Market Update
Stocks Rebound On Slower Rate Hike Hopes
Barry Adams
21 Oct, 2022
New York City
Stocks turned higher after early morning doldrums as investors weighed the latest batch of mixed earnings and rising bond yields.
The Federal Reserve is widely expected to lift rates by 75 basis points at the next meeting ending on November 2.
In recent days Fed officials have also carried out a campaign with a hawkish tone suggesting that the rates may rise above 4.75% and stay there for a while until the inflation drops to the Fed's target rate of 2%.
The wide gap between the Fed target inflation rate of 2% and the current rate above 8% has also stoked the fears that the Fed may not be able to avoid a recession.
The S&P 500 index rose 1.2% to 3,710.30 and the Nasdaq Composite jumped 0.9% to 10,706.58.
Crude oil increased 68 cents to $85.13 a barrel and natural gas fell 36 cents to $4.99 a thermal unit.
The yield on 2-year Treasury notes decreased to 4.54%, 10-year Treasury notes eased to 4.23% and 30-year bonds fell to 4.31%.
On the earnings front, American Express plunged 7% despite reporting higher-than-expected quarterly earnings and lifting annual outlook.
Snap Inc plunged 25% after the social media company reported $1.12 billion in revenues, lower than expected, but adjusted quarterly earnings of 8 cents a share.
Verizon dropped 6% after the wireless communication company reported smaller-than-expected post-paid net subscribers.
CSX Corp rose 0.3% after the railroad operator posted better-than-expected earnings on higher shipping volumes and improvement in freight rates.
European Markets Down On Inflation Worries
European markets traded lower on the ongoing worries of looming recession and rising bond yields.
The UK retail sales fell 1.4% in September following the revised 1.7% decline in August, the Office for National Statistics said Friday.
A separate report showed a slight improvement in consumer confidence in October despite soaring inflation and political chaos.
The confidence index improved to -47 in October from -49 in September, showed the survey from the market research group GfK released Friday.
The DAX index rebounded from the loss of 2% to 0.4% to 12,710.71, the CAC-40 index fell 1% to 6,026.81 and the FTSE 100 index advanced 0.3% to 6,964.97.
For the week, the indexes in the region are set to close up between 1% and 2.5%.
The euro held stable near 98.05 U.S. cents and the British pound declined to $1.1203.
Brent crude oil gained $1.18 to $93.55 a barrel and TTF natural gas futures declined 10.3% to 114.0 euros a MWh.
The yield on 10-year German bunds rose to a new 11-year high of 2.44%, French bonds to 2.99%, the UK Gilts to 4.09% and Italian bonds to 4.78%.
Asian markets generally closed lower on the worries that the rising bond yields and falling local currencies are likely to slow down the economies in the region.
The Bank of Japan conducted its second emergency operations in as many days after the yield on Japanese bonds rose above the target rate 0.25%.
Moreover, consumer price inflation in Japan rose to a 8-year high in September of 3.0%, the Ministry of Internal Affairs and Communications said Friday.
The Nikkei index eased 0.4% to 26,890.58, the Hang Seng Index dropped 0.4% to 16,211.12 and the Sensex index increased 0.2% to 59,307.15.
For the week, the Nikkei declined 0.9%, the Hang Seng fell 2.3% and the Sensex index advanced 2.4%.
Stocks in Mumbai retained upward bias for the sixth day in a row after positive earnings supported cautiously optimistic market sentiment.
Existing Home Sales Fell 1.5% In September
Brian Turner
20 Oct, 2022
New York City
Existing home sales in September fell 1.5% to 4.71 million annual rate, the lowest rate in 2022 and dropped to the level not seen since September 2012, excluding the onset of coronavirus in 2020.
Home sales declined for the eighth month in a row as mortgage rates continue to escalate and home prices remain elevated across the nation.
Home sales fell 23.8% from a year ago.
The median existing home sale price in the month was $384,800, an increase of 8.4% from a year ago and the inventory of unsold homes declined for the second month in a row to 1.25 million, according to the report released by the National Association of Realtors.
Rising Bond Yields Drag Market Averages Lower
Barry Adams
20 Oct, 2022
New York City
Stocks on Wall Street turned morning gains to evening losses after bond yields advanced and closed at new 14-year highs.
The latest batch of positive earnings lifted the market sentiment in the early hours of trading, but investors were unnerved by the rise in bond yields.
The rising yields on Treasuries overshadowed corporate earnings as investors worried that the Federal Reserve will continue its aggressive rate hike.
Comments from Philadelphia Fed President Patrick Harker suggested that the central bank is likely to lift rates "well above 4%" and hold rates at elevated levels to bring down inflation to its target range of 2%.
The S&P 500 index fell 0.8% to 3,665.78 and the Nasdaq Composite index dropped 0.6% to 10,614.84.
Crude oil advanced but natural gas prices fell and extended one-week losses on the falling demand and exports.
Crude oil edged up 6 cents to $85.61 and natural gas declined 14 cents to $5.31 a thermal unit.
Treasury yields continued to climb as worries of rate-path overshadowed positive earnings from the latest batch of corporate earnings.
The yield on 2-year Treasury notes increased to 4.62%, 10-year Treasury notes jumped to 4.24% and 30-year bonds increased to 4.23%.
