Market Update
Lululemon Athletica soared 10.7% to $418.25 ahead of the company's addition to the S&P 500 index later in the week.
16 Oct, 2023
U.S. Movers: Bank of America, Chipmakers, Choice Hotels, Goldman Sachs, Johnson & Johnson, Lockheed Martin, Wyndham Hotels
Scott Peters
17 Oct, 2023
New York City
Stocks faced headwinds after hotter-than-expected retail sales in September supported the case for one more rate hike in the year and higher rates through 2024.
The S&P 500 index decreased 0.2% to 4,364.92 and the Nasdaq Composite fell 0.4% to 13,515.26.
The yield on 2-year Treasury notes increased to 5.13%, 10-year Treasury notes inched higher to 4.76% and 30-year Treasury bonds edged up to 4.91%.
Bank of America Corp increased 1.3% to $27.33 after the financial services company reported quarterly results.
Revenue in the third quarter increased 3% to $25.2 billion from $24.5 billion and net interest income jumped 4% to $14.4 billion driven by higher interest rates and loan growth.
Net income in the quarter increased to $7.8 billion from $7.4 billion and diluted earnings per share edged up to 90 cents from 88 cents a year ago.
The provision for loan losses edged up by $336 million to $1.2 billion, reflecting weakening commercial real estate market conditions and stretched consumers.
Goldman Sachs was unchanged at $314.50 after the financial services provider reported mixed quarterly results.
Third quarter revenue edged slightly lower to $11.8 billion from $11.97 billion and net income dropped to $2.1 billion from $3.1 billion and diluted earnings per share fell to $5.47 from $8.25 a year ago..
The 6% decline in revenue in asset management was overshadowed by an 8% increase in global investment banking fees.
Johnson & Johnson added 0.1% to $157.57 after the company reported slightly better-than-expected quarterly results.
Revenue in the third quarter increased 6.8% to $21.3 billion from $19.99 billion and net earnings was flat at $4.3 billion and diluted earnings per share edged up 4% to $1.69 from $1.62 a year ago.
Sales in the U.S. increased 11.1% to $12 billion from $10.8 billion and international sales rose 1.6% to $9.3 billion from $9.2 billion a year ago.
The company revised higher its estimate of non-GAAP annual sales growth estimate to between 8.5% and 9.0% from the previous estimate between 8.0% and 8.5%.
Advanced chipmakers traded down after the U.S. Commerce Department said it plans to unveil additional restrictions on the sale of artificial intelligence chips to China.
Intel Corp declined 2% to $35.83, Advanced Micro Devices fell 1.0% to $105.40 and Broadcom Inc dropped 2.5% to $880.63.
Wyndham Hotels & Resorts Inc soared 10.4% to $76.28 after Choice Hotels International made a public offer to acquire the budget hotel chain operator.
Choice offered $90 a share, $49.50 in cash and 0.324 of its own stock, about 30% premium to its closing price in the previous regular trading session.
Choice decided to take its $7.8 billion offer directly to shareholders after merger talks between the two companies broke down after six months of discussion.
Before the merger talks broke down, Choice had increased its initial offer of $80 a share to $85 a share, but two parties failed to agree on a deal after discussions stalled since May.
Lockheed Martin Corp jumped 1% to $444.71 after the defense contractor reiterated its full-year guidance and released its latest quarterly results.
Revenue in the third quarter ending on September 24 rose 2% to $16.9 billion and net income declined to $1.7 billion from $1.8 billion and diluted earnings per share edged up to $6.73 from $6.71 a year ago.
Lockheed reiterated its full-year revenue range between $66.25 billion and $66.75 billion and diluted earnings per share between $27.0 and $27.20 and free cash flow of $6.2 billion.
Higher Rates Worries Resurfaced After Retail Sales Data
Barry Adams
17 Oct, 2023
New York City
Stocks on Wall Street headed lower after interest rate and inflation worries resurfaced.
Retail and food services sales unadjusted for inflation rose 0.7% from the previous month and advanced 3.8% from the previous year in September from an upwardly revised 0.8% increase in August.
