Market Update
U.S. Trade Statistics Highlighted Shifting Supply Chain Locations
Brian Turner
08 Mar, 2023
New York City
The U.S. trade deficit in goods and services increased slightly in January after exports rose faster than imports, the Bureau of Economic Analysis reported Wednesday.
Exports increased 3.4% and soared 13.3% to $257.5 billion.
Imports rose 3.0% from the previous month and jumped 3.5% to $325.7 billion.
Overall trade deficit for goods and services increased 1.6% from the previous month but fell 21.9% from the previous year to $68.3 billion.
The changing nature of international supply chain was visible in the latest trade statistics as manufacturing shifted away from China to Indo Pacific and Mexico.
The U.S. recorded largest trade deficit with China but the amount has been declining as more manufacturing is shifted to Vietnam and other countries.
The international goods trade deficit with China was $21.9 billion, with the EU $18.5 billion, Mexico $12.2 billion, Vietnam $8 billion, Japan $5.6 billion and Canada $5.4 billion.
The U.S. recorded goods trade surpluses with South and Central America of $4.8 billion, the UK $2.7 billion, Australia $1.5 billion and Hong Kong $1.5 billion.
Movers: BlackBerry, CarParts.com, Cricut, Crowdstrike, Harte Hanks, Occidental Petroleum, Stitch Fix
Scott Peters
08 Mar, 2023
New York City
BlackBerry Ltd increased 4.2% to $3.65 after the cybersecurity company reported preliminary quarterly results.
BlackBerry Limited said preliminary revenue in the fourth quarter is expected to be $151 million, including $107 million in cybersecurity billings.
BlackBerry’s results are expected to include a material non-cash, one-time goodwill impairment charge of as much as $440 million for the Spark reporting unit.
Total revenue in the full-year 2022 is expected to be $656 million, including cybersecurity revenue of $401 million.
Fourth quarter and full-year fiscal year 2023 revenue for BlackBerry’s Cybersecurity business unit is expected to be lower than the outlook provided during the third quarter's earnings call, primarily due to certain large government deals taking longer-than-expected.
CarParts.com, Inc decreased 2.7% to $5.95 after the online automobile parts seller reported a slightly larger quarterly loss compared to a year ago.
CarParts.com, Inc said revenue in the fourth quarter increased 12% from a year ago to $154.5 million and jumped 27% on a two-year stack.
Net loss expanded to $6.2 million from $5.0 million and diluted loss per share rose to 11 cents from 10 cents a year ago.
In the full-year, revenue increased 14% from a year ago to a record $661.6 million and increased 45% on a two-year stack.
Net loss shrank to $1.0 million from $10.0 million and diluted loss per share declined to 2 cents from 20 cents a year ago.
Cricut Inc fell 2.2% to $8.80 after the maker of connected cutting machines reported a decline in revenue and earnings in the fourth quarter.
Revenue in the quarter declined to $280.8 million from $387.8 million and net income dropped to $10.9 million from $11.9 million and diluted earnings per share was flat at 5 cents.
Full-year 2022 revenue declined to $886.3 million from to $1.3 billion and net income declined to $60.7 million from $140.5 million and diluted earnings per share fell to 28 cents from 64 cents a year ago.
Crowdstrike Holdings Inc added 1.3% to $126.57 after the cybersecurity company reported better-than-expected quarterly results. Revenue in the fourth quarter increased to $637 million and earnings per share rose to 47 cents.
Occidental Petroleum Corporation increased 1.4% to $61.70 after a regulatory filing showed that the Warren Buffett controlled Berkshire Hathaway increased its stake in the company by purchasing 5.8 million additional shares last week.
Harte Hanks, Inc increased 0.3% to $10.23 after the direct mail services company reported an increase in revenue in its latest quarter.
Harte Hanks, Inc said revenue in the fourth quarter increased 5.4% to $54.8 million from $52.0 million a year ago.
Net income increased to $21.8 million, inclusive of a one-time $19.8 million tax benefit and $1.4 million in other expenses mainly related to pension expense and foreign currency loss, compared to net income of $1.8 million a year ago.
Diluted earnings per share was $2.70 compared to 20 cents a year ago. In the full-year 2022, revenues increased 6% to $206.3 million from $194.6 million and net income rose to $36.8 million from $15 million and diluted earnings per share was $4.75 compared to $1.76 a year ago.
Stitch Fix Inc dropped 13.5% to $4.31 after the online fashion platform reported wider-than-expected loss.
