Market Update
Stocks Rise In Volatile Session After Tech Stocks Overcame Early Weakness
Barry Adams
21 Jul, 2023
New York City
Market indexes on the final day of this week are expected to trade volatile after expiry of options and futures add a new dimension.
Tech stocks rebounded from a bruising session on Thursday after tech-heavy Nasdaq dropped 2%.
Market sentiment has decidedly stayed positive after eight weeks rallying and bearish voices of looming recession, stubborn inflation and higher interest rates ahead have been drowned out.
With the recent cooling inflation trend, the Federal Reserve's policy meeting next week is already forcing investors to take sides.
Most market participants are factoring a rate hike of 25 basis points at the Fed's policy meeting next week but what happens to rates after the next meeting is dividing investors in two camps, higher investors for longer and rate pause followed by a gradual decline in rates.
Investors also reacted to the new batch of corporate results and CSX and American Express fell on earnings worries.
U.S. Indexes & Yields
The S&P 500 index traded higher 0.1% to 4,542.43 and the Nasdaq Composite futures edged up 0.2% to 14,104.76.
The yield on 2-year Treasury notes decreased to 4.84%, 10-year Treasury notes inched lower to 3.82% and 30-year Treasury bonds edged down to 3.88%.
Crude oil increased $0.45 to $76.10 a barrel and natural gas prices decreased 2 cents to $2.73 a thermal unit.
Stock Movers
CSX Corporation declined 4% to $32.34 after the railroad operator reported earnings that missed some investors' expectations.
American Express declined 3.3% to $170.89 after the payment processor reported weaker-than-expected revenue but earnings were ahead of market expectations.
AutoNation Inc plunged 9.2% to $160.68 despite the largest automotive dealer network operator reporting better-than-expected revenue and earnings.
Capital One Financial Corp rose 0.6% to $115.58 after the credit card lender and banking services provider reported mixed quarterly results.
The company also reported deposits at the end of the quarter declined 2%, confirming the declining trend at all major banks and regional banks.
Intuitive Surgical, Inc 2.5% to $338.05 after the robotic surgery device maker reported weaker-than-expected revenue in system sales but the company met earnings expectations.
Europe Movers: Danske Bank, Delivery Hero, Glencore, SSAB
Inga Muller
21 Jul, 2023
New York City
The DAX index increased 0.2% to 16,147.21, the CAC-40 index advanced 0.4% to 7,352.81 and the FTSE 100 index increased 0.6% to 7,637.29.
The yield on 10-year German bonds increased higher to 2.44%, French bonds traded higher to 3.0%, the UK gilts edged up to 4.28% and Italian bonds increased to 4.06%.
Danske Bank AS rose 1.5% to €22.0 after the largest Danish bank lifted its annual earnings outlook.
SSAB AB dropped 13% to 65.78 kronor after the Swedish steelmaker said operating profit plunged by 50% in the second quarter.
Glencore Plc increased 0.05% to 472.85 pence after the mining company reported strong gains in production in the first quarter.
SAP SE declined 3.3% to €122.22 after the German information system company reported weaker-than-expected cloud segment revenue growth.
Delivery Hero SE declined 1% to €40.01 after the delivery service provider agreed to acquire a 37% stake in Saudi Arabia based Hungerstation Holding Limited for $297 million.
European Stocks Traded Sideways, Euro Edged Lower, Natural Gas and Wheat Soared
Bridgette Randall
21 Jul, 2023
Frankfurt
European stocks, bonds and currencies were in focus after a week of volatile trading.
Stock market indexes in Paris, Frankfurt and London traded down after three days of gains as investors reassessed economic outlook in the face of a sudden spike in wheat prices.
Wheat prices soared as much as 10% after Russia ended its agreement to permit export of grains from Ukraine and stepped up its bombing campaign on Ukraine's seaports.
The sudden surge in wheat prices stoked fears of another cycle of inflation starting with food prices.
The Euro, British pound and Swiss franc traded slightly lower after the U.S. dollar advanced 1% in what most analysts consider a technical rebound.
The government bond yields advanced on Friday as the European Central Bank, the Bank of England and the Federal Reserve are set to lift rates higher beginning next week.
Natural gas prices also surged 6% on top of 4% rise in Thursday's trading to Є30 per MWh on the rising demand for gas powered electric power plants after record temperatures and across the continent drove electricity demand for air cooling.
