While you were sleeping: Mnuchin comments lift stocks

Friday 1st September 2017

Wall Street advanced amid optimism about the Trump administration’s tax reform and the outlook for the US economy ahead of Friday’s jobs data.

US Treasury Secretary Steven Mnuchin said the administration has a "very detailed" tax plan ready and "couldn't be more excited" about its prospects. He made the comments in an interview with CNBC.

In 3.28pm trading in New York, the Dow Jones Industrial Average gained 0.3 percent, while the Nasdaq Composite Index climbed 0.9 percent. In 3.13pm trading, the Standard & Poor’s 500 Index added 0.6 percent.

Wall Street's fear gauge—the CBOE Volatility Index or the VIX—dropped 7.5 percent to 10.38.

The Dow gained as advances in shares of DuPont and those of General Electric, recently up 2.2 percent and 1.7 percent respectively, outweighed slides in shares of Walt Disney and those of Travelers, recently down 1.5 percent and 1 percent respectively.

Shares of Campbell Soup sank, trading 7.4 percent weaker in New York as of 2.35pm, after the packaged food company posted quarterly earnings and an outlook that fell short of expectations.

“The operating environment for the packaged foods industry remains challenging due to shifting demographics, changing consumer preferences for food, the adoption of new shopping behaviours and the dynamic retailer landscape," Denise Morrison, Campbell’s chief executive officer, said in a statement. “In these times, sales growth remains a challenge.”

“Looking ahead to fiscal 2018, we expect the operating environment to remain difficult," Morrison noted.

In fiscal 2018, the company warned, sales might fall 2 percent, while adjusted earnings before interest and taxes might decline 1 percent. It predicted adjusted earnings per share of between US$3.04 and US$3.11.

In the latest US economic data, a Commerce Department report showed consumer spending rose 0.3 percent in July, following a 0.2 percent advance in June. Meanwhile, the personal consumption expenditures price index excluding food and energy rose 0.1 percent last month.

“The consumer continues to do the heavy lifting when it comes to economic growth,” Chris Rupkey, chief economist at MUFG in New York, told Reuters. “Inflation is in the slow lane for now and this is likely to make [Federal Reserve] officials cautious on the need to raise rates a third time this year.”

In Europe, the Stoxx 600 Index rallied 0.8 percent. Germany’s DAX Index moved 0.4 percent higher, while France’s CAC 40 Index gained 0.6 percent and yhe UK’s FTSE 100 Index increased 0.9 percent.

Shares of Nestle rose 0.5 percent in Zurich as the company’s health division said it would close the Egerkingen factory in Switzerland, which may result in a loss of 190 jobs, and that it planned to transfer manufacturing to its other sites across the world over the next 12 to 18 months.

"Production volumes in Egerkingen are and have been very low, resulting in underutilisation of assets and hence additional pressure on manufacturing cost," Nestle Skin Health said in a statement.

"Nestlé Skin Health does not foresee a significant volume increase over the next years in Egerkingen, even taking into account growth forecasts for markets served by the factory," it noted.

The move is a sign that Nestle's new CEO is being decisive about cutting costs and improving profits.

"For me it's a clear indication that the CEO is really now implementing and executing his plan at high speed, in all Nestle's businesses, by looking at underperformers, tracking costs and improving cash returns," Jean-Philippe Bertschy at Vontobel, told Reuters. "No more holy cows at Nestle."

(BusinessDesk)

Comments from our readers

No comments yet