Market Update
U.S. Movers: Apple, BMW, Starbucks
Scott Peters
03 Nov, 2023
New York City
Apple Inc. declined 1.7% to $174.51 after the maker of popular communication devices reported a decline in revenue for the fourth quarter in a row and forecasted weaker sales in the current quarter.
Revenue in the fiscal fourth quarter declined 1% to $89.5 billion from $90.1 billion, net income advanced to $22.9 billion from $20 billion, and diluted earnings per share rose to $1.46 from $1.29 a year ago.
Sales of iPhones increased to $43.8 billion from $43.6 billion, Macs plunged 34% to $7.6 billion from $11.5 billion, iPads eased to $6.4 billion from $7.2 billion, wearables fell to $9.3 billion from $9.7 billion, and services revenue jumped 16% to a record high of $22.3 billion from $19.2 billion a year ago.
Sales in the Americas edged up to $40.1 billion from $39.8 billion and edged slightly lower in Europe to $22.5 billion, in Greater China to $15 billion, in Japan to $5.5 billion, and in the rest of Asia to $6.3 billion.
For the full year, sales declined 3% to $383.3 billion from $394.3 billion.
The company's board of directors declared a cash dividend of 24 cents per share payable on November 13 to shareholders on record on November 10.
The company's installed base of devices reached a new record high across all products and all geographic segments, said chief financial officer Luca Maestri.
The company guided current quartet sales "to be similar to" the previous year, but the current year has one fewer week.
BMW AG jumped 3.1% to €93.91 after the company said production volume increased 4.2% to 638,524 vehicles in the third quarter.
Group revenue increased 3.4% to €38.5 billion from €37.2 billion, net income declined 7.7% to €2.9 billion from €3.2 billion, and earnings per share fell to €4.20 from €4.25 a year ago.
All electric vehicle sales in the quarter surged 79.6% to 93,931 units, accounting for 15.1% of total deliveries.
Starbucks Corp. extended 2-day gains to 13% after the coffee chain reported better-than-expected quarterly sales.
Revenue in the fiscal fourth quarter ending on October 1 increased 11.4% to $9.4 billion from $8.4 billion, net income advanced 38.3% to $1.2 billion from $878.3 million, and diluted earnings per share rose to $1.06 from 76 cents a year ago.
Global comparable store sales increased by 8%, driven by a 4% increase in average ticket sales and a 3% increase in comparable transactions.
North America and U.S. comparable store sales increased 8%, driven by a 6% increase in average ticket sales and a 2% increase in comparable transactions.
International comparable store sales increased 5%, driven by a 6% increase in comparable transactions and a 1% decline in average ticket sales.
In the second-largest market, China, comparable store sales increased 5%, driven by an 8% increase in comparable transactions and a 3% decline in average ticket sales.
The company continued its expansion and opened 816 net new stores in the quarter, ending the period with 38,038 stores, of which 52% are company-operated and 48% are licensed.
Nonfarm Payroll Growth Slowed In October
Brian Turner
03 Nov, 2023
New York City
Nonfarm payrolls in October increased 150,000, compared to 297,000 in the previous month, the U.S. Bureau of Labor Statistics reported Friday.
The jobless rate at 3.9% and the number of unemployed persons at 6.5 million changed little in October.
In October, the number of long-term unemployed, those jobless for 27 weeks or more, was little changed at 1.3 million and accounted for 19.8% of all unemployed persons.
Employers added jobs in healthcare (58,000), social assistance (19,000), and government (51,000), and several strikes, including by the members of the UAW, pulled down employment in manufacturing by 35,000.
October payrolls increased below the average monthly gain of 258,000 over the last 12 months, but higher than the 75,000 jobs needed to meet the needs of the expanding population.
Hopes of Interest Rates Stability Fuel 5% Weekly Rally In Stocks
Barry Adams
03 Nov, 2023
New York City
Market indexes rallied more than 1% for the third day in a row in the hopes that interest rates have peaked for now.
The yield on 10-year Treasury notes edged lower for the third day in a row as investors hoped that the Federal Reserve may pause rate hikes at the next meeting in December.
Investors warmed up to stocks on the expectation of stable interest rates for the next three months, resilient consumer spending, and a softening but still tight labor market.
The S&P 500 index and the Nasdaq Composite index advanced 1% in active trading after the latest jobs report, which also supported the peak-rate theory.
Nonfarm Payroll Growth Slowed in October
Nonfarm payrolls in October increased 150,000, compared to 297,000 in the previous month, the U.S. Bureau of Labor Statistics reported Friday.
The jobless rate at 3.9% and the number of unemployed persons at 6.5 million changed little in October.
In October, the number of long-term unemployed, those jobless for 27 weeks or more, was little changed at 1.3 million and accounted for 19.8% of all unemployed persons.
Employers added jobs in healthcare (58,000), social assistance (19,000), and government (51,000), and several strikes, including by the members of the UAW, pulled down employment in manufacturing by 35,000.
October payrolls increased below the average monthly gain of 258,000 over the last 12 months, but higher than the 75,000 jobs needed to meet the needs of the expanding population.
U.S. indexes and Yields
The S&P 500 index and the Nasdaq Composite are set to gain about 5% in the week after bond yields edged lower and rate uncertainties eased.
The S&P 500 index increased 1.0% to 4,287.45, and the Nasdaq Composite advanced 1.2% to 13,218.45.
The yield on 2-year Treasury notes decreased to 4.86%, 10-year Treasury notes inched lower to 4.50%, and 30-year Treasury bonds edged down to 4.69%.
Crude oil decreased $1.06 to $81.39 a barrel, and natural gas prices rose 3 cents to $3.50 a thermal unit.
Gold increased $6.61 to $1,992.53 an ounce after bond yields edged lower and the dollar weakened.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 105.25.
