Market Update
Tech Bounce Failed to Lift Broader Averages On Wall Street, European Markets Closed Down
Barry Adams
26 Apr, 2023
New York City
Benchmark indexes advanced on Wall Street after Microsoft-powered tech rally lifted broader averages.
Big tech earnings dominated market sentiment and investors will have first chance to react to positive earnings from several companies including Boeing, Chipotle Mexican Grill and CoStar Group.
Despite the gloom and doom reported in financial media, publicly listed large and medium-sized corporations are reporting healthier quarterly results.
Microsoft revenue rose on the back of intelligent cloud segment revenue surge but the sales of Windows and Office products struggled with the weakness in personal computer markets.
Google's parent Alphabet also reported better-than-expected revenues despite weakness in advertising but cloud and other segment revenues supported the quarterly results.
Boeing reported mixed quarterly results and reaffirmed its 2023 outlook and Chipotle Mexican Grill quarterly earnings doubled on the back of new stores and price hikes.
Enphase Energy Inc plunged 25% after the solar energy company reported weaker-than-expected earnings and also forecasted second quarter sales between $700 million and $750 million, lower than expected.
On the economic front, mortgage applications rebounded and durable goods order rebounded in March on the back of a 78% surge in civilian aircraft orders.
But non-defense orders for capital goods, generally considered as a proxy for business spending, declined 0.4%.
International trade deficit declined and wholesale and retail inventories rose from the previous month, according to the preliminary data from the U.S. Census Bureau released on Wednesday.
International trade deficit declined 8.1% or $7.4 billion to $84.6 billion in March after goods exports rose $4.9 billion to $172.7 billion and goods imports fell $2.5 billion to $257.3 billion.
investors are awaiting release of GDP data on Thursday and Personal Consumption Expenditure Price Index on Friday.
Mortgage Applications Rebounded
Mortgage applications increased 3.7% in the week ended April 21, rebounding from an 8.8% decline in the previous week, Mortgage Bankers Association reported Wednesday.
Mortgage application for the home purchase increased 4.6% and refinance advanced 1.7% in the period.
Mortgage rates increased for the second week in a row and touched to a one-month high on the expectations that the Federal Reserve will increase rate at its meeting next week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $726,200 or less increased 12 basis points to 6.55%, following a 13 bps rise in the previous week.
Indexes & Yields
The S&P 500 index futures decreased 0.3% to 4,057.75 and the Nasdaq Composite index futures advanced 0.5% to 11,869.91.
The yield on 2-year Treasury notes inched up to 3.92%, 10-year Treasury notes rose to 3.42% and 30-year Treasury bonds held at 3.67%.
Crude oil fell 34 cents to $76.71 a barrel and natural gas prices eased a fraction to $2.33 a thermal unit.
Stock Movers
Microsoft Corp jumped 7.9% to $297.50 after the company said revenue in the March quarter increased 7% to $52.9 billion, driven by the jump in cloud segment revenue.
Cloud segment revenue increased $22.1 billion, productivity and business processes increased 11% to $17.5 billion and personal computing segment decreased 9% to $13.3 billion. Microsoft search and news advertising revenue excluding traffic acquisition costs increased 10% but Windows OEM revenue plunged 28%.
Net income increased to $18.3 billion from $16.7 billion and diluted earnings per share advanced to $2.45 from $2.22 a year ago.
Microsoft returned $9.7 billion to shareholders in the form of share repurchases and dividends in the third quarter of fiscal year 2023.
Alphabet Inc declined 1% to $102.80 after the parent of Google said revenue in the first quarter ending in March rose 3% to $69.8 billion, sharply slower than the 23% increase in the quarter a year ago.
Net income in the quarter fell to $15.1 billion from $16.4 billion and diluted earnings per share eased $1.17 from $1.23 a year ago.
Google advertising, which includes Google search, network ad YouTube ads, edged slightly lower to $54.5 billion from $54.7 billion and cloud ads increased to $7.4 billion from $5.8 billion a year ago.
