Market Update
Stocks Struggled With No End In Sight For Rate Hikes
Barry Adams
22 Feb, 2023
New York City
Stocks lacked direction as investors mulled the amount of future interest rate hikes after the release of the Fed minutes.
Fed policymakers supported an increase of target range for fed funds by 25 basis points at the monetary policy meeting held in February.
All participants supported that the rates may have to be revised higher for some time until the inflation showed a sustained decline towards the target rate of 2%.
The minutes showed that inflationary pressures have moderated but acknowledged price growth remains well above the 2% target set by the central bank, with tight labor market conditions fueling upward pressures on wages and prices.
Policymakers are set to meet for a two-day meeting starting on March 21 and investors are anticipating a rate hike of 25 basis points with some anticipating an increase of 50 basis points.
Rising bond yields have kept markets on the edge as investors are still uncertain about how high rates have to go to cool elevated inflation.
Despite eight interest rate hikes over the last twelve months, inflation is far above the Fed's preferred rate of 2% and goods price inflation has spread to services and acceleratred wage inflation.
The yield on 10-year Treasury notes is approaching 4% reached last year for the first time in fourteen years, threatening a 3-month old stock market rally.
U.S. Indexes and Yields
Stocks were under pressure a day after the worst single-day decline in 2023 and investors shifted focus to the latest batch of earnings.
Toll Brothers surpassed expectations and expressed confidence in the strength of the housing demand highlighting demographic and migration trends to the South and the company's land portfolio.
Palo Alto Networks jumped 11% after the company revised higher its full-year outlook and Coinbase fell despite the cryptocurrency exchange exceeding revenue expectations.
CoStar Group plunged as much as 15% in early trading after the real estate marketplace operator forecasted revenue growth in fiscal 2023 of 13%, slightly higher than the previous fiscal year's growth rate of 12%.
Intel Corporation declined 1% to $25.81 after the chipmaker announced a cut of 65.7% for its quarterly dividend to 12.5 cents from 36.5 cents, a first cut in dividend since 2000.
The dividend is payable on June 1 to stockholders of record on May 17.
The company also reaffirmed its 2023 first quarter adjusted earnings outlook of 15 cents and did not provide full-year guidance citing economic uncertainties.
The S&P 500 index increased 1.81 points to 3,999.15 and the Nasdaq Composite index advanced 19.95 points to 11,512.26.
The yield on 2-year Treasury notes edged lower to 4.66%, 10-year Treasury notes edged higher to 3.91% and 30-year Treasury bonds hovered near 3.92%.
Crude oil decreased $1.64 to $74.71 a barrel and natural gas futures increased 11 cents to $2.19 a thermal unit.
U.S. Movers
Toll Brothers Inc increased 3.7% to $57.77 after the luxury home builder reported better-than-expected earnings.
Home sales in the fiscal first quarter ending in January increased 4% to $1.7 billion.
In the quarter, the company delivered 1,826 homes, 5% fewer homes than in the previous year.
Net income increased to $191.5 million from $151.9 million and diluted earnings per share rose to $1.70 from $1.24 a year ago.
Backlog value of homes fell 21% to $8.6 billion and the number of homes in the backlog dropped 32% to 7,733.
The company reaffirmed its full-year fiscal 2023 guidance of an adjusted gross margin of 27.0% and $8.00 to $9.00 of earnings per share.
The homebuilder repurchased approximately 187,300 shares at an average price of $49.95 per share for a total purchase price of approximately $9.4 million.
CoStar Group Inc dropped 5.2% to $72.30 after the online real estate marketplace operator and information provider's current year outlook disappointed some investors.
Revenue in the fourth quarter increased 13% to $573 million and net income increased 34% to $124 million from $94 million a year ago.
Diluted earnings per share increased to 31 cents from 24 cents a year ago.
The real estate company expects revenue in the range of $2.46 billion to $2.48 billion for the full-year of 2023, representing an increase of 13% from the previous year at the midpoint of the range.
Revenue in the first quarter in the range of $575 million to $580 million, representing an increase of 12% from the previous year at the midpoint of the range.
The company also confirmed that it is no longer in discussion with News Corp regarding the purchase of Realtor.com.
European Markets Lacked Direction
European markets closed mixed after a day of lackluster trading.
Market sentiment was dominated by the latest corporate earnings releases with the lingering worries of rate hikes and state of consumer spending.
Investors were cautious ahead of the release of the U.S. Fed's latest minutes of meeting.
The minutes released after the close of market hours showed all policymakers supported the rate increase of 25 basis points and anticipated rates to continue to rise in future until the inflation is on the path towards a target rate of 2%.
Inflation reports from Germany and Italy showed that prices are expected to rise at elevated levels for some time but indicators of manufacturing and businesses showed improvements.
Germany's Business Climate Index Notched Up
Germany's IFO Business Climate Index increased to an eight-month 91.1 in February from a revised 90.1 in January, the data from the Munich-based Ifo showed Wednesday.
France's Manufacturing Confidence Improved
France's manufacturing confidence index increased for the third month in a row in February on the back of rising new orders, the statistical office Insee said Wednesday.
Italy's Inflation Eased In January
Italy's consumer price inflation in January eased to 10.0% from 11.6% in December, ISTAT report released on Wednesday showed.
Core inflation, which excludes energy and unprocessed food prices, accelerated to 6.0% in January from 5.8% in December.
The sharp decline in energy price inflation dragged the overall inflation rate in January.
Prices of regulated energy declined 12.0% in January from a whopping 70.2% surge in December, while those of non-regulated energy increased at a slower pace of 59.3%.
Service inflation increased to 4.2% in January from 4.1% in the previous month.
Germany's January Consumer Inflation Accelerated
Germany's consumer price inflation accelerated in January as previously estimated, the Federal Statistics Office Destatis confirmed today.
Consumer price inflation increased to 8.7% in January from the downwardly revised 8.1% in December.
Europe Indexes and Yields
The DAX index increased 2.27 points to 15,399.89, the CAC-40 index declined 9.39 points to 7,299.26 and the FTSE 100 index fell 0.6% or 47.12 points to 7,930.63.