U.S. Stock Movers
Apple Inc. declined 1.7% to $174.51 after the maker of popular communication devices reported a decline in revenue for the fourth quarter in a row and forecasted weaker sales in the current quarter.
Revenue in the fiscal fourth quarter declined 1% to $89.5 billion from $90.1 billion, net income advanced to $22.9 billion from $20 billion, and diluted earnings per share rose to $1.46 from $1.29 a year ago.
Sales of iPhones increased to $43.8 billion from $43.6 billion, Macs plunged 34% to $7.6 billion from $11.5 billion, iPads eased to $6.4 billion from $7.2 billion, wearables fell to $9.3 billion from $9.7 billion, and services revenue jumped 16% to a record high of $22.3 billion from $19.2 billion a year ago.
Sales in the Americas edged up to $40.1 billion from $39.8 billion and edged slightly lower in Europe to $22.5 billion, in Greater China to $15 billion, in Japan to $5.5 billion, and in the rest of Asia to $6.3 billion.
For the full year, sales declined 3% to $383.3 billion from $394.3 billion.
The company's board of directors declared a cash dividend of 24 cents per share payable on November 13 to shareholders on record on November 10.
The company's installed base of devices reached a new record high across all products and all geographic segments, said chief financial officer Luca Maestri.
The company guided current quartet sales "to be similar to" the previous year, but the current year has one fewer week.
Europe Movers: AP Moeller-Maersk, BMW, Currys, Deutsche Wohnen, Smith & Nephew, Societe Generale, Vonovia
Inga Muller
03 Nov, 2023
Frankfurt
The DAX index increased 0.2% to 15,176.14, the CAC-40 index fell 0.08% to 7,058.16, and the FTSE 100 index edged down 0.04% to 7,442.27.
The yield on 10-year German bonds increased to 2.71%, French bonds traded lower to 3.31%, the UK gilts edged up to 4.39%, and Italian bonds inched higher to 4.55%.
A P Moeller-Maersk AS Class B dropped 15% to DKK 10,300.0 after the shipping company said full-year operating profit is expected to fall to the lower end of its earlier estimate, and the company plans to eliminate at least 10,000 jobs.
Smith & Nephew plc increased 3.3% to 993.64 pence after the company refuted claims that the weight loss drugs were likely to hurt the company's sales.
Currys Plc gained 3.9% to 47.80 pence after the UK-based electrical retailer agreed to sell its Greece and Cyprus-based retail operation Kotsovolos to Public Power Corporation for €200 million.
Societe Generale SA increased 1.1% to €21.84 despite the French lender reporting a decline in third quarter net income.
BMW AG jumped 3.1% to €93.91 after the company said production volume increased 4.2% to 638,524 vehicles in the third quarter.
Group revenue increased 3.4% to €38.5 billion from €37.2 billion, net income declined 7.7% to €2.9 billion from €3.2 billion, and earnings per share fell to €4.20 from €4.25 a year ago.
All electric vehicle sales in the quarter surged 79.6% to 93,931 units, accounting for 15.1% of total deliveries.
Vonovia SE increased 6.2% to €24.17 after the German real estate company confirmed its full-year outlook.
Deutsche Wohnen SE advanced 2.4% to €21.98 after the real estate company reported preliminary funds from operations of €456.3 million, or €1.15 per share, in the 9-month period ending in September.
European Markets Rally for Fifth Consecutive Day
Bridgette Randall
03 Nov, 2023
Frankfurt
European market indexes advanced for the fifth day in a row in the hopes that the central banks are done raising rates for now.
Benchmark indexes in Paris, London, and Frankfurt traded higher and extended weekly gains after the U.S. Federal Reserve and the Bank of England held key lending rates, following similar action by the European Central Bank days ago.
Stocks in interest rate-sensitive sectors—real estate, banks, financial services, and automobiles—led gainers in Friday's trading.
Bond yields also edged lower in the eurozone and the UK after the central banks held rates steady.
Eurozone Jobless Rate Inched Higher
The eurozone jobless rates edged higher to 6.5% in September, higher than 6.4% in the previous month, Eurostat reported Friday.
The jobless rate declined to 6.5% from 6.7% a year ago.
The number of unemployed people rose by 69,000 from the previous month to 11.017 million.
Germany recorded the lowest jobless rate of 3%, while Spain led the larger economies in the currency union with a rate of 12%, followed by Italy with 7.4% and France with 7.3%.
Moreover, the unemployment rate among jobseekers of less than 25 years edged up to 14% from 13.9% in August.
Europe Indexes and Yields
The DAX index increased 0.2% to 15,176.14, the CAC-40 index fell 0.08% to 7,058.16, and the FTSE 100 index edged down 0.04% to 7,442.27.
The yield on 10-year German bonds increased to 2.71%, French bonds traded lower to 3.31%, the UK gilts edged up to 4.39%, and Italian bonds inched higher to 4.55%.
The euro rebounded to $1.064, the British pound at $1.222, and the U.S. dollar at 90.46 Swiss cents.
Brent crude increased $0.02 to $86.27 a barrel, and the Dutch TTF natural gas edged higher by €0.44 to €49.0 per MWh.
Europe Stock Movers
A P Moeller-Maersk AS Class B dropped 15% to DKK 10,300.0 after the shipping company said full-year operating profit is expected to fall to the lower end of its earlier estimate, and the company plans to eliminate at least 10,000 jobs.
Smith & Nephew plc increased 3.3% to 993.64 pence after the company refuted claims that the weight loss drugs were likely to hurt the company's sales.
Currys Plc gained 3.9% to 47.80 pence after the UK-based electrical retailer agreed to sell its Greece and Cyprus-based retail operation Kotsovolos to Public Power Corporation for €200 million.
Societe Generale SA increased 1.1% to €21.84 despite the French lender reporting a decline in third quarter net income.
