen to around $62 per barrel from their recent April highs of $75 per barrel. OPEC's next meeting is in early December in Vienna.
The Gap has announced that CEO Art Peck will be stepping down amid sliding sales at its flagship stores, Old Navy and Banana Republic. Peck has been CEO since 2015.

Online Booking Blues

Travel companies Expedia and Tripadvisor both fell more than 20% today after they reported earnings misses after markets closed yesterday. Both companies blamed the miss on the same thing, worse visibility in Google search results. The third quarter was the first full quarter after Google majorly revamped its own travel planning tools in May.

With Google favoring its own travel booking tool (see below), Expedia and Tripadvisor have been forced to spend much more on paid search results, which are the only thing displayed higher than Google's own. That's expensive, and eats into profit margins.

The EU is Looking into Apple Pay

When it comes to cracking the whip on tech companies behaving badly, the EU's competition chief, Margrethe Vestager, does not play around. She levied $9.5 billion in fines on Google over the past two years, and ordered Apple to pay $14.3 billion in back taxes to Ireland in 2016.

Today, she told reporters at the Web Summit conference in Lisbon that her office has received several complaints about Apple Pay and the Apple Wallet related to anticompetitive practices. While Apple Pay doesn't have the market share of competitors like WeChat and Samsung Pay outside the U.S. , it still boasts 383 million global users, more than mobile payment platforms like Google Pay and Amazon Pay.

Separately, The European Commission is also investigating an antitrust complaint into Apple from music streaming rival Spotify related to terms in the Apple App Store. Vestager said the EU is in the process of analyzing Apple's response to the Spotify complaint.

More News:

How Liquidity Shortage is Fueling Explosive Stock Swings

3 Charts That Suggest Financials Are Headed Higher

Expedia Stock in Freefall After Weak Quarter

(chart courtesy YCHARTS)

Fashion firm Ralph Lauren rose 15% after it announced strong same-store-sales growth in North America, Europe, and Asia. TV production company Discovery rose 12.1% as it reported strong profit growth due to lowered costs and advertising growth.

Travel companies Tripadvisor and Expedia plunged 27.5% and 22.1% respectively after reporting earnings, for more details see above. Fellow online travel company Booking Holdings fell 8.1%.

Word of the Day

Generally Accepted Accounting Principles (GAAP)
Generally accepted accounting principles (GAAP) refer to a common set of accounting principles, standards, and procedures issued by the Financial Accounting Standards Board (FASB). Public companies in the United States must follow GAAP when their accountants compile their financial statements.

Image Source: Twitter

Today in History

November 7, 2013

Today in 2013 social media company Twitter went public. Shares opened at $45.10, a huge jump from its $26 IPO price. The stock peaked in late 2013 at $73.31. Twitter has been in the spotlight in the past few years due to the frequent use of Twitter by president Donald Trump. Recently, federal prosecutors alleged that two ex-Twitter employees used private data obtained at twitter to track dissidents for the Saudi Arabian government.