The euro inched lower to $1.0603, the British pound held at $1.204 and the Swiss franc inched higher to 93.15 U.S. cents.
The yield on 10-year German Bunds increased to 2.53%, French bonds edged higher to 3.01%, the UK Gilts to 3.61% and Italian bonds edged up to 4.47%.
Brent crude oil decreased to $2.59 to $80.45 a barrel and the Dutch TTF natural gas spot price rose 4% to Є50.57 per MWh.
Europe Movers
Danone SA increased 4.5% to €54.66 after the French yogurt maker reported the fastest sales increase in more than a decade in 2022.
Revenue in the fourth quarter increased 12.3% to Є7.0 billion and comparable sales rose 7% and volume mix growth declined 4.4%.
In the full-year 2022, revenue increased 13.9% to 27.7 billion and comparable sales increased 7.8% and volume mix growth declined 0.8%.
Sales in North America increased 20.6% to €6.7 billion, in Europe increased 5.2% to €8.7 billion and rest of the world excluding China and North Asia increased 18.7% to €8.7 billion.
Net income in the full-year 2022 declined to €1.0 billion from €1.9 billion in 2021 or 1.48 from 2.94 a share respectively.
Lloyds Banking Group PLC decreased 2.6% to 49.62 pence after the British banking and insurance company reported flat annual income in 2022.
Total income in 2022 increased 14% to £18 billion from £15.7 billion and after-tax income declined 6% to £5.6 billion from £5.9 billion a year ago and diluted earnings per share fell to 7.3 pence from 7.50 pence a share respectively.
The financial services company announced its plan of a final dividend of 1.60 pence a share resulting in a total dividend of 2.40 pence and announced a new stock buyback plan in 2023 of £2 billion matching the repurchase in 2022 and 2021.
Rio Tinto plc declined 1.7% to 6,096.19 pence after the mining company cut its annual dividend and it reported a 38% decline in annual profit in 2022.
The Anglo-Australian mining company reiterated its unit production cost estimate for iron ore in 2023 between $21.0 and $22.50, slightly higher than $21.0 in 2022.
Pilbara iron ore production in 2023 is estimated to increase between 322 million tons and 335 million tons, higher than 320 million tons in 2022.
Consolidated revenue in 2022 declined to $55.6 billion from $63.5 billion and net income dropped to $13 billion from $22.6 billion and diluted earnings per share fell to $7.62 from $12.95 in the previous year.
Mining companies traded lower after metals prices weakened on the worries that the rebound in China's manufacturing activities may be slower than anticipated.
Glencore, Anglo American and Antofagasta declined between 2% and 3%.
Fresenius Medical SE & Co increased 7.4% to €39.8 after the dialysis services provider reported better-than-expected fourth quarter results.
Revenue in the fourth quarter increased 7% to €10.6 billion and net income fell 15% to €445 million.
In 2022, revenue increased 9% to €40.8 billion and net income fell 7% to €1.7 billion.
The company said it plans to separate its medical care company and continue to hold 32% stake in the newly separated company after the shareholder approval.
The medical care company will focus on medical care, biopharmaceuticals and medical technology units.
The company guided 2023 operating earnings in constant currency is expected to "remain broadly flat or decline up to a mid-single-digit percentage rate."
Stellantis NV rose 2.2% to €16.22 after the parent of Chrysler and Fiat posted better-than-expected annual results and announced a new stock repurchase plan.
Revenue in 2022 increased 18% to €179.6 billion and net profit rose 26% to €16.8 billion.
The company announced a stock repurchase program of €1.5 billion to be completed before the end of 2023 and €4.2 billion of ordinary dividend corresponding to €1.34 per share.
Industrial free cash flow in 2022 increased 78% to €10.8 billion from €6 billion in the previous year.
The automotive company estimated sales in North America, Europe and India and Middle East to increase by 5% in 2023.
Sales in South America are estimated to rise 3% and in China by 2% in 2023.
Vehicle sales in Europe to 2.6 million from 2.86 million and in North America slightly edged up to 1.86 million from 1.82 million in 2021.
Europe Movers: Danone, Fresenius Medical, Lloyds Banking, Rio Tinto, Stellantis
Bridgette Randall
22 Feb, 2023
Frankfurt
Danone SA increased 4.5% to €54.66 after the French yogurt maker reported the fastest sales increase in more than a decade in 2022.
Revenue in the fourth quarter increased 12.3% to Є7.0 billion and comparable sales rose 7% and volume mix growth declined 4.4%.
In the full-year 2022, revenue increased 13.9% to 27.7 billion and comparable sales increased 7.8% and volume mix growth declined 0.8%.
Sales in North America increased 20.6% to €6.7 billion, in Europe increased 5.2% to €8.7 billion and rest of the world excluding China and North Asia increased 18.7% to €8.7 billion.
Net income in the full-year 2022 declined to €1.0 billion from €1.9 billion in 2021 or 1.48 from 2.94 a share respectively.
Lloyds Banking Group PLC decreased 2.6% to 49.62 pence after the British banking and insurance company reported flat annual income in 2022.
Total income in 2022 increased 14% to £18 billion from £15.7 billion and after-tax income declined 6% to £5.6 billion from £5.9 billion a year ago and diluted earnings per share fell to 7.3 pence from 7.50 pence a share respectively.
The financial services company announced its plan of a final dividend of 1.60 pence a share resulting in a total dividend of 2.40 pence and announced a new stock buyback plan in 2023 of £2 billion matching the repurchase in 2022 and 2021.
Rio Tinto plc declined 1.7% to 6,096.19 pence after the mining company cut its annual dividend and it reported a 38% decline in annual profit in 2022.
The Anglo-Australian mining company reiterated its unit production cost estimate for iron ore in 2023 between $21.0 and $22.50, slightly higher than $21.0 in 2022.
Pilbara iron ore production in 2023 is estimated to increase between 322 million tons and 335 million tons, higher than 320 million tons in 2022.