The retail sales are adjusted for seasonal and calendar changes but not adjusted for price changes or inflation.
Retail trade sales were up 0.7% from August, and up 3.0% above last year and nonstore retail sales were up 8.4% and food services and drinking places sales were up 9.2% from a year ago respectively.
The hotter-than-expected retail sales data lifted 10-year U.S. Treasury yield to 4.80% and the yield hovered near 16-year high.
Benchmark indexes traded down after the release of retail sales figures supported the case for one more rate hike in 2023 and higher rates through 2024.
U.S. Indexes & Yields
The S&P 500 index decreased 0.2% to 4,364.92 and the Nasdaq Composite fell 0.4% to 13,515.26.
The yield on 2-year Treasury notes increased to 5.13%, 10-year Treasury notes inched higher to 4.76% and 30-year Treasury bonds edged up to 4.91%.
Crude oil increased $0.33 to $87.02 a barrel and natural gas prices eased 1 cent to $3.09 a thermal unit.
The dollar index edged higher to 106.48, the level last seen in November 2022 and extended gains from the low of 99.85 on July 13, 2023.
U.S. Stock Movers
Bank of America Corp increased 1.3% to $27.33 after the financial services company reported quarterly results.
Revenue in the third quarter increased 3% to $25.2 billion from $24.5 billion and net interest income jumped 4% to $14.4 billion driven by higher interest rates and loan growth.
Net income in the quarter increased to $7.8 billion from $7.4 billion and diluted earnings per share edged up to 90 cents from 88 cents a year ago.
The provision for loan losses edged up by $336 million to $1.2 billion, reflecting weakening commercial real estate market conditions and stretched consumers.
Goldman Sachs was unchanged at $314.50 after the financial services provider reported mixed quarterly results.
Third quarter revenue edged slightly lower to $11.8 billion from $11.97 billion and net income dropped to $2.1 billion from $3.1 billion and diluted earnings per share fell to $5.47 from $8.25 a year ago..
The 6% decline in revenue in asset management was overshadowed by an 8% increase in global investment banking fees.
Johnson & Johnson added 0.1% to $157.57 after the company reported slightly better-than-expected quarterly results.
Revenue in the third quarter increased 6.8% to $21.3 billion from $19.99 billion and net earnings was flat at $4.3 billion and diluted earnings per share edged up 4% to $1.69 from $1.62 a year ago.
Sales in the U.S. increased 11.1% to $12 billion from $10.8 billion and international sales rose 1.6% to $9.3 billion from $9.2 billion a year ago.
The company revised higher its estimate of non-GAAP annual sales growth estimate to between 8.5% and 9.0% from the previous estimate between 8.0% and 8.5%.
Europe Movers: Bellway, Deutsche Post, Ericsson, Lonza Group, Luxury Stocks, Rolls-Royce
Inga Muller
17 Oct, 2023
Frankfurt
European markets edged lower and trimmed gains in the year-to-date on the worries of economic slowdown and interest rate uncertainties and a rebound in inflation.
The DAX index decreased 0.2% to 15,216.43, the CAC-40 index fell 0.02% to 7,020.40 and the FTSE 100 index added 0.3% to 7,654.36.
The yield on 10-year German bonds increased to 2.80%, French bonds traded higher to 3.43%, the UK gilts edged down to 4.48% and Italian bonds eased to 4.81%.
Luxury stocks in Paris and Switzerland edged down ahead of the release of the key economic data in China.
Hermes International, LVMH, Kering SA and Richemont declined between 0.3% and 1.5%.
China is scheduled to release third quarter GDP, retail sales and industrial output data later in the week.
Rolls-Royce Holdings PLC increased 0.6% to 214.90 pence after the UK-based aviation and defense contractor said it plans to eliminate 2,500 jobs.
Bellway Plc inched up 1% to 2,184.0 pence after the UK-based home builder estimated new home sales in the fiscal 2024 to drop as much as 31% citing elevated home prices and a surge in interest rates.
Lonza Group AG plunged 10.5% to CHF 383.60 after the Swiss product development services provider to pharmaceutical and nutrition companies issued an earnings warning citing the recent loss of business from Moderna.