BMW AG jumped 3.1% to €93.91 after the company said production volume increased 4.2% to 638,524 vehicles in the third quarter.
Group revenue increased 3.4% to €38.5 billion from €37.2 billion, net income declined 7.7% to €2.9 billion from €3.2 billion, and earnings per share fell to €4.20 from €4.25 a year ago.
All electric vehicle sales in the quarter surged 79.6% to 93,931 units, accounting for 15.1% of total deliveries.
Vonovia SE increased 6.2% to €24.17 after the German real estate company confirmed its full-year outlook.
Deutsche Wohnen SE advanced 2.4% to €21.98 after the real estate company reported preliminary funds from operations of €456.3 million, or €1.15 per share, in the 9-month period ending in September.
S&P 500 Index and Nasdaq Composite Surged 2% as Bond Yields Recede
Barry Adams
02 Nov, 2023
New York City
The stock market soared for the second day in a row after the Federal Reserve held rates steady, encouraging investors to increase stock exposure.
In a widely anticipated decision, the Federal Reserve held the fed funds rate range between 5.25% and 5.5%, a 22-year high as the central bank battles to cool inflation to the target rate of 2%.
After the Fed's action, the yield on 10-year Treasury bonds edged lower by 12 basis points and turned lower after rising above 5% only about two weeks ago.
Between March 2022 and July 2023, the Federal Reserve raised interest by 500 basis points in eleven increments before pausing for two consecutive meetings in September and November.
After the Fed's forceful actions over the 14-month period, inflation has cooled from the peak above 9% but has stayed near 4%, significantly higher than the Fed's target rate of 2%.
Investors are divided into two camps, with one group of investors estimating that policymakers may have to hold rates higher or increase them in 2024 because of the rebound in energy prices and the rising federal budget deficit contributing to inflationary forces.
In the second group, investors are hoping that inflation will continue to cool in the months ahead, largely because of weaker wage growth and a higher base effect.
In today's trading, investors in the second group stepped up buying and drove market indexes higher for the second day in a row after the Fed's decision to pause.
The Federal Reserve's battle to cool the economy and labor market and slow wage growth got some support from the latest jobless data and labor cost productivity report.
Weekly Jobless Claims Edged Higher
Initial claims for jobless benefits increased from 5,000 to 217,000 in the week ending October 28, a two-month high, the U.S. Department of Labor reported Thursday.
The four-week moving average, which removes week-to-week volatility, edged up 2,000 to 210,000.
Moreover, continuing claims rose by 35,000 to 1.818 million in the previous week, the highest since April, indicating that job hunters are struggling to find work.
Labor Costs Declined In Third Quarter
U.S. nonfarm business sector unit costs declined by 0.8% in the third quarter, following an upwardly revised 3.2% increase in the previous quarter, according to the U.S. Bureau of Labor Statistics.
Unit labor costs declined for the first time since the fourth quarter of 2022, after hourly compensation increased by 3.9% and productivity advanced by 4.7%.
Unit labor costs rose by 1.9% from a year ago in the third quarter, the slowest pace of increase since the second quarter of 2021.
U.S. indexes and Yields
The S&P 500 index increased 1.9% to 4,317.78, and the Nasdaq Composite advanced 1.8% to 13,294.19.
The yield on 2-year Treasury notes decreased to 4.99%, 10-year Treasury notes inched lower to 4.67%, and 30-year Treasury bonds edged down to 4.82%.
Crude oil increased $1.90 to $82.31 a barrel, and natural gas prices rose 1 cent to $3.43 a thermal unit.
Gold increased $3.19 to $1,985.28 an ounce ahead of the Fed's interest rate decision later in the day.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 105.96.
U.S. Stock Movers
Airbnb Inc. increased 0.9% to $120.50 after the vacation rental platform reported higher-than-expected third-quarter revenue but forecasted weaker-than-expected fourth-quarter revenue.
Qualcomm Inc. jumped 6% to $118.0 after the advanced communication chip designer reported better-than-expected quarterly revenue and earnings.
The mobile communication chip maker also forecast higher-than-expected revenue in the fourth quarter, signaling a possible recovery in the microchip industry.
SolarEdge Technologies Inc. dropped 10.5% to $67.65 after the company reported weaker-than-expected sales in the third quarter and forecasted more weakness in the fourth quarter.
Revenue in the third quarter declined to $725 million and loss per share was 55 cents, and the company guided fourth quarter sales to drop in the range between $275 million and $320 million.
The demand for home solar installations nosedived on rising interest rates after California cut the compensation rate for solar incentive programs in April.
California is expected to announce similar compensation cuts for multifamily, farm, and school buildings, which could further dampen the demand.
Peloton Interactive Inc. dropped 6.5% to $4.50 after the company reported a wider-than-expected loss.
Revenue in the quarter fell 3% to $595.1 million from $616.5 million; net loss shrank to $159.1 million from $408.5 million; and diluted loss per share shrank to 44 cents from $1.20 a year ago.
The company forecasted revenue in the fiscal 2024 second quarter ending December in the range of $715 million and $750 million, a decrease of 8% from the midpoint of $793 million a year ago.
European Markets Extend 4-day Rally
Benchmark indexes across Europe jumped more than 1% on interest rate optimism after the U.S. Federal Reserve's rate decision.
Popular indexes in Frankfurt, Paris, and London advanced for the fourth day in a row and jumped 1% after the Fed kept its short-term interest rate range unchanged between 5.25% and 5.5%.
The Bank of England kept its key lending rate at a 15-year high of 5.25% and held rates for the second time in a row.
The Monetary Policy Committee, in a 6-3 vote, decided to leave rates unchanged, and the central bank reiterated that rates are likely to remain restrictive for a while until inflation drops to the 2% level.
Market participants bid up stocks in the hope that the central banks are likely to pause rates for a while.
