Market Update
The S&P 500 and the Nasdaq Composite indexes closed up 1.5% and crude oil jumped nearly 3% to $78.30 a barrel.
21 Dec, 2022
European markets closed up between 1.5% and 2.0% on holiday sales and earnings improvement optimism.
21 Dec, 2022
European Markets Rebound 1.5% from Six-week Low
Bridgette Randall
21 Dec, 2022
Frankfurt
Stock markets in Europe traded higher and major indexes rebounded from six-week lows on holiday sales optimism.
Consumer sector stocks were in focus and bond yields were stable in trading on Wednesday.
Crude oil prices advanced after two separate reports showed a larger than expected decline in the U.S. inventories but natural gas prices extended losses after supply worries eased.
The DAX index increased 1.5% to 14,097.82, the CAC-40 index surged 2.5% to 6,580.24 and the FTSE 100 index jumped 1.7% to 7,497.32.
The yield on 10-year German Bunds inched up to 2.3%, French bonds edged higher to 2.84%, the UK Gilts edged down to 3.47% and Italian bonds inched lower to 4.42%.
Crude Oil Advanced After U.S. Inventories Declined
Dutch front-month natural gas futures extended losses and dropped to one-month low and below
Movers: BlackBerry, Carnival, FedEx, Nike, Rite Aid, Six Flags, Toro
Scott Peters
21 Dec, 2022
New York City
BlackBerry Ltd plunged 10.6% to $3.71 after the company reported a loss in its last quarter.
Revenue in the fiscal third quarter was nearly flat at $169 million compared to $168 million a year ago.
Cyber security unit revenue decreased to $106 million from $111 million in the previous quarter.
Net loss in the quarter shrank to $4 million from $54 million and diluted loss per share fell to 9 cents from 10 cents a year ago.
Carnival Corp rose 5.4% to $8.53 after the largest cruise line operator posted smaller-than-expected loss in the last quarter.
Revenue in the fiscal fourth quarter ending in November rose to $3.8 billion from $1.3 billion a year ago.
Net loss in the quarter dropped to $1.6 billion from $2.5 billion and diluted loss per share fell to $1.27 from $2.31 a year ago.
Occupancy in the fiscal fourth quarter was 19 percentage points below 2019 levels compared to 29 percentage points below 2019 levels.
"Booking volumes during the fourth quarter of 2022 for 2023 sailings are nearing 2019 comparable booking levels, with November booking volumes exceeding 2019 levels," said the company in the earnings release.
FedEx increased 4.8% to $172.12 after the parcel delivery company reported a decline in earnings but results were ahead of expectations.
FedEx revenue in the fiscal second quarter declined 3% to $22.8 billion and net income dropped to $788 million from $1.04 billion and diluted earnings per share fell to $3.07 from $3.88 a year ago.
Nike Inc soared 14.01% to $117.73 after the footwear maker and retailer reported better-than-expected quarterly results.
Revenue in the fiscal second quarter increased 17% to $13.3 billion and gross margin declined 300 basis points to 42.9%.
Net income in the quarter was flat at $1.3 billion and diluted earnings per share increased to 85 cents from 84 cents a year ago.
Inventories in the quarter increased 43% to $9.3 billion from a year ago but declined from $9.7 billion in the previous quarter.
Excess merchandise in the prior quarter led to above-normal discounting, negatively impacting gross margin.
Direct sales also increased 16% to $5.4 billion and digital sales rose 25%.
Rite Aid Corp declined 16.7% to $3.71 after the independent pharmacy operator reported larger quarterly loss.
Revenue in the fiscal third quarter 2023 edged down to $6.2 billion from $6.1 billion a year ago.
Net loss in the quarter rose to $67.1 million from $36 million and diluted loss per share rose to $1.23 from 67 cent a year ago.
The company guided total revenues in 2023 between $23.7 billion and $24.0 billion and net loss between $584 million and $551 million.
Six Flags Entertainment Corp soared 11.6% to $23.35 on the news report that the activist investor Land & Buildings Investment Management LLC has accumulated 3% stake in the theme park operator.
The activist investor L&B is asking the company among other things to sell its non-core assets and real estate holdings.
Toro Co increased 0.5% to $112.64 after the company posted fiscal fourth quarter 2022 results ending in October.
Revenue in the fiscal quarter increased 14% to $4.51 billion from $3.96 billion a year ago.
Net income in the quarter rose 8% to $443.3 million from $409.9 million and diluted earnings per share rose 11% to $4.20 from $3.78 a year ago.
The company guided 2023 revenues to increase between 7% and 10% and adjusted earnings per share in the range of $4.70 to $4.90 compared to $4.20 in fiscal 2022.
Existing Home Sales Declined 7.7% In November
Brian Turner
21 Dec, 2022
New York City
Existing home sales annual pace in November declined 7.7% to 4.09 million units from October, the National Association of Realtors reported Wednesday.
Sales plunged 35.4% from a year ago and weakest since November 2010.
Despite the weak sales median home sales price continued to advance, but at a slower pace.
Median home price rose 3.5% from a year ago to 370,700.
The inventory of unsold homes declined for the fourth month in a row to 1.14 million at the end of November or equivalent to 3.3 months of supply at the current pace of sales.
Home inventories decreased 6.6% from October but rose 2.7% from a year ago.
Earnings Optimism Lifts Major Averages On Wall Street
Barry Adams
21 Dec, 2022
New York City
Stocks on Wall Street advanced after FedEx and Nike reported weak but ahead of expectations results.
Investors also digested latest home sales data and larger-than-expected decline in weekly crude oil inventories.
Housing market continued to slow down and home sales dropped to the lows not seen since 2010 after elevated prices and mortgage rates kept buyers away.