Despite the spike in price and demand for natural gas, storage of energy fuel is near 82% full in the region, assuring ample supply.
In other economic news, UK retail sales rose 0.7% in June from the downwardly revised 1.0% increase in May, the Office for National Statistics reported Friday.
Retail sales rose for the third month in a row on a monthly basis but declined 1.0% in June from a year ago, the fifteenth month of decline in a row.
Market sentiment in stocks was decidedly cautious on the final day of trading this week as investors digested the latest batch of earnings.
Europe Indexes & Yields
The DAX index increased 0.2% to 16,147.21, the CAC-40 index advanced 0.4% to 7,352.81 and the FTSE 100 index increased 0.6% to 7,637.29.
The yield on 10-year German bonds increased higher to 2.44%, French bonds traded higher to 3.0%, the UK gilts edged up to 4.28% and Italian bonds increased to 4.06%.
The euro edged higher to $1.11, the British pound to $1.28 and the U.S. dollar fetched 86.66 Swiss cents
Brent crude increased $0.71 to $80.38 a barrel and the Dutch TTF natural gas increased €1.98 to €30.0 per MWh.
Europe Stock Movers
Danske Bank AS rose 1.5% to €22.0 after the largest Danish bank lifted its annual earnings outlook.
SSAB AB dropped 13% to 65.78 kronor after the Swedish steelmaker said operating profit plunged by 50% in the second quarter.
Glencore Plc increased 0.05% to 472.85 pence after the mining company reported strong gains in production in the first quarter.
SAP SE declined 3.3% to €122.22 after the German information system company reported weaker-than-expected cloud segment revenue growth.
Delivery Hero SE declined 1% to €40.01 after the delivery service provider agreed to acquire a 37% stake in Saudi Arabia based Hungerstation Holding Limited for $297 million.
Tech Heavy Nasdaq Dropped 2%, 9-day Rally In Dow Jones Index
Barry Adams
20 Jul, 2023
New York City
After weeks of optimism, tech stocks faced a wall of reality as investors debated tech earnings, rate path and odds of a recession.
The Nasdaq index turned lower after Tesla and Netflix worries weighed on market sentiment.
Tesla reported record sales and earnings but operating margin dropped to the lowest in five quarters. Moreover, executives also highlighted the likely decline of vehicle sales in the current quarter because of factory maintenance.
But market participants interpreted the step as a way for the electric vehicle maker to focus on factory retooling at the time of weak sales environment in the U.S., China and in Europe.
The yields of 2-year, 10-year and 30-year Treasury securities rose on the worries of the reigniting of food inflation after Russia canceled Black Sea deal yesterday.
Wheat price advanced for the third day in a row and jumped to $7.30 a bushel, following a9% jump in yesterday's session, the largest single-day gain since 2012.
Initial jobless claims declined 9,000 to 228,000 in the last week, the lowest level in two months, the Department of Labor reported Thursday.
The unexpected decline in weekly claims highlighted ongoing tough labor market conditions in several sectors including leisure and entertainment, food services and warehouse and transportation.
The four-week moving averages eased to 237,500, the lowest level in six weeks, indicating a tight labor market.
Existing home sales declined 3.3% to a seasonally adjusted annual rate of 4.16 million, the lowest level in five months, the National Association of Realtors reported Thursday.
There were just 1.08 million homes available for sale at the end of June, about three months of supply, far less than six months supply needed for the normal market functioning.
Despite the fall in sales, median home price edged slightly lower to 410,200 from 414,000 a year ago.
Home sales have been on the skids not for the lack of demand but for the tight supply.
"There are simply not enough homes for sale. The market can easily absorb a doubling of inventory", said NAR Chief Economist Lawrence Yun.
Home sales in June dropped to the slowest pace since 2009 and dropped 18.9% from a year ago.
U.S. Indexes & Yields
The S&P 500 index traded lower 0.02% to 4,563.17 and the Nasdaq Composite futures edged down 2.0% to 14,063.36.
The Dow Jones extended its rally to the ninth day in a row by 0.5% to 35,225.18, the longest since 2017 after Johnson & Johnson reported better-than-expected earnings and lifted its annual estimate.
The yield on 2-year Treasury notes decreased to 4.82%, 10-year Treasury notes inched lower to 3.82% and 30-year Treasury bonds edged down to 3.91%.
