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U.S. Market Weekly Summary – Week Ending 12.15.2017

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The Standard & Poor’s 500 index rose 0.9% this week, with the telecommunications sector leading the climb as the Federal Communications Commission voted to roll back net-neutrality rules.

The market benchmark ended the week at 2675.81, up from 2,651.50 last week. The index also reached a new record high in Friday’s session at 2,679.63.

The telecommunications sector jumped 4.0% this week, marking the biggest percentage gain across the sectors. The technology, consumer-staples, consumer-discretionary and health-care sectors also were strong with increases of more than 1% each.

Four sectors were in the red for the week, but the declines were slight. The utilities sector fell 0.7% while the materials sector shed 0.2% and the energy and financial sectors edged down 0.1% each.

The financial sector had been deeper in the red as of Thursday’s close versus last Friday amid concerns about Republicans’ ability to get enough votes next week for their tax-overhaul plan. However, the sector climbed 1.0% Friday, helping it to pare the decline versus last Friday, as Republican senators Marco Rubio and Bob Corker said they planned to support the tax plan.

The telecommunications sector’s strong advance came as the Federal Communications Commission on Thursday voted to repeal net-neutrality rules, which require broadband providers to treat all internet traffic equally. The repeal is seen as a boon to telecommunications companies because it will enable them to make changes that include offering more package options with a wider range of fees.

Verizon Communications (VZ) shares added 3.1% this week while shares of AT&T (T) rose 4.1%. AT&T’s gain also came as the company reached a tentative deal with the union representing more than 21,000 of its wireless-support and retail workers, ending a 10-month standoff over pay and work conditions. In addition, the US Navy awarded contracts with a potential value of $993 million over five years to AT&T for mobility services from carriers.

The consumer-discretionary sector’s gainers included Twenty-First Century Fox (FOXA), whose shares jumped 5.1% this week as Walt Disney (DIS) said it agreed to buy the company’s Twentieth Century Fox Film and Television studios, along with cable and international TV businesses, for approximately $52.4 billion in stock. Immediately prior to the deal, Twenty-First Century Fox plans to spin off its news, sports and broadcast businesses to its shareholders to create a new “Fox” centered on live news and sports brands. Disney shares climbed 6.8% this week.

Employer Costs for Employee Compensation

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Employer costs for state and local government workers averaged $30.54 per hour worked for wages and salaries and $18.24 for benefits in September 2017.

State and local government health benefit costs averaged $5.65 per hour worked.

Closing Bell

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U.S. stocks surged to new record highs amid investor expectations that the final version of the GOP tax bill will be released on Friday evening.

The S&P 500 soared 0.9%, while the Dow Jones Industrial Average increased 0.6% and the more tech-heavy Nasdaq 100 index climbed 1.2%.

First up, the scoreboard:

  • Dow: 24,651.74, +143.08, (+0.58%)
  • S&P 500: 2,675.81, +23.80, (+0.90%)
  • Nasdaq: 6,936.58, +80.06, (+1.17%)
  • US 10-year yield: 2.36%, +0.009
  • WTI crude oil: $57.35, +$0.31, +0.54%


ADDITIONALLY:

  • JPMorgan’s quant guru says traders are waiting for tax cuts to unleash more stock market gains. Marko Kolanovic, the firm’s global head of quantitative and derivatives strategy, says a successful Republican tax overhaul will give equities a huge shot in the arm in 2018.

  • A photo from the CEO of Goldman Sachs is fueling Twitter takeover chatter. The company’s stock surged as much as 7.3% on Thursday, closing at its highest level in 14 months, amid speculation that Twitter and Goldman are re-engaging in discussions around a sale to Disney.

  • Oracle tops Wall Street targets — but shares sink more than 4%. The company reported strong quarterly earnings after the closing bell on Thursday afternoon, beating revenue and profit estimates.

  • Bitcoin pops to new all-time high. The red-hot cryptocurrency reached a new record versus the dollar, and has been steadily recovering ground after falling as low as $13,000 on Sunday.

  • Facebook admits that social media can be bad for you. In a blog post published on Friday, Facebook addressed a “hard question”: “Is spending time on social media bad for us?“

  • Corker and Rubio reverse course, and the GOP tax bill now looks like a slam dunk to pass

  • Walmart and Amazon’s long-simmering feud exploded in 2017 — and it’s redefining retail

  • Ripple hires Facebook communications manager after its cryptocurrency triples in a week

  • Wall Street is obsessed with Tesla Model 3 production — but investors may be missing something more important

  • There’s a lot to learn about bitcoin from looking at the tulip bulb bubble

Target is about to give its customers same-day delivery

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Target is doubling-down on its efforts to compete with Amazon and Walmart with the purchase of Shipt, a same-day delivery company that specializes in groceries.

The Minneapolis-based chain on Wednesday said it would pay $550 million in cash for the technology company, and that it will begin offering same-day delivery at about half of its 1,800 stores early next year.

The acquisition comes as Target’s largest competitors invest heavily in groceries, as well as speedy delivery. Walmart-the country’s largest grocer-in September paid an undisclosed sum for Parcel, a New York-based startup that provides same-day deliveries. And Amazon on Wednesday said it had expanded its same-day delivery service to Prime members in 8,000 U.S. cities, up from 5,000 last month. Earlier this year, the online behemoth bought Whole Foods Market for $13.7 billion. (Jeff Bezos, Amazon’s chief executive, owns The Washington Post.)

“Target’s plan to acquire Shipt signals a clear intent to capture a much larger slice of the online grocery market,“ Neil Saunders, managing director of the research and consulting firm GlobalData Retail, wrote in a note to clients. “As positive as the news is, it does not change the fact that Target has a lot more work to do in developing a clear proposition in grocery.“

In August, Target purchased Grand Junction, a San Francisco-based technology company that specializes in providing software for local deliveries. The company has also been expanding its Target Restock program to cities like Dallas and Denver, where it now offers next-day delivery service on baby products, cleaning supplies and other everyday items.

“Same-day delivery is a service that our guests are asking for more and more often,“ John Mulligan, Target’s chief operating officer, said Wednesday on the company’s website. “By acquiring Shipt, we’ll be able to take advantage of our network of stores and Shipt’s technology platform and shopper community to quickly offer same-day delivery to millions of our guests.“

The news comes as UPS and other delivery services warn of delays in holiday deliveries, putting pressure on retailers to find new ways to quickly get products to customers.

“Bottom line, these types of delays are simply not acceptable to shoppers any more,“ said Tushar Patel, chief marketing officer for Kibo Commerce, an e-commerce software company. “We are now at a point where same-day delivery service is becoming the rule for top retailers, rather than the exception.“

Shipt, founded three years ago in Birmingham, Alabama, has more than 20,000 personal shoppers who buy and deliver items from a number of stores, including Harris Teeter and Kroger. The company, which will be a subsidiary of Target, plans to continue to work with other retailers.

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