Consolidated revenue in 2022 declined to $55.6 billion from $63.5 billion and net income dropped to $13 billion from $22.6 billion and diluted earnings per share fell to $7.62 from $12.95 in the previous year.
Mining companies traded lower after metals prices weakened on the worries that the rebound in China's manufacturing activities may be slower than anticipated.
Glencore, Anglo American and Antofagasta declined between 2% and 3%.
Fresenius Medical SE & Co increased 7.4% to €39.8 after the dialysis services provider reported better-than-expected fourth quarter results.
Revenue in the fourth quarter increased 7% to €10.6 billion and net income fell 15% to €445 million.
In 2022, revenue increased 9% to €40.8 billion and net income fell 7% to €1.7 billion.
The company said it plans to separate its medical care company and continue to hold 32% stake in the newly separated company after the shareholder approval.
The medical care company will focus on medical care, biopharmaceuticals and medical technology units.
The company guided 2023 operating earnings in constant currency is expected to "remain broadly flat or decline up to a mid-single-digit percentage rate."
Stellantis NV rose 2.2% to €16.22 after the parent of Chrysler and Fiat posted better-than-expected annual results and announced a new stock repurchase plan.
Revenue in 2022 increased 18% to €179.6 billion and net profit rose 26% to €16.8 billion.
The company announced a stock repurchase program of €1.5 billion to be completed before the end of 2023 and €4.2 billion of ordinary dividend corresponding to €1.34 per share.
Industrial free cash flow in 2022 increased 78% to €10.8 billion from €6 billion in the previous year.
The automotive company estimated sales in North America, Europe and India and Middle East to increase by 5% in 2023.
Sales in South America are estimated to rise 3% and in China by 2% in 2023.
Vehicle sales in Europe to 2.6 million from 2.86 million and in North America slightly edged up to 1.86 million from 1.82 million in 2021.
Business Climate In Germany and France Improved Despite Elevated Inflation
Bridgette Randall
22 Feb, 2023
Frankfurt
European markets closed mixed after a day of lackluster trading.
Market sentiment was dominated by the latest corporate earnings releases with the lingering worries of rate hikes and state of consumer spending.
Investors were cautious ahead of the release of the U.S. Fed's latest minutes of meeting.
The minutes released after the close of market hours showed all policymakers supported the rate increase of 25 basis points and anticipated rates to continue to rise in future until the inflation is on the path towards a target rate of 2%.
Inflation reports from Germany and Italy showed that prices are expected to rise at elevated levels for some time but indicators of manufacturing and businesses showed improvements.
Germany's Business Climate Index Notched Up
Germany's IFO Business Climate Index increased to an eight-month 91.1 in February from a revised 90.1 in January, the data from the Munich-based Ifo showed Wednesday.
France's Manufacturing Confidence Improved
France's manufacturing confidence index increased for the third month in a row in February on the back of rising new orders, the statistical office Insee said Wednesday.
Italy's Inflation Eased In January
Italy's consumer price inflation in January eased to 10.0% from 11.6% in December, ISTAT report released on Wednesday showed.
Core inflation, which excludes energy and unprocessed food prices, accelerated to 6.0% in January from 5.8% in December.
The sharp decline in energy price inflation dragged the overall inflation rate in January.
Prices of regulated energy declined 12.0% in January from a whopping 70.2% surge in December, while those of non-regulated energy increased at a slower pace of 59.3%.
Service inflation increased to 4.2% in January from 4.1% in the previous month.
Germany's January Consumer Inflation Accelerated
Germany's consumer price inflation accelerated in January as previously estimated, the Federal Statistics Office Destatis confirmed today.
Consumer price inflation increased to 8.7% in January from the downwardly revised 8.1% in December.
Europe Indexes and Yields
The DAX index increased 2.27 points to 15,399.89, the CAC-40 index declined 9.39 points to 7,299.26 and the FTSE 100 index fell 0.6% or 47.12 points to 7,930.63.
The euro inched lower to $1.0603, the British pound held at $1.204 and the Swiss franc inched higher to 93.15 U.S. cents.
The yield on 10-year German Bunds increased to 2.53%, French bonds edged higher to 3.01%, the UK Gilts to 3.61% and Italian bonds edged up to 4.47%.
Brent crude oil decreased to $2.59 to $80.45 a barrel and the Dutch TTF natural gas spot price rose 4% to Є50.57 per MWh.
Europe Movers
Danone SA increased 4.5% to €54.66 after the French yogurt maker reported the fastest sales increase in more than a decade in 2022.
Revenue in the fourth quarter increased 12.3% to Є7.0 billion and comparable sales rose 7% and volume mix growth declined 4.4%.
In the full-year 2022, revenue increased 13.9% to 27.7 billion and comparable sales increased 7.8% and volume mix growth declined 0.8%.
Sales in North America increased 20.6% to €6.7 billion, in Europe increased 5.2% to €8.7 billion and rest of the world excluding China and North Asia increased 18.7% to €8.7 billion.
Net income in the full-year 2022 declined to €1.0 billion from €1.9 billion in 2021 or 1.48 from 2.94 a share respectively.
Lloyds Banking Group PLC decreased 2.6% to 49.62 pence after the British banking and insurance company reported flat annual income in 2022.
Total income in 2022 increased 14% to £18 billion from £15.7 billion and after-tax income declined 6% to £5.6 billion from £5.9 billion a year ago and diluted earnings per share fell to 7.3 pence from 7.50 pence a share respectively.
The financial services company announced its plan of a final dividend of 1.60 pence a share resulting in a total dividend of 2.40 pence and announced a new stock buyback plan in 2023 of £2 billion matching the repurchase in 2022 and 2021.
Rio Tinto plc declined 1.7% to 6,096.19 pence after the mining company cut its annual dividend and it reported a 38% decline in annual profit in 2022.
The Anglo-Australian mining company reiterated its unit production cost estimate for iron ore in 2023 between $21.0 and $22.50, slightly higher than $21.0 in 2022.
Pilbara iron ore production in 2023 is estimated to increase between 322 million tons and 335 million tons, higher than 320 million tons in 2022.