Crude oil increased $0.82 to $76.17 a barrel and natural gas prices increased 12 cents to $2.73 a thermal unit.
Stock Movers
Tesla Inc declined 5.7% to $274.92 after the electric vehicle maker reported quarterly results and executives indicated lower sales volume in the current quarter because of plant maintenance.
Total revenue jumped 47% to $24.9 billion from $16.9 billion and net income attributable to common stockholders increased 20% to $2.7 billion from $2.3 billion and diluted earnings per share rose 91 cents from 76 cents a year ago.
Quarterly revenue and earnings were ahead of market expectations and operating margin fell to a low of at least five quarters to 9.6% from the high of 17.2% in third quarter of 2022 on higher discounting.
Free cash flow jumped 62% to $1.0 billion from $621 million a year ago.
Las Vegas Sands Corp dropped 3% to $57.85 after the casino and resort company reported mixed quarterly results.
Revenue in the quarter soared to $2.5 billion from $1.0 billion and net income swung to a profit of $368 million from a loss of $414 million and diluted earnings per share increased to 41 cents from (38) cents.
The company reinstated its quarterly cash dividend of 20 cents a share.
Netflix Inc declined 8.3% to $437.95 after the video content streaming company reported weak revenue growth in the second quarter.
Revenue rose 2.7% to $8.2 billion from $7.9 billion and net income was nearly unchanged at $1.49 billion and diluted earnings per share rose to $3.29 from $3.20 a year ago.
Free cash flow jumped to $1.3 billion from $13 million and global streaming paid members increased 8% to 238.39 million from 220. 67 a year ago.
European Markets Rebounded
Market averages in Europe attempted a rebound and investors reviewed another batch of fresh earnings.
European government bond yields edged higher and the yield on Italian bonds jumped above 4% and stayed below the UK gilts.
Investors are anticipating the European Central Bank to raise hike rates at its next policy meeting but the rates are still not restrictive.
Investors are also worried that the uneven economic recovery in China could dampen demand for industrial and luxury goods from the region but the demand in the U.S. could hold if the Federal Reserve manages to avoid dipping the economy into a recession.
Closer to home, German's producer price inflation slowed in June to 0.1% from 1% annual pace in May, the Federal Statistics Office or DeStatis reported Thursday.
Producer prices fell 0.3% on a monthly basis in June after falling 1.4% in May, largely driven by a sharp fall in prices of energy by 5% and electricity by 12.4%.
Europe Indexes & Yields
The DAX index increased 0.6% to 16,204.22, the CAC-40 index advanced 0.8% to 7,384.91 and the FTSE 100 index increased 0.8% to 7,646.05.
The yield on 10-year German bonds increased higher to 2.41%, French bonds traded lower to 2.97%, the UK gilts edged up to 4.21% and Italian bonds increased to 4.09%.
The euro edged higher to $1.19, the British pound to $1.28 and the U.S. dollar fetched 85.88 Swiss cents
Brent crude increased $0.30 to $79.79 a barrel and the Dutch TTF natural gas increased €1.06 to €28.02 per MWh.
Europe Stock Movers
ABB Ltd gained 2.9% to CHF 34.42 after the Swiss engineering company reported a rise in earnings on strong revenue growth.
Revenue in the second quarter rose 13% to $8.1 billion from $7.2 billion and earnings soared 139% to $906 million from $379 million and basic earnings per share jumped to 49 cents from 20 cents a year ago.
New orders in the quarter declined to $8.67 billion from $8.81 billion with 5% increase in the Americas and mid-single digit increase in the U.S.
ASML Holding NV declined 4% to €626.10 and extended two day losses to 7% despite the Netherlands-based semiconductor equipment maker reported higher revenue and earnings and said demand from China remained strong.
Electrolux AB plunged 20.5% to kr122.0 after the Swedish appliance maker reported sales declined 8% in its latest quarter.
Revenue in the quarter declined 8.4% to SEK 32.6 billion and the company swung to a loss of SEK 648 million from a profit of SEK 257 million and diluted earnings per share was (SEK 2.43) from a profit of SEK 0.93.
Sales were impacted by weaker demand and customers opting for cheaper priced products.
Movers: D R Horton, Las Vegas Sands, Netflix, Pool Corp, Tesla, WNS
Scott Peters
20 Jul, 2023
New York City
Market averages struggled near recent highs after investors reassessed economic outlook despite strong quarterly results from Tesla, Netflix, DR Horton and Las Vegas Sands.