Existing Home Sales Fell In September
Existing home sales in September fell 1.5% to 4.71 million annual rate, the lowest rate in 2022 and dropped to the level not seen since September 2012, excluding the onset of coronavirus in 2020.
Home sales declined for the eighth month in a row as mortgage rates continue to escalate and home prices remain elevated across the nation.
The median existing home sale price in the month was $384,800, an increase of 8.4% from a year ago and the inventory of unsold homes declined for the second month in a row to 1.25 million, according to the report released by the National Association of Realtors.
U.S. Stocks Movers
AT&T Inc rose 7.7% to $16.74 after the telecom operator posted better-than-expected quarterly earnings as consumers splurge on latest smartphones and the company adds more subscribers for its fiber broadband and wireless services.
The telecom operator reported $30.4 billion in quarterly revenues and earned 68 cents a share.
IBM jumped 4.7% to $128.30 after the tech company reported better-than-expected results and lifted its annual revenue growth forecast to exceed mid-single digit.
Tesla dropped 6.6% after the electric vehicle maker reported third quarter revenue that missed investors' expectations.
Revenue in the third quarter increased 56% to $21.4 billion from $13.7 billion a year ago.
Net income in the quarter doubled to $3.3 billion from $1.6 billion and diluted earnings per share rose to 95 cents from 48 cents a year ago.
Alcoa closed 3% higher and the company reported unexpected quarterly loss after alumina costs rose faster than Aluminum prices. Higher energy costs also weighed on the quarter's results.
Snap closed down 0.7% in regular trading session and in the after-hour trading plunged additional 25.8% to $8.0 after the social media company reported weaker-than-expected revenue of $1.13 billion for the third quarter.
The company also said its Snapchat+ subscription service has 1.5 million users with a monthly charge of $3.99 and is available in 170 countries.
Cautious European Markets
Caution prevailed in European markets despite positive corporate results on the ongoing worries of elevated energy prices and aggressive rate hike worries.
The DAX index edged down 0.3% to 12,706.18, the CAC-40 index increased 0.3% to 6,058.01 and the FTSE index was nearly unchanged at 6,919.29.
The euro edged up to 98.02 U.S. cents and the British pound held near $1.12.
Brent crude increased $2.04 to $94.40 a barrel and TTF natural gas rose 12.5% to 126.52 euros a MWh.
Record Current Account Deficit In Euro Zone
The Euro zone's current account deficit shot up to a record high in August, according to the data released by the European Central Bank.
Deficit increased to 26.323 billion euros in August from 19.960 billion euros in August, and swung from 17.089 billion euros a year ago.
UK Prime Minister's Resignation May Not End Political Chaos
U.K. political turmoil consumed another prime minister in less than two months after Liz Truss was forced to cut short her appointment.
Prime Minister Liz Truss announced her resignation and the UK will search for its fifth prime minister in six years, the third Conservative prime minister forced out in as many years.
Truss' premiership lasted only 45 days, the shortest on record after economic missteps damaged her credibility and party rebellion evaporated her authority.
Political infighting and mini-budget proposals and U-turns sapped support for Truss' leadership as post-Brexit turmoil reached a new high.
About three weeks ago after the release of the Truss government's mini-budget which included unfunded and uncalled tax cuts for the wealthy, sparked a bond market turmoil and sank the pound more than 3%.
The sudden and sharp market swings led to the once unthinkable Gilt market meltdown prompting the Bank of England to take emergency steps costing the central bank 65 billion pounds.
Conservative Party will elect a new leader before October 28 and former finance minister Rishi Sunak and home minister Suella Braverman are expected to run for the leadership position.
Former Prime Minister Boris Johnson is also expected to run for the leadership but Liberal Democratic Party has urged Conservative Party to prevent Johnson from seeking the office again.
With no clear leader in sight, the turmoil in Conservative Party is likely to spillover in financial markets in the weeks and months ahead.
Asian Markets Fall On Diverging Monetary Policy
Benchmark indexes in Asia declined on the worries that the diverging monetary policies of the region with the U.S. may drive the region's currencies lower.
Nikkei 225 Average declined 0.9% to 27,006.96, the Hang Seng index dropped 1.4% to 16,280.22 and the Sensex index increased 0.2% to 59,202.90.
The yen dropped to 150 against the U.S. dollar, the lowest not seen since 1990 and the Japanese bond yield traded above the 0.25% limit set by the Bank of Japan.
Stocks in Mumbai opened lower but major averages pared losses on the corporate earnings optimism.
The rupee dropped to a new low and fell below 83 to a dollar after the reserve currency resumed its climb.
The yuan also dropped to a 14-year low of 7.2205 on the rising U.S. Treasury bond yields.
Movers: Alcoa, Allstate, American Airlines, IBM, Las Vegas Sands, Tesla, WD-40
Scott Peters
20 Oct, 2022
New York City
Alcoa Corp recovered from the morning loss of 10% and traded up 5.5% to $39.69 after the aluminum maker reported unexpected quarterly loss, reflecting restructuring and pension charges..
Third quarter revenue declined to $2.85 billion from $3.1 billion a year ago.
The company swung to a loss of $746 million from a net income of $337 million and diluted loss per share was $4.17 from income of $1.76 a year ago.
Alumina prices sourced from third parties increased 16% and average price realized for the sales of aluminum fell 17%.
Allstate Corp dropped 12.2% to $118.56 after the insurance company said in an earnings alert that it would report a third quarter loss.
