Here are five things you must know for Friday, Jan. 19:
1. -- Stocks Higher but Government Shutdown Looms
U.S. stock futures pointed to gains for Wall Street on Friday, Jan. 19, even as investors grew increasingly concerned the federal government will be forced into a shutdown at midnight unless lawmakers can reach an 11th-hour agreement on funding.
The House of Representatives passed a continuing resolution late Thursday, Jan. 18, that would continue funding the federal government until Feb. 16, but the bill is unlikely to pass the Senate in its current form, setting up a battle between Republican and Democratic lawmakers over immigration protections for the so-called Dreamers and spending on Donald Trump's promised border wall.
But is government shutdown even the worst case scenario?
The backdrop of political risk played on both the U.S. dollar and Treasury bond yields overnight, pushing the dollar index to fresh three-year lows of 90.23 against a basket of six global currencies and lifting benchmark 10-year Treasury yields to a September 2014 high of 2.64%.
Wall Street was looking to rebounded after finishing lower on Thursday, after setting fresh records in the previous session.
The Dow Jones Industrial Average declined by 97 points, or 0.37%, to 26,018 after rising at the open to a fresh intraday high. The S&P 500 dropped 0.16% and the Nasdaq fell 0.03%.
The economic calendar in the U.S. on Friday includes Consumer Sentiment for January at 10 a.m. ET.
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2. -- IBM Falls Despite a Return to Growth
Shares of International Business Machines Corp. (IBM) - Get International Business Machines (IBM) Report fell 3.3% in premarket trading on Friday as investors reacted cautiously to the company's outlook even as it posted its first quarterly revenue increase in more than five years.
IBM told investors after the close of trading on Thursday that it expects operating profit for the current fiscal year of at least $13.80 a share, a figure that is essentially unchanged from 2017 and shy of the Wall Street consensus of $13.92. The Armonk, N.Y.-based tech company also said it anticipates a full-year tax rate of around 16%, nearly four percentage points higher than what it paid over the course of 2017 as changes in the U.S. corporate code trim its bottom line.
"Tax will be a headwind in 2018 year to year," said Chief Financial Officer James Kavanaugh."Given our trajectory exiting 2017 and the confidence we have in our portfolio and how we've repositioned it, we do expect revenue growth at current spot rates for 2018."
"We see stabilization of our margins on a year-to-year basis, driven by the continued scale-out of our cloud business as we drive efficiency, and we're also going to get yield from our services productivity improvements," Kavanaugh added.
3. -- AmEx Posts First Loss in 26 Years
American Express Co. (AXP) - Get American Express Company Report fell 3.3% in premarket trading on Friday after the credit card giant posted its first quarterly loss in 26 years and said it would suspend its stock buyback program because of the new U.S. tax law.
American Express posted a $1.2 billion quarterly loss after booking a $2.6 billion charge related to the new tax law. The charges were mostly tied to profits American Express had earned abroad and was now returning to the U.S. under a special one-time tax program. .
AmEx said it would hold off on buying back shares for the first half of 2018, but continue paying dividends at current levels.
4. -- Oil Prices Tumble as U.S. Output Seen Accelerating
Global oil prices fell on Friday following data and projections that suggested U.S. crude output was set to accelerate over the near-term.
West Texas Intermediate crude, the U.S. benchmark, fell 0.86% to $63.40 a barrel, and Brent crude was down 0.94% to $68.66. Some of the declines were pared thanks to another leg-down in the U.S. dollar after data from the U.S. Energy Information Administration showed domestic oil output recovered to a rate of 9.75 million barrels a day last week, a figure that offset a larger-than-expected 6.9 million barrel decline in crude inventories.
That estimate was supported by the International Energy Agency's monthly oil report, which noted that the "big 2018 supply story is unfolding fast in the Americas" and that U.S. production will overtake Saudi Arabia's this year.
"Explosive growth in the U.S. and substantial gains in Canada and Brazil will far outweigh potentially steep declines in Venezuela and Mexico," the Paris-based IEA said.
5. -- Softbank Is Uber's Largest Shareholder
SoftBank Group Corp. (SFTBY) closed a deal to acquire 15% of Uber Technologies Inc., making the Japanese technology conglomerate the largest shareholder in the ride-sharing company.
As part of the deal, investors led by SoftBank and Dragoneer Investment Group will invest about $9 billion into Uber, including about $1.25 billion in new shares.
The investment deal clears the way for Uber to sell stock to the public in 2019.
Uber hopes the deal strengthens the position of CEO Dara Khosrowshahi, who replaced former CEO Travis Kalanick after the company survived more than a long PR nightmare that was riddled with sexual harassment allegations, well-publicized lawsuits, a broken corporate culture and the discovery of a 2016 data breach that the company had concealed.
This article has been updated to include earnings from Schlumberger.
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