LM Ericsson Class B dropped 8.6% to Skr 49.30 after the Swedish telecom equipment maker reported a decline in third quarter revenue.
Sales in the quarter decreased 5% to 64.5 billion kronor from 68 billion kronor and net income swung to a loss of 30.6 billion kronor from a profit of 5.2 billion kronor and diluted earnings per share was (9.21 kronor) compared to 1.56 kronor a year ago.
The quarterly results were hurt by the one-time goodwill impairment charge of 31.9 billion kronor linked to the acquisition of the U.S.-based Vonage Holdings Corp in July 2022 for $6.2 billion.
The company forecasted weak market conditions are likely to persist in the fourth quarter citing sharp fall in sales in the U.S. after companies delay network equipment deployment.
Deutsche Post AG declined 1.4% to €38.48 and the Germany logistics company's subsidiary DHL said it plans to invest €350 million over the next five years in Southeast Asia to expand its workforce and warehousing capacity.
European Markets Retained Downward Bias, German Investor Sentiment at 6-month High
Bridgette Randall
17 Oct, 2023
New York City
European markets traded in a tight range with a downward bias amid heightened geopolitical tensions in the Middle East.
Market sentiment in Paris, London and Frankfurt was mixed as earnings season picked up pace and investors reviewed the latest economic signals from the UK and Germany.
Germany's ZEW economic sentiment index improved to -1.1 in October from -11.4 in September, marking the highest reading since April, the Center for Economic Research reported Monday.
The private survey indicated that over three quarters of participants expected a steady improvement in inflation and estimated short term interest rates have stabilized in the Euro Area.
Separately, the average earnings growth in three months to August in the UK eased slightly, but the increase was still one of the largest gains since record keeping began in 2001.
Average weekly earnings, including bonuses rose 8.1% from a year ago to £661 and excluding bonuses gained 7.8% from a year ago £619, the Office for National Statistics reported Monday.
The weekly earnings from a year ago rose 12.7% in the public sector and increased 7.1% in the private sector, following the one-time payments to civil servants and NHS in June, July and August.
Annual growth in real terms, adjusted for inflation. rose 1.3% for total wages including bonuses and inched up 1.1% excluding bonuses.
Europe Indexes & Yields
The DAX index decreased 0.2% to 15,216.43, the CAC-40 index fell 0.02% to 7,020.40 and the FTSE 100 index added 0.3% to 7,654.36.
The yield on 10-year German bonds increased to 2.80%, French bonds traded higher to 3.43%, the UK gilts edged down to 4.48% and Italian bonds eased to 4.81%.
The euro hovered near a three-month low to $1.055, the British pound to $1.216 and the U.S. dollar fetched 90.11 Swiss cents.
Brent crude increased $0.13 to $89.79 a barrel and the Dutch TTF natural gas edged higher by €0.80 to €47.67 per MWh.
Europe Stock Movers
Luxury stocks in Paris and Switzerland edged down ahead of the release of the key economic data in China.
Hermes International, LVMH, Kering SA and Richemont declined between 0.3% and 1.5%.
China is scheduled to release third quarter GDP, retail sales and industrial output data later in the week.
Rolls-Royce Holdings PLC increased 0.6% to 214.90 pence after the UK-based aviation and defense contractor said it plans to eliminate 2,500 jobs.
Bellway Plc inched up 1% to 2,184.0 pence after the UK-based home builder estimated new home sales in the fiscal 2024 to drop as much as 31% citing elevated home prices and a surge in interest rates.
Lonza Group AG plunged 10.5% to CHF 383.60 after the Swiss product development services provider to pharmaceutical and nutrition companies issued an earnings warning citing the recent loss of business from Moderna.
LM Ericsson Class B dropped 8.6% to Skr 49.30 after the Swedish telecom equipment maker reported a decline in third quarter revenue.
Deutsche Post AG declined 1.4% to €38.48 and the Germany logistics company's subsidiary DHL said it plans to invest €350 million over the next five years in Southeast Asia to expand its workforce and warehousing capacity.