The loss in the quarter ending in September is estimated in the range between $675 million and $725 million largely on the account of Hurricane Ian.
Pre-tax catastrophe losses for the third quarter, net of reinsurance, are estimated to be $763 million and for the month of September were $440 million, or $348 million after-tax, with approximately 80% of losses related to Hurricane Ian.
American Airlines Group dropped 3.5% to $13.50 despite the company reporting third quarter revenue and earnings ahead of expectations.
Third quarter revenue soared to $13.5 billion from $8 billion a year ago.
Net income in the period surged to $483 million from $169 million and diluted earnings per share rose to 69 cents from 25 cents a year ago.
Transatlantic travel revenue jumped nearly five-fold to $1.9 billion from $408 million and domestic revenues increased to $8.8 billion from $6.5 billion a year ago.
IBM increased 4.5% to $128.01 after the tech company lifted its annual outlook and said that the company is experiencing pick up in business activities in its software and infrastructure segments.
Software segment revenues increased 7%, consulting revenues rose 5% and infrastructure revenues soared 15% in the quarter.
Revenues increased 6% to $14.1 billion from a year ago and net loss was $3.25 billion on the account of one-time charge of $4.4 billion related to pension asset transfer to an insurer.
Despite the currency headwinds, the company estimates 2022 revenues in constant currency to increase more than mid-single digit.
Las Vegas Sands Corp gained 4.7% to $37.28 after the casino operator reported larger-than-estimated quarterly loss.
Third quarter revenues increased to $1.0 billion from $857 million a year ago.
Net loss in the quarter shrank to $381 million from $495 million and diluted loss per share declined to 31 cents from 61 cents a year ago.
The operations in China and Singapore were impacted by the continued travel restrictions and slow recovery in travel spending.
Sands China revenues declined to $251 million from $611 million and net loss increased to $472 million from $423 million a year ago.
Tesla Inc dropped 6.4% to $207.62 after the company posted third quarter results that missed some investors revenue expectations.
Tesla reported third quarter revenue increased 56% to $21.4 billion from $13.7 billion a year ago.
Net income in the quarter doubled to $3.3 billion from $1.6 billion and diluted earnings per share rose to 95 cents from 48 cents a year ago.
In the quarter, free cash flow jumped 148% to $3.3 billion from $1.3 billion a year ago and cash on hand increased to $21.1 billion from $16.09 billion.
Total vehicle production soared 54% to 365,923 units from 237,823 a year ago.
WD-40 Company dropped 10.06% to $153.64 after the household products maker reported weaker-than-expected gross margin in the quarter and fiscal year.
The company reported revenue in the fiscal fourth quarter ending in August rose 13% to $130.4 million from $115.2 million a year ago.
Net income in the quarter surged to $14.7 million from $8.4 million and diluted earnings per share jumped to $1.08 from 61 cents a year ago.
Gross margin in the fiscal fourth quarter was 47.4% compared to 51.2% in the prior year fiscal quarter.
For the full fiscal year, gross margin was 49.1% compared to 54.0% a year ago.
The company forecasted fiscal 2023 net sales growth between 5% and 10% with net sales expected to be between $545 million and $570 million.
Gross margin percentage for the full year is expected to be between 51% and 53%
UK Prime Minister Resigns Raising the General Election Prospects
Bridgette Randall
20 Oct, 2022
Frankfurt
U.K. political turmoil consumed another prime minister in less than two months after Liz Truss was forced to cut short her appointment.
Prime Minister Liz Truss announced her resignation and the UK will search for its fifth prime minister in six years, third Conservative prime minister to lose job in as many years.
Truss' premiership lasted only 45 days, the shortest on record after economic missteps damaged her credibility and party rebellion evaporated her authority.
Political infighting and mini-budget proposals and U-turns sapped support for Truss' leadership as post-Brexit turmoil reached a new high.
About three weeks ago after the release of the Truss government's mini-budget which included unfunded and uncalled tax cuts for the wealthy, sparked a bond market turmoil and sank the pound more than 3%.
The sudden and sharp market swings led the once unthinkable Gilt market meltdown prompting the Bank of England to take emergency steps costing the central bank 65 billion pounds.
The Conservative Party is expected to announce its new leader on or before October 28 and former finance minister Rishi Sunak and the Leader of the House of Commons Penny Mordaunt are expected to be the front runners.
Former Prime Minister Boris Johnson is also looking to to run for the leadership but Liberal Democratic Party has urged Conservative Party to prevent Johnson from seeking the office again.
With no clear leader in sight, the turmoil in Conservative Party is likely to spillover in financial markets in the weeks and months ahead.
The UK may be headed for a general election sooner than 2024 if the Conservative Party fails to stop infighting and finally accepts that the the party's parliament members are not in a position to form a stable government.
For now, the British pound held firm at $1.12 and the yield on the 10-year Gilt traded unchanged at 3.89%.
However, the pound is expected to resume its slide and the yields on the UK government bonds are estimated to resume advance as the U.S. Federal Reserve Bank continues its aggressive rate hikes.
The political turmoil set in motion by the Brexit event in 2016 has been compounded by the coronavirus pandemic and four-decade high inflation and voters may decide the next prime minister sooner than the required date in 2024.
The British pound has fallen about 41.5% from $1.71 on July 7, 2014 to the 4-decade low of $1.05 on September 26. 2022.
