STOCKS: Shares of Huawei Technologies suppliers fall following Meng Wanzhou’s arrest
The arrest of Meng Wanzhou rattled suppliers to the Chinese tech company, sending their shares tumbling. U.S. NeoPhotonics ( ), which carries 47% revenue exposure to Huawei Technologies, slumped about 16% to $6.48 per share as of market close. Taiwan Semiconductor Manufacturing Company ( ) with 8% revenue exposure fell 1.59% to $36.84 per share. U.S. chipmakers also slipped, with the iShares PHLX Semiconductor ETF ( ) lower by 0.54%.
Guggenheim Securities initiated coverage of Facebook (), Twitter ( ), Snap ( ) and Alphabet ( , ). The firm gave Facebook a neutral recommendation and a price target of $150, or about 8.8% upside from the last close. Guggenheim rated both Twitter and Alphabet as Buy, with the firm asserting that the former’s efforts to clean up fake accounts will help increase usage and bring on advertisers. Guggenheim rated Snap as new Neutral with a price target of $6, or 3.4% lower than the last closing price.
Thor Industries (), which makes recreational vehicles, reported quarterly net sales below consensus estimates, sending shares falling. Net sales came in at $1.76 billion for the fiscal first quarter of 2019, below estimates of $1.91 billion. Gross margin was narrower than expected at 11.8% versus 12.6%. The company noted that quarterly results were “significantly impacted by acquisition-related costs” that totaled $57.1 million. Shares of Thor fell 6.17% to $60.34 each as of market close.
ECONOMY: U.S. trade deficit widens to a 10-year high
The U.S. trade deficit jumped to a 10-year high in October, increasing 1.7% to $55 billion, theThursday. The trade gap has widened for five consecutive months. Trade data for the total September trade deficit was upwardly revised to reflect a $54.6 billion trade deficit. The trade deficit with China, a focal point of U.S.-Sino tensions, jumped 7.1% to a record $43.1 billion in October, from $40.2 billion in September. was mainly driven by a further plunge in exports to China, and suggests that net trade will once again be a drag on GDP growth in the fourth quarter.
Andrew Hunter, U.S. economist for Capital Economics, wrote in a note the widening deficit “was mainly driven by a further plunge in exports to China, and suggests that net trade will once again be a drag on GDP growth in the fourth quarter.”
Factory orders decreased by 2.1% in October, the, versus consensus expectations of a 2% decrease, according to Bloomberg data. This reverses a 0.2% increase in factory orders in September. New orders for manufactured durable goods also fell in October for the third time in the last four months, down 4.3% versus expectations of a 2.4% decrease. Transportation led total durable goods orders lower, posting a 12% decrease. New orders for manufactured durable goods excluding transportation rose 0.2% in October.
Initial jobless claims fell during the week ending November 24 but came in higher than consensus estimates, based on the. Initial unemployment claims fell by 4,000 to 231,000 for the week, while consensus expectations were for new claims to come in at 225,000. Continuing jobless claims, however, were lighter-than-expected at 1.631 million versus estimates of 1.69 million.
Nonfarm private sector employment grew by 179,000 jobs in November,from ADP National Employment. This fell short of the 195,000 new jobs expected by economists polled by Bloomberg, and decreased from the month-priors addition of 225,000 new jobs.
Nonfarm business labor productivity increased in-line with estimates, coming in at a pace of 2.3% in the third quarter of 2018,. This represented a 10-basis point increase from the previous preliminary estimate. Nonfarm unit labor costs increased 0.9% to represent a 3.1%-increase in hourly compensation and a 2.3% increase in labor productivity, falling slightly short of estimates of a 1% unit labor cost increase.
Economic activity in the non-manufacturing sector grew in November, according to ISM’s non-manufacturing. The headline reading came in at 60.7 for the month, up from 60.3 in October and ahead of expectations of 59, according to Bloomberg analysts.
“For all the turmoil in financial markets, the message from the incoming survey data is that the economy is still growing at a strong pace,” Michael Pearce, senior U.S. economist for Capital Economics, wrote in a note Thursday. “The small rise in the non-manufacturing ISM index in November leaves it consistent with an acceleration in economic growth.”
Emily McCormick is a reporter for Yahoo Finance.
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