>>> US Close Dow -1.81% S&P -2.06% Nasdaq -2,99% Russell -2.56%


Closing Market Summary: Stocks Roll Over amid Continued Uncertainty

The S&P 500 fell 2.1% on Friday, as uncertainty surrounding a host of issues, which included politics and trade, continued to provide a justification to reduce risk. Friday's decline pushed the benchmark index to a new yearly low of 2408.12 and a weekly loss of 7.1%.

The Dow Jones Industrial Average (-1.8%), the Nasdaq Composite (-3.0%), and the Russell 2000 (-2.6%) also posted considerable declines to cap weekly losses at 6.9%, 8.4%, and 8.2%, respectively.

The S&P 500 had climbed to session highs in morning action (+1.5%) amid some market-soothing commentary from New York Fed President John Williams. Specifically, Mr. Williams indicated that the Fed is listening to the market and that the path of balance sheet runoff in 2019 is not "inflexible."

That recovery effort, however, was yet again met with selling resistance that drove the market further into negative territory. Disappointment in the inability to sustain a rebound effort from short-term oversold conditions effectively led to a buyers strike that weighed heavily on the indices.

Some discouraging headlines that compounded risk-reduction efforts included (1) the threat of a partial government shutdown due to disagreement over funding for a border wall, and (2) a late-day report that Director of the White House National Trade Council Peter Navarro told Nikkei that an agreement with China in 90 days will be difficult to attain.

All 11 S&P 500 sectors finished in negative territory with the communication services (-3.1%), information technology (-3.0%), and consumer discretionary (-2.6%) groups leading the retreat.

Dow component Nike (NKE 72.37, +4.84, +7.2%), for its part, was the best-performing stock in the S&P 500 after it released a strong earnings report and issued an encouraging FY19 currency neutral revenue growth outlook.

U.S. Treasuries remained resistant to selling pressure amid the equity sell-off. The 2-yr yield dropped four basis points to 2.63%, and the 10-yr yield was unchanged at 2.79%.

Reviewing Friday's batch of economic data, which included Personal Income and Spending for November; PCE Prices for November; Durable Orders for November; and GDP - Third Estimate for Q3; and the final reading of the University of Michigan Consumer Sentiment for December:

  • Personal income increased 0.2% month-over-month in November (consensus 0.3%). Personal spending rose 0.4% (consensus 0.3%). The PCE Price Index increased 0.1% (consensus 0.0%) while the core PCE Price Index, which excludes food and energy, also increased 0.1% (consensus 0.2%).
    • The key takeaway from the report is that it showed PCE inflation continues to run below the Federal Reserve's longer-run target of 2.0%, which could raise the market's angst level about the Fed being on course to make a policy mistake with further tightening action.
  • Durable goods orders increased 0.8% in November (consensus 1.7%) after an upwardly revised 4.3% decline (from -4.4%) in October. Excluding transportation, orders declined 0.3% (consensus +0.3%) after increasing an upwardly revised 0.4% (from 0.1%) in October.
    • The key takeaway from the report is that business investment was weak, evidenced by the 0.6% decline in nondefense capital goods orders excluding aircraft. Moreover, a 0.1% decline in shipments of those same goods will be accounted for as a negative input in Q4 GDP forecasts.
  • The third estimate for Q3 GDP showed a downward revision to 3.4% from 3.5% (consensus 3.5%) and an upward revision to the GDP Price Deflator to 1.8% from 1.7% (consensus 1.7%).
    • The key takeaway from the report was the same as before, which is that real final sales grew at their slowest rate since the fourth quarter of 2016.
  • The University of Michigan Index of Consumer Sentiment checked in at 98.3 with the final reading for December (consensus 97.5) versus a preliminary reading of 97.5 and the final reading of 97.5 for November. That left the 2018 average at 98.4, which was the best year since 2000.
    • The key takeaway from the report is that sentiment wasn't dented with the stock market's losses; however, expectations were tempered a bit amid burgeoning concerns about income and job prospects.

Investors will not receive any notable economic data on Monday.

  • Nasdaq Composite -8.3% YTD
  • Dow Jones Industrial Average -9.2% YTD
  • S&P 500 -9.6% YTD
  • Russell 2000 -15.7% YTD

>>> US Early premarket gappers

TICKER ALERT: SCANX

Early premarket gappers

Gapping up:

  • CDXC +25.3%, GRTS +12.2%, CRCM +8.8%, NKE +8.1%, DFRG +7.9%, ZNGA +6.4%, CGC +5.6%, AKRX +5%, ARLO +5%, CTAS +5%, IVAC +4.4%, MJ +2.9%, GTN +2.4%, PYX +1.8%, TLRY +1.6%, REI +0.9%, ACN +0.7%

Gapping down:

  • PTI -23.4%, PRGO -8.3%, CAMP -5.7%

FRT : Nestlé revives talks for Canadian pet food group Champion

Nestlé revives talks for Canadian pet food group Champion

Ralph Atkins in Zurich, Leila Abboud and Arash Massoudi in London 5 MINUTES AGO Print this page
Nestlé has rekindled early stage talks to buy a majority stake in Champion Petfoods, the Canadian company it initially looked at buying earlier this year before discussions foundered, people close to the situation said.

The private, Edmonton-based company makes premium dog and cat foods with what it calls “fresh, regional ingredients” like vegetables, meat and poultry. One of its backers is private equity fund Bedford Capital.

The people familiar with the situation cautioned that there was no guarantee a deal could be reached. It is also not clear if Champion’s backers want to pursue a sale of the company, which continues to grow quickly.

Nestlé and Champion declined to comment on the deal talks. The Wall Street Journal first reported on talks about Nestlé acquiring a controlling stake for more than $2bn in July of this year.

If finalised, a Champion acquisition would build on Nestlé’s deal earlier this year for UK-based tails.com, which makes personalised dog food tailored by breed, age, and activity level. Chief Executive Mark Schneider last year made pet care one of Nestlé’s four priority growth areas, along with coffee, bottled water and baby food, as the group seeks to offset weaker demand for its packaged foods.

Champion does not disclose its revenue or profit. But its products fit squarely into a fast-growing segment of the pet food market, namely responding to consumers’ desire to give their pets healthier and more authentic food and treats.

Champion touts its pet food as “biologically appropriate”, but faces about a dozen lawsuits alleging it contains heavy metals like mercury and lead. A lawyer for Champion said the lawsuits have no factual or legal merit. “Champion intends to vigorously defend itself in all litigation and judges have already found in our favour regarding a number of our requests during procedural rulings for dismissal,” said Dave Coulson, a lawyer for Champion Petfoods.

Switzerland-based Nestlé is already a major player in pet food thanks to its Purina Petcare subsidiary, which it acquired in 2001.

The talks also amid a period of deal activity for Mr Schneider, who is seeking to blunt critiques from activist investor Third Point that Nestlé is not growing fast enough. He signed a big licensing deal with a Starbucks to expand in coffee, but lost a bidding war win Unilever for Horlicks, a malted hot beverage popular in India. Nestlé has also been in talks with potential buyers of its skin care business, which could fetch SFr7bn.

Last year pet food sales accounted for nearly 15 per cent of Nestlé revenue of 89.8 billion Swiss francs. It was the second-fastest growing category for Nestlé after coffee, delivering 3 per cent organic sales growth.