Consolidated revenue in 2022 declined to $55.6 billion from $63.5 billion and net income dropped to $13 billion from $22.6 billion and diluted earnings per share fell to $7.62 from $12.95 in the previous year.
Mining companies traded lower after metals prices weakened on the worries that the rebound in China's manufacturing activities may be slower than anticipated.
Glencore, Anglo American and Antofagasta declined between 2% and 3%.
Fresenius Medical SE & Co increased 7.4% to €39.8 after the dialysis services provider reported better-than-expected fourth quarter results.
Revenue in the fourth quarter increased 7% to €10.6 billion and net income fell 15% to €445 million.
In 2022, revenue increased 9% to €40.8 billion and net income fell 7% to €1.7 billion.
The company said it plans to separate its medical care company and continue to hold 32% stake in the newly separated company after the shareholder approval.
The medical care company will focus on medical care, biopharmaceuticals and medical technology units.
The company guided 2023 operating earnings in constant currency is expected to "remain broadly flat or decline up to a mid-single-digit percentage rate."
Stellantis NV rose 2.2% to €16.22 after the parent of Chrysler and Fiat posted better-than-expected annual results and announced a new stock repurchase plan.
Revenue in 2022 increased 18% to €179.6 billion and net profit rose 26% to €16.8 billion.
The company announced a stock repurchase program of €1.5 billion to be completed before the end of 2023 and €4.2 billion of ordinary dividend corresponding to €1.34 per share.
Industrial free cash flow in 2022 increased 78% to €10.8 billion from €6 billion in the previous year.
The automotive company estimated sales in North America, Europe and India and Middle East to increase by 5% in 2023.
Sales in South America are estimated to rise 3% and in China by 2% in 2023.
Vehicle sales in Europe to 2.6 million from 2.86 million and in North America slightly edged up to 1.86 million from 1.82 million in 2021.
Movers: Coinbase, CoStar Group, Dillard's, Haverty Furniture, Intel, Palo Alto Networks, Toll Brothers
Scott Peters
22 Feb, 2023
New York City
Coinbase Global Inc declined 6.4% to $58.12 despite the cryptocurrency exchange exceeding revenue expectations.
Revenue in the fourth quarter declined to $605 million from $2.5 billion a year ago and the company swung to a loss of $557 million from $840 million a year ago.
Diluted loss per share was $2.46 compared to a profit of $3.32 in the previous year.
In 2022, revenue declined to $3.2 billion from $7.8 billion and the company reported a loss of $2.6 billion compared to a profit of $3.2 billion a year ago.
Diluted loss per share was $11.83 compared to a profit of $14.50 in the previous year.
The company said 2022 total trading volumes and transaction revenues declined 50% and 66% from the previous year, respectively.
CoStar Group Inc dropped 5.2% to $72.30 after the online real estate marketplace operator and information provider's current year outlook disappointed some investors.
Revenue in the fourth quarter increased 13% to $573 million and net income increased 34% to $124 million from $94 million a year ago.
Diluted earnings per share increased to 31 cents from 24 cents a year ago.
The real estate company expects revenue in the range of $2.46 billion to $2.48 billion for the full-year of 2023, representing an increase of 13% from the previous year at the midpoint of the range.
Revenue in the first quarter in the range of $575 million to $580 million, representing an increase of 12% from the previous year at the midpoint of the range.
The company also confirmed that it is no longer in discussion with News Corp regarding the purchase of Realtor.com.
Dillard's Inc increased 1.5% to $342.16 after the retailer said comparable store sales were unchanged and inventories rose 4% from the previous year.
Revenue in the fourth quarter was flat at $2.1 billion and net income declined to $289.2 million from $321.2 million a year ago.
The latest quarterly earnings included pre-tax gain of $13.8 million, after-tax gain of $10.8 million or 63 cents a share, and tax benefits of $16.3 million linked to dividend payments linked to employee stock plan and $13.6 million related to state net carry loss forward.
Diluted earnings per share increased to $16.89 from $16.61 in the previous year.
In 2022, sales increased 5% to $6.7 billion from $6.6 billion and net income rose to $891.6 million from $862.5 million and diluted earnings per share increased to $50.81 from $41.88 a year ago.
Haverty Furniture Companies, Inc increased 6.4% to $37.27 after the retailer reported comparable store sales increased 5.8% in the fourth quarter.
Revenue in the fourth quarter increased 5.5% to $280.6 million and net income declined to $23.7 million from $24.2 million a year ago.
Diluted earnings per share increased to $1.45 from $1.35 in the previous year.
In 2022, revenue slightly edged up to $1.4 billion from $1.01 billion and net income edged lower to $89.4 million from $90.8 million or diluted earnings per share increased to $5.24 from $4.90 in the previous year.
Average sales ticket in 2022 increased to $3,171 from $2,865 in 2021 and sales per square foot rose to $256 from $232 in respective years.
Intel Corporation declined 1% to $25.81 after the chipmaker announced a cut of 65.7% for its quarterly dividend to 12.5 cents from 36.5 cents, a first cut in dividend since 2000.
The dividend is payable on June 1 to stockholders of record on May 17.
The company also reaffirmed its 2023 first quarter adjusted earnings outlook of 15 cents and did not provide full-year guidance citing economic uncertainties.
Palo Alto Networks Inc jumped 11.8% to $186.66 after the company revised higher its full-year outlook.
Revenue in the fiscal second quarter ending in January increased 26% to $1.7 billion and the company swung to a net income of $84.2 million from a loss of $93.5 million a year ago.
Diluted earnings per share was 25 cents compared to a loss of 32 cents in the previous year.
The cyber security company lifted its full-year revenue to increase between 25% and 26% in the range of $6.85 billion and $6.91 billion and total billings in the range of $9.1 billion and $9.2 billion.
Toll Brothers Inc increased 3.7% to $57.77 after the luxury home builder reported better-than-expected earnings.
Home sales in the fiscal first quarter ending in January increased 4% to $1.7 billion.
