JNJ - Johnson & Johnson
| Previous close | 130.96 |
| Open | 131.25 |
| Bid | 134.70 x 1000 |
| Ask | 134.99 x 2200 |
| Day's range | 130.78 - 134.97 |
| 52-week range | 121.00 - 148.99 |
| Volume | 8,455,478 |
| Avg. volume | 7,616,556 |
| Market cap | 355.145B |
| Beta (3Y monthly) | 0.70 |
| PE ratio (TTM) | 25.74 |
| EPS (TTM) | 5.24 |
| Earnings date | 21 Jan 2020 |
| Forward dividend & yield | 3.80 (2.90%) |
| Ex-dividend date | 2019-11-25 |
| 1y target est | 150.24 |
- Reuters
Oklahoma judge reduces Johnson & Johnson opioid payout to $465 million
The decision by Cleveland County District Judge Thad Balkman in Norman, Oklahoma, came in the first case to go to trial out of 2,700 nationally by states, counties and cities seeking to hold drug companies responsible for the deadly epidemic. Balkman reduced the amount he had awarded in August by $107 million after agreeing with New Brunswick, New Jersey-based J&J that he had made a math error. A spokesman for Oklahoma Attorney General Mike Hunter said that office is reviewing the decision and will formally respond within the next few days.
- Reuters - UK Focus
US STOCKS-Trade deal hopes propel Wall St to fresh record highs
Wall Street's main stock indexes hit record highs on Friday, fueled by fresh optimism over a potential calming of U.S.-China trade tensions and by a strong forecast from semiconductor industry bellwether Applied Materials. The benchmark S&P 500 was on track for its sixth straight week of gains. White House economic adviser Larry Kudlow said late on Thursday that the United States and China are getting close to a trade agreement, citing what he called very constructive talks with Beijing.
- Zacks
4 Big Drugmakers to Bet on After a Great Earnings Season
Big drugmakers post better-than-expected Q3 results, leading to rise in share price of most of the companies in the industry.
- Zacks
FDA Panel Votes Against Lilly's Jardiance for Type I Diabetes
Eli Lilly (LLY) gets an unfavorable FDA panel vote to expand the label of its type II diabetes medicine Jardiance (2.5 mg) for type I diabetes.
- Zacks
Why Is Johnson & Johnson (JNJ) Down 2.9% Since Last Earnings Report?
Johnson & Johnson (JNJ) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.
- Zacks
Halozyme (HALO) Earnings & Revenues Miss Estimates in Q3
Halozyme (HALO) reports lower-than-expected earnings and revenues in third-quarter 2019. It lowers the sales outlook for 2019 and raises the same for operating expenses.
- Zacks
The Zacks Analyst Blog Highlights: Novo Nordisk, Allergan, Sanofi, Novartis and J&J
The Zacks Analyst Blog Highlights: Novo Nordisk, Allergan, Sanofi, Novartis and J&J
- Zacks
AbbVie Eyes Approval for Imbruvica+Rituxan in First-Line CLL
AbbVie (ABBV) submits a regulatory application with the FDA seeking label expansion of Imbruvica as a first-line treatment for chronic lymphocytic leukemia in combination with Roche's Rituxan.
- Zacks
Pacira's (PCRX) Q3 Earnings Top Estimates, Revenues Rise Y/Y
Pacira's (PCRX) third-quarter results reflect an earnings beat while revenues almost match estimates. Exparel drives year-over-year growth.
- Zacks
Pharma Stock Roundup: AGN, NVO Q3 Earnings, FDA Nod to SNY & NVS' Products
Novo Nordisk (NVO) and Allergan (AGN) release Q3 results. FDA approves Sanofi's quadrivalent flu vaccine for older adults and Novartis' long-acting biosimilar version of Amgen's Neulasta.