Higher interest rates lower the value of the future earnings stream, especially for high-growth and tech companies where most of the earnings are in the future, and higher short-term rates drive long-term bond yields higher, providing an attractive alternative to stock investing.
On the economic front, Germany's seasonally adjusted jobless rate increased to 5.8% in October from 5.7% in September, the Federal Statistics Office reported Thursday.
Manufacturing surveys across the eurozone showed persistent growth weakness.
HCOB's final eurozone manufacturing Purchasing Managers' Index fell to 43.1 in October from 43.4 in September, S&P Global reported Thursday.
Manufacturing weakness intensified in Italy and Spain due to challenging economic conditions in the currency union.
The manufacturing index in Italy fell to 44.9 in October from 46.8 in September, and in Spain it eased to 45.1 from 47.7 in September, separate reports from S&P Global showed.
Europe Indexes and Yields
The DAX index increased 1.5% to 15,143.60, the CAC-40 index advanced 1.9% to 7,060.69, and the FTSE 100 index edged up 1.4% to 7,446.53.
The yield on 10-yetrar German bonds decreased to 2.70%, French bonds traded lower to 3.32%, the UK gilts edged up to 4.41%, and Italian bonds inched lower to 4.48%.
The euro rebounded to $1.062, the British pound at $1.212, and the U.S. dollar at 90.33 Swiss cents.
Brent crude increased $2.33 to $86.94 a barrel, and the Dutch TTF natural gas edged higher by €0.81 to €48.56 per MWh.
Europe Stock Movers
BT Group Class A jumped 6.4% to 118.19 pence after the UK-based broadband and mobile services provider reported better-than-expected quarterly results.
Shell plc jumped 2.2% to 2,711.05 pence after the oil company reported a third-quarter profit of $6.2 billion and launched a $3.5 billion stock repurchase plan.
Trainline Plc soared 8.2% to 284.22 pence after an online train travel information provider and ticketing platform reported positive results in the first half.
Net rail ticket sales in the first half increased by 23% to £2.6 billion, following the post-pandemic rebound in travel.
Revenue in the first half increased 19% to £197 million from £165 million, operating profit advanced 36% to £23 million from £17 million, and basic earnings per share rose to 2.9 pence from 2.6 pence a year ago.
The company revised its estimated full-year revenue growth range to between 17% and 22% from the previous range of between 13% and 22%.
The company also tightened its full-year revenue growth range between 15% and 20%, from the previous range between 13% and 22%.
Hikma Pharmaceuticals Plc declined 3.5% to 1,847.0 pence despite the company forecasting core operating margin growth for its generic at the upper end of its previous announced range.
Alstom SA jumped 4.6% to €13.39 after the French-rail service company won an eight-year services contract extension of €950 million from CrossCountry trains, part of Arriva Group, in the United Kingdom.
Schneider Electric SE added 3.5% to €150.22 after the company said it finalized the acquisition of EcoAct SAS, a climate consulting and net zero solutions provider.
Hugo Boss AG increased 5.7% to €58.58 after the fashion apparel company reported positive third-quarter earnings and reiterated its full-year 2023 outlook.
U.S. Movers: Airbnb, DoorDash, Electronic Arts, Peloton Interactive, SolarEdge, Qualcomm
Scott Peters
02 Nov, 2023
New York City
Airbnb Inc. increased 0.9% to $120.50 after the vacation rental platform reported higher-than-expected third-quarter revenue but forecasted weaker-than-expected fourth-quarter revenue.
Revenue in the third quarter jumped 18% to $3.4 billion from $1.9 billion, net income before-tax advanced to $1.7 billion from $1.2 billion, and diluted earnings per share rose to $6.63 from $1.79 a year ago.
After-tax income jumped to $4.4 billion from $1.21 billion, after adjusting for $2.7 billion tax benefit related to previous years.
The company estimated fourth quarter revenue in the range of $2.14 billion and $2.17 billion, representing growth from a year ago between 12% and 14%.
The company also added that it is "seeing greater volatility early in the fourth quarter" and estimated nights booked growth in the fourth quarter to "moderate" from the third quarter and average daily rate "to be stable to slightly up" compared to the same period last year.
Qualcomm Inc. jumped 6% to $118.0 after the advanced communication chip designer reported better-than-expected revenue and earnings in the fourth quarter ending on September 24.
Revenue in the fourth quarter dropped 24% to $8.6 billion from $11.4 billion, net income plunged 48% to $1.5 billion from $2.9 billion, and diluted earnings per share dropped to $1.32 from $2.54 a year ago.
The mobile communication chip maker also forecast higher-than-expected revenue in the fourth quarter, signaling a possible recovery in the microchip industry.
The company forecasted fiscal 2024 first quarter revenue between $9.1 billion and $9.9 billion and diluted earnings per share between $1.82 and $2.02.
SolarEdge Technologies Inc. dropped 10.5% to $67.65 after the company reported weaker-than-expected sales in the third quarter and forecasted more weakness in the fourth quarter.
Revenue in the third quarter declined to $725 million and loss per share was 55 cents, and the company guided fourth quarter sales to drop in the range between $275 million and $320 million.
The demand for home solar installations nosedived on rising interest rates after California cut the compensation rate for solar incentive programs in April.
California is expected to announce similar compensation cuts for multifamily, farm, and school buildings, which could further dampen the demand.
Peloton Interactive Inc. dropped 6.5% to $4.50 after the company reported a wider-than-expected loss.
Revenue in the quarter fell 3% to $595.1 million from $616.5 million; net loss shrank to $159.1 million from $408.5 million; and diluted loss per share shrank to 44 cents from $1.20 a year ago.
The company forecasted revenue in the fiscal 2024 second quarter ending December in the range of $715 million and $750 million, a decrease of 8% from the midpoint of $793 million a year ago.
DoorDash Inc. jumped 16.5% to $88.46 after the company reported better-than-expected quarterly results.
