Market Update
GDP and Durable Goods Orders Data Lift Sentiment On Wall Street
Barry Adams
26 Jan, 2023
New York City
U.S. stocks opened higher after a flood economic reports provided more insights in the health of the economy.
GDP in the fourth quarter rose at a faster annual pace than expected on the strength in consumer spending, business inventories and fixed investments and stable government spending.
International goods deficit expanded in December after imports rose at a faster pace than exports.
Stocks retained upward bias after Tesla reported a surge in sales and profit and the electric vehicle maker cautioned that the average selling price for the vehicle is expected to keep falling.
Tesla Inc's larger vehicle discounts in the U.S. are likely to have a ripple effect in the industry as the company is expected to cross two million vehicle sales in 2023.
Investors also digested the latest batch of earnings and American Airlines and Southwest were in focus after the release of diverging quarterly results.
Chevron also boosted its quarterly dividends and expanded its stock repurchase program.
The S&P 500 index rose 0.7% to 4,045.90 and the Nasdaq Composite index advanced 1.4% to 11,474.98.
The S&P 500 index is up 1.9% and the Nasdaq Composite is up 3.1% in the week so far.
Crude oil price increased $2.01 to $82.16 a barrel and natural gas prices fell 22 cents to $2.84 a thermal unit.
The yield on 2-year Treasury notes edged higher to 4.17%, 10-year Treasury notes increased to 3.47% and 30-year Treasury bonds rose to 3.62%.
U.S. GDP Growth Slowed In Fourth Quarter
The U.S. economy expanded at 2.9% annual pace in the fourth quarter, slower than 3.2% in the third quarter, the BEA said in a preliminary report.
For all of 2022, GDP expanded 2.1% following a 5.9% rise in 2021.
Economists are estimating a mild recession may drag the 2023 growth near zero after seven rate hikes in 2022 and interest rates running at highs not seen in nearly 40 years.
U.S. Durable Goods Orders Surged In December
U.S. durable goods orders soared 5.6% in December from previous month and orders, largest increase since July 2020.
Transportation orders increased 16.7% and new orders excluding transportation fell 0.1%.
Transportation equipment, also up four of the last five months, drove the increase, $15.5 billion or 16.7% to $108.1 billion.
New orders excluding defense orders rose 6.3%.
Shipments of manufactured durable goods in December, up nineteen of the last twenty months, increased $1.4 billion or 0.5% to $277.7 billion, following a 0.4% November increase.
Transportation equipment, up fourteen of the last fifteen months, drove the increase, $1.5 billion or 1.7% to $93.8 billion.
International Goods Trade Deficit Expanded In December
The international trade deficit expanded to $90.3 billion in December, up $7.3 billion from $82.9 billion in November.
Exports of goods for December fell $2.6 billion from November to $166.8 billion, $2.6 billion and imports fell $4.7 billion to $257.1 billion, $4.7 billion.
Weekly Jobless Claims Fall
U.S. weekly jobless claims fell 6,000 from the downwardly revised previous week to 186,000 in the week ending January 21. the lowest since April and the 4-week moving average fell 9,250 to 197,000.
U.S. Movers
American Airlines advanced 1.6% in pre-market trading after the company reported better-than-expected earnings on higher holiday travel demand and rising prices for travel services.
American Airlines said the December quarter revenue soared 40% to $13.2 billion and swung to net income of $803 million from a loss of $931 million.
Diluted earnings per share in the latest quarter was $1.14 from a loss of $1.44 in the previous year.
CSX Corp fell 1% to $31.05 after the railroad operators reported mixed quarterly results and said price increase and higher storage revenue supported the increase in quarterly results.
CSX Corp said fourth quarter revenue increased 9% to $3.73 billion and net income increased 9% to $1.0 billion from $934 million and earnings per share rose 17% to 49 cents from 42 cents a year ago.
Chevron Corp rose 3.5% to $185.40 after the oil explorer and refiner increased its quarterly dividends and expanded its stock repurchase program.
Chevron Corp said its board authorized a new $75 billion stock repurchase program with no expiry date from April 1 after the ending of the $25 billion plan that will be completed at the end of March.