Stocks Powered Ahead On Wall Street and U.S. Treasury Yields Rebounded
Barry Adams
16 Oct, 2023
New York City
Stocks on Wall Street advanced as investors focused on earnings and bond yields gains amid rising geopolitical tensions.
Benchmark indexes advanced in Monday's trading and investors looked ahead to a fresh batch of earnings including quarterly updates from Bank of America, Tesla, Netflix and Johnson & Johnson.
The S&P 500 index and the Nasdaq Composite index jumped more than 1% and extended previous week's gains on earnings optimism, despite the rise in Treasury yields and elevated crude oil prices.
Crude oil prices remained elevated on the worries of widening war in the Middle East as Israel prepares for its ground offensive in Gaza and the United Nations warned of an impending humanitarian crisis in the region.
At least 500,000 Gaza residents have left northern Gaza as Israel prepares for its bombing campaign and ground invasion in addition to shutting off the supply of electricity and water to the occupied territory.
There are at least 2.5 million people living in Gaza and about half of the residents are women and children.
U.S. Indexes & Yields
The S&P 500 index increased 1.1% to 4,375.54 and the Nasdaq Composite added 1.3% to 13,575.16.
The yield on 2-year Treasury notes increased to 5.10%, 10-year Treasury notes inched higher to 4.70% and 30-year Treasury bonds edged up to 4.86%.
Crude oil decreased $1.20 to $86.48 a barrel and natural gas prices eased 12 cents to $3.11 a thermal unit.
The dollar index edged higher to 106.48, the level last seen in November 2022 and extended gains from the low of 99.85 on July 13, 2023.
U.S. Stock Movers
Big banks were in focus on the second day after Wells Fargo, Citigroup and JPMorgan Chase reported stronger-than-expected earnings.
Rite Aid Corp declined 6% to 61 cents after the drug retailer filed for bankruptcy protection as the company struggled under the weight of hundreds of cases linked to opioid prescriptions.
Pfizer Inc gained 4.5% to $33.69 after the pharmaceutical company lowered its annual revenue guidance.
Pfizer revised lower its 2023 revenue in the range between $58 billion and $61 billion, from the previous estimate between $67 billion and $70 billion on the weakening demand for its Covid products.
The company also lowered its full-year adjusted earnings per share outlook to a new range of $1.45 to $1.65 from the previous estimate between $3.25 and $3.45.
Lululemon Athletica soared 10.7% to $418.25 ahead of the company's addition to the S&P 500 index later in the week.
Charles Schwab Corporation increased 4.2% to $53.49 after the online brokerage firm reported mixed quarterly results.
Net revenue in the third quarter ending in September declined 16% to $4.6 billion from $5.5 billion and net income plunged 44% to $1.1 billion from $2.0 billion and diluted earnings per share dropped to 56 cents from 99 cents a year ago.
Net interest revenue declined 24% to $2.2 billion but advised solution and asset management fees jumped 17% to a quarterly record of $1.2 billion.
European Markets Struggled After Bond Yields Advanced
Stocks across Europe struggled and market indexes traded near flatline in Monday's trading.
Benchmark indexes In London, Paris and Frankfurt struggled to gain traction and bond yields advanced in the region.
Investors turned cautious on the worries of higher interest rates, looming global economic slowdown and impending Israel's invasion in Gaza as early as this week.
Natural gas prices stayed elevated on the supply worries after Israel asked Chevron to halt natural gas production at fields located near its northern shores.
Closer to home, German wholesale prices dropped for the sixth month in a row and declined 4.1% in September, following a 2.7% decline in August, the Federal Statistics office or Destatis reported Monday.
The measure of wholesale price declined after petroleum products prices eased from a higher price base in the month a year ago.
Euro Area Goods Trade Balance Swung to Surplus
The Euro Area goods trade balance swung to a surplus of Є6.7 billion in August from a Є54.4 billion deficit in the month a year ago.
Exports declined 3.9% to Є221.6 billion and imports plunged 24.6% to Є214.9 billion.
In the first eight months of the year, international trade deficit declined to Є9.8 billion from Є311.4 billion and the surplus with the U.S. rose to Є100.2 billion from Є98.3 billion in the corresponding period a year ago.