Stocks On Wall Street Retain Upward Bias, Yields Scale Higher
Barry Adams
20 Oct, 2022
New York City
Stocks on Wall Street advanced following a stronger-than-anticipated batch of corporate earnings.
The S&P 500 index gained 0.9% to 3,728.21 and the Nasdaq Composite index advanced 1.3% to 10,814.40.
Crude oil advanced but natural gas prices fell and extended one-week losses on the falling demand and exports.
Crude oil edged up $1.12 to $86.67 and natural gas declined 17 cents to $5.29 a thermal unit.
Treasury yields continued to climb as worries of rate-path overshadowed positive earnings from the latest batch of corporate earnings.
The yield on 2-year Treasury notes increased to 4.60%, 10-year Treasury notes jumped to 4.16% and 30-year bonds increased to 4.16%.
IBM reported better-than-expected results and lifted its revenue forecast.
Tesla dropped 4.4% after the electric vehicle maker reported third quarter revenue increased 56% to $21.4 billion from $13.7 billion a year ago.
Net income in the quarter doubled to $3.3 billion from $1.6 billion and diluted earnings per share rose to 95 cents from 48 cents a year ago.
Cautious European Markets
Caution prevailed in European markets despite positive corporate results on the ongoing worries of elevated energy prices and aggressive rate hike worries.
The DAX index edged down 0.3% to 12,706.18, the CAC-40 index increased 0.3% to 6,058.01 and the FTSE index was nearly unchanged at 6,919.29.
The euro edged up to 98.02 U.S. cents and the British pound held near $1.12.
Brent crude increased $2.04 to $94.40 a barrel and TTF natural gas rose 12.5% to 126.52 euros a MWh.
Record Current Account Deficit In Euro Zone
The Euro zone's current account deficit shot up to a record high in August, according to the data released by the European Central Bank.
Deficit increased to 26.323 billion euros in August from 19.960 billion euros in August, and swung from 17.089 billion euros a year ago.
UK to Appoint Fifth Prime Minister In Six Years
Political chaos in the U.K. also weighed on the market sentiment.
Prime Minister Liz Truss announced her resignation and the UK will search for its fifth prime minister in the last six years. Prime Minister Truss survived in her position for about two months.
Political infighting and mini-budget missteps sapped support for Truss' leadership as post-Brexit turmoil reached a new high.
Asian Markets Fall On Diverging Monetary Policy
Benchmark indexes in Asia declined on the worries that the diverging monetary policies of the region with the U.S. may drive the region's currencies lower.
Nikkei 225 Average declined 0.9% to 27,006.96, the Hang Seng index dropped 1.4% to 16,280.22 and the Sensex index increased 0.2% to 59,202.90.
The yen dropped to 150 against the U.S. dollar, the lowest not seen since 1990 and the Japanese bond yield traded above the 0.25% limit set by the Bank of Japan.
Stocks in Mumbai opened lower but major averages pared losses on the corporate earnings optimism.
The rupee dropped to a new low and fell below 83 to a dollar after the reserve currency resumed its climb.
The yuan also dropped to a 14-year low of 7.2205 on the rising U.S. Treasury bond yields.
Tesla Third Quarter Earnings Double, Shanghai Picks Up Pace
Scott Peters
19 Oct, 2022
New York City
Tesla reported third quarter revenue increased 56% to $21.4 billion from $13.7 billion a year ago.
Net income in the quarter doubled to $3.3 billion from $1.6 billion and diluted earnings per share rose to 95 cents from 48 cents a year ago.
In the quarter, free cash flow jumped 148% to $3.3 billion from $1.3 billion a year ago and cash on hand increased to $21.1 billion from $16.09 billion.
Total vehicle production soared 54% to 365,923 units from 237,823 a year ago.
Supercharge stations increased 32% to 4,283 at the end of the third quarter from 3,254 a year ago.
Production at the Shanghai, China facility picked up pace in the third quarter after a production slowdown on the account of zero-Covid policy.
The Shanghai facility has installed production capacity of 750,000 of model 3 and model Y Tesla vehicles and remains a main hub in supplying vehicles to markets outside of North America.
Production facility in Berlin, Germany has an installed capacity of 250,000 Model Y vehicles and now reached weekly production of 2,000 vehicles.
The company guided initial phase of Tesla Semi is scheduled in December 2022.
Tesla closed up 0.8% to $222.04 at the end of the regular trading session and eased 5% to $210.95 in after-hour session and traded near the 2022-low of $209.
Stocks Meandered as Rate Path Worries Overshadowed Earnings
Barry Adams
19 Oct, 2022
New York City
Benchmark indexes on Wall Street declined as investors worried about the Federal Reserve's next move despite stronger-than-anticipated earning results.
Popular indexes declined after rising for two days in a row and bond yields resumed advance as the rate decision date approaches in two weeks.
The hawkish comments from Fed officials supported the yield's advance and Minneapolis Fed President Kashkari supported the view that rates may have to continue to rise beyond 4.75% if underlying inflation remains elevated.
"The Fed can't pause its campaign of monetary policy tightening once its benchmark interest rate reaches 4.5% to 4.75% if "underlying" inflation is still accelerating," Kashkari intoned in a panel discussion at a conference.
The S&P 500 index fell 0.7% to 3,695.16 and the Nasdaq Composite index declined 0.9% to 10,680.51.