- Bloomberg
What Happened at Mithril When Peter Thiel Wasn’t Around
(Bloomberg) -- When Ajay Royan started Mithril Capital in 2012 at the age of 32, he’d never worked at a venture firm or managed a team. Hailing from a modest background in India, his sharp mind distinguished him in and out of school, but he lacked the funds to invest in technology startups. What Royan did have was a curiously strong relationship with the fabulously wealthy and powerful investor Peter Thiel.Royan had worked at Thiel’s hedge fund Clarium Capital—infamous for a spectacular collapse that vaporized more than $6 billion in value between 2008 and 2012. Unlike most of Thiel’s employees who fled Clarium as it cratered, Royan stuck around. He wasn’t awarded a huge salary for his loyalty, but he earned something infinitely more valuable: Thiel’s trust and financial backing to build and manage a venture firm.Thiel put up $100 million to start Mithril. His name and reputation helped attract dozens of prominent investors who followed his lead, pouring hundreds of millions of dollars into the new fund. Then, for the most part, Thiel left Royan and his team to their own devices. While Thiel busied himself with other pursuits—backing a lawsuit against gossip site Gawker, advising the Trump administration on technology matters, dreaming of floating cities and radical life extension—his protege came under fire for allegedly mismanaging Mithril and driving off most of the firm’s top managers. The drama centers on an epic falling-out between Royan and his former general counsel, Crystal McKellar, who left Mithril earlier this year. In a lawsuit filed in October, Royan accuses McKellar of instigating a “whisper campaign” claiming that he committed financial fraud connected to how Mithril collects and spends management fees. A second lawsuit filed about two weeks later by Mithril accuses McKellar of breaching confidentiality and other agreements and seeks a declaration that she was fired for cause as a result of those actions.On Thursday, McKellar returned fire with her own lawsuit, in which she reiterates allegations of financial fraud and says Thiel considered shutting down Mithril before being persuaded to give Royan a chance to get the firm back on track. In the complaint she quotes Thiel as saying: “I can’t believe how greedy Ajay is. Ajay has broken Mithril.” In a statement, a spokesman for Mithril said that the allegations in McKellar’s suit were false, “as evidence in Mithril’s lawsuit against her demonstrates.” He added: “Mithril is confident they will be proven as such in court.”Last month, in an interview overseen by two crisis-management consultants, Royan denied doing anything wrong. “The core of this entire allegation is that there’s some financial issues at the firm,” he said during the almost three-hour conversation. “There are freaking zero issues.” Royan’s reputation—and by extension Thiel’s—was losing luster even before the lawsuits. In recent months, McKellar's concerns coincided with complaints from some investors that Royan is an overly timid deal-maker who has invested just a quarter of Mithril’s newest fund. Former employees and others in Thiel’s extended network have criticized Royan for keeping their names on the website after they left—giving the appearance that the team was larger than it actually was. Several former and existing Mithril employees also said they find it unseemly that Royan put his father and sister on the payroll.So far most investors are keeping the faith. Two major backers reaffirmed their support for Royan and his investing strategy, according to letters written by them and reviewed by Bloomberg. One praised his “patience to not chase inflated pricing” and “world-wide view of investment opportunities.” With the addition of McKellar's suit, which describes Mithril as operating on the power of Thiel’s name but largely ignored by the man himself, that faith will be further tested. Thiel didn’t respond to a request for comment. In the interview, Royan described his patron as “blown away. Like shocked” about allegations of fraud and mismanagement. He added: “I’m not happy, he’s not happy.”Founded in 2012, Mithril is named after the super-strong armor worn by characters in “The Lord of the Rings.” (Thiel, an unabashed Tolkien fan, also mined the trilogy for the name of his data software company, which he tagged Palantir after the books’ magical communication orbs.) Even before Mithril opened its doors, there were problems. Investors at Founders Fund, the venture firm Thiel started several years earlier, were unhappy that Mithril would operate just a few steps from their office on San Francisco’s leafy Presidio campus, according to people with knowledge of the situation. Mithril could have provided a natural complement to early-stage Founders Fund deals by bankrolling some of their more mature startups. But instead of cooperating, Thiel’s two firms competed from the start.In an episode that has not previously been reported, Mithril and Founders Fund clashed over the right to invest in Airbnb Inc. According to two people with direct knowledge of the situation, Mithril locked the deal down as one of its first, crowing about its early stake in the vacation rental startup to newly committed investors. The move rankled many at Founders Fund who felt that because Thiel was already an Airbnb backer they had the first right to invest. After heated exchanges between the two firms, Founders Fund prevailed, leading a $200 million round at a $2.3 billion valuation. Airbnb is now worth $31 billion.