Chevron Corp increased quarterly dividend by 6% to $1.51 a share payable on March 10 to shareholders on record February 16, 36th consecutive year of increase in annual dividend payout per share.
Las Vegas Sands soared 4% after the operator of casinos in Las Vegas, Singapore and Macao reported a rebound in activities in Singapore.
Revenue in the December quarter increased to $1.1 billion from $1.0 billion and net loss widened to $274 million from $194 million and diluted loss per share expanded to 22 cents from 17 cents a year ago.
Levi Strauss soared 5.5% after the maker of denim apparel reported better-than-expected quarterly results.
Fiscal fourth quarter revenue ending in November decreased 6% to $1.6 billion and net income fell 1% to $151 million and diluted earnings per share 38 cents from 37 cents a year ago.
Southwest Airlines fell 2.4% to $25.98 after the company swung to a quarterly loss following the cancellation of 1,6700 flights during the holiday period.
Southwest Airlines said revenue in the December quarter increased 22% to $6.2 billion and swung to a net loss of $220 million or 37 cents from a profit of $68 million or 11 cents a share.
Tesla Inc soared 8.5% to $156.49 after the electric vehicle maker reported record quarterly revenues and profit and record production and deliveries of vehicles despite the market struggles in China.
Tesla Inc said electric vehicles production surged 44% from a year ago to 439,701 in the December quarter and deliveries rose 31% to 405,278.
Tesla Inc said revenue in the December quarter increased 37% to $24.3 billion and net income soared 59% to $3.7 billion and diluted earnings per share rose to $1.07 from 68 cents a year ago.
Europe Indexes Swing to Positive Territory
European indexes advanced following upbeat earnings updates and hopes of softer rate hike in the U.S. also supported the market sentiment.
STMicroelectronics, Thales, Worldline, Sartorius, Infineon Technologies and Zalando advanced after the release of earnings updates.
Pernod Ricard and Essilor Luxottica fell on earnings worries.
The DAX index increased 0.07% to 15,093.20, the CAC-40 index rose 0.7% to 7,096.34 and the FTSE 100 index inched up 0.07% to 7,751.26.
The euro traded at $1.0889, the British pound edged up to $1235 and the Swiss franc advanced to 91.94 U.S. cents.
Brent crude oil rose 6 cents to $86.75 a barrel and the Dutch TTF natural gas futures increased a fraction to 56.71 per MWh.
The yield on 10-year German Bunds traded at 2.18%, French bonds at 2.64%, UK Gilts at 3.45% and Italian bonds at 4.14%.
Asian Markets Trade Higher
Financial markets in Asia opened higher and benchmark indexes in Tokyo trimmed losses but indexes in Seoul and Hong Kong soared.
Market sentiment was positive in the region on the hopes that the U.S. Federal Reserve may slow rate hike pace on the waning wage and price inflation and optimism about the latest U.S. economic data scheduled to be released later in the day.
Investors are awaiting the release of fourth quarter GDP and durable goods orders data.
The Nikkei 225 average declined 0.1% to 27,362.75 and the yen eased to 129.81 against the U.S. dollar.
Toyota Motor Corp fell 0.6% to ¥1,893.0 after the company said founder's grand-son Akio Toyoda stepped down from the leadership role to make way for a younger leader.
Exporters traded higher after the yen weakened.
Canon edged up 0.2% to ¥2,945.50 and Panasonic Holdings Corp increased 2.2% to ¥1,197.50.
Softbank Corp closed unchanged and Fast Retailing, the parent of Uniqlo, edged down 0.1%.
Japan's Wholesale Inflation Eased
Producer price index, a measure of wholesale inflation, increased at a slower pace of 1.5% in December after rising at 1.7% in November, said the Bank of Japan.
On a monthly basis, the wholesale inflation slowed to 0.1% from 0.2$ rise in November.
In 2022, producer prices increased 1.7%.
Toyota Motor Akio Toyoda Steps Down
Toyota Motor appointed Lexus President Koji Sato as the next chief executive of the company, after Akio Toyoda decided to step down and assume chairman role.
