Credit: Shutterstock photoThe S&P 500 index and other major averages to record highs helped by Trump tax cut momentum. Bitcoin futures had a successful launch on the Cboe Global Markets ( CBOE ). Walt Disney ( DIS ) agreed to buy the bulk of 21st Century Fox ( FOXA ) while also launching "Star Wars: The Last Jedi." The Federal Reserve raised rates while the FCC repealed net neutrality. Adobe Systems ( ADBE ) had strong earnings and guidance while Oracle ( ORCL ) missed on cloud revenue and cloud guidance.
Stocks Rally
[ibd-display-video id=3025730 width=50 float=left autostart=true] The Nasdaq rose 1.4%, the Dow industrials 1.3% and the S&P 500 index 0.9%, all hitting record highs Friday as the GOP finalized its tax legislation with apparently enough support to pass. The Federal Reserve offered few surprises. Media stocks were in focus with Disney buying most of 21st Century Fox and the GOP-led FCC rolling back net neutrality.
Bitcoin Futures Launch
Bitcoin futures on the Cboe ( CBOE ) got off to a strong start, trading at their best levels on Friday amid typically volatile moves for the cryptocurrency. Federal Reserve chief Janet Yellen said that Bitcoin played a very small role in the payments landscape, but that it was "not a stable store of value" and "highly speculative." Her remarks add to the chorus of banking officials weighing in on the much-hyped cryptocurrency. They echo those of Goldman Sachs CEO Lloyd Blankfein and others who believe Bitcoin, which can gain or lose thousands of dollars in a day, can't be depended on to retain consistent value.
CME Group (CME) will launch its Bitcoin futures on Dec. 18.
Disney Buys Fox, Releases 'Last Jedi'
The megadeal is a reality: Disney is buying Fox's entertainment assets for an enterprise value of $66.1 billion. It includes 20th Century Fox's movie and TV studios, National Geographic, FX, 22 Fox regional sports networks, and certain international assets. Disney CEO Bob Iger, who is extending his contract past 2019 to 2021 because of the merger, expressed enthusiasm about the deal's ability to boost the media giant's direct-to-consumer strategy and spread the ESPN brand internationally. It's not clear how regulators feel about the transaction, and Disney has promised a $2.5 billion breakup fee. Fox will keep its broadcast, news as well sports networks FS1, FS2 and Big Ten Network. Disney and Fox shares soared.
Separately, Disney should expect a windfall from its latest entrant to the "Star Wars" franchise, "The Last Jedi," which has already garnered largely positive reviews from critics and early viewers. Some analysts are expecting around $200 million from the film domestically. The film opened to the public on Thursday evening, with an estimated $45 million in ticket sales
FCC Ends Net Neutrality
The Republican-led Federal Communications Commission voted to repeal utilitylike oversight on internet service providers, delivering regulatory reversal sought by Comcast, AT&T, Verizon Communications and other ISPs. FCC chairman Ajit Pai said the new rules will "return regulatory parity to the internet economy." He said some giant internet companies engage in anti-consumer behavior, while ISPs have been unfairly targeted by regulators. State regulators, Comcast and others said Congress should step in and pass internet legislation. One analyst put the chances of that at less than 30%.
Federal Reserve Still Sees 3 Hikes In 2018
The Federal Reserve raised rates at its final meeting of the year, as expected. Policymakers also still expect to raise interest rates three times next year and didn't seem concerned about Trump tax cuts overheating the economy. Economic data backed a Goldilocks scenario. November retail sales were much stronger than expected, core consumer inflation cooled.
Biotechs
Several biotechs popped on news stemming from the American Society of Hematology conference last week in Atlanta, while clinical trial data from others fell short. Bluebird Bio (BLUE) soared Monday after it reported improvement in patients using its LentiGlobin therapy to treat sickle cell disease and beta thalassemia. Fellow CAR-T player Juno Therapeutics (JUNO), though, retreated nearly 22% in two days despite strong data in patients with a form of Non-Hodgkin lymphoma. Investors wanted more data, analysts said. On Tuesday, GlycoMimetics (GLYC) rocketed on data from its drug in acute myeloid leukemia , but Global Blood Therapeutics (GBT) sank following its presentation of its sickle cell disease drug. Spark Therapeutics (ONCE) crashed on its hemophilia A drug data, suggesting a later approval than a rival treatment from Biomarin (BMRN). Cellectis (CLLS) launched Wednesday after Phase 1 trials showed promise for its experimental treatment in acute lymphoblastic leukemia.
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Oracle Cloud Growth Lags
Oracle earnings rose 14% as revenue rose 6% to $9.6 billion, both beating views. Cloud revenue missed , with the 44% rise to $1.5 billion below views for $1.56 billion. Oracle also gave weak guidance, especially for cloud revenue. Oracle shares tumbled 3.8% on Friday.