Europe Indexes & Yields
The DAX index increased 0.4% to 15,237.99, the CAC-40 index rose 0.3% to 7,022.19 and the FTSE 100 index added 0.4% to 7,630.69.
In the previous week, the DAX index increased 1.1%, the CAC-40 index advanced 0.8% and the FTSE 100 index edged higher 1.4%.
The yield on 10-year German bonds decreased to 2.79%, French bonds traded higher to 3.42%, the UK gilts edged up to 4.47% and Italian bonds rose to 4.87%.
The euro edged lower to a three-month low to $1.053, the British pound to $1.215 and the U.S. dollar fetched 90.24 Swiss cents.
Brent crude decreased $1.04 to $89.84 a barrel and the Dutch TTF natural gas edged lower by €5.54 to €48.47 per MWh.
Europe Stock Movers
Resource stocks were in focus on the hopes that demand growth from China would recover after the People's Bank of China offered additional liquidity to the banking system.
Anglo America, Glencore and Antofagasta advanced between 1% and 2% after base metal prices advanced.
BioNTech SE dropped 7.7% to €93.14 after the German biotech company said it plans to take a one-time charge to write-down assets worth €900 million in the third quarter.
GSK Plc declined 1.2% to 1,491.60 pence despite the European Medicines Agency's drug approval committee offering a positive view on its intravenous cancer treatment therapy Jemperli.
U.S. Movers: Charles Schwab, Lululemon Athletica, Pfizer Corp, Rite Aid
Scott Peters
16 Oct, 2023
New York City
Big banks were in focus on the second day after Wells Fargo, Citigroup and JPMorgan Chase reported stronger-than-expected earnings.
Rite Aid Corp declined 6% to 61 cents after the drug retailer filed for bankruptcy protection as the company struggled under the weight of hundreds of cases linked to opioid prescriptions.
Pfizer Inc gained 4.5% to $33.69 after the pharmaceutical company lowered its annual revenue guidance.
Pfizer revised lower its 2023 revenue in the range between $58 billion and $61 billion, from the previous estimate between $67 billion and $70 billion on the weakening demand for its Covid products.
The company also lowered its full-year adjusted earnings per share outlook to a new range of $1.45 to $1.65 from the previous estimate between $3.25 and $3.45.
Lululemon Athletica soared 10.7% to $418.25 ahead of the company's addition to the S&P 500 index later in the week.
Charles Schwab Corporation increased 4.2% to $53.49 after the online brokerage firm reported mixed quarterly results.
Net revenue in the third quarter ending in September declined 16% to $4.6 billion from $5.5 billion and net income plunged 44% to $1.1 billion from $2.0 billion and diluted earnings per share dropped to 56 cents from 99 cents a year ago.
Net interest revenue declined 24% to $2.2 billion but advised solution and asset management fees jumped 17% to a quarterly record of $1.2 billion.
Treasury Yields Resumed Advance Crude and Oil Prices Stayed Elevated as Investors Focused On Upcoming Earnings
Barry Adams
16 Oct, 2023
New York City
Stocks on Wall Street advanced as investors focused on earnings and bond yields advanced amid rising geopolitical tensions.
Benchmark indexes struggled to advance in Monday's trading and investors looked ahead to a fresh batch of earnings including quarterly updates from Bank of America, Tesla, Netflix and Johnson & Johnson.
Benchmark S&P 500 index and the Nasdaq Composite index advanced in morning trading and extended gains of the previous week.
Crude oil prices remained elevated on the worries of widening war in the Middle East as Israel prepares for its ground offensive in Gaza and the United Nations warned of an impending humanitarian crisis in the region.
U.S. Indexes & Yields
The S&P 500 index increased 0.6% to 4,353.43 and the Nasdaq Composite added 0.4% to 13,466.07.
The yield on 2-year Treasury notes increased to 5.09%, 10-year Treasury notes inched higher to 4.71% and 30-year Treasury bonds edged up to 4.86%.
Crude oil decreased $0.20 to $87.64 a barrel and natural gas prices eased 15 cents to $3.08 a thermal unit.