In the quarter, the company delivered 1,826 homes, 5% fewer homes than in the previous year.
Net income increased to $191.5 million from $151.9 million and diluted earnings per share rose to $1.70 from $1.24 a year ago.
Backlog value of homes fell 21% to $8.6 billion and the number of homes in the backlog dropped 32% to 7,733.
The company reaffirmed its full-year fiscal 2023 guidance of an adjusted gross margin of 27.0% and $8.00 to $9.00 of earnings per share.
The homebuilder repurchased approximately 187,300 shares at an average price of $49.95 per share for a total purchase price of approximately $9.4 million.
With Fed Minutes In Focus, Investors React to Latest Earnings
Barry Adams
22 Feb, 2023
New York City
Stocks lacked direction as investors mulled the amount of future interest rate hikes ahead of the release of minutes of meeting later in the day.
The Fed minutes are scheduled to be released at 2:00 p.m. ET and investors are looking for clues about how long elevated rates are likely to stay.
Rising bond yields have kept markets on the edge as investors are still uncertain about how high rates have to go to cool elevated inflation.
Despite eight interest rate hikes over the last twelve months, inflation is far above the Fed's preferred rate of 2%.
Stocks were under pressure a day after the worst single-day decline in 2023 and investors shifted focus to the latest batch of earnings.
Toll Brothers surpassed expectations and expressed confidence in the strength of the housing demand highlighting demographic and migration trends to the South and the company's land portfolio.
Palo Alto Networks jumped 11% after the company revised higher its full-year outlook and Coinbase fell despite the cryptocurrency exchange exceeding revenue expectations.
CoStar Group plunged as much as 15% in early trading after the real estate marketplace operator forecasted revenue growth in fiscal 2023 of 13%, slightly higher than the previous fiscal year's growth rate of 12%.
Intel Corporation declined 1% to $25.81 after the chipmaker announced a cut of 65.7% for its quarterly dividend to 12.5 cents from 36.5 cents, a first cut in dividend since 2000.
The dividend is payable on June 1 to stockholders of record on May 17.
The company also reaffirmed its 2023 first quarter adjusted earnings outlook of 15 cents and did not provide full-year guidance citing economic uncertainties.
U.S. Indexes and Yields
The S&P 500 index increased 1.81 points to 3,999.15 and the Nasdaq Composite index advanced 19.95 points to 11,512.26.
The yield on 2-year Treasury notes edged lower to 4.66%, 10-year Treasury notes edged higher to 3.91% and 30-year Treasury bonds hovered near 3.92%.
Crude oil decreased $1.64 to $74.71 a barrel and natural gas futures increased 11 cents to $2.19 a thermal unit.
U.S. Movers
Toll Brothers Inc increased 3.7% to $57.77 after the luxury home builder reported better-than-expected earnings.
Home sales in the fiscal first quarter ending in January increased 4% to $1.7 billion.
In the quarter, the company delivered 1,826 homes, 5% fewer homes than in the previous year.
Net income increased to $191.5 million from $151.9 million and diluted earnings per share rose to $1.70 from $1.24 a year ago.
Backlog value of homes fell 21% to $8.6 billion and the number of homes in the backlog dropped 32% to 7,733.
The company reaffirmed its full-year fiscal 2023 guidance of an adjusted gross margin of 27.0% and $8.00 to $9.00 of earnings per share.
The homebuilder repurchased approximately 187,300 shares at an average price of $49.95 per share for a total purchase price of approximately $9.4 million.
CoStar Group Inc dropped 5.2% to $72.30 after the online real estate marketplace operator and information provider's current year outlook disappointed some investors.
Revenue in the fourth quarter increased 13% to $573 million and net income increased 34% to $124 million from $94 million a year ago.
Diluted earnings per share increased to 31 cents from 24 cents a year ago.
The real estate company expects revenue in the range of $2.46 billion to $2.48 billion for the full-year of 2023, representing an increase of 13% from the previous year at the midpoint of the range.
Revenue in the first quarter in the range of $575 million to $580 million, representing an increase of 12% from the previous year at the midpoint of the range.
The company also confirmed that it is no longer in discussion with News Corp regarding the purchase of Realtor.com.
After Retailer Earnings, Investors Fear Not So Resilient Consumer Spending
Barry Adams
21 Feb, 2023
New York City
Market indexes registered the worst day in 2023 after interest rate worries lifted bond yields to a four-month high.
After 3-day weekend, benchmark indexes opened lower and steadily drifted to new lows every hour following the rebound in bond yields and energy prices drifted to new one-year lows.
The yield on 10-year Treasury notes inched closer to 4.0%, the level seen in last November, after retailers Walmart and Home Depot posted strong results but guided weaker growth.
The growth outlook from two retail giants put investors on the defensive on the worries that higher interest rates and inflation may have started affecting consumer spending.
Home Depot fell 6% after the home improvement retailer missed the quarterly revenue estimate and the retailer estimated flat sales in the current fiscal year.
Investors were also on the backfoot after tensions continued to rise between the two superpowers of the world, U.S. and China.
U.S. Secretary of State Antony Blinken in an interview on Sunday raised the prospects of "Chinese companies providing non-lethal support to Russia for use in Ukraine."
Last Saturday, on the sidelines of the Munich Security Conference, the meeting between Secretary Blinken and Chinese Director of the Office of the Central Foreign Affairs Commission Wang Yi failed to calm down the rising tensions.
Relations between the U.S. and China are at low not seen in decades after China ramps up its military influence in North Asia and tightened its dominance in rare metals markets.
China has not criticized Russia's invasion of Ukraine and the second largest economic power has a long term ambition to regain control of renegade province Taiwan.
U.S. Existing Home Sales Declined 12th Straight Month
Existing home sales declined for the twelfth month in a row in January after home affordability kept buyers away.
Sales of single-family homes, condominiums and co-ops declined 0.7% from the previous month in January to a seasonally adjusted annual rate of 4 million.
Sales plunged 36.9% from the previous year and median price of a home increased 1.3% from a year ago to $359,000.
