While you were sleeping: eBay rallies as it drops PayPal

Friday 2nd February 2018

Wall Street rose, bolstered by better-than-expected corporate earnings including from Facebook and eBay.

Shares of Facebook traded 4 percent stronger as of 1.33pm in New York, while those of eBay jumped 15.3 percent.

EBay shares rallied on an upbeat outlook and its plans to team up with Adyen, a Netherlands-based global payments company, shifting away from its longtime payments processing partner PayPal. Shares of PayPal sank, down 6.3 percent recently.

“Moving away from PayPal, lowering the costs of selling products on the marketplace makes eBay a more significant competitor because it lowers the relative cost versus others including Amazon,” said DA Davidson & Co’s analyst Tom Forte, Reuters reported.

In 1.30pm trading in New York, the Dow Jones Industrial Average gained 0.5 percent, while the Nasdaq Composite Index rose 0.3 percent. In 1.16pm trading, the Standard & Poor’s 500 Index advanced 0.4 percent.

Wall Street’s gains were limited as investors adjusted to the possibility of accelerating inflation and interest rate increases following Wednesday’s statement at the end of a Federal Reserve policy meeting.

“There are concerns that rates are moving up and inflation is firming,” Jeff Zipper, managing director for investments at Private Client Reserve at US Bank, told Reuters. “If inflation moves higher then the chances of a fourth rate hike go up. The market is a lot more jittery and is dissecting every piece of economic data more closely.”

US Treasuries declined, sending the yield on the 10-year note two basis points higher to 2.73 percent.

The Dow rose as gains in shares of Walt Disney and those of Boeing, recently up 1.7 percent and 1.6 percent respectively, outweighed declines in shares of DowDuPont and those of General Electric, recently down 2.1 percent and 0.7 percent respectively.

Shares of DowDuPont fell after the company’s first-quarter and full-year sales and profit outlook fell short of analysts’ expectations.

First-quarter earnings will be hurt by farmers delaying orders and “aggressive competitive pressure” in crop seeds, Jim Collins, chief operating officer of the agriculture unit, said on a conference call, according to Bloomberg.

“It’s going to be a tough go here as we start out the year,” Collins said.

Meanwhile, DowDuPont chief executive officer Ed Breen said the company increased its goal for annual cost savings to US$3.3 billion, up from US$3 billion.

"We also are making significant progress standing up the intended public companies, which we now expect to spin about 14 to 16 months from today,” Breen said in a statement.

Materials Science is expected to separate by the end of the first quarter of 2019, and Agriculture and Specialty Products are expected to separate by June 1, DowDuPont said.

In Europe, the Stoxx 600 Index ended the day with a 0.5 percent decrease from the previous close. Germany’s DAX Index dropped 1.4 percent, while the UK’s FTSE 100 index slid 0.6 percent, and France’s CAC40 Index retreated 0.5 percent.

“The market is a bit stretched and the DAX hitting some technical levels, like the 50-day moving average, has certainly triggered some of the declines,” Benno Galliker, a trader at Luzerner Kantonalbank in Lucerne, Switzerland, told Bloomberg.

“It looks like more of a technical thing—the fundamentals are still solid, earnings are overall good and the economy is doing well,” Galliker noted. “Any dip would be short-term and a buying opportunity for me.”

(BusinessDesk)

Comments from our readers

No comments yet