Chipotle Mexican Grill, Inc rose 7.6% to $1,915.0 after the fast food chain operator reported higher earnings driven by new stores and price increases.
Total revenue in the first quarter increased 17.2% to $2.4 billion and comparable restaurant sales advanced 10.9%.
Net income increased to $291.6 million from $158.3 million and diluted earnings per share rose to $10.50 from $5.59 a year ago.
CoStar Group Inc rose 0.4% to $68.75 after the real estate information services provider reported higher revenue and bookings in the first quarter.
Revenue in the first quarter increased 13% to $584 million and net income declined to $87 million from $89 million and diluted earnings per share fell to 21 cents from 23 cents a year ago.
European Markets Turn Lower On Economic Growth Worries
European markets traded down on economic worries despite improving corporate performance in the region.
Market indexes were on the defensive for the second week in a row on the worries that higher interest rates and slowing business activities may negatively impact corporate earnings.
The latest batch of earnings suggested positive performance from companies in France, Germany and the UK.
The forward looking German consumer sentiment index improved to -25.7 for May from the revised prior reading of 29.3 in April, GfK Institute's data showed Wednesday.
The consumer sentiment was the highest since April 2022, reflecting higher income expectations and sharply lower energy inflation.
Indexes & Yields
The DAX index decreased 0.5% to 15,795.73, the CAC-40 index dropped 0.8% to 7,466.66 and the FTSE 100 index declined 0.5% to 7,852.46.
The yield on 10-year German Bunds eased to 2.34%, French bonds to 2.92%, the UK gilts to 3.68% and Italian bonds to 4.23%.
The euro edged higher to $1.10, the British pound to $1.246 and the Swiss franc to 88.91 cents.
Brent crude fell $2.43 to $78.43 a barrel and the Dutch TTF natural gas fell €1.38 to €38.55 per MWh.
Stock Movers
Danone SA increased 1% to €61.04 after the French yogurt and food products maker lifted its 2023 sales outlook.
Dassault Systemes SE dropped 7.8% to €34.51 despite the French software company reporting quarterly results that matched market expectations.
Orange SA increased 1.9% to €11.66 after the French mobile telecom operator reported rising sales in the first quarter and the company reiterated its 2023 sales outlook.
Safran SA fell 2.2% to €138.90 despite the aerospace company reporting sales increase of 29.4% to €5.3 billion, mainly fueled by propulsion and aircraft Interiors activities.
As a part of its stock repurchase program for 9.4 million shares, the company has acquired 6.9 million shares and announced its plan to acquire €350 million of its shares between April 11 and June 9.
Standard Chartered Plc rose 1.4% to 629.0 pence after the UK-based bank reported pre-tax profit in the first quarter increased 23%.
Operating revenue in the first quarter rose 8% to $4.4 billion and pre-tax income rose to $1.7 billion from $1.4 billion and net interest margin increased 5 basis points to 1.63%.
International Trade Deficit Declined In March, Inventories Rose
Brian Turner
26 Apr, 2023
New York City
International trade deficit declined and wholesale and retail inventories rose from the previous month, according to the preliminary data from the U.S. Census Bureau released on Wednesday.
International trade deficit declined 8.1% or $7.4 billion to $84.6 billion in March after goods exports rose $4.9 billion to $172.7 billion and goods imports fell $2.5 billion to $257.3 billion.
Wholesale inventories for March, adjusted for seasonal variations and trading day differences, but not for price changes, increased 0.1% from the previous month and rose 9.3% from a year ago to $919.9 billion.
Retail inventories for March, adjusted for seasonal variations and trading day differences, but not for price changes, rose 0.7% from the previous month and advanced 8.4% to $773.4 billion.
Durable Goods Orders Advanced In March
Brian Turner
26 Apr, 2023
New York City
Durable goods orders increased in March and rebounded from the decline in February, the Commerce Department reported Wednesday.
Orders for long lasting items such as computers, household appliances and transportation equipment rose 3.2% to $276.4 billion.