“We had egg on our face,” said a former Mithril employee who, fearing retribution for speaking publicly, asked not to be identified. To help smooth frustrations between his warring fiefdoms, according to the same people, Thiel helped arrange a Mithril investment in Palantir. Thiel had already steered Founders Fund to invest in the company, which has secured billions in government and private-sector contracts, but has never turned an annual profit in 15 years. Said the former employee about letting Mithril take a stake in Palantir: “It was like, ‘Hey look at this other shiny thing.’”The initial drama notwithstanding, Mithril’s first fund was fairly typical, with nearly a dozen employees who had all worked with or known Thiel previously finding and funding startups for the firm. Johnson & Johnson acquired one of those earlier this year, snapping up surgical robotics company Auris Health Inc. for $3.4 billion in a deal that delivered Mithril an exit of roughly $510 million. If Auris hits additional milestones, Mithril’s haul will be $870 million, more than returning the entire $540 million fund on that one deal.But back in 2015, when investors were asked to commit to a second larger Mithril fund of $740 million, they didn’t know Auris would be the largest acquisition of a venture-backed medical device company in history. They were mostly betting on Thiel’s reputation.Silicon Valley doesn’t have oligarchs, but Thiel, 52, comes mighty close. He helped build PayPal and when EBay Inc. bought it in 2002 and parlayed the payout into venture investing—writing a now-famous first check to Facebook Inc. That set him on the path to becoming a billionaire. Now, with his Facebook board seat, consigliere status within the Trump administration and expansive network of powerful friends including Elon Musk and Reid Hoffman, Thiel is an influential and, for many, coveted investing partner.His association with Mithril was good enough for the Getty family, Singapore’s Temasek Holdings Pte and dozens of others who joined Thiel to invest a combined $540 million in the fledgling firm’s first fund. Though Thiel is featured prominently on the firm’s website, he has never played a role in daily operations or management.In fact, Thiel has no fiduciary responsibility to Mithril and is free to engage in investing activities that compete with the firm, according to documents reviewed by Bloomberg. “Peter has no control, responsibility or oversight with respect to the manager’s or general partner’s financial reporting and controls, or their disclosure and investor reporting,” states a memorandum between Mithril and investors.Instead, Royan ran the shop and quickly became known for making unconventional choices. The most unorthodox, perhaps, is how he structured Mithril’s management fees. Venture firms typically charge 2% of a fund’s capital to pay for salaries and other operating expenses while investments mature. Fees typically begin tapering off after five years or so as partners harvest profits from their startups. Mithril was structured that way too, but with a twist.A separate management company operated by Royan collected the fees. In financial statements shared with the limited partners in 2017 and 2018, the firm said it was waiving 25% of the fees. In fact, that isn’t exactly what happened. The investors actually paid the full $11.7 million in 2017 and $11.9 million in 2018. But $3 million of that each year was renamed a special “contribution,” which Royan then used to make a personal investment back into the fund. Directors at venture funds are often required to commit their own capital alongside fund investors to strengthen alignment, and this is how Mithril structured that commitment.Royan characterized the fees as standard and said no investors have complained. He said former general counsel McKellar crafted and approved the fee structure; in the first lawsuit he accuses her of weaponizing the fees in an attempt to sully Mithril’s reputation at a time when she has started her own venture firm. “The core of this entire thing is a subterfuge about how we’re actually set up, which has been transparent from day zero,” Royan said. Mithril’s second lawsuit against McKellar, filed in mid-October, requests a monetary award for damages as well as a declaration Mithril terminated her for cause. She deleted more than 98% of all text messages on her company-issued phone before returning it, according to vendor analysis using carrier records included in the suit. McKellar, who played Becky Slater in the “Wonder Years” television show and met Royan at Yale University, denied the claims made in the two Mithril lawsuits, characterizing them as retaliatory. In her own suit, McKellar paints herself as a whistleblower