Crude oil rose $3.11 to $85.90 a barrel and natural gas fell 25 cents to $5.48 a thermal unit.
The yield on 2-year Treasury notes edged up to 4.56%, 10-year Treasury notes increased to 4.15% and 30-year bonds edged higher to 4.13%.
After the close, IBM reported better-than-expected results and lifted its revenue forecast.
Tesla dropped in after hour trading after the electric vehicle maker reported third quarter revenue increased 56% to $21.4 billion from $13.7 billion a year ago.
Net income in the quarter doubled to $3.3 billion from $1.6 billion and diluted earnings per share rose to 95 cents from 48 cents a year ago.
September Housing Starts Declined
Housing starts fell 8.1% to an annualized rate of 1.439 million in September, lower than the revised 1.566 million rate in August, U.S. Census Bureau reported Wednesday.
Home sales have been on the decline after the sustained rise in home prices and a surge in mortgage rate.
Mortgage rates have risen from near 2.2% to above 7.2% in less than a year.
Single-family home starts declined 4.7% to 892,000 rate, the lowest since May 2020. Multi-family housing starts dropped 13.1% to 530,000.
U.S. Stock Movers
Generac Holdings Inc plunged 24.8% to $111.11 after the power company lowered its earnings and sales growth outlook.
The company revised its sales growth outlook in the range 22% and 24% from the previous estimate between 36% and 40%.
The company also lowered its full-year 2022 net income margin, before deducting for non-controlling interests, between 9.0% and 10.0% compared to the previous guidance of 13.0 to 14.0%.
The company said preliminary net sales increased 15% to approximately $1.09 billion during the third quarter of 2022 from $943 million in the prior-year third quarter.
Preliminary net income fell to $58 million or $0.83 a share compared to $132 million or $1.93.
Interactive Brokers Group, Inc advanced 6.5% to $75.77 after the company said third quarter revenues increased to $790 million from $464 million a year ago.
Diluted earnings per share increased to 97 cents from 43 cents a year ago.
Commission revenue increased 3% to $320 million and net interest income soared 73% to $473 million.
The company also declared a cash dividend of 10 cents a share.
Intuitive Surgical, Inc soared 9.4% to $211.90 after the medical equipment maker posted third quarter sales increased 11% to $1.56 billion from $1.40 billion a year ago.
Net income in the period fell to $324 million from $381 million and diluted earnings per share declined to 90 cents from $1.04 a year ago.
The company also grew its da Vinci Surgical System installed base by 13% to 7,364 systems at the end of the third quarter from 6,525 a year ago.
Netflix Inc soared 13.8% after the streaming service provider reported strong subscriber growth and revenue and earnings rose in the third quarter.
The company added 2.41 net new subscribers, more than twice the additions the company had estimated in the previous quarter.
Procter & Gamble jumped 2.2% after the consumer goods maker reported better-than-expected earnings.
United Airlines jumped more than 7% after the international airline said resilient travel demand is likely to lift annual earnings.
Winnebago Industries, Inc plunged 10.9% to $53.66 after the company reported earnings ahead of market expectations but the backlog plunged.
The maker of motorhomes said revenue in the fiscal fourth quarter ending in August increased 13.8% to $1.18 billion from $1.04 billion a year ago.
Net income in the quarter decreased 1.8% to $82.6 million from $84.1 million and diluted earnings per share increased to $2.61 from $2.45 a year ago.
Motorhomes backlog declined 26.7% to $1.7 billion at the end of the fiscal fourth quarter from a year ago on higher dealer inventories.
Towable segment backlog plunged 66.2% to $576.5 million "due to normalized dealer inventories" and backlog for the Marine segment was $314.7 million and "remain elevated as low dealer inventories persist."
European Markets Halt 4-day Winning Streak
European markets traded lower snapping a four-day winning streak after stocks in construction and financial services led the decliners.
Bond yields were on the rise in Europe after the consumer price inflation in the UK rose to 10.1% in September from 9.9% in August, the Office for National Statistics reported today.
The UK inflation rebounded to the level last seen in July stoking the fears of another large-size rate hike.
The eurozone inflation rate was revised lower to 9.9% in September from the previous estimate of 10.0%, Eurostat said in its final report on Wednesday.
Despite the slight downward revision, the inflation rate was record high since the comparable record keeping began in 1991, driven by a 40.7% surge in energy price following a 38.6% rise in August.
Major averages declined in Europe and bond yields rose.
The DAX index decreased 0.17%or 22.15 to 12,743.72, the CAC-40 index edged up 0.07% or 4.69 to 6,069.43 and the FTSE 100 index fell 0.07% or 5.43 to 6,931.31.
The yield on 10-year German bunds rose to 2.37%, French bonds increased to 2.95%, UK Gilts edged down to 3.88% and Italian bonds rose to 4.77%.
The euro edged down to 97.82 U.S. cents and the British pound turned lower to $1.124.
Brent crude oil edged up $1.30 to $91.39 a barrel and TTF natural gas futures rose 2% to 115.50 euros MWh.
Asian Markets Close Mixed
Asian markets closed mixed and bond yields rose across the region.
The Nikkei 225 average rose 0.4% to 27,257.38, the Hang Seng index dropped 2.4% to 16,511.28 and the Sensex index added 0.3% to 59,107.19.
The yen traded at a new 32-year low of 149.75 and the Indian rupee dropped to a new record low of 82.94 against the U.S. dollar.