Stitch Fix Inc said revenue in the fiscal second quarter ended on January 28 declined 20% to $412.1 million and net loss expanded to $65.6 million from $30.9 million and diluted loss per share rose to 58 cents from 28 cents a year ago.
Active clients in the quarter declined 11% to 3.6 million and net revenue per active client fell 6% to $516 million.
The company forecasted revenue in the fiscal third quarter ending on April 29 in the range between $385 million and $395 million, a decline between 20% and 22% from the previous year.
Private Payrolls Gain Signaled Faster Rate Hikes Ahead
Barry Adams
08 Mar, 2023
New York City
Major averages edged higher as investors digested recent comments from the Federal Reserve chairman and awaited Friday's jobs data.
U.S. Treasury yields hovered near 16-year highs as investors mulled faster rate hikes and higher peak rates in the month ahead.
Private payrolls expanded at a faster pace in February, suggesting tight labor market conditions to persist despite multiple rate hikes over the last twelve months.
What is good news on the Main Street is bad news on Wall Street as investors fear that rates may have to go further in the restrictive territory before the inflation cools and may push the economy towards a recession.
Employment report tracking payrolls across all sectors of the economy are scheduled to be released on Friday by the U.S. Labor Department and investors are anticipating net job gains of closer to 300,000.
February Private Payrolls Growth Accelerated
Private sector net job addition accelerated in February, according to the latest monthly report released by the payrolls processing company ADP.
U.S. private payrolls increased by 242,000 in February, higher than the revised 119,000 increase in January.
The February's gains were driven by 190,000 additions in the service sector and 52,000 increase in the manufacturing sector.
Overall wage gains decelerated to 7.2%.
U.S. Trade Deficit Edged Higher In January
The U.S. trade deficit in goods and services increased slightly in January after exports rose faster than imports, the Bureau of Economic Analysis reported Wednesday.
Exports increased 3.4% and soared 13.3% to $257.5 billion.
Imports rose 3.0% from the previous month and jumped 3.5% to $325.7 billion.
Overall trade deficit for goods and services increased 1.6% from the previous month but fell 21.9% from the previous year to $68.3 billion.
Indexes & Yields
The S&P 500 index increased 0.1% to 3,992.05 and the Nasdaq Composite index inched higher to 0.4% to 11,576.86.
The yield on 2-year Treasury notes hovered near 5.0%, 10-year Treasury notes inched lower to 3.96% and 30-year Treasury bonds traded around 3.84%.
Crude oil prices declined 96 cents to $76.58 a barrel and natural gas prices eased 14 cents to $2.54 a thermal unit.
U.S. Stock Movers
Occidental Petroleum Corporation increased 1.4% to $61.70 after a regulatory filing showed that the Warren Buffett controlled Berkshire Hathaway increased its stake in the company by purchasing 5.8 million additional shares last week.
Crowdstrike Holdings Inc added 1.3% to $126.57 after the cybersecurity company reported better-than-expected quarterly results. Revenue in the fourth quarter increased to $637 million and earnings per share rose to 47 cents.
Stitch Fix Inc dropped 13.5% to $4.31 after the online fashion platform reported wider-than-expected loss.
Stitch Fix Inc said revenue in the fiscal second quarter ended on January 28 declined 20% to $412.1 million and net loss expanded to $65.6 million from $30.9 million and diluted loss per share rose to 58 cents from 28 cents a year ago.
BlackBerry Ltd increased 4.2% to $3.65 after the cybersecurity company reported preliminary quarterly results.
BlackBerry Limited said preliminary revenue in the fourth quarter is expected to be $151 million, including $107 million in cybersecurity billings.
Markets Confront Reality of Higher and Faster Rate Hikes After Powell Comments
Barry Adams
07 Mar, 2023
New York City
Major indexes accelerated decline in the afternoon after worries of larger interest rate hike at the next policy meeting resurfaced.
The uptick in Treasury yields came together with a weakness in high-growth and tech stocks after the Federal Reserve chairman delivered a hawkish sentiment in his prepared remarks for lawmakers.
The yields on the U.S. Treasury notes maturing between three months and two years traded above 5% for the first time since 2007.
Federal Reserve chairman Jerome Powell said the central bank is ready to increase rates faster if incoming data supported the case in his testimony to the U.S. Senate Banking, Housing and Urban Affairs Committee Tuesday morning.
Moreover, Powell added that the terminal rates are likely to be higher than previously estimated.
Chairman Powell noted that latest economic data have been stronger-than-anticipated and to bring down inflation to 2% and restore price stability will require raising rates to restrictive levels.
At the Fed's policy meeting in February, the committee raised the target range for federal funds by 25 basis points to between 4.5% and 4.75%, the highest level since 2007.