who was wrongly terminated. In the suit she says she tried to correct problems at the firm, and when she realized she would be unsuccessful, she contacted the Federal Bureau of Investigation and the Securities and Exchange Commission to protect investors. (The SEC and FBI declined to comment.) She describes a phone call with Thiel, during which she says he told her he wanted to be more involved at Mithril, but Royan had kept him out of the loop. She subsequently met Thiel at his Los Angeles home, according to the complaint, and discussed the fees, investor relations and Royan’s management style.They agreed to meet again at the house the following day with Royan. During that meeting, McKellar alleges, Royan mischaracterized what was going on at Mithril, and she was forced to contradict him. Thiel threatened to shutter Mithril but Royan appeared “chastened” and promised to implement various fixes. Thiel then relented. In the complaint, McKellar says she tried to implement the fixes but was ultimately thwarted by Royan and officially left Mithril in February, although she continued as an adviser through the summer. Several former employees told Bloomberg that Royan’s flawed leadership helped set the stage for the recent troubles. They say he was rarely at the San Francisco office and when he was there did little to foster esprit de corps. He held himself apart—and some say above—others, communicating infrequently and creating what one ex-employee described as a caste system. “It was like he was Brahmin and we were untouchables,” said this person, who after realizing he would get little mentoring from Royan and virtually no contact with Thiel, decided to leave.He has had plenty of company. Not one of nine team members featured on Mithril’s site in July 2014 are still with the firm. Other more recent hires have also departed. The steady stream of departures is unusual for the venture industry, where it can take several years for investments to pay off, and employees typically stick around to see them through. The talent drain was a touchy subject for Thiel, according to people familiar with his thinking. Like other Mithril investors, he expected Royan to use the management fees to build a sharp investing team adept at finding and evaluating deals.When told departed colleagues faulted his management style, Royan expressed surprise. “If there are issues you’re hearing, I haven’t heard them,” he said. He explained there is no mechanism for employees to voice concerns because he doesn’t believe formal processes unearth substantive issues. Royan also dismissed concerns about the high rate of turnover, arguing that Mithril resembles a private-equity firm in that it relies more on financial models than superstar deal-hunters. Former employees said low salaries were another irritant. According to two of them, the pay was below market rate and the share of profits was designed to be 1.2% rather than the promised 2%. Mithril’s management company, which is majority owned and operated by Royan, gets that 2% and employees are paid after Royan’s management firm takes its cut, the two former employees said. One of them said the arrangement was especially upsetting because he only learned about it two years after starting work at Mithril, over drinks with others in Thiel’s network. In a statement, the firm said: “Mithril pays competitive compensation tied to an individual’s qualifications and role, with significant upside when the fund outperforms.”Either by accident or design, Mithril maintained the appearance of having a fully staffed operation. Apache Web server co-developer and open-source advocate Brian Behlendorf was a major selling point to investors while Royan was raising Mithril’s second fund. Less than a month after the fund closed, Behlendorf quit. Still, he remained a prominent fixture on the firm’s website for more than a year. Behlendorf declined to comment. JD Vance, who wrote the bestselling memoir “Hillbilly Elegy,” joined Mithril in September 2016. He quit about a year later to join Steve Case’s Rise of the Rest Fund but remained on the site as a managing director for another six months. He has since removed any mention of Mithril from his LinkedIn profile. Vance, whose photo on the site was misidentified for much of his tenure as another employee named Sam Ecker, also declined to comment.Royan said there was never any intent to deceive anyone and that Mithril has “possibly the least updated website in the world. We have to call an external person and have them update it.” Royan took down Mithril’s team page last month to protect identities of team members from what he described as harassment from a reporter. One person was never listed on the site, despite being retained as a consultant: Royan’s father. Asked about the arrangement, Royan said it’s one of several such advisory roles he finances from his portion of the management fees. “I need counsel and I have multiple people I get counsel from,” he said. “These are not people that are on my team or my professional staff. One of these advisers happens to be my dad and that’s fine. End of discussion.” He added: “He’s the man who