“Home sales are bottoming out,” said NAR Chief Economist Lawrence Yun.
“Prices vary depending on a market’s affordability, with lower-priced regions witnessing modest growth and more expensive regions experiencing declines.”
Homes available for sale at the end of January increased 2.1% from December and 15.3% from a year ago to 980,000.
U.S. Markets In Review
The S&P 500 index decreased 2.0% to 3,997.34 and the Nasdaq Composite index dropped 2.50% to 11,492.30.
The yield on 2-year Treasury notes increased to 4.73%, 10-year Treasury yields jumped to 3.95% and 30-year Treasury bonds jumped to 3.97%.
Crude oil and natural gas prices declined on the first day of trading this week and natural gas prices dropped below $2 a thermal unit, the first time since September 2020.
Crude oil declined $1.20 to $75.99 a barrel and natural gas futures declined 16 cents to $2.07 a thermal unit.
Walmart and Home Depot Results Dent Sentiment
Home Depot fell 6% to $298.77 after the home improvement retailer reported weaker-than-expected quarterly results.
The retailer said revenue in the fiscal fourth quarter ending in January increased 0.3% to $35.8 billion from the previous year.
Comparable sales for the fourth quarter fell 0.3% and comparable sales in the U.S. decreased 0.3%.
Net earnings for the fourth quarter were $3.4 billion or $3.30 per diluted share compared with net earnings of $3.4 billion or $3.21 per diluted share a year ago.
The home improvement retailer said sales and comparable sales growth to be approximately flat compared to fiscal 2022 as consumers shift aways from goods to services.
Walmart Inc increased 0.7% to $147.56 after the discount retailer reported strong quarterly results as high income consumers search for bargains in the face of high inflation.
Total revenues in the fourth quarter rose 7.9% to $164 billion and comparable sales in the U.S. rose 8.3% from the previous year and 13.9% from two-years ago.
Sam’s Club comparable sales increased 12.2% from a year ago and 22.6% in two years and membership income increased 7.1% to and membership count rose to a record high.
Total transactions at Walmart U.S. locations increased 1.8% and average ticket size rose 6.3% from a year ago.
Consolidated net income soared 76% to $6.3 billion from $3.6 billion and diluted earnings per share rose to $2.32 from $1.28 in the previous year.
The company estimated fiscal 2024 comparable sales at Walmart U.S. locations to grow between 2% and 2.5%, slower than the 6.6% increase in the previous year.
Consolidated sales in the fiscal 2024 are estimated to rise between 2.5% and 3.0%, compared to 6.7% in the prior year.
Rate Worries Drag European Markets Lower
Benchmark indexes in Europe closed down after choppy sessions on the worries that high inflation and rising interest rates are beginning to negatively impact consumer spending.
Despite the two economic reports showing improving business sentiment in Germany and economic activities in the Euro Area, market indexes sold off.
German Economic Confidence Index Rose 5th Month
Germany's economic sentiment improved for the fifth month in a row in February to 281. from 16.9 in January, the Manheim-based think tank ZEW said in a report today.
The Inflation expectations in the Euro Area remained almost constant at a level of minus 83.4 points.
Euro Area Business Activities Expanded at Fastest Pace In Nine Months
The Euro Area business activities rose at the fastest pace in nine months in February after service sector activities improved and the manufacturing sector returned to expansion, S&P Global noted in its purchasing managers' survey Tuesday.
The preliminary composite output index increased more-than-expected to 52.3 in February from 50.3 in the previous month.
The services Purchasing Managers' Index increased to 53.0, up from 50.8 in January.
The manufacturing PMI unexpectedly fell to a two-month low of 48.5 from 48.8 in the previous month but the manufacturing output index increased to 50.4 from 48.9 in the previous month.
Any reading higher than 50 indicates expansion and lower shows contraction in growth rates.
Swiss international goods trade surplus expanded to Sfr 3.12 billion in January from Sfr 2.82 billion in December, the Federal Customs Administration reported Tuesday.
In nominal terms, exports increased 2.2% led by a 6.1% rise in chemicals and pharmaceuticals exports followed by a 4.0% increase in shipment of precision instruments. however, jewellery exports dropped 13.1%
Watch exports rose 8.6% to Sfr 1.9 billion, according to the Federation of the Swiss Watch Industry.
U.S. China Tensions Stay Elevated
Investors were also on the backfoot after tensions continued to rise between the two superpowers of the world, U.S. and China.
U.S. Secretary of State Antony Blinken in an interview on Sunday raised the prospects of "Chinese companies providing non-lethal support to Russia for use in Ukraine."
On the sidelines of the Munich Security Conference, the meeting between Secretary Blinken and Chinese Director of the Office of the Central Foreign Affairs Commission Wang Yi failed to calm down the rising tensions.
European Indexes and Yields
The DAX index declined 0.5% to 15,397.62, the CAC-40 index fell 0.4% to 7,308.65 and the FTSE 100 index dropped 0.5% to 7,977.75.
The euro edged lower to $1.06, the British pound inched up to $1.2107 and the Swiss franc edged higher to 92.74 U.S. cents.
The yield on 10-year German Bunds increased to 2.55%, French bonds rose to 3.02%, the UK Gilts to 3.63% and Italian bonds to 4.47%.
Brent crude oil eased $1.41 to $82.65 a barrel and the Dutch TTF natural gas spot price fell 2.6% to Є48.67 per MWh.
Europe Stock Movers
HSBC Holdings Plc declined 1.8% to 609.50 pence despite the global bank reported a rise in earnings.
Fourth quarter revenue increased 24% to $14.9 billion and profit before-tax increased by $2.5 billion to $5.2 billion.
Estimated credit losses in the quarter jumped to $1.4 billion from $0.5 billion largely because of the exposure to commercial real estate in mainland China and UK corporate loans.
The company estimated net interest income in 2023 of at least $36 billion and the global bank revised higher credit impairment charges to 40 basis points from 30 basis points.
In 2022, revenue increased 4% to $51.7 billion and pre-tax income fell by $1.4 billion to $17.5 billion.