The S&P 500 index increased 1.2% to 3,868.40 and the Nasdaq Composite index advanced 1.2% to 10,674.11.
The yield on 2-year Treasury notes eased to 4.21%, 10-year Treasury notes fell to 3.65% and 30-year Treasury bonds dropped to 3.71%.
Crude Oil Jumps After Inventories Reports
Crude oil futures jumped 2.5% to $77.85 a barrel after the U.S. inventories declined 3.1 million barrels last week from the 7.8 million barrels increase in the previous week, the American Petroleum Institute reported Tuesday.
U.S. crude oil inventories declined 5.894 million in the week ending December 16, the Energy Information Administration indicated in its weekly report released Wednesday.
Crude oil increased $1.43 to $77.68 a barrel and natural gas futures rose 16 cents to $5.48 a thermal unit.
Home Sales Declined 7.7% In November
Existing home sales annual pace in November declined 7.7% to 4.09 million units from October, the National Association of Realtors reported Wednesday.
Sales plunged 35.4% from a year ago and weakest since November 2010.
Mortgage Rate Eased Last Week
Mortgage rates for standard loans with 20% down payment decreased 8 basis points to 6.34% in the week ended December 16, the Mortgage Bankers Association report showed Wednesday.
U.S. Stock Movers
FedEx increased 4.8% to $172.12 after the parcel delivery company reported a decline in earnings but results were ahead of expectations.
FedEx revenue in the fiscal second quarter declined 3% to $22.8 billion and net income dropped to $788 million from $1.04 billion and diluted earnings per share fell to $3.07 from $3.88 a year ago.
Nike Inc soared 14.01% to $117.73 after the footwear maker and retailer reported better-than-expected quarterly results.
Revenue in the fiscal second quarter increased 17% to $13.3 billion and gross margin declined 300 basis points to 42.9%.
Net income in the quarter was flat at $1.3 billion and diluted earnings per share increased to 85 cents from 84 cents a year ago.
Inventories in the quarter increased 43% to $9.3 billion from a year ago but declined from $9.7 billion in the previous quarter.
Excess merchandise in the prior quarter led to above-normal discounting, negatively impacting gross margin.
Direct sales also increased 16% to $5.4 billion and digital sales rose 25%
Dutch front-month natural gas futures extended losses and dropped to one-month low and below
21 Dec, 2022
U.S. Stocks Snap 4-day Losing Streak, European Markets Wavered
Barry Adams
20 Dec, 2022
New York City
Stocks on Wall Street opened lower and bond yields inched higher after a selloff in the global bond markets.
The worldwide bond yields rose after the Bank of Japan lifted the upper limit of the target range, surprising financial markets.
The Bank of Japan also left its key lending rate at -0.1% but the widening of the yield range confirmed the central bank's readiness in ending six years of loose monetary policy.
The Bank of Japan is the last major central bank to adjust rate policy, following rate hikes by more than 10 central banks.
Despite the multiple rate hikes, real rates are still negative in G7 countries and not restrictive in limiting economic activities.
Moreover, investors are anticipating downward earnings revision as central banks are looking to dampen economic activities and tame 4-decade high inflation in the Euro Area and in the United States.
In addition, China is battling the fallout from the strict zero-Covid restrictions and deep financial turmoil in the property sector.
Stocks rebounded in afternoon trading and the S&P 500 and the Nasdaq snapped a 4-day losing streak.
Market Indexes Struggled to Gain Traction
The S&P 500 index declined 0.1% to 3,821.73 and the Nasdaq Composite index rose 0.01% to 10,547.11.
Crude oil inched up 49 cents to $75.83 a barrel and natural gas futures prices declined 54 cents to $5.32 a thermal unit.
The yield on 2-year Treasury notes increased to 4.27%, 10-year Treasury notes rose to 3.69% and 30-year Treasury bonds edged up to 3.74%.
U.S. Movers
Tesla Inc declined 6.6% to $140.10 on the China sales worries and CEO Elon Musk leadership at the company after his recent purchase of Twitter Inc.
General Mills, Inc declined 4.2% to %83.44 despite the company reporting higher sales and earnings in the last quarter but investors worried that nearly flat earnings were supported by a large price increase in North America.
Lucid Group Inc increased 0.7% to $7.29 after electric vehicle maker said it has raised $1.515 billion, including $915 million through a private placement and $600 million through the sale of stock "at-the-market" equity offering.
Quantumscape Corp increased 0.4% to $5.87 after the company said it has shipped its first 24-layer prototype lithium-metal battery cells to automotive OEMs for testing.
Housing Permits Plunge, Completions Rise
U.S. housing starts declined 0.5% to a seasonally adjusted 1.427 million annual rate after dropping downwardly revised 2.1% in October, the U.S. Census Bureau reported Tuesday.
Single family housing starts declined 4.1% to an annual pace of 828.000 and multi-family starts jumped 4.8% to 584,000.
Housing market is struggling under rising mortgage rates and record home prices, keeping many first time buyers away from the market.
November building permits declined 11.2% to a seasonally adjusted annual rate of 1.342 million from October and 22.4% below 1.792 million a year ago.
The monthly decline in permits was the largest since the pandemic era as home builders struggle with rising mortgage rates.
Housing completions increased 10.8% to a seasonally adjusted annual rate of 1.49 million from the revised October estimate of 1.345 million and 6.0% higher than 1.406 million rate a year ago.
European Markets Wavered, Natural Gas Volatile After Pipe Explosion
European markets pared losses and investors continue to assess the hawkish stance from the central banks and worry that rising rates and elevated inflation are likely to drag the economy into a recession.
The DAX index dropped 0.4% to 13,884.66, the CAC-40 index declined 0.4% to 6,450.43 and the FTSE 100 index inched up 9.31 points to 7,370.63.
Natural gas prices were volatile and traded as low as