Market Update
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%.
S&P 500 and Nasdaq Down 1.5% As Regional Banks Worries Mount
Barry Adams
25 Apr, 2023
New York City
Market indexes accelerated losses as the session progressed and tech stocks and regional banks led the decliners.
First Republic Bank reported a sharp decline in deposits and despite the $30 billion deposits by some of the largest banks in support of the bank failed to stem market anxieties.
Regional banks were among the leading decliners in today's session on the worries that banks are not out of the woods yet and higher rates next week will only bring more pain to the industry.
Regional banks were under pressure after First Republic reported higher-than-expected deposit outflows and borrowings soared.
Pacific West Bancorp, East West Bancorp, Zions Bancorporation and U.S. Bancorp declined between 3% and 5%.
The sustained and rapid increase in interest rates are having negative impacts on government securities assets held by all banks, including regional, small and large.
Moreover, if banks suffer deposit outflows, then the unrealized losses in treasury securities have to be realized to shore up capital or banks have to seek alternative capital infusion, which is hard to come by when depositors are leaving.
More losses are on the way for many regional and large banks, if rates continue to rise at rapid pace, forcing more banks to seek capital infusion either from the Federal Reserve or from investors.
The Federal Reserve may have to provide additional liquidity to stressed regional banks. meaning more quantitative easing, while the central bank is conducting its quantitative tightening.
Moreover, the stress test conducted by the Federal Reserve over the last decade failed to consider how banks will be impacted in the event of rapid increase in interest rates and many regional banks including Silicon Valley Bank were exempted from the tests.
On the earnings front, investors were disappointed after UPS reported a decline in revenue and earnings and PepsiCo and Nestle reported weak quarterly results despite double digit price increases in many business segments.
The familiar pattern of higher sales, driven by price increases and weaker volumes or transactions was on display in the current batch of earnings.
Investors stayed on the sidelines as the broader market indexes and tech indexes accelerated declines above 1.5%.
New Home Sales Unexpectedly Soared In March
New home sales unexpectedly increased in March, the latest data from the Commerce Department showed Tuesday.
New home sales in March rose 9.6% from the previous month to $683,000 and February home sales were revised to 623,000, but 3.4% lower than in the month a year ago.
The median sales price of new homes sold in March was $449,800 and the average sales price was $562,400.
Sales soared 170.8% to 65,000 in the Northeast, 29.8% to 161,000 in the West and 6% to 71,000 in the Midwest but decreased 5.4% to 386,000 in the South.
Indexes & Yields
The S&P 500 index declined 1.3% to 4,084.97 and the Nasdaq Composite index dropped 1.6% to 11,847.87.
The yield on 2-year Treasury notes eased to 3.96%, 10-year Treasury notes fell to 3.34% and 30-year Treasury bonds dropped to 3.66%.
Crude oil decreased $1.90 to $76.86 a barrel and natural gas dropped 5 cents to $2.21 a thermal unit.
Stock Movers
First Republic Bank plunged 27.4% to $11.62 after the regional bank reported elevated deposit outflows.
said revenue in the first quarter declined 13.4% from a year ago to $1.2 billion and net interest margin fell 19.4% to $923 million.
Net income in the quarter declined 32.9% to $269 million from $401 million and diluted earnings per share fell to $1.23 from $2.0 a year ago.
On the balance sheet front, loans increased 22.6% from a year ago to $173.3 million, total deposits 35.5% to $104.5 billion and borrowings soared by $101.2 billion to $106.7 billion.
At the end of March, excluding the $30 billion of deposits made by the large U.S. banks, the bank's estimated uninsured deposits totaled $19.8 billion, or 27% of total deposits.
Insured deposits fell moderately during the quarter and have "remained stable" from March 31 through April 21.
PepsiCo Inc rose 2.4% to $189.99 after the food and beverage maker reported better-than-expected quarterly results.
The company said first quarter revenue increased 10.2% to $17.8 billion and net income of $1.3 billion.
The company lifted its full-year 2023 growth estimate of organic revenue to 8% from the previous estimate of 6% and core constant currency earnings per share to 9% from 8%.
United Parcel Service, Inc dropped 8.9% to $178.40 after the company reported weaker-than-expected quarterly results.
Ameriprise Financial, Inc decreased 5.8% to $294.47 despite the financial services provider reported better-than-expected earnings.
European markets lacked direction for the third day in a row and investors digested a slew of earnings announcements.
Banks were in focus after Spain-based Santander reported better-than-expected quarterly results but the Switzerland-based UBS reported a sharp decline in earnings.
Novartis, Associated British Foods, Whitbread and Daimler Truck were among the leading European companies reporting better-than-expected quarterly results.
Despite the improving quarterly results from European companies, benchmark indexes trended lower on the worries of future rate hikes and slowing economic activities.
UK Government Debt Expanded In March
The UK government's borrowing increased by £21.53 billion in March of 2023, higher than £16.3 billion in the month a year ago, the Office for National Statistics reported Tuesday.
The UK government's receipts rose 2.3% to £88.8 billion and spending advanced 19.9% to £110.3 billion, reflecting a surge in energy subsidies by £8.0 billion to households and businesses.
Over the twelve months to March 2023, borrowing increased to £139.2 billion or 5.5% of the GDP, £18.1 billion more than in the previous 12 month period and the fourth-highest borrowing since records began in 1946.