Hang Seng Index Rebounds, India Markets Closed
Financial markets in India were closed for the Republic Day holiday and markets in mainland China and Taiwan are closed to celebrate Lunar New Year.
The Hang Seng index soared 2.4% to 22,566.78 after the market reopened and on the hopes that the ending of the "zero-Covid" policy will revive domestic demand.
The Kospi Index in Seoul increased 40 points or 1.60% to close at 2,468.65 and traded between 2,426.40 and 2,468.65.
Movers: American Airlines, CSX, Chevron, Levi Strauss, Las Vegas Sands, Southwest Air, Tesla
Scott Peters
26 Jan, 2023
New York City
American Airlines advanced 1.6% in pre-market trading after the company reported better-than-expected earnings on higher holiday travel demand and rising prices for travel services.
American Airlines said the December quarter revenue soared 40% to $13.2 billion and swung to net income of $803 million from a loss of $931 million.
Diluted earnings per share in the latest quarter was $1.14 from a loss of $1.44 in the previous year.
CSX Corp fell 1% to $31.05 after the railroad operators reported mixed quarterly results and said price increase and higher storage revenue supported the increase in quarterly results.
CSX Corp said fourth quarter revenue increased 9% to $3.73 billion and net income increased 9% to $1.0 billion from $934 million and earnings per share rose 17% to 49 cents from 42 cents a year ago.
Chevron Corp rose 3.5% to $185.40 after the oil explorer and refiner increased its quarterly dividends and expanded its stock repurchase program.
Chevron Corp said its board authorized a new $75 billion stock repurchase program with no expiry date from April 1 after the ending of the $25 billion plan that will be completed at the end of March.
Chevron Corp increased quarterly dividend by 6% to $1.51 a share payable on March 10 to shareholders on record February 16, 36th consecutive year of increase in annual dividend payout per share.
Las Vegas Sands soared 4% after the operator of casinos in Las Vegas, Singapore and Macao reported a rebound in activities in Singapore.
Revenue in the December quarter increased to $1.1 billion from $1.0 billion and net loss widened to $274 million from $194 million and diluted loss per share expanded to 22 cents from 17 cents a year ago.
Levi Strauss soared 5.5% after the maker of denim apparel reported better-than-expected quarterly results.
Fiscal fourth quarter revenue ending in November decreased 6% to $1.6 billion and net income fell 1% to $151 million and diluted earnings per share 38 cents from 37 cents a year ago.
Southwest Airlines fell 2.4% to $25.98 after the company swung to a quarterly loss following the cancellation of 1,6700 flights during the holiday period.
Southwest Airlines said revenue in the December quarter increased 22% to $6.2 billion and swung to a net loss of $220 million or 37 cents from a profit of $68 million or 11 cents a share.
Tesla Inc soared 8.5% to $156.49 after the electric vehicle maker reported record quarterly revenues and profit and record production and deliveries of vehicles despite the market struggles in China.
Tesla Inc said electric vehicles production surged 44% from a year ago to 439,701 in the December quarter and deliveries rose 31% to 405,278.
Tesla Inc said revenue in the December quarter increased 37% to $24.3 billion and net income soared 59% to $3.7 billion and diluted earnings per share rose to $1.07 from 68 cents a year ago.
Asian Markets Advanced, Toyota Motor CEO Steps Down
Arjun Pandit
26 Jan, 2023
Mumbai
Financial markets in Asia opened higher and benchmark indexes in Tokyo trimmed losses but indexes in Seoul and Hong Kong soared.
Market sentiment was positive in the region on the hopes that the U.S. Federal Reserve may slow rate hike pace on the waning wage and price inflation and optimism about the latest U.S. economic data scheduled to be released later in the day.
Investors are awaiting the release of fourth quarter GDP and durable goods orders data.
The Nikkei 225 average declined 0.1% to 27,362.75 and the yen eased to 129.81 against the U.S. dollar.