Chairman Powell's comments suggested that the central bank may increase rates by a larger amount than last month's 25 basis points at its next two-day policy meeting ending on March 22.
The talk of faster rate hikes and higher terminal rates spooked investors and tech stocks accelerated the decline in the afternoon.
U.S. Indexes & Yields
The S&P 500 index decreased 1.5% to 3,986.41 and the Nasdaq Composite index fell 1.3% to 11,530.33.
The yield on 2-year Treasury notes inched higher to 5.02%, 10-year Treasury notes inched higher to 3.96% and 30-year Treasury bonds edged higher to 3.87%.
Crude oil fell $3.19 to $77.27 a barrel and natural gas prices fell 9 cents to $2.66 a thermal unit.
U.S. Stock Movers
Dick's Sporting Goods Inc increased 9.2% to $144.28 after the specialty retailer reported higher-than-expected sales in the holiday period.
Profit in the fourth quarter declined 32% despite sales rising 7.3% in the period, hurt by lower gross margin.
Net sales in the quarter rose 7.3% to $3.60 billion from $3.35 billion in the previous year and comparable store sales rose 5.3%.
Net income fell to $235.6 million or $2.60 per share from $346.1 million or $3.16 per share in the prior-year quarter.
Excluding items, adjusted income decreased to $2.93 per share from $3.64 a year ago.
JetBlue Airways Corporation declined 0.2% to $8.39 and the Justice Department sued the company to block its proposed takeover of the discount airline Spirit Airlines.
Rivian Automotive Inc plunged 12% to $15.02 after the electric vehicle maker said it plans to offer $1.3 billion convertible debt amid growing demand slump.
The electric vehicle maker lost $6.8 billion in 2022 and after supply chain issues negatively impacted production.
Meta Platforms Inc increased 1% to $186.33 after a Bloomberg report said that the parent of Facebook is planning to layoff thousands of employees as early as this week.
European Markets Trade Near One-year Highs
Stocks in Europe lacked direction and investors reacted to local earnings and awaited commentary from the U.S. Federal Reserve chairman Jerome Powell.
France's benchmark index advanced to a new record high and Germany's index traded at a new one-year high after energy prices eased for the third week in a row.
German factory orders unexpectedly rose and the UK's home prices rose at the fastest pace in eight months.
German Factory Orders Unexpectedly Rose In January
German factory orders rose unexpectedly in January driven by demand from international customers.
German factory orders increased 1.0% in January from the revised 3.4% in December, the Federal Statistical Office or Destatis said Tuesday.
Manufacturing new orders on an annual basis declined at a faster rate of 10.9% in January after dropping 9.9% in December.
UK Home Prices Increased at 8-month High Rate
Home prices in the UK rose at a faster pace in February underpinned by the improving confidence and resilient labor markets.
Despite the cost of living crisis, home prices rose 1.1% in February after rising 0.2% in January, S&P Global and Halifax said in a report released Tuesday.
Home prices rose for the second month in a row and jumped at the fastest pace since June 2022.
The average home price increased to £285,476 in February compared to £282,360 in January.
Europe Indexes & Yields
The DAX index increased 0.2% to 15,678.50, the CAC-40 index added 0.2% to 7,387.18 and the FTSE 100 index advanced 0.3% to 7,949.76.
The yield on 10-year German Bunds edged down to 2.66%, French bonds to 3.15%, the UK gilts to 3.78% and Italian bonds to 4.45%.
The euro hovered near $1.065, the British pound inched lower to $1.19 and the Swiss franc to 93.36 cents.
Brent crude oil eased 56 cents to $85.56 a barrel and the Dutch TTF natural gas edged up to Є42.05 per MWh.
Europe Stock Movers
Schaeffler AG fell 7.3% to €6.84 after the Germany-based bearings maker reported a decline in financial year 2022 profit and issued a cautious outlook for 2023.
The company also trimmed its dividend.
Henkel AG declined 2.2% to €67.70 after the German chemical and consumer goods company reported a 13.7% decline in its adjusted operating earnings in 2022.
HelloFresh SE decreased 6.9% to €21.16 after the meal-kit maker estimated lower-than-expected core profit in 2023.
Ashtead Group plc increased 3.3% to 5,936.0 pence after the UK-based equipment rental company said annual results are likely to surpass its own estimate.
Zalando SE increased 3.4% to €40.15 after the online marketplace operator said it plans to focus on improving its operating margins and eliminate unnecessary costs.
