The Wall Street Journal - 07.10.2019

B4| Monday, October 7, 2019 ***** THE WALL STREET JOURNAL.

BUSINESS & TECHNOLOGY WSJ.com/Tech

estimates.

After the latest quarter’s

potential fall, analysts are pro-

jecting growth to rebound

later this year and through the

middle of next year, according

to FactSet.

The coming earnings season

could further distinguish the

trade war’s relative winners

from its losers, analysts said.

For example,NikeInc. execu-

tives said revenue is expected

to grow this year after its sales

beat expectations for its latest

quarter, sending its shares to a

record in September.

Amy Kong, managing direc-

tor at Fiduciary Trust Co. In-

ternational, said she has taken

profits in certain sectors and

companies that have per-

formed well and expects a

continued divergence between

different stock groups.

“We’re positioning portfo-

lios to be ready for more vola-

tility,” said Ms. Kong. “We are

building cash positions.”

Some investors and ana-

tors in the region, including
the continuing trade dispute
between the U.S. and China
and disruptions in Hong
Kong,” according to a company
disclosure.
Lighting-products maker
Acuity Brands Inc. said
Wednesday that sales volumes
fell 16% in its latest quarter.
Chief Executive Vernon Nagel
pointed to “a number of mar-
ket shocks, including the addi-
tion of significant tariffs
placed on Chinese-made com-
ponents and finished goods,
uncertainty created by the
threat of further trade actions
and labor shortages in key
markets” on the company’s
earnings call. The company’s
shares slumped 11% on
Wednesday, one of their big-
gest single-day drops of the
past decade.
Among the companies set
to report results this week are
Levi Strauss & Co.,Domino’s
PizzaInc. andDelta Air Lines
Inc. Earnings season ramps up
in earnest Oct. 15 with reports
fromJPMorgan Chase&Co.,
Citigroup Inc., Johnson &
JohnsonandUnited Airlines
HoldingsInc., among others.
“The environment with the
trade war has become much,
much less certain,” said Chris
Dillon, a capital-markets in-
vestment specialist at T. Rowe
Price’s multi-asset division,
which oversees $330 billion.
“Thateasyliftofgetting19%
annualized from the S&P 500
is gone.”
Particularly worrying is the
number of tech executives say-
ing that earnings could take a
hit. A record number of tech
companies are on track to is-
sue negative guidance for the
third quarter, according to
FactSet, potentially weighing
on a key driver of the market’s
gains.
It is common for earnings
to come in better than ex-
pected because analysts tend
to be conservative with their

Continued from page B1

lysts said they don’t expect to

see a continuation of the

strong economic growth re-

corded in recent years, but

they aren’t positioning for a

recession, either. They will be

closely parsing the latest data

on consumer sentiment and

inflation due this week, which

could stoke moves across bond

and stock markets.

Additionally, Federal Re-

serve Chairman Jerome Powell

and regional presidents

Charles Evans and Neel Kash-

kari are scheduled to speak.

Further cuts from the Fed

could help buoy markets, sev-

eral investors said. The grow-

ing concerns about the global

economy have coincided with

rising bets of further interest-

rate cuts from the central

bank. Investors are positioning

forasmanyastwomorerate

cuts through December.

An accommodative Fed has

been a primary driver of major

indexes’ gains this year. The

central bank lowered rates for

the first time since the finan-

cial crisis in July and followed

with another cut in Septem-

ber. “It could be a lot worse,”

T. Rowe Price’s Mr. Dillon said.

Wynn Resorts expects July and August profit to be below last year. Its Encore Boston Harbor casino.

SCOTT EISEN/BLOOMBERG NEWS

Earnings

Threaten

Stocks

cause of the vaping-related ill-

ness, which has sickened more

than 1,000 people and is linked

to at least 19 deaths. Many pa-

tients have reported vaping

cartridges that they purchased

from informal sources, such as

friends, illicit dealers or off the

street, and that contained THC,

the psychoactive chemical in

marijuana.

Juul and other manufactur-

ers have argued that regulators

should do more to clear out

unauthorized—and potentially

unsafe—products from the

marketplace.

“The black market needs to

be shut down and legal, safe

product will protect the pub-

lic,” said Bill Loucks, co-

founder of TKO Products,

which is licensed to sell THC

vape cartridges in California.

Mr. Loucks said his com-

pany’s products are “being

knocked off all over the coun-

try” and his company has been

unable to find the counterfeit-

ers. “The knockoffs are being

knocked off as the packaging is

for sale on Chinese websites,”

he said. “Someone buying a

TKO fake won’t know if it was

made by the same people as

the last one they bought.”

Marijuana is illegal under

federal law, though more than

30 states have approved recre-

ational or medical use. Legal

U.S. sales of marijuana vaping

cartridges and disposable vape

pens are estimated at $2.5 bil-

lion this year, but the market is

roughly twice as large when in-

cluding illicit sales, according

to industry tracking firm BDS

Analytics. Nicotine e-cigarette

sales are forecast to reach $9

billion this year.

Juul has sued to stop hun-

dreds of online sellers from

hawking counterfeits and has

tracked many knockoffs to

China. In the second quarter of

this year, the San Francisco

startup had more than 7,000

online listings for counterfeit

products pulled down. It also

Continued from page B1

Knockoffs

Muddle

Vape Crisis

has taken legal actions against

manufacturers of unauthorized

Juul-compatible pods with

child-friendly flavors.

Federal and state officials

have sought to curb teen e-cig-

arette use through proposed

bans on sweet and fruity fla-

vored nicotine vaping prod-

ucts. The FDA also has sent let-

ters to 90 e-cigarette

manufacturers, many of them

makers of unauthorized Juul-

compatible pods, according to

the agency. Some of them have

taken their products off the

market. The agency doesn’t

regulate marijuana.

“The FDA continues to work

on all fronts to tackle the trou-

bling epidemic of youth e-ciga-

rette use,” including investigat-

ing counterfeit products, an

agency spokeswoman said.

“The ban is just going to

force people to create these

things on the black market,”

said John Wells, a 32-year-old

former smoker in New York,

who said he recently bought

$200 worth of Juul menthol

refills when he heard the flavor

could be banned.

The Centers for Disease

Control and Prevention on

Sept. 27 said it surveyed 86

patients in Illinois and Wiscon-

sin with the lung illness and

found they used 87 brands of

vaping products. The most

commonly reported brand was

Dank Vapes, a generic brand of

THC cartridges that isn’t made

by any one company.

Juul told the FDA in January

that in a survey of 9,872 teens,

the company found that of

those who said they had used a

Juul device, 69% reported first

using flavors like iced straw-

berry, which Juul doesn’t

make.

Juul has traced many coun-

terfeits to factories in Shen-

zhen, China. Juul investigators

told The Wall Street Journal

they have presented evidence

to local police, who have raided

17 counterfeiters.

Juul has traced

many counterfeits to

factories in

Shenzhen, China.

S&P 500 geographic revenue exposure, by sector

Source: FactSet

Overall index

Utilities

Real estate

Financials

Consumer discretionary

Communication services

Industrials

Health care

Energy

Consumer staples

Materials

Information technology

62% 38

97 3

85 15

78 22

69 31

64 36

63 37

62 38

58 42

55 45

46 54

43 57

U.S. International

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