Toyota Motor Corp fell 0.6% to ¥1,893.0 after the company said founder's grand-son Akio Toyoda stepped down from the leadership role to make way for a younger leader.
Exporters traded higher after the yen weakened.
Canon edged up 0.2% to ¥2,945.50 and Panasonic Holdings Corp increased 2.2% to ¥1,197.50.
Softbank Corp closed unchanged and Fast Retailing, the parent of Uniqlo, edged down 0.1%.
Japan's Wholesale Inflation Eased
Producer price index, a measure of wholesale inflation, increased at a slower pace of 1.5% in December after rising at 1.7% in November, said the Bank of Japan.
On a monthly basis, the wholesale inflation slowed to 0.1% from 0.2$ rise in November.
In 2022, producer prices increased 1.7%.
Toyota Motor Akio Toyoda Steps Down
Toyota Motor appointed Lexus President Koji Sato as the next chief executive of the company, after Akio Toyoda decided to step down and assume chairman role.
Hang Seng Index Rebounds, India Markets Closed
Financial markets in India were closed for the Republic Day holiday and markets in mainland China and Taiwan are closed to celebrate Lunar New Year.
The Hang Seng index soared 2.4% to 22,566.78 after the market reopened and on the hopes that the ending of the "zero-Covid" policy will revive domestic demand.
The Kospi Index in Seoul increased 40 points or 1.60% to close at 2,468.65 and traded between 2,426.40 and 2,468.65.
Wall Street Stocks Trim Losses After Tech Stocks Rebounded, Tesla and Microsoft In Focus
Barry Adams
25 Jan, 2023
New York City
Benchmark indexes erased most of the session's losses as investors digested corporate earnings releases and tackled worries about rising rates and recession fears.
Tech stocks turned lower after Microsoft reported weakest quarterly revenue growth in several years and earnings declined more-than-expected.
Microsoft weakness spread to the semiconductor sector and dragged stocks in several sectors after investors downgraded corporate earnings outlook for the year.
Moreover, higher rates will only negatively impact earnings in the year as consumers struggle to adjust to price inflation and businesses struggle to contain input costs.
Despite the earnings worries, benchmark indexes managed to erase losses in the day and looked ahead to earnings from large companies and durable goods orders and fourth quarter GDP growth data.
The S&P 500 index fell 0.73 points to 4,016.22 and the Nasdaq Composite index dropped 20.91 points to 11,313.36.
After the close of regular session, Tesla reported a surge in production and delivery of electric vehicles and record quarterly revenue and profit in the fourth quarter 2022.
Energy Prices Traded Sideways
Crude oil price increased 23 cents to $80.35 a barrel and natural gas futures contract price eased 21 cents to $3.01 a thermal unit.
Treasury Yields Hovered Near Recent Lows
The yield on 2-year Treasury notes decreased to 4.13%, 10-year Treasury notes eased to 3.45% and 30-year Treasury bonds declined to 3.60%.
U.S. Stock Movers
Boeing Company decreased 1.1% to $209.56 after the company said rising operating costs impacted quarterly results.
Boeing Company said revenue in the December quarter soared 35% to $20 billion and net loss shrank to $663 million from $4.2 billion.
Diluted loss per share fell to $1.06 from $7.02 a year ago.
Microsoft Corp decreased 1.5% to $238.45 after the software developer reported weak quarterly revenue growth and earnings fell.
Microsoft said revenue in the December quarter increased 2% to $52.7 billion and net income declined 12% to $16.4 billion and diluted earnings share fell to $2.20 from $2.48 in previous year.
In a conference call with investors, CEO Satya Nadella said revenue in the current quarter is expected to fall between $50.5 billion and $51.5 billion, about $1.0 billion lower than what most analysts on Wall Street were looking for.
The revenue guidance at the mid-point of the range showed an increase of 3% from the previous year.
Azure cloud services revenue decelerated to 38% adjusted for currency swings in the fiscal second quarter from 42% in the previous quarter as clients looked for ways to optimize spending and the division's sales growth declined to 31% including the effect of a strong dollar.