Profit after-tax increased $2.0 billion to $16.7 billion, including a $2.2 billion credit linked to the recognition of a deferred tax asset.
Intercontinental Hotels Group declined 1.2% to 5,526.88 pence despite the UK-based hotel chain reporting a surge in revenue and earnings and announced a stock repurchase program.
The company plans to repurchase $750 million of its stock in 2023 and increased its final dividend by 10% to 94.5 U.S. cents, resulting in a total dividend of 138.4 cents.
Total revenues increased 34% to $3.8 billion and operating income rose 27% to $628 million from the previous year.
Diluted earnings per share increased to 207.2 cents from 145.4 cents in the previous year.
Credit Suisse AG declined 4.2% to Sfr 2.66 after the Swiss Financial Market Supervisory Authority, Finma, said it plans to review the recent statement from the company's chairman Axel Lehman.
Chairman Lehman had indicated in the statement that the net asset outflows stabilized in December.
Smith Nephew Plc increased 4.2% to 1,210.50 pence after the company reported a less-than-expected drop in annual profit.
Fourth quarter revenue increased 1.4% to $1.37 billion from the previous year.
Revenue in 2022 increased 0.1% to $5.2 billion and operating profit declined to $450 million from $593 million and diluted earnings per share fell to 25.5 cents from 59.8 cents a year ago.
Europe Movers: Credit Suisse, HSBC, IHG, Smith & Nephew
Bridgette Randall
21 Feb, 2023
Frankfurt
HSBC Holdings Plc declined 1.8% to 609.50 pence despite the global bank reported a rise in earnings.
Fourth quarter revenue increased 24% to $14.9 billion and profit before-tax increased by $2.5 billion to $5.2 billion.
Estimated credit losses in the quarter jumped to $1.4 billion from $0.5 billion largely because of the exposure to commercial real estate in mainland China and UK corporate loans.
The company estimated net interest income in 2023 of at least $36 billion and the global bank revised higher credit impairment charges to 40 basis points from 30 basis points.
In 2022, revenue increased 4% to $51.7 billion and pre-tax income fell by $1.4 billion to $17.5 billion.
Profit after-tax increased $2.0 billion to $16.7 billion, including a $2.2 billion credit linked to the recognition of a deferred tax asset.
Intercontinental Hotels Group declined 1.2% to 5,526.88 pence despite the UK-based hotel chain reporting a surge in revenue and earnings and announced a stock repurchase program.
The company plans to repurchase $750 million of its stock in 2023 and increased its final dividend by 10% to 94.5 U.S. cents, resulting in a total dividend of 138.4 cents.
Total revenues increased 34% to $3.8 billion and operating income rose 27% to $628 million from the previous year.
Diluted earnings per share increased to 207.2 cents from 145.4 cents in the previous year.
Credit Suisse AG declined 4.2% to Sfr 2.66 after the Swiss Financial Market Supervisory Authority, Finma, said it plans to review the recent statement from the company's chairman Axel Lehman.
Chairman Lehman had indicated in the statement that the net asset outflows stabilized in December.
Smith Nephew Plc increased 4.2% to 1,210.50 pence after the company reported a less-than-expected drop in annual profit.
Fourth quarter revenue increased 1.4% to $1.37 billion from the previous year.
Revenue in 2022 increased 0.1% to $5.2 billion and operating profit declined to $450 million from $593 million and diluted earnings per share fell to 25.5 cents from 59.8 cents a year ago.
Euro Area Business Activities Expanded But Interest Rate Worries Overshadowed Stocks
Bridgette Randall
21 Feb, 2023
Frankfurt
Benchmark indexes in Europe closed down after choppy sessions on the worries that high inflation and rising interest rates are beginning to negatively impact consumer spending.
Despite the two economic reports showing improving business sentiment in Germany and economic activities in the Euro Area, market indexes sold off.
German Economic Confidence Index Rose 5th Month
Germany's economic sentiment improved for the fifth month in a row in February to 281. from 16.9 in January, the Manheim-based think tank ZEW said in a report today.
The Inflation expectations in the Euro Area remained almost constant at a level of minus 83.4 points.
Euro Area Business Activities Grows at Fastest Pace In Nine Months
The Euro Area business activities rose at the fastest pace in nine months in February after service sector activities improved and the manufacturing sector returned to expansion, S&P Global noted in its purchasing managers' survey Tuesday.
The preliminary composite output index increased more-than-expected to 52.3 in February from 50.3 in the previous month.
The services Purchasing Managers' Index increased to 53.0, up from 50.8 in January.
The manufacturing PMI unexpectedly fell to a two-month low of 48.5 from 48.8 in the previous month but the manufacturing output index increased to 50.4 from 48.9 in the previous month.
Any reading higher than 50 indicates expansion and lower shows contraction in growth rates.
Swiss international goods trade surplus expanded to Sfr 3.12 billion in January from Sfr 2.82 billion in December, the Federal Customs Administration reported Tuesday.
In nominal terms, exports increased 2.2% led by a 6.1% rise in chemicals and pharmaceuticals exports followed by a 4.0% increase in shipment of precision instruments. however, jewellery exports dropped 13.1%
Watch exports rose 8.6% to Sfr 1.9 billion, according to the Federation of the Swiss Watch Industry.
U.S. China Tensions Stay Elevated
Investors were also on the backfoot after tensions continued to rise between the two superpowers of the world, U.S. and China.
U.S. Secretary of State Antony Blinken in an interview on Sunday raised the prospects of "Chinese companies providing non-lethal support to Russia for use in Ukraine."
On the sidelines of the Munich Security Conference, the meeting between Secretary Blinken and Chinese Director of the Office of the Central Foreign Affairs Commission Wang Yi failed to calm down the rising tensions.
European Indexes and Yields
The DAX index declined 0.5% to 15,397.62, the CAC-40 index fell 0.4% to 7,308.65 and the FTSE 100 index dropped 0.5% to 7,977.75.
The euro edged lower to $1.06, the British pound inched up to $1.2107 and the Swiss franc edged higher to 92.74 U.S. cents.