The dollar index edged higher to 106.48, the level last seen in November 2022 and extended gains from the low of 99.85 on July 13, 2023.
U.S. Stock Movers
Big banks were in focus on the second day after Wells Fargo, Citigroup and JPMorgan Chase reported stronger-than-expected earnings.
Rite Aid Corp declined 6% to 61 cents after the drug retailer filed for bankruptcy protection as the company struggled under the weight of hundreds of cases linked to opioid prescriptions.
Pfizer Inc gained 4.5% to $33.69 after the pharmaceutical company lowered its annual revenue guidance.
Pfizer revised lower its 2023 revenue in the range between $58 billion and $61 billion, from the previous estimate between $67 billion and $70 billion on the weakening demand for its Covid products.
The company also lowered its full-year adjusted earnings per share outlook to a new range of $1.45 to $1.65 from the previous estimate between $3.25 and $3.45.
European Markets Struggled, Euro Area Trade Deficit Shrank and German Wholesale Inflation Declined
Bridgette Randall
16 Oct, 2023
Frankfurt
Stocks across Europe struggled and market indexes traded near flatline in Monday's trading.
Benchmark indexes In London, Paris and Frankfurt struggled to gain traction and bond yields advanced in the region.
Investors turned cautious on the worries of higher interest rates, looming global economic slowdown and impending Israel's invasion in Gaza as early as this week.
Natural gas prices stayed elevated on the supply worries after Israel asked Chevron to halt natural gas production at fields located near its northern shores.
Closer to home, German wholesale prices dropped for the sixth month in a row and declined 4.1% in September, following a 2.7% decline in August, the Federal Statistics office or Destatis reported Monday.
The measure of wholesale price declined after petroleum products prices eased from a higher price base in the month a year ago.
Euro Area Goods Trade Balance Swung to Surplus
The Euro Area goods trade balance swung to a surplus of Є6.7 billion in August from a Є54.4 billion deficit in the month a year ago.
Exports declined 3.9% to Є221.6 billion and imports plunged 24.6% to Є214.9 billion.
In the first eight months of the year, international trade deficit declined to Є9.8 billion from Є311.4 billion and the surplus with the U.S. rose to Є100.2 billion from Є98.3 billion in the corresponding period a year ago.
Europe Indexes & Yields
The DAX index increased 0.08% to 15,198.75, the CAC-40 index rose 0.2% to 7,015.60 and the FTSE 100 index added 0.4% to 7,630.60.
In the week, the DAX index increased 1.1%, the CAC-40 index advanced 0.8% and the FTSE 100 index edged higher 1.4%.
The yield on 10-year German bonds decreased to 2.79%, French bonds traded higher to 3.42%, the UK gilts edged up to 4.47% and Italian bonds rose to 4.87%.
The euro edged lower to a three-month low to $1.053, the British pound to $1.215 and the U.S. dollar fetched 90.24 Swiss cents.
Brent crude increased $0.17 to $90.78 a barrel and the Dutch TTF natural gas edged higher by €2.74 to €51.24 per MWh.
Europe Stock Movers
Resource stocks were in focus on the hopes that demand growth from China would recover after the People's Bank of China offered additional liquidity to the banking system.
Anglo America, Glencore and Antofagasta advanced between 1% and 2% after base metal prices advanced.
BioNTech SE dropped 7.7% to €93.14 after the German biotech company said it plans to take a one-time charge to write-down assets worth €900 million in the third quarter.
GSK Plc declined 1.2% to 1,491.60 pence despite the European Medicines Agency's drug approval committee offering a positive view on its intravenous cancer treatment therapy Jemperli.
Overall Inflation Held Steady In September
Brian Turner
13 Oct, 2023
New York City
The Consumer Price Index, a measure of overall inflation, rose 0.4% in September and jumped 3.7% from a year ago, the U.S. Bureau of Labor Statistics reported Thursday.
Core inflation, which excludes volatile food and energy prices, rose 4.1% from a year ago, the slowest pace of increase since September 2021.
On a monthly basis, overall consumer price inflation declined to 0.4% from 0.6% increase in the previous month and core inflation held steady at 0.3%.