The S&P 500 index traded lower 0.02% to 4,563.17 and the Nasdaq Composite futures edged down 0.7% to 14,308.76.
Tesla Inc declined 5.7% to $274.92 after the electric vehicle maker reported quarterly results and executives indicated lower sales volume in the current quarter because of plant maintenance.
Total revenue jumped 47% to $24.9 billion from $16.9 billion and net income attributable to common stockholders increased 20% to $2.7 billion from $2.3 billion and diluted earnings per share rose 91 cents from 76 cents a year ago.
Quarterly revenue and earnings were ahead of market expectations and operating margin fell to a low of at least five quarters to 9.6% from the high of 17.2% in third quarter of 2022 on higher discounting.
Free cash flow jumped 62% to $1.0 billion from $621 million a year ago.
Las Vegas Sands Corp dropped 3% to $57.85 after the casino and resort company reported mixed quarterly results.
Revenue in the quarter soared to $2.5 billion from $1.0 billion and net income swung to a profit of $368 million from a loss of $414 million and diluted earnings per share increased to 41 cents from (38) cents.
The company reinstated its quarterly cash dividend of 20 cents a share.
Netflix Inc declined 8.3% to $437.95 after the video content streaming company reported weak revenue growth in the second quarter.
Revenue rose 2.7% to $8.2 billion from $7.9 billion and net income was nearly unchanged at $1.49 billion and diluted earnings per share rose to $3.29 from $3.20 a year ago.
Free cash flow jumped to $1.3 billion from $13 million and global streaming paid members increased 8% to 238.39 million from 220. 67 a year ago.
D R Horton, Inc declined 3.7% to $123.10 after the company reported sharply higher-than-expected revenue and earnings.
Revenue in the fiscal third quarter increased to $9.7 billion from $8.8 billion but net income declined to $1.4 billion from $1.7 billion and diluted earnings per share fell to $3.93 from $4.70 a year ago.
Home sales in the quarter increased 8% to 22,985 units and 4% to $8.7 billion and net orders increased 37% to 22,879 and 26% to $8.7 billion.
Despite the rising mortgage rates, new home sales continued to advance amid tight home supply availability as demand outstrips supply in suburban areas in the South and in the West.
Cancelation rate declined to 18% in the quarter from 24% in the prior year quarter.
In the quarter, the company repurchased 3.1 million shares for $342.9 million.
At the end of the quarter, the company had 43,800 homes in inventory, of which 5,700 homes were completed.
Pool Corporation declined 0.3% to $365.20 after the pool products retailer reported a decline in sales.
Revenue in the second quarter declined 10% to $1.9 billion from $2.1 billion and net income fell 24% to $232.3 million from $307.3 million and diluted earnings per share dropped to $1.10 from $1.0 a year ago.
Net sales decreased 10% in the second quarter of 2023 to $1.9 billion compared to $2.1 billion in the second quarter of 2022 following 15% net sales growth in the second quarter of 2022 and 40% growth in the second quarter of 2021, resulting in a compound annual growth rate of 13% from 2019 to 2023.
The company lowered its annual earnings per share outlook to a new range between $13.14 and $14.14 from the previous estimate between $14.62 to $16.12.
WNS (Holdings) Ltd declined 5% to $68.95 after the company reported mixed quarterly results.
The information technology and business services provider based in India reported revenue in the fiscal first quarter 2024 ending in June increased 10.5% to $326.5 million from $295.4 million and profit after-tax decreased to $30.1 million from $33.1 million and diluted earnings per share fell to 60 cents from 65 cents a year ago.
The company added six new clients and expanded existing 34 relationships and total staff at the end of the quarter was 59,871.
Tesla and Netflix Worries Drive Averages Lower, Wheat Rallies 3rd Day
Barry Adams
20 Jul, 2023
New York City
Stocks edged lower on Wall Street after Tesla and Netflix earnings missed investors' expectations and Treasury yields advanced after inflation worries reemerged.
The yields of 2-year, 10-year and 30-year Treasury securities rose higher on the worries of the reigniting of food inflation after Russia canceled Black Sea deal yesterday.
Wheat price advanced for the third day in a row and jumped to $7.30 a bushel, following a9% jump in yesterday's session, the largest single-day gain since 2012.
