U.S. Stocks Overcome Trade Jitters
Amid the continuing anxieties over the trade conflict between Washington and Beijing, U.S. stocks closed higher on Tuesday. Investors’ focus is on positive corporate earnings. The Nasdaq Composite Index gained 23.99 points (+0.31%) to register its longest winning streak. The tech-heavy index rose for a sixth day in a row.
The Dow Jones Industrial Average advanced for a third straight, gaining 126.73 points (+0.5%). The S&P 500 index climbed 8.05 points (+0.28%), its fourth session in a row of gains. The energy and industrial sectors powered the broader benchmark index.
U.S. stocks remain buoyant as stellar second-quarter results continue to pour in. The companies in the S&P 500 that have reported showed an earnings growth of 24% with sales gains of 9.8% based on FactSet data.
Semiconductor Industry Rues New Tariffs
Beginning on August 23, the U.S. will collect 25% tariffs on another $16 billion in Chinese goods. The U.S. Trade Representative (USTR) office published a final tariff list targeting 279 imported product lines. But the latest list will hit semiconductors from China even if many of the basic chips in these products originate from the South Korea, Taiwan or the U.S.
The Semiconductor Industry Association (SIA) expressed disappointment at USTR’s decision to keep the sector on the tariff list. The 25% tariffs will also apply to a broad range of Chinese electronics, plastics, chemicals and railway equipment.
SIA President John Neuffer said in a statement, “We have made the case to the administration, in the strongest possible terms, that tariffs imposed on semiconductors imported from China will hurt America’s chipmakers, not China’s, and will do nothing to stop China’s problematic and discriminatory trade practices.”
Tesla Ponders on Going Private
Elon Musk, CEO of Tesla Inc. (TSLA) made headlines anew when he told company employees his intention to go private. TSLA jumped 10.99% to $379.57 on Tuesday. Employees received from Musk where he intimated his desire for Tesla to go private to have more leeway to achieve its long-term goals.
The goal of electric-car maker’s CEO is to “create the environment for Tesla to operate best.” Musk wrote, “As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders.”
He added, “Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term.”
Disney Outline Plans to Fight Streaming Wars
Walt Disney Co. (DIS) CEO Bob Iger said on Tuesday that the company will not combine the assets of Twenty-First Century Fox (FOXA) once the acquisition is finalized. However, Disney will utilize the Fox assets in the streaming war against rivals like Netflix Inc. (NFLX).
Iger said the plan for now is offer three options for customers: ESPN will concentrate on sports, Disney will carry family-friendly content, and Hulu will feature shows for the general audience.
The quarterly earnings report presented by Disney late Tuesday failed to meet Wall Street’s revenue and earnings expectations. DIS fell as much as 2% in after-hours trading. Prior to the conference call, the stock finished +0.53% higher at $116.56.
Saudi Prince Reveals $250 Million Investment in Snapchat
Alwaleed Bin Talal, the billionaire prince of Saudi Arabia, announced via a tweet on Tuesday that he invested $250 million in Snapchat last May 25. The prince paid about $11 per share to acquire a 2.3% stake in the social media platform.
Snap Inc.’s (SNAP) CEO Evan Spiegel met with Saudi prince three years ago to “explore future investment and business opportunities.” Alwaleed said, “Snapchat is one of the most innovative social media platforms in the world and we believe it has only just begun to scratch the surface of its true potential and we are blessed to be part of it.”
The parent company of Snapchat reported a 44% climb in revenue ($262 million) during the three months ending in June. However, for the first time, the company saw a drop in daily users during the same quarter. The decline was attributed to a rocky app redesign. SNAP jumped as much as 11% in after-hours trading but eventually slid as trading progressed. The stock closed +0.54% higher at $13.12 on Tuesday prior to the release of the earnings report.