During the quarter, total orders jumped 24% to 543 million from 439 million, and gross order volume soared 24% to $16.8 billion from $13.5 billion a year ago.
Revenue in the third quarter increased 27% to $2.2 billion from $1.7 billion, net loss shrank to $75 million from $296 million, and diluted loss per share decreased to 19 cents from 77 cents a year ago.
Free cash flow improved substantially in the quarter after the company benefited from rising sales and an improved cost structure.
Free cash in the quarter increased to $324 million and jumped to $878 million in the trailing twelve months.
The company also completed its stock repurchase program authorized in February through the repurchase of 12 million shares for $750 million.
The company estimated gross market volume in the fourth quarter in the range of $17.0 billion to $17.4 billion and adjusted operating earnings between $320 million and $380 million.
Electronic Arts Inc. advanced 4.4% to $129.20 after the company reported quarterly results.
Revenue in the third quarter edged up to $1.91 billion from $1.90 billion, net income edged up to $399 million from $299 million, and diluted earnings per share to $1.77 from $1.47 a year ago.
The company repurchased 2.6 million shares in the quarter for $325 million, bringing the total for the trailing twelve months to 10.5 million shares for $1.3 billion.
For the fiscal year ending in March, the company estimated net revenue in the range of $7.3 billion and $7.7 billion, net income between $1.118 billion and $1.273 billion, and diluted earnings per share between $4.10 and $4.66.
Fiscal year operating cash flow is expected to be between $1.95 billion and $2.10 billion.
U.S. Market Averages Extend Gains On Hopes of Stable Interest Rates
Barry Adams
02 Nov, 2023
New York City
Stocks advanced for the second day after the Federal Reserve held rates steady, encouraging investors to increase stock exposure.
In a widely anticipated decision, the Federal Reserve held the fed funds rate range between 5.25% and 5.5%, a 22-year high as the central bank battles to cool inflation to the target rate of 2%.
The Federal Reserve's battle to cool the economy and labor market and slow wage growth got some support from the latest jobless data and labor cost productivity report.
Initial claims for jobless benefits increased from 5,000 to 217,000 in the week ending October 28, a two-month high, the U.S. Department of Labor reported Thursday.
The four-week moving average, which removes week-to-week volatility, edged up 2,000 to 210,000.
Moreover, continuing claims rose by 35,000 to 1.818 million in the previous week, the highest since April, indicating that job hunters are struggling to find work.
U.S. nonfarm business sector unit costs declined by 0.8% in the third quarter, following an upwardly revised 3.2% increase in the previous quarter, according to the U.S. Bureau of Labor Statistics.
Unit labor costs declined for the first time since the fourth quarter of 2022, after hourly compensation increased by 3.9% and productivity advanced by 4.7%.
Unit labor costs rose by 1.9% from a year ago in the third quarter, the slowest pace of increase since the second quarter of 2021.
U.S. indexes and Yields
The S&P 500 index increased 1.0% to 4,287.45, and the Nasdaq Composite advanced 1.2% to 13,218.45.
The yield on 2-year Treasury notes decreased to 4.9%, 10-year Treasury notes inched lower to 4.65%, and 30-year Treasury bonds edged down to 4.84%.
Crude oil decreased $0.90 to $81.40 a barrel, and natural gas prices fell 6 cents to $3.42 a thermal unit.
Gold increased $2.01 to $1,981.48 an ounce ahead of the Fed's interest rate decision later in the day.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 105.96.
U.S. Stock Movers
Airbnb Inc. increased 0.9% to $120.50 after the vacation rental platform reported higher-than-expected third-quarter revenue but forecasted weaker-than-expected fourth-quarter revenue.
Qualcomm Inc. jumped 6% to $118.0 after the advanced communication chip designer reported better-than-expected quarterly revenue and earnings.
The mobile communication chip maker also forecast higher-than-expected revenue in the fourth quarter, signaling a possible recovery in the microchip industry.
SolarEdge Technologies Inc. dropped 10.5% to $67.65 after the company reported weaker-than-expected sales in the third quarter and forecasted more weakness in the fourth quarter.
Revenue in the third quarter declined to $725 million and loss per share was 55 cents, and the company guided fourth quarter sales to drop in the range between $275 million and $320 million.
The demand for home solar installations nosedived on rising interest rates after California cut the compensation rate for solar incentive programs in April.
California is expected to announce similar compensation cuts for multifamily, farm, and school buildings, which could further dampen the demand.
Peloton Interactive Inc. dropped 6.5% to $4.50 after the company reported a wider-than-expected loss.
Revenue in the quarter fell 3% to $595.1 million from $616.5 million; net loss shrank to $159.1 million from $408.5 million; and diluted loss per share shrank to 44 cents from $1.20 a year ago.
The company forecasted revenue in the fiscal 2024 second quarter ending December in the range of $715 million and $750 million, a decrease of 8% from the midpoint of $793 million a year ago.
Europe Movers: Alstom, BT Group, Hikma Pharma, Hugo Boss, Lufthansa, Schneider Electric, Shell, Trainline
Inga Muller
02 Nov, 2023
New York City
Benchmark indexes in Europe advanced for the fourth day in a row, and bond yields edged lower after the U.S. Federal Reserve paused its rate hike but left the door open for another rate hike.
The DAX index increased 1.5% to 15,145.14, the CAC-40 index advanced 1.6% to 7,042.96, and the FTSE 100 index edged up 1.2% to 7,430.87.
The yield on 10-yetrar German bonds decreased to 2.70%, French bonds traded lower to 3.32%, the UK gilts edged up to 4.41%, and Italian bonds inched lower to 4.48%.
BT Group Class A jumped 6.4% to 118.19 pence after the UK-based broadband and mobile services provider reported better-than-expected quarterly results.