The renminbi declined to 7.28 and the Korean won dropped to 1,434.67.
Movers: Ally, Baker Hughes, Generac, Interactive Brokers, Intuitive Surg, Netflix, P&G, Winnebago
Scott Peters
19 Oct, 2022
New York City
Ally Financial Inc declined 8.7% to $26.31 after the financial services company said total net revenues in the third quarter increased 2% to $2.02 billion from $1.99 billion a year ago.
Net income in the period plunged 60% to $272 million from $683 million and diluted earnings per share dropped to 88 cents from $1.89 a year ago.
Retail customer base increased to 2.6 million and retail deposit base increased $2.7 billion to $133.9 billion.
Provision for credit losses jumped by $362 million to $438 million, reflecting losses "which are normalizing in-line with expectations."
Baker Hughes Co increased 6.6% to $25.65 after the oil services company reported third quarter revenues increased 5% to $5.4 billion from $5.1 billion a year ago.
The company swung to a net loss of $17 million from a profit of $8 million and diluted loss was 2 cents from earnings of 1 cent a year ago.
"Despite these economic challenges, we remain positive on the outlook for oil and gas.
We believe the fundamentals remain supportive of a multi-year upturn in global upstream spending, and that elevated natural gas and LNG pricing remains constructive for future FIDs," said said chief executive Lorenzo Simonelli.
Housing Starts Declined In September
Brian Turner
19 Oct, 2022
New York City
Housing starts fell 8.1% to an annualized rate of 1.439 million in September, lower than the revised 1.566 million rate in August, U.S. Census Bureau reported Wednesday.
Home sales have been on the decline after the sustained rise in home prices and a surge in mortgage rate.
Mortgage rates have risen from near 2.2% to above 7.2% in less than a year.
Single-family home starts declined 4.7% to 892,000 rate, the lowest since May 2020. Multi-family housing starts dropped 13.1% to 530,000.
European Markets Halt 4-day Advances, Natural Gas at 4-month Low
Bridgette Randall
19 Oct, 2022
Frankfurt
European markets traded lower snapping a four-day winning streak after stocks in construction and financial services led the decliners.
Bond yields were on the rise in Europe after the consumer price inflation in the UK rose to 10.1% in September from 9.9% in August, the Office for National Statistics reported today.
The UK inflation rebounded to the level last seen in July stoking the fears of another large-size rate hike.
The eurozone inflation rate was revised lower to 9.9% in September from the previous estimate of 10.0%, Eurostat said in its final report on Wednesday.
Despite the slight downward revision, the inflation rate was record high since the comparable record keeping began in 1991, driven by a 40.7% surge in energy price following a 38.6% rise in August.
Major averages declined in Europe and bond yields rose.
The DAX index decreased 0.17%or 22.15 to 12,743.72, the CAC-40 index edged up 0.07% or 4.69 to 6,069.43 and the FTSE 100 index fell 0.07% or 5.43 to 6,931.31.
The yield on 10-year German bunds rose to 2.37%, French bonds increased to 2.95%, UK Gilts edged down to 3.88% and Italian bonds rose to 4.77%.
The euro edged down to 97.82 U.S. cents and the British pound turned lower to $1.124.
Brent crude oil edged up $1.30 to $91.39 a barrel and TTF natural gas futures rose 2% to 115.50 euros MWh.
Stocks Lack Direction and Bond Yields Resume Advance
Barry Adams
19 Oct, 2022
New York City
Stocks struggled for direction in early trading and investors worried that looming recession and elevated inflation may accelerate earnings shortfall.
The S&P 500 index fell 0.2% to 3,712.35 and the Nasdaq Composite index declined 0.3% to 10,743.57.
United Airlines jumped more than 7% after the international airline said resilient travel demand is likely to lift annual earnings.
Procter & Gamble jumped 2.2% after the consumer goods maker reported better-than-expected earnings.
Netflix Inc soared 13.8% after the streaming service provider reported strong subscriber growth and revenue and earnings rose in the third quarter.
Crude oil rose $1.42 to $84.12 a barrel and natural gas fell 16 cents to $5.56 a thermal unit.
The yield on 2-year Treasury notes edged up to 4.53%, 10-year Treasury notes increased to 4.10% and 30-year bonds edged higher to 4.09%.
September Housing Starts Fell
Housing starts fell 8.1% to an annualized rate of 1.439 million in September, lower than the revised 1.566 million rate in August, U.S. Census Bureau reported Wednesday.
Home sales have been on the decline after the sustained rise in home prices and a surge in mortgage rate.
Mortgage rates have risen from near 2.2% to above 7.2% in less than a year.
Single-family home starts declined 4.7% to 892,000 rate, the lowest since May 2020. Multi-family housing starts dropped 13.1% to 530,000.
Bond Yields Advance In Europe, Euro Eases
European markets traded lower snapping a four-day winning streak after stocks in construction and financial services led the decliners.
Bond yields were on the rise in Europe after the consumer price inflation in the UK rose to 10.1% in September from 9.9% in August, the Office for National Statistics reported today.
The UK inflation rebounded to the level last seen in July stoking the fears of another large-size rate hike.
The eurozone inflation rate was revised lower to 9.9% in September from the previous estimate of 10.0%, Eurostat said in its final report on Wednesday.
Despite the slight downward revision, the inflation rate was record high since the comparable record keeping began in 1991, driven by a 40.7% surge in energy price following a 38.6% rise in August.