Rising Shale Output Will Pressure OPEC
U.S. crude production surged to another record high of 9.780 million barrels per day, according to the Energy Information Administration, which sees output hitting 10 million bpd next year. OPEC said that it doesn't see oil markets balancing until late next year on increased U.S. production, throwing into doubt recent talk of forming an exit strategy from its output cut deal. The International Energy Agency raised its 2017 growth forecast for U.S. crude by 390,000 barrels per day and by 870,000 bpd in 2018 vs. estimates in its November report. But the energy watchdog sees a "closely balanced market" in 2018.
Western Digital, Toshiba End Feud
Western Digital (WDC) raised its financial outlook after settling a lengthy legal battle with Toshiba over the ownership and expansion of a flash-memory-chip business. Toshiba Memory will be allowed to sell its stake in the joint venture to a consortium led by Bain Capital. Western Digital gets to participate in the development of new factory expansions and certain rights to the chip output. Western Digital shares rose on the news, but closed the week up just 0.2%.
Apple Awards Finisar Big Contract
Consumer electronics giant Apple (AAPL) committed to spending $390 million on components from optical device maker Finisar (FNSR) to help fund a new factory in Texas to make vertical-cavity surface-emitting lasers. The iPhone X uses VCSELs to power its Face ID security feature, Animojis and other apps. The deal marked Apple's second major commitment to support U.S. production with its $1 billion Advanced Manufacturing Fund. In May, Apple awarded $200 million to glass display cover maker Corning (GLW).
Finisar shares soared 21%, even after paring gains as Apple clarified the nature of the deal.
Adobe Beats Fourth-Quarter Sales, Earnings Targets
Digital media and marketing software maker Adobe Systems ( ADBE ) reported adjusted fiscal fourth-quarter earnings per share of $1.26, up 40% year over year, on sales of $2.01 billion, up 25%, in the quarter ended Dec. 1. Analysts expected $1.15 and $1.95 billion. For the current quarter, Adobe expects to earn an adjusted $1.27 a share, up 35%, on sales of $2.04 billion, up 21%. For fiscal 2018, Adobe expects to earn an adjusted $5.50 a share, up 28% year over year, on revenue of $8.725 billion, up 20%.
Adobe rose 1.4% Friday, continuing a rebound from its 50-day line.
Boeing Will Buy Stock, Hike Dividend
Boeing (BA) announced a $18 billion repurchase program and a 20% dividend hike to $1.71, joining other big companies like Bank of America (BAC), Home Depot (HD) and Mastercard (MA) in returning more capital to shareholders. Boeing shares hit record highs. That's despite Delta Air Lines (DAL) snubbing the aerospace giant. Delta will buy 100 Airbus (EADSY) A321neos, worth $12.7 billion at list prices. The carrier had been in talks to buy 100 of Boeing 737 Max 10 jets.
Airbus fell on reports, confirmed Friday, that CEO Tom Enders will leave at the end of his term in February 2019, while COO Fabrice Bregier will exit in February, amid U.K. and French corruption probes.
Delta Raises Key Guidance
Delta Air Lines (DAL) raised its fourth-quarter unit revenue guidance, lifting shares above a buy point despite a weaker margin outlook. JetBlue (JBLU) also raised unit revenue guidance, but shares reversed lower. United Airlines (UAL) and Southwest Airlines (LUV) recently raised Q4 unit revenue targets.
Costco Earnings Top As Online Sales Boom
Costco Wholesale (COST) profit grew 16% to $1.36 a share on a 13% sales increase to $31.81 billion, ahead of estimates for $1.35 EPS and $31.52 billion in revenue. Same-store sales rose 10.5%, or 7.9% after adjusting for gas sales and foreign exchange. Online comps popped 43.5% . Shares rallied 3.3% Friday.
News In Brief
CSX (CSX) CEO Hunter Harrison, a highly respected industry vet installed by activists investors in early 2017, is taking medical leave due to complications from a recent illness. Shares of the rail operator plunged 7.6% Friday.
T-Mobile (TMUS) agreed to buy Layer3 TV, a startup offering pay-TV over private interconnections in five markets. Terms weren't disclosed. T-Mobile plans to leverage its wireless technology to launch its own streaming TV service in 2018.
Unibail, Europe's largest commercial landlord, agreed to buy Australia-based mall giant Westfield for $15.8 billion. Meanwhile, mall operator GGP (GGP) rejected a $14.8 billion offer from Brookfield Property Partners (BPY) for the 66% that it doesn't already own.
Teva Pharmaceutical (TEVA) rocketed 16% as the generic drug giant said it would slash 14,000 jobs, more than 25% of its work force. Teva also will close several manufacturing plants and suspend its dividend to tackle $34.7 billion in debt.
Honeywell (HON) set out an outlook for fiscal 2018 profits that Wall Street deemed typically conservative. The industrial giant's forecast of annual EPS of $7.55-$7.80 next year was achievable and beatable, one analyst said. Shares rose a fraction to 154.13, just below their November high of 156.70, having advanced 11% from their September breakout past a 140.31 flat-base entry.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