taught me everything.” Through a Mithril spokesman, Royan’s father declined to comment.Mithril also employs Ajay’s sister Anuja Royan as a managing director with a focus on operations and finance. She joined the firm in 2015 after a decade of experience building financial models at private equity groups Counsel Corp. and Hilco Consumer Capital and handling audit and assurance at Ernst & Young. Her name did appear on the website. Through a Mithril spokesman, Anuja also declined to comment.In January, Royan decamped from San Francisco and opened a new Mithril headquarters in Austin. Explaining the move, he said he chose the Texas tech hub because it’s centrally located, cheaper and embraces more diverse thinking than the east or west coasts. (His comments echoed Thiel’s own disparagement and abandonment of Silicon Valley.) While the larger venture and tech community took the move in stride, most Mithril team members didn’t want to relocate. So far, just a few have made the move with Royan. In December, investors will gather at Mithril’s first annual meeting in four years—an event requested by Cambridge Associates, a global investment firm that advises other investors about which venture firms to back. During the meeting Mihtril will update the group on performance and future plans as it gets closer to raising a third fund.With the new location—and almost a dozen new hires—Royan seems to be hoping he can start fresh and put the recent unpleasantness behind him. In a letter reviewed by Bloomberg, a major investor in both Mithril funds and member of the firm’s LP committee said after reviewing the firm’s financials, visiting the Austin office and evaluating allegations of misconduct and employee departures, her firm found no cause for concern. “You have our unequivocal support,” she wrote. With the claims in McKellar’s lawsuit challenging Royan’s integrity, he’s redoubling efforts to polish his and Mithril’s image in an industry where reputation is everything because results can take a decade. Said Royan: “It’s a trust business.”To contact the author of this story: Lizette Chapman in San Francisco at lchapman19@bloomberg.netTo contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net, Mark MilianFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
Peter Thiel’s VC Firm Is Sued by Its Former Top Lawyer
(Bloomberg) -- The former general counsel of Mithril Capital, a venture capital firm co-founded by investor Peter Thiel, is suing her ex-employer for wrongful termination and retaliation against her for acting as a whistle-blower. Crystal McKellar, the former Mithril attorney and managing director, filed the countersuit Thursday, claiming that management punished her for alerting authorities to alleged financial fraud at the firm.In the complaint, McKellar reconstructs several conversations with Thiel, Mithril’s largest backer, who is not named as a defendant. Instead, the suit takes aim at Mithril’s managing director, Ajay Royan, who McKellar alleges repeatedly lied to the firm’s investors. Royan didn’t immediately respond to a request for comment.In a statement, a spokesman for Mithril said that the allegations in McKellar’s suit were false, "as evidence in Mithril’s lawsuit against her demonstrates." He added: "Mithril is confident they will be proven as such in court."The filing represents the latest, and most dramatic, volley in what has become a pitched battle over the formerly low-key venture firm. Last month, Mithril sued McKellar in Texas, alleging she conducted a “whisper campaign” to sully its reputation while setting up a competing venture firm. It also filed a separate suit in Delaware last month, alleging that McKellar breached confidentiality and other agreements and was fired for cause.McKellar’s complaint disputed those allegations, calling them a “pretext” for retaliation against her. In her countersuit, McKellar said that in conversations with Thiel, he expressed concern about Mithril, asking her whether Royan was suffering from a “mental episode” or was “engaged in a massive financial fraud,” after the firm reduced the size of its investment team. She also said that she felt she had no recourse to address the “ongoing fraud” at Mithril, other than going to federal authorities. A spokesman for Thiel didn’t immediately have a comment.McKellar is seeking to recoup at least $30 million in lost compensation, her lawsuit states, plus $30 million more for damages for the fallout she said she suffered because she told the Federal Bureau of Investigation and the Securities and Exchange Commission about mismanagement at the Austin, Texas-based firm.Since launching operations in 2012, Mithril has raised $1.2 billion from investors. The firm, which relocated earlier this year from San Francisco, is known for making bets on late-stage companies including data-mining company Palantir Technologies Inc. and internet news site Reddit Inc. Its largest exit came earlier this year when Johnson & Johnson acquired surgical robotics company Auris Health for $3.4 billion.McKellar, who once played Becky Slater on the hit TV show “The Wonder Years,” graduated from Yale University, earned her