Major averages declined in Europe and bond yields rose.
The DAX index decreased 0.17%or 22.15 to 12,743.72, the CAC-40 index edged up 0.07% or 4.69 to 6,069.43 and the FTSE 100 index fell 0.07% or 5.43 to 6,931.31.
The yield on 10-year German bunds rose to 2.37%, French bonds increased to 2.95%, UK Gilts edged down to 3.88% and Italian bonds rose to 4.77%.
The euro edged down to 97.82 U.S. cents and the British pound turned lower to $1.124.
Brent crude oil edged up $1.30 to $91.39 a barrel and TTF natural gas futures rose 2% to 115.50 euros MWh.
Asian Markets Close Mixed
Asian markets closed mixed and bond yields rose across the region.
The Nikkei 225 average rose 0.4% to 27,257.38, the Hang Seng index dropped 2.4% to 16,511.28 and the Sensex index added 0.3% to 59,107.19.
The yen traded at a new 32-year low of 149.75 and the Indian rupee dropped to a new record low of 82.94 against the U.S. dollar.
The renminbi declined to 7.28 and the Korean won dropped to 1,434.67.
Goldman Q3 Earnings Falls on Weak Investment Banking Offset by Higher Bond Trading Fees
Scott Peters
18 Oct, 2022
New York City
Goldman Sachs Group Inc increased 3.2% to $316.38 after the financial services provider reported lower but better-than-expected earnings supported by bond trading activities.
Net revenues in the quarter declined to $11.975 billion from $13.608 billion a year ago.
Net income declined to $3.06 billion from $5.4 billion a year ago and diluted earnings per share fell to $8.25 from $14.93.
Segment Breakdown
Global markets trading in bonds and equities dominated financial company's quarterly results.
Global markets, which includes commodities and currencies, increased 11% from a year ago but declined 4% from the previous quarter to $6.2 billion.
Net revenue in bonds, currencies and commodities increased 41% to $3.53 billion, primarily reflecting significantly higher net revenues in intermediation or brokerage fees, driven by significantly higher net revenues in interest rate products and currencies, and higher net revenues in commodities and credit products, partially offset by significantly lower net revenues in mortgages.
Revenues in the equities brokerage business declined 14% to $2.68 billion.
Net revenue in asset management unit declined 20% from a year ago and jumped 68% from the previous quarter to $1.82 billion, primarily reflecting lower net revenues in equity and debt products offset by higher management fees.
Weak market environment also impacted investment banking unit fees.
Investment banking revenues plunged 57% from a year ago and 26% lower than in the previous quarter to $1.58 billion, reflecting weak advisory and underwriting fees.
Consumer and wealth management fees increased 18% from a year ago and 9% from the previous quarter to $2.38 billion.
Net revenues in wealth management was nearly unchanged at $1.63 billion and consumer banking revenues nearly doubled to $744 million reflecting higher credit card balances and higher deposit spreads.
Provision for credit losses increased to $515 million from $175 million a year ago but fell from $667 million in the second quarter.
The allowance for credit losses was $5.59 billion as of September 30, 2022.
Geographic Breakdown
Americas revenues accounted for 63%, Europe and Middle East 26% and Asia accounted for 11% of total revenues in the third quarter.
Book Value
Book value per common share increased 2.1% during the quarter and 8.4% during the first nine months of 2022 to $308.22.
Movers: Carnival Corp, Goldman Sachs, Hasbro, Lockheed, Microsoft, Salesforce, XPO Logistics
Scott Peters
18 Oct, 2022
New York City
Goldman Sachs Group Inc increased 3.2% to $316.38 after the financial services provider reported lower but better-than-expected earnings supported by bond trading activities.
Salesforce Inc jumped 5.2% to $154.52 after activist investor Starboard took a position in the company.
Colgate Palmolive Company increased 0.8% to $72.71 after activist investor Dan Loeb controlled Third Point acquired a stake in the company.
The activist investor investments were reported by CNBC without citing sources.
Microsoft Corporation increased 0.7% to $239.01 and erased morning gains of 2.7% after the company confirmed it cut about 1,000 jobs as revenue growth slows. The news was first reported by Axios and independently verified by ticker.com.
Semiconductor stocks also declined on the worries that the current slowdown in personal computing devices may last longer than anticipated.
Intel Corporation declined 2.1% to $25.90, Advanced Micro Devices, Inc inched up 0.1% to $58.03, Nvidia edged up 1% to $120.02 and Taiwan Semiconductor dropped 1.7% to $63.74.
Home builders were in focus after the industry sentiment extended its recent plunge to a 12-year low, excluding a brief period during the start of the coronavirus pandemic in March 2020.
The National Association of Home Builders/Wells Fargo Housing Market Index declined 8 points to 38 in October from the previous month.
Any reading below 50 indicates negative sentiment.
Despite the weak reading on the sentiment, home builder stocks advanced.
Lennar Corp added 3.2% to $76.86, PulteGroup Inc jumped 3.1% to $39.48 and Toll Brothers increased 1.9% to $42.86.
Carnival Corp jumped 11.5% to $8.11 after the cruise company's subsidiary launched an offering of $1.25 billion senior priority notes due in 2028.
The notes will be backed by 12 unencumbered vessels with an aggregate net book value of approximately $8.2 billion and proceeds will be used to repay principal on 1.875% senior notes due in 2022.