Shell plc jumped 2.2% to 2,711.05 pence after the oil company reported a third-quarter profit of $6.2 billion and launched a $3.5 billion stock repurchase plan.
Trainline Plc soared 8.2% to 284.22 pence after an online train travel information provider and ticketing platform reported positive results in the first half.
Net rail ticket sales in the first half increased by 23% to £2.6 billion, following the post-pandemic rebound in travel.
Revenue in the first half increased 19% to £197 million from £165 million, operating profit advanced 36% to £23 million from £17 million, and basic earnings per share rose to 2.9 pence from 2.6 pence a year ago.
The company revised its estimated full-year revenue growth range to between 17% and 22% from the previous range of between 13% and 22%.
The company also tightened its full-year revenue growth range between 15% and 20%, from the previous range between 13% and 22%.
Hikma Pharmaceuticals Plc declined 3.5% to 1,847.0 pence despite the company forecasting core operating margin growth for its generic at the upper end of its previous announced range.
Alstom SA jumped 4.6% to €13.39 after the French-rail service company won an eight-year services contract extension of €950 million from CrossCountry trains, part of Arriva Group, in the United Kingdom.
Schneider Electric SE added 3.5% to €150.22 after the company said it finalized the acquisition of EcoAct SAS, a climate consulting and net zero solutions provider.
Hugo Boss AG increased 5.7% to €58.58 after the fashion apparel company reported positive third-quarter earnings and reiterated its full-year 2023 outlook.
Deutsche Lufthansa AG jumped 7.7% to €7.07 after the airline reported positive third-quarter results amid rising demand for international travel.
Total group revenue increased 8% to €10.3 billion from €9.5 billion, and the passenger count increased to 38 million from 33 million a year ago, respectively.
Net income increased 47% to €1.2 billion from €809 million, and earnings per share advanced to €1.0 from 68 euro cents a year ago.
The German state-owned airline said fourth quarter booking volume percentage growth is in double digits, and the airline expects to achieve full-year 2023 adjusted operating earnings of more than €2.6 billion.
European Markets Extend 4-day Rally, BoE Left Rates Unchanged
Bridgette Randall
02 Nov, 2023
Frankfurt
Benchmark indexes across Europe jumped more than 1% on interest rate optimism after the U.S. Federal Reserve's rate decision.
Popular indexes in Frankfurt, Paris, and London advanced for the fourth day in a row and jumped 1% after the Fed kept its short-term interest rate range unchanged between 5.25% and 5.5%.
The Bank of England kept its key lending rate at a 15-year high of 5.25% and held rates for the second time in a row.
The Monetary Policy Committee, in a 6-3 vote, decided to leave rates unchanged, and the central bank reiterated that rates are likely to remain restrictive for a while until inflation drops to the 2% level.
Market participants bid up stocks in the hope that the central banks are likely to pause rates for a while.
Higher interest rates lower the value of the future earnings stream, especially for high-growth and tech companies where most of the earnings are in the future, and higher short-term rates drive long-term bond yields higher, providing an attractive alternative to stock investing.
On the economic front, Germany's seasonally adjusted jobless rate increased to 5.8% in October from 5.7% in September, the Federal Statistics Office reported Thursday.
Manufacturing surveys across the eurozone showed persistent growth weakness.
HCOB's final eurozone manufacturing Purchasing Managers' Index fell to 43.1 in October from 43.4 in September, S&P Global reported Thursday.
Manufacturing weakness intensified in Italy and Spain due to challenging economic conditions in the currency union.
The manufacturing index in Italy fell to 44.9 in October from 46.8 in September, and in Spain it eased to 45.1 from 47.7 in September, separate reports from S&P Global showed.
Europe Indexes and Yields
The DAX index increased 1.5% to 15,145.14, the CAC-40 index advanced 1.6% to 7,042.96, and the FTSE 100 index edged up 1.2% to 7,430.87.
The yield on 10-yetrar German bonds decreased to 2.70%, French bonds traded lower to 3.32%, the UK gilts edged up to 4.41%, and Italian bonds inched lower to 4.48%.
The euro rebounded to $1.062, the British pound at $1.212, and the U.S. dollar at 90.33 Swiss cents.
Brent crude increased $1.19 to $85.84 a barrel, and the Dutch TTF natural gas edged lower by €0.62 to €47.13 per MWh.
Europe Stock Movers
BT Group Class A jumped 6.4% to 118.19 pence after the UK-based broadband and mobile services provider reported better-than-expected quarterly results.
Shell plc jumped 2.2% to 2,711.05 pence after the oil company reported a third-quarter profit of $6.2 billion and launched a $3.5 billion stock repurchase plan.
Trainline Plc soared 8.2% to 284.22 pence after an online train travel information provider and ticketing platform reported positive results in the first half.
Net rail ticket sales in the first half increased by 23% to £2.6 billion, following the post-pandemic rebound in travel.
Revenue in the first half increased 19% to £197 million from £165 million, operating profit advanced 36% to £23 million from £17 million, and basic earnings per share rose to 2.9 pence from 2.6 pence a year ago.
The company revised its estimated full-year revenue growth range to between 17% and 22% from the previous range of between 13% and 22%.
The company also tightened its full-year revenue growth range between 15% and 20%, from the previous range between 13% and 22%.
Hikma Pharmaceuticals Plc declined 3.5% to 1,847.0 pence despite the company forecasting core operating margin growth for its generic at the upper end of its previous announced range.
Alstom SA jumped 4.6% to €13.39 after the French-rail service company won an eight-year services contract extension of €950 million from CrossCountry trains, part of Arriva Group, in the United Kingdom.
Schneider Electric SE added 3.5% to €150.22 after the company said it finalized the acquisition of EcoAct SAS, a climate consulting and net zero solutions provider.
Hugo Boss AG increased 5.7% to €58.58 after the fashion apparel company reported positive third-quarter earnings and reiterated its full-year 2023 outlook.