Initial jobless claims declined 9,000 to 228,000 in the last week, the lowest level in two months, the Department of Labor reported Thursday.
The unexpected decline in weekly claims highlighted ongoing tough labor market conditions in several sectors including leisure and entertainment, food services and warehouse and transportation.
The four-week moving averages eased to 237,500, the lowest level in six weeks, indicating a tight labor market.
U.S. Indexes & Yields
The S&P 500 index traded lower 0.02% to 4,563.17 and the Nasdaq Composite futures edged down 0.7% to 14,308.76.
The yield on 2-year Treasury notes decreased to 4.77%, 10-year Treasury notes inched lower to 3.76% and 30-year Treasury bonds edged down to 3.86%.
Crude oil increased $0.82 to $76.17 a barrel and natural gas prices increased 12 cents to $2.73 a thermal unit.
Stock Movers
Tesla Inc declined 5.7% to $274.92 after the electric vehicle maker reported quarterly results and executives indicated lower sales volume in the current quarter because of plant maintenance.
Total revenue jumped 47% to $24.9 billion from $16.9 billion and net income attributable to common stockholders increased 20% to $2.7 billion from $2.3 billion and diluted earnings per share rose 91 cents from 76 cents a year ago.
Quarterly revenue and earnings were ahead of market expectations and operating margin fell to a low of at least five quarters to 9.6% from the high of 17.2% in third quarter of 2022 on higher discounting.
Free cash flow jumped 62% to $1.0 billion from $621 million a year ago.
Las Vegas Sands Corp dropped 3% to $57.85 after the casino and resort company reported mixed quarterly results.
Revenue in the quarter soared to $2.5 billion from $1.0 billion and net income swung to a profit of $368 million from a loss of $414 million and diluted earnings per share increased to 41 cents from (38) cents.
The company reinstated its quarterly cash dividend of 20 cents a share.
Netflix Inc declined 8.3% to $437.95 after the video content streaming company reported weak revenue growth in the second quarter.
Revenue rose 2.7% to $8.2 billion from $7.9 billion and net income was nearly unchanged at $1.49 billion and diluted earnings per share rose to $3.29 from $3.20 a year ago.
Free cash flow jumped to $1.3 billion from $13 million and global streaming paid members increased 8% to 238.39 million from 220. 67 a year ago.
Europe Movers: ABB, Anglo American, ASML, Electrolux
Inga Muller
20 Jul, 2023
New York City
European markets attempted a rebound and investors reviewed the latest batch of corporate earnings.
The DAX index increased 0.2% to 16,147.21, the CAC-40 index advanced 0.4% to 7,352.81 and the FTSE 100 index increased 0.6% to 7,637.29.
The yield on 10-year German bonds increased higher to 2.41%, French bonds traded lower to 2.97%, the UK gilts edged up to 4.21% and Italian bonds increased to 4.09%.
ABB Ltd gained 2.9% to CHF 34.42 after the Swiss engineering company reported a rise in earnings on strong revenue growth.
Revenue in the second quarter rose 13% to $8.1 billion from $7.2 billion and earnings soared 139% to $906 million from $379 million and basic earnings per share jumped to 49 cents from 20 cents a year ago.
New orders in the quarter declined to $8.67 billion from $8.81 billion with 5% increase in the Americas and mid-single digit increase in the U.S.
Anglo American Plc jumped 3.6% to 2,387.50 pence after the company said copper production soared in the second quarter by 56% after ramp up of activities at a mine in Peru.
Production of copper jumped 56% to 209,000 tons from 134,000 tons, iron ore increased 9% to 15.6 million tons from 14.4 million tons, nickel declined 4% to 9,900 tons from 10,300 tons and diamond fell 5% to 7.3 million carats from 7.9 million carats a year ago.
ASML Holding NV declined 4% to €626.10 and extended two day losses to 7% despite the Netherlands-based semiconductor equipment maker reported higher revenue and earnings and said demand from China remained strong.
Electrolux AB plunged 20.5% to kr122.0 after the Swedish appliance maker reported sales declined 8% in its latest quarter.
Revenue in the quarter declined 8.4% to SEK 32.6 billion and the company swung to a loss of SEK 648 million from a profit of SEK 257 million and diluted earnings per share was (SEK 2.43) from a profit of SEK 0.93.
Sales were impacted by a weaker demand and customers opting for cheaper priced products.