XPO Logistics declined 2.1% to $47.48 after the freight transportation company issued an earnings alert ahead of its scheduled earnings report on October 31.
The company said third quarter revenue is estimated at $3.04 billion and operating earnings between $181 million and $185 million.
North American less-than-truckload segment revenue per hundredweight, excluding fuel, is expected to increase 7% in the third quarter.
Lockheed Martin Corporation soared 8.7% to $431.93 after the defense contractor reported third quarter net sales increased $16.6 billion from $16.0 billion a year ago.
Net income jumped to $1.8 billion or $6.71 per share compared to $614 million or $2.21 a year ago.
Hasbro, Inc declined 1.8% to $66.47 after the toy maker reported third quarter revenue declined 15% to $1.6 billion from a year ago.
"As expected, the third quarter is our most difficult comparison and was further impacted by increasing price sensitivity for the average consumer," said Chris Cocks, Hasbro chief executive officer.
Net income in the quarter plunged 49% to $129.2 million from $252.2 million a year ago and diluted earnings per share dropped to 93 cents from $1.83.
Stocks Extend Rally, Oil Under Pressure, Home Builders Sentiment Drops
Barry Adams
18 Oct, 2022
New York City
Major averages on Wall Street advanced on earnings optimism but bond yields remained near 14-year highs.
Goldman Sachs reported lower but better-than-expected earnings supported by bond trading activities.
Salesforce was also in focus after activist investor Starboard took a position in the company.
Colgate Palmolive added more than 2% after activist investor Dan Loeb controlled Third Point acquired a stake in the company.
The activist investor investments were reported by CNBC without citing sources.
Microsoft erased morning gains of 2.7% after the company confirmed it cut about 1,000 jobs as revenue growth slows. The news was first reported by Axios and independently verified by ticker.com.
Semiconductor stocks also declined on the worries that the current slowdown in personal computing devices may last longer than anticipated.
Home builders were in focus after the industry sentiment extended its recent plunge to a 12-year low, excluding a brief period during the start of the coronavirus pandemic in March 2020.
The National Association of Home Builders/Wells Fargo Housing Market Index declined 8 points to 38 in October from the previous month.
Any reading below 50 indicates negative sentiment.
The S&P 500 index jumped 0.9%or 32.53 to 3,710.81 and the Nasdaq Composite index increased 0.8% or 81.17 to 10,756.32.
Crude oil fell $2.93 to $82.43 a barrel and natural gas dropped 6 cents to $5.93 a thermal unit.
The yield on 2-year Treasury notes edged down to 4.42%, 10-year Treasury notes eased to 3.99% and FTSE 100 index dropped to 4.03%.
European Markets Advance, Natural Gas Drops to 4-month Low
European markets extended gains as natural gas price dropped to a 4-month low.
Natural gas declined for the fourth day in a row on milder than usual weather conditions across Europe and a large stockpile eased shortage worries.
Germany ordered two nuclear power plants to continue operating till mid-2023 and Spain's national gas grid operator Enagas said it may reject the next shipment of LNG on the account of lack of storage capacity.
Italy's trade account swung to a deficit in August and Spain's trade deficit widened in the month.
German business sentiment improved in October by 2.7 points to -59.2, from the previous month's 14-year low of 61.9, the Center for Economic Research said Tuesday.
Brent crude fell $2.66 to $88.94 a barrel and natural gas TTF futures dropped 11.7% to 113.11 euros MWh.
The DAX index jumped 1.75% or 221.99 to 12,869.00, the CAC-40 index increased 1.06% or 63.82 to 6,104.48.
The euro edged down to 98.28 U.S. cents and the British pound inched lower to $1.129.
The yield on 10-year German Bunds declined to 2.23%, French bonds edged lower to 2.817%, British Gilt to 3.92% and Italian bonds to 4.61%.
Asian Markets Extend Rally On Earnings Optimism
Stocks in Asia closed higher as investors focused on domestic earnings and the Hang Seng index soared.
BYD, the maker of electric vehicles, reported third quarter earnings soared more than three-fold.
The People's Bank of China pumped 500 billion renminbi or $70 billion of liquidity into the financial system on Monday.
The new medium term lending facility offered loans at 2.75%, the key rate that acts as a base for the prime lending rate.
The PoB is set to announce its rate decision on October 20 and rates are expected to be left unchanged.
The Nikkei 225 average rose 1.4% or 382.35 to 27,156.14, the Hang Seng index increased 1.8% or 301.68 to 16,914.58 and the Sensex index rose 0.9% or 549.62 to 58,960.60.
The Kospi gained 1.4% to close at 2,249.95 ahead of earnings from Hyundai Motor and several other large conglomerates.
Hyundai Motor added 0.6% and SK Telecom increased 2.5%.
Stocks in Mumbai advanced after the Reserve Bank of India highlighted resilient economic activities.
L&T Tech Services said fiscal second quarter revenue increased 24% and net income jumped 23% from a year ago.
Adani Defence & Aerospace agreed to acquire the largest independent air services contractor Air Works for 400 crore rupees or $50 million.
The yield on 10-year Japanese bonds held firm at 0.25%, Chinese bonds at 2.70% and Indian bonds at 7.42%.
The yen traded near a 32-year low of 149.11 against a dollar, the Indian rupee at 82.20 and Chinese yuan at 7.22.