Fed Leaves Rates Unchanged, Offers No Clear Timetable to Cool Inflation to 2%
Brian Turner
01 Nov, 2023
New York City
Treasury yields for longer-dated maturities edged slightly higher after the Federal Reserve left rates unchanged but left the door open for a rate hike at the next meeting.
Policymakers are struggling to lower the inflation rate to 3% while keeping economic growth intact and navigating tight labor market conditions.
Historically, when interest rates rise rapidly, the labor market cools and economic growth slows, but the latest rate tightening cycle has had little impact on the labor market and economic growth.
The Federal Reserve has increased rates over the last eighteen months from near zero to close to 5.5%, and the U.S. economy has managed to avoid a much-foreseen economic slowdown or a recession.
Policymakers are still struggling to cool inflation, which has weakened in the last eleven months, but prices are still rising faster than the 2% target rate set by the central bank.
The Federal Reserve is struggling to understand the cumulative effects of 500 basis points of rate increases and the lags with which rate hikes affect economic activities, inflation, and economic and financial developments.
Inflation is still high because supply chain disruption-driven price hikes are cooling, helping the inflation to moderate, but demand-driven inflation is still fueling inflationary pressures.
While the Fed talks about cooling inflation, it also fans the fires of inflation by purchasing large chunks of federal government debt, which is fueling inflationary forces.
The U.S. Treasury Department is planning to auction $112 billion in debt next week as the federal government prepares to finance its rising debt, which reached $33.7 trillion at the end of October.
The federal government increased its deficit by 23.2%, or $320 billion, to $1.7 trillion in the fiscal year 2023 ending in September, and the federal deficit is expected to approach $2 trillion in the current fiscal year if the government continues to spend at its current levels.
The White House is seeking $106 billion to finance wars in Israel and Ukraine, and the president's office is looking for an additional $56 billion for childcare and disaster relief.
Fed Leaves Rates Unchanged, Sets No Timetable to Lower Inflation
The Federal Reserve held the fed funds rate range at a 22-year high between 5.25% and 5.50% for the second time in a row and left the door open for another rate hike to cool inflationary pressure.
The central bank's move was widely anticipated, but policymakers failed to provide a definite timetable for bringing down inflation to the target rate of 2%.
S&P 500 and Nasdaq Jump 1% After Fed Holds Rates Steady
Barry Adams
01 Nov, 2023
New York City
Stocks continued to move higher after the Fed's rate decision, and investors stepped up to increase bets on tech stocks.
Treasury yields for longer-dated maturities edged slightly higher after the Federal Reserve left rates unchanged but left the door open for a rate hike at the next meeting.
Policymakers are struggling to lower the inflation rate to 3% while keeping economic growth intact and navigating tight labor market conditions.
Historically, when interest rates rise rapidly, the labor market cools and economic growth slows, but the latest rate tightening cycle has had little impact on the labor market and economic growth.
The Federal Reserve has increased rates over the last eighteen months from near zero to close to 5.5%, and the U.S. economy has managed to avoid a much-foreseen economic slowdown or a recession.
Policymakers are still struggling to cool inflation, which has weakened in the last eleven months, but prices are still rising faster than the 2% target rate set by the central bank.
The Federal Reserve is struggling to understand the cumulative effects of 500 basis points of rate increases and the lags with which rate hikes affect economic activities, inflation, and economic and financial developments.
Inflation is still high because supply chain disruption-driven price hikes are cooling, helping the inflation to moderate, but demand-driven inflation is still fueling inflationary pressures.
While the Fed talks about cooling inflation, it also fans the fires of inflation by purchasing large chunks of federal government debt, which is fueling inflationary forces.
The U.S. Treasury Department is planning to auction $112 billion in debt next week as the federal government prepares to finance its rising debt, which reached $33.7 trillion at the end of October.
The federal government increased its deficit by 23.2%, or $320 billion, to $1.7 trillion in the fiscal year 2023 ending in September, and the federal deficit is expected to approach $2 trillion in the current fiscal year if the government continues to spend at its current levels.
The White House is seeking $106 billion to finance wars in Israel and Ukraine, and the president's office is looking for an additional $56 billion for childcare and disaster relief.
In stock trading on Wall Street, market indexes advanced more than 1% because investors bought into the narrative that the central bank is done raising rates for now and may skip rate hikes at the next meeting in December.
Fed Leaves Rates Unchanged, Sets No Timetable to Lower Inflation
The Federal Reserve held the fed funds rate range at a 22-year high between 5.25% and 5.50% for the second time in a row and left the door open for another rate hike to cool inflationary pressure.
The central bank's move was widely anticipated, but policymakers failed to provide a definite timetable for bringing down inflation to the target rate of 2%.
Private Sector Hiring Accelerated in October
Private sector payrolls expanded to a weaker-than-expected 113,000 in October, the ADP survey showed on Wednesday.
Payrolls expanded at a faster pace after rising by 89,000 in September, after education and healthcare added 45,000 jobs in the month.
The U.S. Labor Department is set to release its October nonfarm payroll estimate on Friday, and economists polled by Ticker.com are looking for payrolls to expand by 195,000.
The ADP survey and the nonfarm payrolls survey significantly diverge at times because the government data is based on a larger sample size and has a greater diversity of employers in its sample size.
28-year Low In Mortgage Application Volume
Mortgage applications declined by 2.1% in the week ending October 27, following a 1% fall in the previous week and extending the weekly decline to the third week in a row.
The 30-year fixed rate dipped slightly to 7.86% but remained close to 23-year highs and has been above the 7-percent level since early August 2023.
The refinance share of mortgage activity decreased to 31.2% of total applications from 31.4% the previous week.
The adjustable-rate mortgage share of activity increased to 10.7% of total applications as buyers struggled with elevated interest rates and home affordability and hoped they would be able to later refinance mortgages at a lower rate.