Indexes & Yields
The DAX index index increased 8.18 points to 15,872.13, the CAC-40 index declined 42.25 points to 7,53160 and the FTSE 100 index dropped 21.70 points to 7,891.13.
The yield on 10-year German Bunds eased to 2.44%, French bonds to 3.00%, the UK gilts to 3.73% and Italian bonds to 4.32%.
The euro weakened to $1.10, the British pound to $1.24 and the Swiss franc to 88.69 cents.
Brent crude oil decreased $2.03 to $80.68 a barrel and the Dutch TTF natural gas eased 33 cents to Є39.60 per MWh.
Europe Stock Movers
Alstom SA increased 1.1% to €21.92 after the French company won an €900 million order to supply trams to Quebec City, Canada.
UBS Group AG decreased 1.9% to CHF 17.85 after the Swiss bank reported a 52% fall in its first quarter earnings, reflecting higher provision for U.S. litigation and weaker sales.
ABB Ltd advanced 3.2% to CHF 32.69 after the Swiss engineering and construction company raised its full-year 2023 sales and earnings outlook.
Jungheinrich AG soared 10.4% to €33.66 after the German forklift maker reported higher first quarter operating earnings and the company also lifted its full-year outlook.
Daimler Truck Holding AG added 2.5% to €30.71 after the German heavy duty vehicle maker reported better-than-expected earnings.
Novartis AG rose 2.7% to CHF 91.92 after the Swiss drug maker lifted its full-year 2023 outlook.
Nestle SA advanced 1.1% to CHF 115.96 after the Swiss food products maker posted better-than-expected first quarter sales.
Associated British Foods Plc decreased 3.4% to 2,001.0 pence after the owner of Primark reported a 3% decline in first-half profit.
Ocado Group Plc advanced 1.4% to 512.80 pence after the online grocery company said it plans to stop operation at its Hatfield customer fulfillment center, impacting about 2,300 staff.
Whitbread Plc soared 5.6% to 3,302.66 pence after the parent of Premier Inn after the company said its annual income surpassed pre-pandemic levels.
Movers: Ameriprise, Cadence Design, First Republic, PepsiCo, UBS, UPS
Scott Peters
25 Apr, 2023
New York City
Ameriprise Financial, Inc declined 5.6% to $295.27 after the company released its latest quarterly results.
Revenue in the first quarter increased 3% to $3.7 billion from $3.6 billion and net income dropped 49% to $417 million from $825 million and diluted earnings per share to $3.79 from $7.10 a year ago.
Total assets under management declined 9% to $1.0 trillion from $1.1 trillion a year ago.
Cadence Design Systems Inc declined 5.1% to $202.09 after the semiconductor design software developer reported its quarterly results.
Revenue in the first quarter increased to $1.02 billion from $901 million and net income rose to $241.8 million from $235.3 million and diluted earnings per share increased to 89 cents from 85 cents a year ago.
For the second quarter, the company estimated total revenue in the range of $960 million to $980 million and operating margin in the range of 29% to 30% and diluted earnings per share in the range of $0.73 to $0.77.
First Republic Bank plunged 27.4% to $11.62 after the regional bank reported elevated deposit outflows.
said revenue in the first quarter declined 13.4% from a year ago to $1.2 billion and net interest margin fell 19.4% to $923 million.
Net income in the quarter declined 32.9% to $269 million from $401 million and diluted earnings per share fell to $1.23 from $2.0 a year ago.
On the balance sheet front, loans increased 22.6% from a year ago to $173.3 million, total deposits 35.5% to $104.5 billion and borrowings soared by $101.2 billion to $106.7 billion.
At the end of March, excluding the $30 billion of deposits made by the large U.S. banks, the bank's estimated uninsured deposits totaled $19.8 billion, or 27% of total deposits.
Insured deposits fell moderately during the quarter and have "remained stable" from March 31 through April 21.
PepsiCo Inc rose 2.4% to $189.99 after the food and beverage maker reported better-than-expected quarterly results.
The company said first quarter revenue increased 10.2% to $17.8 billion and net income of $1.3 billion.
The company lifted its full-year 2023 growth estimate of organic revenue to 8% from the previous estimate of 6% and core constant currency earnings per share to 9% from 8%.
UBS Group AG declined 3.4% to $19.84 after the Swiss bank reported a decline in earnings on higher provisions for litigation expenses.
Total revenue in the first quarter declined to $8.7 billion from $9.3 billion and net income dropped to $1.0 billion from $2.2 billion and diluted earnings per share fell to 32 cents from 61 cents a year ago.
The Swiss bank set aside $857 million for litigation related to legacy U.S. residential mortgage-backed securities.
United Parcel Service, Inc dropped 8.9% to $178.40 after the company reported weaker-than-expected quarterly results.
Ameriprise Financial, Inc decreased 5.8% to $294.47 despite the financial services provider reported better-than-expected earnings.
Consolidated revenue in the first quarter declined 6% to $22.9 billion and net income declined 28.8% of $1.9 billion from $2.6 billion and diluted earnings per share fell to $2.19 from $3.03 a year ago.
The parcel delivery company said the full-year 2023 revenue is likely to be near the low end of its previously released revenue and earnings range.
The company estimated full-year consolidated revenue of $97 billion and adjusted operating margin of 12.8% and capital expenditure of $5.3 billion.
The company estimated a dividend of $5.4 billion and set the share repurchase target of $3.0 billion.