Global markets are reacting to a chill in China. The economy has cooled even further in the most recent quarter. The Chinese government says GDP grew at an annual rate of 7.5%. That's down from 7.7% in the first quarter of the year. It's also the ninth time in the last ten quarters that expansion has slowed. Still, the numbers were not as bad as many had feared, sending markets higher. Yahoo! Finance Editor-in-Chief Aaron Task has reaction to the report and the larger implications in the video above.
Retail sales for June came in below expectations. The Commerce Department says retail sales for the month rose .4% when estimates had been for .8%. They were up point-6 percent in May.
Back to China, four Glaxo Smith Kline (GSK) executives are now being detained in the country as part of a bribery case. Last week the Chinese government accused Glaxo's sales team of giving cash kickbacks and other perks for prescribing its medications. Now the head of economic crimes says money was being funneled through travel agencies. Glaxo has denied the charges. So far the stock hasn't been hit, rising 2 and 2/3? over the last week, though it's down more than 1% this morning in early trading. Shares of GSK are up 20% year-to-date.
Things don't look good on the Surface for Microsoft (MSFT). The company has suddenly cut the price of its Surface tablets by $150. That's a 30% discount on the cheapest model. Of course, it's not uncommon for companies to discount devices when they've got a new model coming out. But there's no indication Microsoft has an updated Surface in the works. Two other tech stories this morning: BlackBerry (BBRY) is now discounting its flagship z-10 smartphone by 75% for a price of $49. Meanwhile, the Financial Times reports that Apple (AAPL) has gone on a hiring spree to fix problems with its so-called iWatch. At this point the device might not be available until the end of next year.
STOCKS TO WATCH
Citigroup (C) just reported quarterly earnings at 8am. The company beat estimates posting $1.25 a share when expectations were for $1.17. Revenue also beat, topping $20 billion dollars for the quarter when consensus had been for $19.746. These results are similar to what we saw last Friday from JPMorgan (JPM) which made $1.60 a share versus estimates of $1.44. Wells Fargo (WFC) also beat, posting 98-cents when estimates were for 93-cents. As for Citi, its profits were up 42% for the quarter. The company has cut costs by firing thousands of workers and scaling back operations in less profitable countries. Citigroup is up 23% year-to-date. The stock is up a whopping 90% over the past year.
Boeing (BA) has been up nearly 2% in early trading. This follows a fall of nearly 5% on Friday when there were problems with two of the plane-maker's new 787s. In one case a Dreamliner parked at London's Heathrow Airport caught fire. In the other a 787 headed from England to Florida had to turn around because of a technical issue. Shares of Boeing have been up 32% this year, despite the face that the Dreamliner was grounded for several months.
UPS (UPS) is down more this morning after falling 5.8% on Friday. Shares tumbled after the company said Q-2 profits are going to come in below prior expectations. The shipping giant says it's being hurt both by overcapacity in the global freight market, and a slowing U.S. industrial economy. Shares of UPS are still up about 13% year-to-date. But Friday's warning also hurt the company's chief competitor FedEx, sending its shares down more than 2%.
Leap Wireless (LEAP) is up 117%. AT&T (T) announced Friday that it's buying Leap for $15 a share. The stock had been trading just shy of $8 before announcement of the deal. It may be a sign that AT&T is going on a buying spree. Bloomberg says the company will likely look to Europe for other acquisitions. AT&T stock is up just 2% so far this year as it struggles to grow profits with its existing businesses.