law degree from Harvard Law School and practiced law for nearly a decade before starting at Mithril. She joined her former Yale classmate Royan at the firm in 2012 as its general counsel and served as a managing director.McKellar’s lawsuit alleges that Royan lied about Mithril in investor meetings, in financial statements, on the firm’s website and in published interviews with the press. It accuses Royan of falsely claiming he waived management fees charged to Mithril investors in 2017, falsely representing the presence of a larger investment team than it actually had and inflated the valuations of portfolio companies in Mithril’s reported financials.The suit alleges that Royan hiked up the valuations in an effort to “pilfer hundreds of thousands of dollars in unearned management fees and millions of dollars in unjustified carried interest from Mithril’s investors.” It also claims Royan misrepresented the extent of his own investments in Mithril funds in an effort to instill false confidence in other investors.In a statement, the Mithril spokesman said that its own lawsuit included documents that demonstrated that McKellar "personally approved the fee disclosures and repeatedly stated that Ajay had the highest integrity."McKellar’s complaint said she urged the firm to take corrective measures while she was still an employee. That included asking Royan to hire a new chief financial officer to replace his sister, Anuja Royan, who served in that capacity. Nothing was done, according to the suit. McKellar met with federal authorities and alerted Mithril’s outside auditor to address her concerns, actions the complaint alleges she was later wrongfully terminated for taking.The case is McKellar v. Mithril Capital Management LLC, 3:19-cv-07314, U.S. District Court, Northern District of California (San Francisco).(Adds comment starting in the third paragraph.)To contact the reporter on this story: Lizette Chapman in San Francisco at lchapman19@bloomberg.netTo contact the editors responsible for this story: Mark Milian at mmilian@bloomberg.net, Anne VanderMeyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Reuters
Special Report: How plaintiff lawyers help corporate America keep its secrets
Paula Lawlor was sifting through piles of internal General Motors Co documents in a hotel room outside of Los Angeles when she hit pay dirt: Company records showing that GM knew for years that stronger roofs on its vehicles could save lives. It was one of thousands of lawsuits GM and other automakers faced over the years that claimed that the roofs of their vehicles easily crumpled in rollovers, resulting in severe injury and death. GM invariably denied the allegations, arguing that roof strength made little difference.
- Zacks
Geron (GERN) Q3 Earnings Beat Estimates, Stock Gains 4.1%
Geron (GERN) reports encouraging third-quarter 2019 results. Operating expenses increase on a year-over-year basis.
- Zacks
Theravance (TBPH) Q3 Loss In Line, Revenues Lag Estimates
Theravance's (TBPH) third-quarter loss matches estimates while revenues miss the same in absence of product sales due to the sale of its only marketed drug Vibativ to Cumberland Pharmaceuticals.
- Zacks
Should iShares Russell Top 200 Value ETF (IWX) Be on Your Investing Radar?
Style Box ETF report for IWX
- Zacks
Medical Products' Earnings Roster for Nov 5: BDX, ZBH & More
Encouraging growth in the emerging markets despite the ongoing Sino-US trade tensions is likely to favor revenues in the medical products space this earnings season.
- Zacks
AbbVie (ABBV) Beats on Q3 Earnings & Sales, Tweaks EPS View
AbbVie (ABBV) beats on both earnings and revenues in the third quarter. The company ups the lower end of its 2019 guidance for adjusted earnings per share.
- Zacks
Pharma Stock Roundup: MRK, PFE, GSK, BMY Q3 Earnings, Other Updates
Pfizer (PFE), Merck (MRK), Bristol-Myers (BMY) and others release Q3 results.
- Zacks
Glaxo (GSK) Beats Q3 Earnings Estimates, Raises '19 EPS View
Glaxo (GSK) beats on earnings and sales in the third quarter. Strong growth of vaccine and respiratory portfolio boosts sales. However, Advair generic severely impacts the drug's U.S. sales.
- Zacks
Stock Market News For Oct 31, 2019
Benchmarks closed in the green on Wednesday as the Federal Reserve cut rates for the third time this year, and Chairman Jerome Powell signaled no rate hikes until he witness a "really significant" rise in inflation.
- Market Realist
JNJ Stock Up, Says No Asbestos in Baby Powder
Johnson & Johnson (JNJ) stock was up 2.9% today as investors reacted positively to the company’s statement about no asbestos in its baby powder.
- Reuters - UK Focus
US STOCKS-S&P closes at record on Fed bump
U.S. stocks advanced on Wednesday, with the S&P 500 closing at a record for the second time in three sessions, after a policy statement by the U.S. Federal Reserve that cut interest rates by a quarter of a percentage point. The Fed lowered its policy rate to a target range between 1.50% and 1.75%, but dropped a previous reference in its statement to "act as appropriate" to sustain the economic expansion, which could signal the Fed may hold off on future rate cuts.
