Alphabet, Old Navy, Schlumberger, Facebook, Weak China Growth - 5 Things You Must Know Friday

Stock futures rise Friday; China's growth in 2019 was weak but fourth-quarter GDP steadies; Schlumberger reports earnings; Gap won't spin off Old Navy, Alphabet hits $1 trillion market cap.
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Here are five things you must know for Friday, Jan. 17:

1. -- Stock Futures Rise on Steady Fourth-Quarter Growth in China

Stock futures rose Friday and Wall Street looked set for fresh record highs even as data showed China's economy grew at the slowest pace in three decades last year, thanks in part to its trade war with the United States.

China's GDP slowed to 6.1% in 2019, the weakest annual growth rate since 1990, and fell from a 6.6% pace in the previous year.

But fourth-quarter GDP held steady at 6%, and data for December on industrial output, retail sales and government investment all surprised to the upside. The signing of the phase one trade agreement between Beijing and Washington, meanwhile, also was seen as reviving consumer and business confidence.

Contracts linked to the Dow Jones Industrial Average rose 81 points, futures for the S&P 500 were up 8.10 points and Nasdaq futures jumped 34.25 points.

Stocks in the U.S. closed at record highs Thursday on optimism over the U.S.-China trade accord, a strong earnings report from Morgan Stanley MS, and rising retail sales.

2. -- Schlumberger and J.B. Hunt Report Earnings

Schlumberger (SLB) - Get Report posted fourth-quarter adjusted earnings of 39 cents a share, 2 cents ahead of estimates.

Earnings reports are also Friday from State Street (STT) - Get Report, Fastenal (FAST) - Get Report, Regions Financial (RF) - Get Report and J.B. Hunt Transport Services (JBHT) - Get Report.

Schlumberger is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells SLB? Learn more now.

The economic calendar in the U.S. Friday includes Housing Starts for December at 8:30 a.m. ET, Industrial Production for December at 9:15 a.m., Consumer Sentiment for January at 10 a.m. and the Job Openings and Labor Turnover Survey for December at 10 a.m.

3. -- Gap Won't Spin Off Old Navy

Gap (GPS) - Get Report was rising Friday after saying it was no longer pursuing a spinoff of its Old Navy business and estimating that earnings would come in ahead of previous guidance.

The move to keep Old Navy within the Gap reporting structure comes just two months after the retailer confirmed the "strategic rationale for the planned separation" following the announced departure of former CEO Art Peck in November.

Gap said Thursday the spinoff could be too costly and complex, and it prefers to focus on near-term sales increases at all three of its brands - Gap, Old Navy and Banana Republic - while continuing the search for a permanent CEO.

“The plan to separate was rooted in our commitment to value creation from our portfolio of iconic brands,” said interim CEO Robert Fisher. “While the objectives of the separation remain relevant, our board of directors has concluded that the cost and complexity of splitting into two companies, combined with softer business performance, limited our ability to create appropriate value from separation.”

Gap also said it now “expects its adjusted fiscal year 2019 earnings per share to be moderately above its previous guidance of $1.70 - $1.75." The company said the  improvement came “as a result of better-than-anticipated promotional levels over the holiday period, particularly at Old Navy.”

The stock rose 5.37% to $19.61 in premarket trading.

4. -- Alphabet Hits $1 Trillion Market Cap 

With a 0.76% rise on Thursday, Google parent company Alphabet (GOOGL) - Get Report became the fourth U.S. company to ever achieve a trillion-dollar market value.

Alphabet follows Apple (AAPL) - Get Report, Amazon.com (AMZN) - Get Report and Microsoft (MSFT) - Get Report in reaching the mark, with Apple and Amazon hitting the level in 2018 and Microsoft reaching it for the first time in April 2019. Apple is currently the most valuable public U.S. company with a market cap of $1.38 trillion, followed by Microsoft at $1.27 trillion and now Alphabet. Since reaching its high in 2018, Amazon’s market cap is now down to $930 billion.

Alphabet shares have risen 6% this year amid strong momentum for large-cap technology stocks. The stock has risen 33% in the last 12 months. It closed at $1,459.30 on Thursday.

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5. -- Facebook Reportedly Scraps Plan to Sell Ads in WhatsApp

Facebook (FB) - Get Report is backing away from efforts to sell ads in WhatsApp, The Wall Street Journal reported, citing people familiar with the matter.

WhatsApp in recent months disbanded a team that had been established to find the best ways to integrate ads into the service, and the team’s work was then deleted from WhatsApp’s code, the people told the Journal.

Facebook unveiled plans in 2018 to generate more revenue from WhatsApp that included selling ads, and a year ago WhatsApp’s then-CEO, Chris Daniels, called ads a “primary monetization mode” for the company. The company also unveiled prototypes last May for ads in its Status feature.

But those plans have been scrapped, the Journal reported. Facebook plans at some point to introduce ads to Status, but for now the focus is on building out money-making features allowing businesses to communicate with customers and better manage those interactions, one person familiar with the matter told the Journal.

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