John Wood Group Plc increased 14.3% to 221.80 pence after the UK-based engineering company said it is likely to reject the latest buyout proposal from the private equity group Apollo Global Management.
Greggs Plc declined 0.7% to 2,732.0 pence after the bakery and fast food chain said that the company is facing inflationary cost pressures.
Movers: Dick's Sporing Goods, Gaia, Intrepid Potash, JetBlue, Meta, Rivian, ThredUp, WW International
Scott Peters
07 Mar, 2023
New York City
Dick's Sporting Goods Inc increased 9.2% to $144.28 after the specialty retailer reported higher-than-expected sales in the holiday period.
Profit in the fourth quarter declined 32% despite sales rising 7.3% in the period, hurt by lower gross margin.
Net sales in the quarter rose 7.3% to $3.60 billion from $3.35 billion in the previous year and comparable store sales rose 5.3%.
Net income fell to $235.6 million or $2.60 per share from $346.1 million or $3.16 per share in the prior-year quarter.
Excluding items, adjusted income decreased to $2.93 per share from $3.64 a year ago.
Gaia, Inc soared 24.5% to $3.28 after the alternative video content producer and streamer swung to a net loss in its latest quarter.
Gaia, Inc said revenue in the fourth quarter declined 6%to $19.6 million from $20.8 million and video content publishing company swung to a net loss of $0.9 million from a profit of $2.1 million and diluted earnings per share was ($0.04) compared to 11 cents a year ago.
In 2022, revenue increased 3% to $82.0 million from $79.6 million and the company swung to a loss of $3.1 million from a profit of $3.7 million and diluted income per share fell to ($0.15) from 19 cents a year ago.
The member count as of December 31, 2022 was 759,000.
Intrepid Potash, Inc declined 1.7% to $31.62 after the agrochemicals maker said a decline in earnings after higher potash costs forced farmers to restrict purchases.
Intrepid Potash, Inc said revenue in the fourth quarter increased to $43.7 million from $38.8 million and net income fell to $3.98 million from $223.8 million and diluted earnings per share fell to 30 cents from $16.66 a year ago.
Potash production in the quarter increased to !06 tons from 86 tons and sales volume fell to 50 tons from 61 tons a year ago. Average potash net realized sales price per ton increased to 693 from 504 a year ago.
Revenue in the full-year 2022 rose to $337.5 million from $270.3 million and net income fell to $72.2 million from $249.8 million and diluted earnings per share fell to $5.37 from $18.66 in the previous year.
In the full-year 2022, potash production volume in tons fell to 270 from 287, sales volume in tons declined to 222 from 331 and average potash realized net sales price per ton rose to $713 from $353 a year ago.
JetBlue Airways Corporation declined 0.2% to $8.39 and the Justice Department sued the company to block its proposed takeover of the discount airline Spirit Airlines.
Meta Platforms Inc increased 1% to $186.33 after a Bloomberg report said that the parent of Facebook is planning to layoff thousands of employees as early as this week.
Rivian Automotive Inc plunged 12% to $15.02 after the electric vehicle maker said it plans to offer $1.3 billion convertible debt amid growing demand slump.
The electric vehicle maker lost $6.8 billion in 2022 and after supply chain issues negatively impacted production.
ThredUp Inc soared 69.8% to $2.75 after the online apparel and accessories resale platform operator reported better-than-expected revenue. The company also highlighted cost cutting steps to reach profitability.
ThredUp Inc said revenue in the fourth quarter decreased 2% to $71.3 million and net loss attributable to stockholders was $19.5 million compared to $17.9 million and diluted loss per share increased to 19 cents from 18 cents a year ago.
The resale platform operator said active buyers decreased 2% to 1.7 million and orders fell 8% to 1.5 million from the previous quarter.
In 2022, revenue increased to $288.3 million from $251.8 million and net loss expanded to $92.3 million from $63.2 million and diluted loss per share rose to 92 cents from 82 cents a year ago.
Orders in the full-year increased 22% to 6.5 million from 5.3 million in the previous year.
WW International Inc soared 42.5% to $5.52 after the the company reported an acquisition of telehealth services provider Sequence.
The company agreed to pay $132 million for the purchase of Sequence in three stages.
Since its launch in late 2021, Sequence has grown into an approximately $25 million annual revenue run-rate business serving approximately 24,000 members as of February.
Formerly known as Weight Watchers said revenue in the fourth quarter declined 18.8% to $223.9 million from $275 million in the previous year.
The company swung to a net loss of $32.5 million from a profit of $29.0 million and diluted earnings per share was ($0.46) compared to 42 cents a year ago.