U.S. indexes and Yields
The S&P 500 index increased 1.0% to 4,235.55, and the Nasdaq Composite advanced 1.3% to 13,026.22.
The yield on 2-year Treasury notes decreased to 5.0%, 10-year Treasury notes inched lower to 4.80%, and 30-year Treasury bonds edged down to 4.98%.
Crude oil decreased $0.54 to $80.47 a barrel, and natural gas prices fell 8 cents to $3.48 a thermal unit.
Gold increased $2.01 to $1,981.48 an ounce ahead of the Fed's interest rate decision later in the day.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged higher to 106.86, and the index traded volatile after the euro and the pound eased for the second day in a row and the yen fell to a multi-year low after the Bank of Japan left its ultra-loose policy intact.
U.S. Stock Movers
Wayfair Inc. declined 4.5% to $40.46 after the online furniture retailer reported weak third-quarter revenue, reflecting a weak demand for home goods and residential furniture.
Advanced Micro Devices, Inc. jumped 4.4% to $102.64 after the advanced chip maker reported mixed quarterly results and offered a positive 2024 outlook for its data center segment.
Wework Inc. plunged 52% to $1.08 after a report in the Wall Street Journal noted that the company is looking to file Chapter 11 bankruptcy protection as early as next week.
Caesars Entertainment Inc. decreased 0.7% to $39.63 after the resorts and casinos operator reported rising revenue and earnings in the third quarter, helped by steady demand at its properties in Las Vegas.
Revenue rose 3.7% to $2.99 billion, and earnings increased to 34 cents from 24 cents a year ago.
Match Group Inc. plunged 16.8% after the dating services provider forecast fourth-quarter revenue that fell short of market expectations.
In the third quarter, revenue rose 8.9% from a year before to $881.6 million, and earnings per share eased to 57 cents from 58 cents a year ago.
Active paying subscribers declined 5% from the previous quarter to 15.7 million, and average subscriptions increased 15% from the previous quarter to $18.39.
During the quarter, the company repurchased $300 million of stock and a total of $445 million in the year-to-date, reducing its share count by 2.8% from the beginning of the year.
About $667 million is available under the $1 billion stock repurchase program, and the company declared its plan to return to shareholders at least 50% of its free cash flow.
Paycom Software Inc. plunged 37.7% to $152.38 after the payroll processor forecasted weak fourth-quarter revenue.
In the third quarter, non-GAAP net income increased to $102.4 million, or $1.77 per diluted share, up 39% from the prior-year period.
During the quarter, the company repurchased over $76 million worth of stock and paid nearly $22 million in cash dividends.
European Stocks and Bond Yields Rebounded In Cautious Trading
European markets hovered near the flatline, and the euro edged lower for the second day in a row.
Market indexes across Europe were in a holding pattern, and investors reacted to another batch of earnings and bond yields traded with a downward bias.
Investors awaited interest rate decisions from the Federal Reserve later today and from the Bank of England on Thursday.
On Tuesday, Eurostat, the statistical agency of the currency union, said the consumer price index in the eurozone dropped to a two-year low, raising hopes that the European Central Bank may pause rates for an extended period.
But worries of an economic slowdown dominated market sentiment after the eurozone economy struggled to expand in the third quarter.
Moreover, worries of a wider war in the Middle East also kept crude oil and natural gas prices elevated for the third week in a row, rekindling fears of a rebound in inflation.
Europe Indexes and Yields
The DAX index increased 0.8% to 14,923.27, the CAC-40 index advanced 0.7% to 6,932.63, and the FTSE 100 index edged up 0.3% to 7,342.43.
The yield on 10-yetrar German bonds decreased to 2.75%, French bonds traded lower to 3.37%, the UK gilts edged down to 4.49%, and Italian bonds inched lower to 4.67%.
The euro hovered near a three-month low at $1.054, the British pound at $1.214, and the U.S. dollar at 90.88 Swiss cents.
Brent crude decreased $0.14 to $86496 a barrel, and the Dutch TTF natural gas edged lower by €0.25 to €47.76 per MWh.
Europe Stock Movers
Wolters Kluwer NV declined 3.5% to €116.90 after the Netherlands-based trade publishing firm reported adjusted operating profit for the first nine months declined 2% in constant currencies.
Skanska AB plunged 11.5% to 148.80 Swedish kronor after the Swedish construction firm reported lower-than-expected third-quarter profit, reflecting a weak commercial real estate market.
ASOS Plc dropped 10.5% to 352.10 pence after the struggling online fashion retailer reported an annual loss of £300 million.
ASOS stock dropped to the level last seen in 2009.
The embattled fashion retailer said annual revenue declined 11% to £3.5 billion from £3.9 billion, after-tax losses expanded to £223.1 million from £30.8 million, and diluted earnings per share fell to 213 pence from 30.9 pence a year ago.
Active customers declined 9% to 23.3 million, but average transaction value increased 7% to £40.3 million from £37.6 million, and average order frequency edged lower to 3.6 from 3.8 a year ago.
The company accelerated its turnaround efforts, adjusted from pandemic boom to post-pandemic bust, and aligned its corporate structure to reflect weaker demand from repeat customers.
Premier customers declined 11%, reflecting higher subscription prices and higher thresholds for free delivery.
Aston Martin Lagonda Global Holdings PLC dropped 11% to 194.60 pence after the luxury vehicle maker reported a wider-than-expected loss in the third quarter.
The company also lowered its 2023 volume outlook for the DB12 model, but total vehicle sales in the quarter rose 4% to 1,444 from 1,384 a year ago.
Revenue increased 15% to £362.1 million from £315.5 million, and net loss shrank to £118.0 million from £228.2 million.
In the nine-month period, the wholesale average selling price across all models increased to £219,000 from £195,000 a year ago.