- Bloomberg
U.S. Stocks Rise to Record, Treasuries Gain on Fed: Markets Wrap
(Bloomberg) -- U.S. stocks advanced to an all-time high after the Federal Reserve cut interest rates as expected and signaled it was unlikely to move in either direction any time soon as inflation remains muted. Treasuries extended gains and the dollar erased an advance. The S&P 500 swung between gains and losses after the Fed cut rates by a quarter point before turning sharply higher when Chairman Jerome Powell said rate hikes won’t occur as long as inflation remains persistently cool. That fueled a rally in Treasuries and sent the dollar lower. Earlier, risk assets were under pressure after hawks saw a change in the policy statement’s language -- removing “act as appropriate” -- as signaling officials will not make any further cuts this year.“Markets believe that, irrespective of easing trade issues, there is a gigantic pause on future rate increases unless and until inflation moves markedly higher,” said Jamie Cox, managing partner for Harris Financial Group. “The Federal Reserve just put a big stake in the ground on the future rate path.” Apple and Facebook report after the close.Equities had spent most of the day treading water as investors digested the latest batch of earnings and trade headlines. Shares fell to session lows when Chile canceled next month’s APEC meeting where the U.S. and China intended to sign a partial trade pact.Johnson & Johnson led gains in the Dow Jones Industrial Average. Yum Brands, C.H. Robinson and Molson Coors slumped after reporting results. General Electric jumped after raising its forecast while Mattel soared after a sales beat. Data showed the U.S. economy rose 1.9% in the third quarter and a report on private hiring showed solid gains, with both data sets topping estimates.“This quarter’s results suggest that recession fears may have been overblown, and the U.S. economy is simply going through another growth scare, akin to late 2015/early 2016,” said Michael Reynolds, investment strategy officer at Glenmede.Earnings also set the tone in Europe, where the Stoxx 600 added 0.1%. Total’ profit beat analyst estimates and cash flow held firm, Airbus cut its full-year delivery target and Volkswagen lowered its outlook for vehicle deliveries. Deutsche Bank saw earnings from trading debt securities and currencies drop 13%, Credit Suisse Group posted better-than-expected profit and Standard Chartered generated 19% more revenue in Europe and the Americas. PSA Group and Fiat Chrysler Automobiles rose after saying they’re in talks about a tie-up.Elsewhere, the pound strengthened after U.K. Prime Minister Boris Johnson won backing in Parliament for a Dec. 12 election. The euro was steady after data showed France’s economy grew more than expected in the third quarter, but economic confidence in the broader region extended a slide. Oil fluctuated and gold rose.Here are some key events coming up this week:Earnings include: Apple and Facebook on Wednesday; Mitsubishi Heavy on Thursday; Exxon Mobil and Macquarie Group on Friday.The Fed is expected to lower the main interest rate when policy makers decide on Wednesday.The Fed’s preferred inflation metric, the core PCE deflator, is due Thursday.The Bank of Japan sets policy on Thursday and Governor Haruhiko Kuroda will hold a news conference.Friday brings the monthly U.S. non-farm payrolls report.These are some of the main moves in markets:StocksThe S&P 500 Index rose 0.3% at 4 p.m. New York time.The Dow Jones Industrial Average added 0.4% and the Nasdaq 100 climbed 0.4%.The Stoxx Europe 600 Index rose 0.1%.The MSCI Asia Pacific Index declined 0.2%.The MSCI Emerging Market Index fell 0.2%.CurrenciesThe Bloomberg Dollar Spot Index fell 0.1%.The euro rose 0.2% to $1.1137.The Japanese yen added 0.1% to 108.79 per dollar.BondsThe yield on 10-year Treasuries lost five basis points to 1.78%.The two-year yield slipped two basis points to 1.62%.Germany’s 10-year yield was flat at -0.35%.CommoditiesGold futures increased 0.2% to $1,494.10 an ounce.West Texas Intermediate crude declined 1.4% to $54.77 a barrel.\--With assistance from Samuel Potter.To contact the reporters on this story: Vildana Hajric in New York at vhajric1@bloomberg.net;Sarah Ponczek in New York at sponczek2@bloomberg.netTo contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Todd WhiteFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