Orders rebounded from the decline in 1.2% in February.
Excluding transportation, new orders increased 0.3% and excluding defense, new orders rose 3.5%.
Transportation equipment, also up following two monthly decreases in a row, led the increase, $8.1 billion or 9.1% to $97.4 billion.
Orders for non-defense capital goods excluding aircraft, generally viewed as a barometer for business spending, fell 0.4% in March, following a 0.7% decline in February.
Shipments of manufactured durable goods in March increased following two consecutive monthly decreases,
Shipments increased $2.9 billion or 1.1% to $277.0 billion, following a 0.8% increase in February.
Transportation equipment shipments rebounded after falling for two months in a row by $3.3 billion or 3.7% to $93.3 billion.
Movers: Alphabet, Chipotle Mexican Grill, Corning, CoStar Group, McDonald's, Microsoft
Scott Peters
26 Apr, 2023
New York City
Alphabet Inc declined 1% to $102.80 after the parent of Google said revenue in the first quarter ending in March rose 3% to $69.8 billion, sharply slower than the 23% increase in the quarter a year ago.
Net income in the quarter fell to $15.1 billion from $16.4 billion and diluted earnings per share eased $1.17 from $1.23 a year ago.
Google advertising, which includes Google search, network ad YouTube ads, edged slightly lower to $54.5 billion from $54.7 billion and cloud ads increased to $7.4 billion from $5.8 billion a year ago.
Chipotle Mexican Grill, Inc rose 7.6% to $1,915.0 after the fast food chain operator reported higher earnings driven by new stores and price increases.
Total revenue in the first quarter increased 17.2% to $2.4 billion and comparable restaurant sales advanced 10.9%.
Net income increased to $291.6 million from $158.3 million and diluted earnings per share rose to $10.50 from $5.59 a year ago.
Corning Inc was unchanged at $32.89 after the optical fiber maker reported first quarter sales decreased 7% to $3.14 billion.
The company swung to a net income of $176 million from a loss of $36 million and diluted earnings per share was 20 cents compared to a loss of 4 cents a year ago.
The company forecasted second-quarter sales, earnings per share, and cash flow to increase sequentially, with core sales in the range of $3.4 billion to $3.6 billion and core earnings per share in the range of $0.42 to $0.49.
CoStar Group Inc rose 0.4% to $68.75 after the real estate information services provider reported higher revenue and bookings in the first quarter.
Revenue in the first quarter increased 13% to $584 million and net income declined to $87 million from $89 million and diluted earnings per share fell to 21 cents from 23 cents a year ago.
McDonald's Corp decreased 0.5% to $290.24 after the fast food chain reported a surge in sales and earnings.
Sales in the first quarter rose 4% to $5.9 billion and net income soared 63% to $1.8 billion from $1.1 billion and diluted earnings per share increased to $2.45, including 18 cents of restructuring charges, from $1.48 a year ago.
Global comparable store sales increased 12.6% and systemwide sales increased 9% from a year ago.
Microsoft Corp jumped 7.9% to $297.50 after the company said revenue in the March quarter increased 7% to $52.9 billion, driven by the jump in cloud segment revenue.
Cloud segment revenue increased $22.1 billion, productivity and business processes increased 11% to $17.5 billion and personal computing segment decreased 9% to $13.3 billion. Microsoft search and news advertising revenue excluding traffic acquisition costs increased 10% but Windows OEM revenue plunged 28%.
Net income increased to $18.3 billion from $16.7 billion and diluted earnings per share advanced to $2.45 from $2.22 a year ago.
Microsoft returned $9.7 billion to shareholders in the form of share repurchases and dividends in the third quarter of fiscal year 2023.
Tech Stocks and Broader Market Averages Rebounded After Microsoft Earnings Advanced
Barry Adams
26 Apr, 2023
New York City
Tech stocks led market averages higher After Microsoft reported better-than-expected earnings.
Big tech earnings dominated market sentiment and investors will have first chance to react to positive earnings from several companies including Boeing, Chipotle Mexican Grill and CoStar Group.