Azure sales growth dropped to "mid-30s" by the end of the quarter and is expected to fall by another "4-to-5 percentage points" in the fiscal second half which ends in June 2023.
Tesla Inc edged up a fraction in the after-hours trading to $145.10 after the electric vehicle maker reported stellar quarterly results.
Tesla Inc said revenue in the December quarter increased 37% to $24.3 billion and net income soared 59% to $3.7 billion and diluted earnings per share rose to $1.07 from 68 cents a year ago.
Tesla said electric vehicles production surged 44% from a year ago to 439,701 in the December quarter and deliveries rose 31% to 405,278.
European Indexes In Negative Territory
European indexes declined on rate hike worries led by losses in tech stocks after Microsoft reported weaker-than-expected revenue growth and earnings.
Recession worries dominated market sentiment after recent layoffs from large tech companies, slower global economic growth outlook and weak outlook for corporate earnings growth kept investors on the sidelines.
The DAX index fell 0.3% to 15,044.0, the CAC-40 index declined 0.4% to 7,020.27 and the FTSE 100 index dropped 0.5% to 7,719.55.
Euro Extend Recent Gains
The euro extended recent gains to a fresh 9-month high after investors anticipated aggressive rate hikes from the ECB to continue and the U.S. Federal Reserve to slow rate hikes.
The euro edged higher to $1.089, the British pound rebounded $1.235 and the Swiss franc edged higher to 91.99 U.S. cents.
Natural Gas Prices Sink Near 16-month Low
Natural gas prices eased for the third day in a row and inched closer to the price last seen in September 2021 amid warmer weather conditions, near-full storage and rising supply.
Brent crude oil increased 45 cents to $86.55 a barrel, the Dutch TTF natural gas futures contract price inched lower 5% to €55.10 per MWh.
UK Wholesale Inflation Fell for the 5th Month
The measure of wholesale inflation declined for the fifth month in a row, calming fears of high inflation and supporting the case for a slower rate hike by the Bank of England.
The UK producer price index slowed to an annual pace of 16.5% in December from 18% in November, the Office for National Statistics reported Wednesday.
The index in October showed wholesale inflation at 20.2%.
The producer price index, a measure of wholesale inflation, has been declining tracking lower energy prices in the last three months.
On a monthly basis, output prices dropped 0.8%, following a 0.1% fall in the previous month and changed at the lowest monthly rate since April 2020.
Europe Stock Movers
Lonza Group AG increased 7.4% to 522.0 Swiss francs after the pharmaceutical contract manufacturing company reported strong financial results and announced a share buyback plan.
In 2022, revenue increased 15% to 6.2 billion Swiss francs and operating earnings improved 57% to 2.1 billion Swiss francs.
The company increased dividend by 17% to 3.50 Swiss francs and proposed a stock repurchase plan of 2.0 billion Swiss francs.
Aviva Plc increased 3.0% to 454.40 pence after the British insurer reiterated its estimate for stock repurchase and dividends.
Polymetal International Plc declined 20% to 276.40 pence after the Russia-focused gold mining company released its fourth quarter and 2022 production data.
Fourth quarter gold equivalent increased 16% to 540 Koz from 467 Koz in the comparable quarter in 2021.
In 2022, gold equivalent production increased 2% to 1,712 Koz, meeting the company estimate of 1.7 million ounces.
2022 revenue declined 3% to $2.8 billion on the back of lower average gold and silver prices.
The company reiterated its 2023 production outlook of 1.7 million ounces and production cost between $950 and $1,000 an ounce.
Tokyo Stocks Advanced On Rate Optimism
Stocks in Tokyo traded higher on rate optimism and investors reacted to corporate earnings.
The Nikkei 225 average increased 0.3% to 27,395.01 and the yen edged higher to 129.77 against the U.S. dollar.
Nidec Corporation declined 5.4% to ¥7,145.0 after the maker of spindle motors used in electronic devices reported weaker-than-expected earnings.
Disco Corp declined 3.5% to ¥39,000.0 after the maker of precision tools reported weaker-than-anticipated quarterly results.
