Market Outlook – May 1, 2018

Wall Street Ends April Positive but U.S. Stocks Fall


The major U.S. indexes ended April with gains but drops on Monday. U.S. stocks fell in a broad decline as the latest positive corporate earnings reports again failed to excite investors.

The Dow Jones Industrial Average fell 148 points (-0.6%) while the S&P 500 declined for the first time in the past four sessions. The index shaved off 21.86 points, (-0.8%). All 11 sectors in the S&P 500 ended lower on the last day of April. The 25 of the 30 Dow Jones also closed lower. The Nasdaq Composite Index dropped 53.5 points (-0.8%).

For the month, the Dow Jones inched 0.3% higher, cutting its year-to-date loss to 2.3%. The S&P rose 0.3% and is now down by 1% in 2018. The tech-heavy Nasdaq climbed less than 0.1% to post a year-to-date advance of 2.4%.

Trump Extends Tariff Exemptions for Key Trade Partners


On Monday, U.S. President Donald Trump extended the steel and aluminum tariffs exemptions of Canada, the European Union and Mexico. The temporary exemptions are due  to expire on May1. Trump’s postponement is until June 1.

Meanwhile the White House also announced the agreements for permanent exemptions with Argentina, Australia and Brazil.  The details of the deals with the three countries are being finalized.

According to U.S. administration officials, in lieu of tariffs, steel- and aluminum-exporting countries would have to agree to quotas designed to achieve similar protections for U.S. producers. The Trump administration is focusing on quotas that will restrain imports, prevent transshipment, and protect the national security.

Judge on DOJ and AT&T Case Leans toward Compromise


In the U.S. Justice Department’s closing arguments, lawyer Craig Conrath asked for the planned transaction to be stopped. “Consumers will be worse off and that’s why this merger ought to be blocked,” he said. In the absence of blocking it, Conrath urged the judge to consider a divestiture, or asset sale.

The lawyer for AT&T (T) and Time Warner Inc. (TWX), Daniel Petrocelli, argued against any ruling that would, for example, require AT&T to sell DirecTV, which has more than 20 million subscribers, in order to purchase Time Warner. “That is an effort to kill the deal,” he said.

Judge Richard Leon wants to look at the possibility of imposing a remedy. The deal could move forward if the companies sell a particular asset. Conrath response was for the judge to impose a remedy if he finds the deal to be anti-competitive.

At the end of Monday’s hearing, Judge Leon indicated he could consider a decision that isn’t entirely a clear approval or blocking of the deal worth $85 billion.

Qualcomm Broadens License Model to Ease Tensions


Qualcomm Inc.’s (QCOM) head of licensing division, Alex Rogers, said on Monday the company is broadening its use of a lower-cost licensing model for the next generation of mobile data networks. The move could help in touchy talks with two customers including iPhone maker Apple Inc. (AAPL).

The patent business traditionally has supplied much of the wireless tech company’s profit but has also incited conflict with Apple, Samsung Electronics Ltd and Huawei Technologies Co Ltd. as well as American, Chinese, and South Korean regulators.

They hope the regulators and their two major customers, Apple and most likely Huawei Technologies, would find the new deals favorable. Qualcomm is lowering their licensing rate to make the business more dependable. The objective is to resolve disputes and for the customers to resume payments to Qualcomm.

Twitter to Feature Disney’s Sports & Entertainment Shows


Walt Disney Co. (DIS) will be creating live sports, news and entertainment programming specifically for Twitter Inc. (TWTR). They expect the shows on the social network to attract more online viewers and increase advertising revenue through digital video.

Comcast Corp. (CMCSA) networks including NBC and MSNBC, Viacom Inc.’s (VIA) Comedy Central, MTV and BET, and others are already developing content for the social network. Twitter made the confirmation on Monday saying there are about 30 deals lined up for live and original programming.

The deals will expand Twitter’s streaming video offerings are seen to expand and help Disney and others to reach more audiences online now that traditional TV viewing is declining.

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