The daily business briefing: February 4, 2020
Alphabet shares drop on news of disappointing Google ad revenue, Tesla shares make biggest daily gain since 2013, and more
1. Alphabet shares fall after Google ad revenue disappoints
Alphabet shares fell by 5 percent in after-hours trading after the Google parent beat earnings estimates but fell short on revenues as Google's advertising business came in weaker than expected. New data about YouTube and Google Cloud also came as a disappointment. Google's YouTube video streaming unit posted ad revenue on a $15 billion annual pace, below estimates that went as high as $25 billion. Google's cloud services revenue was up by 53 percent over the same period a year ago, but that was slower than the growth of Microsoft's Azure business. "The stock was priced for perfection, and a top-line miss was enough to send it lower," said Michael Pachter, analyst at Wedbush Securities.
2. Tesla stock soars after research firm raises share target
Tesla shares made their biggest single-day jump since May 2013 on Monday, jumping by 19.9 percent after Panasonic reported profits at its battery business with the electric-car maker, and Targus Research raised its price target on Tesla shares to $808 from $556. Targus analysts cited Tesla's better-than-expected fourth quarter results and forecasts of rising earnings as justification for the change. The research firm said one reason for its "positive view" was strong demand for the new Model 3, Tesla's first mass-market electric car. "Despite past production delays, parts shortages, labor cost overruns, and other difficulties, we expect Tesla to benefit from its dominant position in the electric vehicle industry and to improve performance in 2020 and beyond," Targus Research said.
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3. U.S. factories rebound after U.S., China trade truce
U.S. factories broke a five-month losing streak and expanded unexpectedly in January, the Institute for Supply Management said Monday. The institute, an association of purchasing managers, said its manufacturing index rose to 50.9 in January from 47.8 in December. The index showed that manufacturing contracted from August through December as President Trump's trade war with China raised costs, and economists had expected further trouble in January. But following a partial deal that amounted to a truce between Beijing and Washington, new orders, production, and export orders rose. Timothy Fiore, chair of the ISM's manufacturing survey committee, cautioned that China's coronavirus outbreak is threatening manufacturers' supply chains and "has got me concerned."
4. U.S. stocks continue to rebound after last week's losses
U.S. stock index futures surged early Tuesday as concerns continued to ease over potential economic damage from China's rapidly expanding coronavirus outbreak. Futures for the Dow Jones Industrial Average, the S&P 500, and the Nasdaq were up by more than 1 percent several hours before the opening bell. The gains continued a rebound that began on Monday after Friday's big selloff. The Dow rose by 0.5 percent on Monday, while the S&P 500 and the Nasdaq rose by 0.7 percent and 1.3 percent, respectively. Global concerns over the coronavirus outbreak continued, as the death toll reached 425 with 20,438 confirmed cases in China. But Atlanta Federal Reserve Bank President Raphael Bostic said Monday that his outlook for the U.S. economy had not been changed due to the possibility of trade troubles from the virus.
5. U.K. speeds up plan to ban new gas and diesel cars
Britain plans to start banning the sale of new gasoline, diesel, and hybrid cars in 2035, five years earlier than previously scheduled. British Prime Minister Boris Johnson announced the change Tuesday at a launch event for COP26, a Glasgow U.N. Climate Change Conference planned for November. The change followed complaints from climate experts that the old target year of 2040 would be too late to keep the U.K. on track to meet its goal of zero carbon emissions by 2050. Johnson said 2020 would be a "defining year of climate action." "As we set out our plans to hit our ambitious 2050 net zero target across this year, so we shall urge others to join us in pledging net zero emissions," Johnson said in a statement released ahead of a London speech.
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Harold Maass is a contributing editor at The Week. He has been writing for The Week since the 2001 debut of the U.S. print edition and served as editor of TheWeek.com when it launched in 2008. Harold started his career as a newspaper reporter in South Florida and Haiti. He has previously worked for a variety of news outlets, including The Miami Herald, ABC News and Fox News, and for several years wrote a daily roundup of financial news for The Week and Yahoo Finance.
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