Net sales in the nine-month period ending in December rose 13.8% to 205 billion yen and net income increased 25.7% to 57.2 million yen.
Earnings per share increased to 1,585 yen from 1,261 yen in the previous year.
Weakness In Adani Group Drags Lower India Indexes
Stocks in Mumbai traded lower ahead of the Republic Day holiday and Adani Group stocks declined after the U.S.-based research company published negative comments ahead of the $2.5 billion secondary offering.
Hindenburg Research alleged that Adani Group operates multiple entities in tax havens and siphons revenue from the publicly listed entities.
The research note also alleges that the company is involved in "brazen stock manipulation and accounting fraud scheme," without citing any specific transaction.
Hindenburg holds short positions in the group's stocks and debts and the short seller is looking for a decline in valuation as much as 85%.
"The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India's highest courts," Adani Group refuted in a statement Wednesday.
The Sensex declined 1.3% or 773.69 points to 60,205.06 points and the Nifty index dropped 1.3% or 226.35 points to 17,891.95.
The Indian rupee inched lower to 81.49 against the U.S. dollar.
Mixed Economic Data In Europe Fail to Reverse Downward Trend in Stocks
Bridgette Randall
25 Jan, 2023
Frankfurt
European indexes declined on rate hike worries led by losses in tech stocks after Microsoft reported weaker-than-expected revenue growth and earnings.
Recession worries dominated market sentiment after recent layoffs from large tech companies, slower global economic growth outlook and weak outlook for corporate earnings growth kept investors on the sidelines.
The DAX index fell 0.3% to 15,044.0, the CAC-40 index declined 0.4% to 7,020.27 and the FTSE 100 index dropped 0.5% to 7,719.55.
Euro Extend Recent Gains
The euro extended recent gains to a fresh 9-month high after investors anticipated aggressive rate hikes from the ECB to continue and the U.S. Federal Reserve to slow rate hikes.
The euro edged higher to $1.089, the British pound rebounded $1.235 and the Swiss franc edged higher to 91.99 U.S. cents.
Natural Gas Prices Sink Near 16-month Low
Natural gas prices eased for the third day in a row and inched closer to the price last seen in September 2021 amid warmer weather conditions, near-full storage and rising supply.
Brent crude oil increased 45 cents to $86.55 a barrel, the Dutch TTF natural gas futures contract price inched lower 5% to €55.10 per MWh.
UK Wholesale Inflation Fell for the 5th Month
The measure of wholesale inflation declined for the fifth month in a row, calming fears of high inflation and supporting the case for a slower rate hike by the Bank of England.
The UK producer price index slowed to an annual pace of 16.5% in December from 18% in November, the Office for National Statistics reported Wednesday.
The index in October showed wholesale inflation at 20.2%.
The producer price index, a measure of wholesale inflation, has been declining tracking lower energy prices in the last three months.
On a monthly basis, output prices dropped 0.8%, following a 0.1% fall in the previous month and changed at the lowest monthly rate since April 2020.
Europe Stock Movers
Lonza Group AG increased 7.4% to 522.0 Swiss francs after the pharmaceutical contract manufacturing company reported strong financial results and announced a share buyback plan.
In 2022, revenue increased 15% to 6.2 billion Swiss francs and operating earnings improved 57% to 2.1 billion Swiss francs.
The company increased dividend by 17% to 3.50 Swiss francs and proposed a stock repurchase plan of 2.0 billion Swiss francs.
Aviva Plc increased 3.0% to 454.40 pence after the British insurer reiterated its estimate for stock repurchase and dividends.
Polymetal International Plc declined 20% to 276.40 pence after the Russia-focused gold mining company released its fourth quarter and 2022 production data.
Fourth quarter gold equivalent increased 16% to 540 Koz from 467 Koz in the comparable quarter in 2021.
In 2022, gold equivalent production increased 2% to 1,712 Koz, meeting the company estimate of 1.7 million ounces.
2022 revenue declined 3% to $2.8 billion on the back of lower average gold and silver prices.
The company reiterated its 2023 production outlook of 1.7 million ounces and production cost between $950 and $1,000 an ounce.