The yield on 10-year German Bunds increased to 2.55%, French bonds rose to 3.02%, the UK Gilts to 3.63% and Italian bonds to 4.47%.
Brent crude oil eased $1.41 to $82.65 a barrel and the Dutch TTF natural gas spot price fell 2.6% to Є48.67 per MWh.
Europe Stock Movers
HSBC Holdings Plc declined 1.8% to 609.50 pence despite the global bank reported a rise in earnings.
Fourth quarter revenue increased 24% to $14.9 billion and profit before-tax increased by $2.5 billion to $5.2 billion.
Estimated credit losses in the quarter jumped to $1.4 billion from $0.5 billion largely because of the exposure to commercial real estate in mainland China and UK corporate loans.
The company estimated net interest income in 2023 of at least $36 billion and the global bank revised higher credit impairment charges to 40 basis points from 30 basis points.
In 2022, revenue increased 4% to $51.7 billion and pre-tax income fell by $1.4 billion to $17.5 billion.
Profit after-tax increased $2.0 billion to $16.7 billion, including a $2.2 billion credit linked to the recognition of a deferred tax asset.
Intercontinental Hotels Group declined 1.2% to 5,526.88 pence despite the UK-based hotel chain reporting a surge in revenue and earnings and announced a stock repurchase program.
The company plans to repurchase $750 million of its stock in 2023 and increased its final dividend by 10% to 94.5 U.S. cents, resulting in a total dividend of 138.4 cents.
Total revenues increased 34% to $3.8 billion and operating income rose 27% to $628 million from the previous year.
Diluted earnings per share increased to 207.2 cents from 145.4 cents in the previous year.
Credit Suisse AG declined 4.2% to Sfr 2.66 after the Swiss Financial Market Supervisory Authority, Finma, said it plans to review the recent statement from the company's chairman Axel Lehman.
Chairman Lehman had indicated in the statement that the net asset outflows stabilized in December.
Smith Nephew Plc increased 4.2% to 1,210.50 pence after the company reported a less-than-expected drop in annual profit.
Fourth quarter revenue increased 1.4% to $1.37 billion from the previous year.
Revenue in 2022 increased 0.1% to $5.2 billion and operating profit declined to $450 million from $593 million and diluted earnings per share fell to 25.5 cents from 59.8 cents a year ago.
Movers: Copart, Expeditors Intnl, Home Depot, Nordson, Walmart
Scott Peters
21 Feb, 2023
New York City
Copart, Inc increased 0.7% to $68.85 after the online auctions services provider met investors' expectations.
Revenue in the fiscal second quarter ending in January increased 10.9% to $956.7 million and net income rose to 2.2% to $23.2 million compared to $287.4 million a year ago.
Diluted earnings per share increased to 62 cents from 61 cents a year ago.
The company said used car prices on its auction platform have jumped 55% over the last three years to 2022.
Expeditors International of Washington Inc declined 5.5% to $105.25 after the logistics services provider reported a sharp decline in earnings and revenue in its latest quarter.
Revenue in the fourth quarter fell 36% to $3.6 billion and net income dropped 52% to $219 million from $452.8 million and diluted earnings per share declined 48% to $1.38 compared to $2.69 in the previous year.
The demand for goods from North Asia plunged sharply after the U.S. customers retrenched in the face of elevated inflation and looming economic slowdown worries.
“As pandemic-related bottlenecks eased and air and ocean supply/demand imbalances began to dissipate in the first half of the year, average buy and sell rates progressively declined to varying degrees, as they typically do – until they suddenly began to plummet simultaneously and faster than we would have expected in the fourth quarter,” said Jeffrey S. Musser, President and Chief Executive Officer.
Home Depot Inc fell 6% to $298.77 after the home improvement retailer reported weaker-than-expected quarterly results.
The retailer said revenue in the fiscal fourth quarter ending in January increased 0.3% to $35.8 billion from the previous year.
Comparable sales for the fourth quarter fell 0.3% and comparable sales in the U.S. decreased 0.3%.
Net earnings for the fourth quarter were $3.4 billion or $3.30 per diluted share compared with net earnings of $3.4 billion or $3.21 per diluted share a year ago.
The home improvement retailer said sales and comparable sales growth to be approximately flat compared to fiscal 2022 as consumers shift aways from goods to services.
Nordson Corp dropped 13.8% to $212.25 after the maker of adhesive dispensing equipment reported quarterly results below expectations.
Revenue in the fiscal first quarter ending in January rose 1% to $610 million and net income fell to $104 million from $120 million in the previous year.
Diluted earnings per share dropped to $1.81 from $2.05 a year ago.
The company lowered its fiscal year sales outlook to between zero and 3.0% and adjusted earnings outlook to between $8.75 and $9.50 a share.
"While the backlog remains robust at approximately $1 billion, the backlog is not consistent across the different businesses and is heavily weighted toward systems and medical interventional solutions.
Order entry in recent weeks has decreased from the previous run rate and several customers have been pushing delivery dates out into the second half of fiscal 2023," the company noted in the earnings statement.
Walmart Inc increased 0.7% to $147.56 after the discount retailer reported strong quarterly results as high income consumers search for bargains in the face of high inflation.
Total revenues in the fourth quarter rose 7.9% to $164 billion and comparable sales in the U.S. rose 8.3% from the previous year and 13.9% from two-years ago.
Sam’s Club comparable sales increased 12.2% from a year ago and 22.6% in two years and membership income increased 7.1% to and membership count rose to a record high.
Total transactions at Walmart U.S. locations increased 1.8% and average ticket size rose 6.3% from a year ago.
Consolidated net income soared 76% to $6.3 billion from $3.6 billion and diluted earnings per share rose to $2.32 from $1.28 in the previous year.
The company estimated fiscal 2024 comparable sales at Walmart U.S. locations to grow between 2% and 2.5%, slower than the 6.6% increase in the previous year.
Consolidated sales in the fiscal 2024 are estimated to rise between 2.5% and 3.0%, compared to 6.7% in the prior year.