Here is what you need to know.
Facebook beat on the top and bottom lines. The social media giant announced earnings of $US0.50 per share, topping analyst estimates by $US0.03. Revenue surged 38.9% compared to a year ago to $US4.04 billion, beating the $US3.99 billion that was expected. The closely followed daily active users metric climbed 17% year-over-year to 968 million, but that was slightly below the 970.5 million that analysts were anticipating. On the conference call, CFO David Wehner commented, “Mobile is the engine of our revenue growth.” The stock was lower by more than 3% in after hours action.
Whole Foods missed and lowered guidance. The grocery giant announced earnings of $US0.43 per share, missing analyst estimates by a penny. Revenue climbed 9% from last year to $US3.6 billion, matching forecasts. Whole Foods projects sales growth of 7%, which is down from their previous estimate of up 9%. The stock was down more than 11% in after hours trade.
Deutsche Bank beat. The investment bank saw revenue climb 17% versus last year to €9.2 billion, outpacing the €8.6 billion estimate. According to new CEO John Cryan, “Solid revenue growth underscores the fundamental strengths of our businesses and the commitment of our people. However, our challenges are also evident in the unacceptably high level of our costs, our continuing burden of heavy litigation charges, a balance sheet that must be more efficient, and the poor overall returns to our shareholders.” Deutsche Bank booked €1.2 billion in litigation expenses in the second quarter alone, up from €757 million a year ago.
Samsung was hurt by its Galaxy S6 shortage. The world’s top smartphone maker announced its operating profit fell 4% versus last year to 6.9 trillion won ($US5.9 billion). The number was in-line with prior guidance. Reuters says, Samsung had trouble keeping up with demand for the curved S6, and that was at least partially responsible for the 37.6% drop in profits at the mobile division, compared to a year ago.
Brazil hiked. The Central Bank of Brazil hiked its Selic rate 50 basis points to 14.25%, as expected. The interest rate hike comes despite the country’s economy teetering on the brink of recession as the central bank looks to strengthen the weak real. AFP reports, Wednesday’s meeting was the seventh consecutive to produce a rate hike and the 50 basis point move was the largest by the central bank in nine years.
Spain’s economy posted its strongest growth since before the financial crisis. The Spanish economy expanded at 1% in the second quarter, matching estimates. According to the Telegraph, the economy was boosted by strong consumer spending, industrial investment and the weaker euro. The reading marked an eighth straight quarter of growth and was the strongest since the second quarter of 2007. On a year-over-year basis, the Spanish economy grew at a 3.1% clip. Spain’s 10-year yield is down 6 basis points at 1.90%.
Greece might be forced into snap elections. Prime minister Alexis Tsipras has been unable to win back support from members of his Syriza party after they voted against his deal with Greece’s creditors. According to Bloomberg, “A formal party split would strip Tsipras’ coalition of its parliamentary majority and could force him to hold elections.” Greece’s 2-year yield is unchanged at 21.70%.
Stock markets around the world trade mixed. China’s Shanghai Composite (-2.2%) paced the decline in Asia and France’s CAC (+0.7%) leads the way higher in Europe. S&P 500 futures are higher by 0.25 points at 2101.75.
US economic data flows. Initial and continuing claims and GDP will cross the wires at 8:30 a.m. ET. Natural gas inventories are scheduled for 10:30 a.m. ET. The US Treasury will auction $US29 billion 7-year notes at 1 p.m. ET. The US 10-year yield is up 1 basis point at 2.30%.
Earnings releases remain heavy. Anheuser-Busch InBev, ConocoPhillips, Fiat Chrysler, Procter & Gamble, Sony and T-Mobile US are among the companies scheduled to report ahead of the opening bell. Amgen, Banco Santander and LinkedIn highlight the names set to release their quarterly results after the close.