Despite the gloom and doom reported in financial media, publicly listed large and medium-sized corporations are reporting healthier quarterly results.
Microsoft revenue rose on the back of intelligent cloud segment revenue surge but the sale of Windows and Office products struggled with the weakness in personal computer sales.
Google's parent Alphabet also reported better-than-expected revenues despite weakness in advertising but cloud and other segment revenues supported the quarterly results.
Boeing reported mixed quarterly results and reaffirmed its 2023 outlook and Chipotle Mexican Grill quarterly earnings doubled on the back of new stores and price hikes.
On the economic front, investors are awaiting release of GDP data on Thursday and Personal Consumption Expenditure Price Index on Friday.
Mortgage Applications Rebounded
Mortgage applications increased 3.7% in the week ended April 21, rebounding from an 8.8% decline in the previous week, Mortgage Bankers Association reported Wednesday.
Mortgage application for the home purchase increased 4.6% and refinance advanced 1.7% in the period.
Mortgage rates increased for the second week in a row and touched to a one-month high on the expectations that the Federal Reserve will increase rate at its meeting next week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $726,200 or less increased 12 basis points to 6.55%, following a 13 bps rise in the previous week.
Indexes & Yields
The S&P 500 index futures increased 0.2% to 4,100.50 and the Nasdaq Composite index futures advanced 0.9% to 11,924.0.
The yield on 2-year Treasury notes inched up to 3.92%, 10-year Treasury notes rose to 3.42% and 30-year Treasury bonds held at 3.67%.
Crude oil fell 34 cents to $76.71 a barrel and natural gas prices eased a fraction to $2.33 a thermal unit.
Stock Movers
Microsoft Corp jumped 7.9% to $297.50 after the company said revenue in the March quarter increased 7% to $52.9 billion, driven by the jump in cloud segment revenue.
Cloud segment revenue increased $22.1 billion, productivity and business processes increased 11% to $17.5 billion and personal computing segment decreased 9% to $13.3 billion. Microsoft search and news advertising revenue excluding traffic acquisition costs increased 10% but Windows OEM revenue plunged 28%.
Net income increased to $18.3 billion from $16.7 billion and diluted earnings per share advanced to $2.45 from $2.22 a year ago.
Microsoft returned $9.7 billion to shareholders in the form of share repurchases and dividends in the third quarter of fiscal year 2023.
Alphabet Inc declined 1% to $102.80 after the parent of Google said revenue in the first quarter ending in March rose 3% to $69.8 billion, sharply slower than the 23% increase in the quarter a year ago.
Net income in the quarter fell to $15.1 billion from $16.4 billion and diluted earnings per share eased $1.17 from $1.23 a year ago.
Google advertising, which includes Google search, network ad YouTube ads, edged slightly lower to $54.5 billion from $54.7 billion and cloud ads increased to $7.4 billion from $5.8 billion a year ago.
Chipotle Mexican Grill, Inc rose 7.6% to $1,915.0 after the fast food chain operator reported higher earnings driven by new stores and price increases.
Total revenue in the first quarter increased 17.2% to $2.4 billion and comparable restaurant sales advanced 10.9%.
Net income increased to $291.6 million from $158.3 million and diluted earnings per share rose to $10.50 from $5.59 a year ago.
CoStar Group Inc rose 0.4% to $68.75 after the real estate information services provider reported higher revenue and bookings in the first quarter.
Revenue in the first quarter increased 13% to $584 million and net income declined to $87 million from $89 million and diluted earnings per share fell to 21 cents from 23 cents a year ago.
Europe Movers: Danone, Dassault, Orange, Safran, Standard Chartered
Bridgette Randall
26 Apr, 2023
Frankfurt
Danone SA increased 1% to €61.04 after the French yogurt and food products maker lifted its 2023 sales outlook.
Net sales in the first quarter increased 11.6% to €6.96 billion and sales rose 10.3% on a comparable basis from a year ago.
Sales in North America rose 11.6%, in China and North Asia rebounded 16% and rose 6.2% in France driven by higher sales in France, UK and Poland.
The company reiterated its full-year 2023 sales growth estimate between 4% and 6%.
Dassault Systemes SE dropped 7.8% to €34.51 despite the French software company reporting quarterly results that matched market expectations.
Total revenue in the first quarter rose 8% to €1.4 billion, driven by 10% increase in recurring revenue.
Operating margin dropped to 20.8% from 25.3% in the quarter year ago.
Net income in the quarter rose to Є367 million from Є362.3 million from and diluted earnings per share rose 1% to 28 cents from 27 cents on the non-IFRS basis.
The company guided second quarter revenue between €1.440 billion and €1.463 billion and diluted earnings per share between 27 euro cents and 28 euro cents.
Orange SA increased 1.9% to €11.66 after the French mobile telecom operator reported rising sales in the first quarter and the company reiterated its 2023 sales outlook.
Revenue in the first quarter increased 0.3% to €10.6 billion and adjusted operating earnings decreased 1.2% to €2.59 billion.
Safran SA fell 2.2% to €138.90 despite the aerospace company reporting sales increase of 29.4% to €5.3 billion, mainly fueled by propulsion and aircraft Interiors activities.
As a part of its stock repurchase program for 9.4 million shares, the company has acquired 6.9 million shares and announced its plan to acquire €350 million of its shares between April 11 and June 9.
Standard Chartered Plc rose 1.4% to 629.0 pence after the UK-based bank reported pre-tax profit in the first quarter increased 23%.
Operating revenue in the first quarter rose 8% to $4.4 billion and pre-tax income rose to $1.7 billion from $1.4 billion and net interest margin increased 5 basis points to 1.63%.
Economic Growth Worries Keep European Investors On Sidelines
Bridgette Randall
26 Apr, 2023
Frankfurt
European markets traded down on economic worries despite improving corporate performance in the region.
Market indexes were on the defensive for the second week in a row on the worries that higher interest rates and slowing business activities may negatively impact corporate earnings.
The latest batch of earnings suggested positive performance from companies in France, Germany and the UK.
The forward looking German consumer sentiment index improved to -25.7 for May from the revised prior reading of 29.3 in April, GfK Institute's data showed Wednesday.
The consumer sentiment was the highest since April 2022, reflecting higher income expectations and sharply lower energy inflation.
Indexes & Yields
The DAX index decreased 0.6% to 15,774.25, the CAC-40 index dropped 0.9% to 7,466.99 and the FTSE 100 index declined 0.3% to 7,871.08.
The yield on 10-year German Bunds eased to 2.34%, French bonds to 2.92%, the UK gilts to 3.68% and Italian bonds to 4.23%.
The euro edged higher to $1.10, the British pound to $1.246 and the Swiss franc to 88.91 cents.
Brent crude rose 5 cents to $80.83 a barrel and the Dutch TTF natural gas fell €1.38 to €38.45 per MWh.
Stock Movers
Danone SA increased 1% to €61.04 after the French yogurt and food products maker lifted its 2023 sales outlook.
Dassault Systemes SE dropped 7.8% to €34.51 despite the French software company reporting quarterly results that matched market expectations.
Orange SA increased 1.9% to €11.66 after the French mobile telecom operator reported rising sales in the first quarter and the company reiterated its 2023 sales outlook.
Safran SA fell 2.2% to €138.90 despite the aerospace company reporting sales increase of 29.4% to €5.3 billion, mainly fueled by propulsion and aircraft Interiors activities.
As a part of its stock repurchase program for 9.4 million shares, the company has acquired 6.9 million shares and announced its plan to acquire €350 million of its shares between April 11 and June 9.
Standard Chartered Plc rose 1.4% to 629.0 pence after the UK-based bank reported pre-tax profit in the first quarter increased 23%.
Operating revenue in the first quarter rose 8% to $4.4 billion and pre-tax income rose to $1.7 billion from $1.4 billion and net interest margin increased 5 basis points to 1.63%.