Market Update
Movers: Boeing, General Dynamics, F5, Fox Corp, Intuitive Surgical, Microsoft, Nasdaq Inc
Scott Peters
25 Jan, 2023
New York City
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.
The aerospace company reaffirmed its 2023 operating cash flow outlook to between $4.5 billion and $6.5 billion and free cash flow between $3.0 billion and $5.0 billion.
Total company backlog at the end of the December quarter was $404 billion.
During the quarter, the company secured net orders for 376 aircrafts, including an order from United Airlines for 100 737 MAX and 100 787 airplanes.
Commercial airplane division delivered 152 airplanes during the quarter and the backlog of commercial planes was over 4,500 airplanes valued at $330 billion.
General Dynamics Corp declined 3.4% to $227.20 after the defense contractor reported revenue and earnings ahead of expectations but offered a weak 2023 outlook.
Fourth quarter revenue increased 5.4% to $10.8 billion and net income increased 4% to $992 million and diluted earnings per share increased to $3.59 from $3.39 in the previous year.
During the year, the company reduced debt by $1 billion, invested $1.1 billion in capital expenditures, paid $1.4 billion in dividends, and used $1.2 billion to repurchase shares.
The company ended 2022 with $1.2 billion in cash and equivalents on hand.
Full-year 2022 revenue increased 2.4% to $39.4 billion and net income rose 4.1% to $3.4 billion and diluted earnings per share increased 5.5% to $12.19.
With the record backlog of $91.1 billion, book-to-bill ratio for the December quarter was 1.2 and 1.1 for 2022.
F5 Inc declined 0.9% to $145.22 after the network security and cloud computing company reported a weak quarterly revenue growth but earnings were ahead of expectations.
F5 said revenue in the December quarter rose 2% to $700 million and net income declined to $72 million from $94 million and diluted earnings per share fell to $1.20 from $1.51 a year ago.
Fox Corp Class A stock increased 2.6% to $33.53 and News Corp Class A increased 5% to $20.61 after Rupert Murdoch, the largest shareholder of both companies, called off the merger of two companies.
Intuitive Surgical, Inc dropped 4.7% to $245.88 after the maker of advanced surgical robotic equipment issued cautious earnings outlook.
Intuitive Surgical said revenue in the December quarter increased 7% to $1.66 billion and net income fell to $325 million from $381 million and diluted EPS fell to 91 cents from $1.04 a year ago.
The company said it placed 365 da Vinci Surgical Systems, 4% lower than 385 in the comparable quarter a year ago and increased its installed base 12% from the previous year to 7,544 from 6,730 at the end of December 2021.
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 the conference call, 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.
Microsoft returned $9.7 billion to shareholders in the form of share repurchases and dividends in the fiscal second quarter, a decrease of 11% compared from the comparable quarter in the previous year.
Microsoft declared a quarterly dividend of $0.68 per share payable March 9, 2023, to shareholders of record on February 16, 2023.
The ex-dividend date will be February 15, 2023.
Nasdaq Inc declined 6% to 11,251.67 after the operator of a stock exchange reported weaker-than-expected quarterly revenues.
Fourth quarter revenue increased 2% to $906 million and net income declined to $241 million from $259 million and diluted earnings per share dropped to 48 cents from 51 cents in the previous year.
In 2022, the company returned $1.01 billion to shareholders, $633 million in share repurchases and 383 million in dividends.
The exchange operator has $650 million available for share repurchase following the board's authorization to increase the repurchase amount.
The company initiated its 2023 non-GAAP operating expense guidance to a range of $1,770 to $1,850 million and estimated non-GAAP tax rate to be in the range of 24% to 26%.
Tech and Broad Indexes Falter After Muted Guidance from Microsoft
Barry Adams
25 Jan, 2023
New York City
Stocks accelerated declines in the week on the rising worries about the corporate earnings outlook.
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.
The S&P 500 index fell 1.6% to 3,953.22 and the Nasdaq Composite index dropped 2.2% to 11,087.50.
Energy Prices Traded Sideways
Crude oil price was nearly unchanged at $80.12 a barrel and natural gas futures contract price eased 10 cents to $3.15 a thermal unit.
Treasury Yields Hovered Near Recent Lows
The yield on 2-year Treasury notes decreased to 4.14%, 10-year Treasury notes eased to 3.45% and 30-year Treasury bonds declined to 3.62%.
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.
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.
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.
Tokyo Stocks Advanced, India Indexes Trended Lower
Arjun Pandit
25 Jan, 2023
New York City
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.
Earnings Worries Keep Wall Street Indexes In Check
Barry Adams
24 Jan, 2023
New York City
Stocks rested after two days of solid gains and chip stocks led the decliners.
Market sentiment was also weak after the U.S. Department of Justice and several other states filed an antitrust lawsuit against Google's parent Alphabet Inc and sought separation of certain of its advertising businesses.
Investors also worried about the implications of the U.S. debt ceiling delays and how the government will cope with spending cuts.
Investors also digested a fresh batch of earnings from Verizon, Johnson & Johnson, 3M, Lockheed Martin and await earnings from 300 companies this week.
Microsoft surged 4% in extended trading hours after the software developer reported better-than-expected earnings.
On the economic front, investors are also looking to gain clues on the economy after the release of durable goods orders, fourth quarter GDP, new home sales and personal income and spending later in the week.
The S&P 500 index fell 2.86 points to 4,016.95 and the Nasdaq Composite index decreased 30.14 to 11,334.27.
Energy Prices Lacked Direction
Energy prices closed down in volatile trading as traders awaited weekly inventories data on Thursday.
Crude oil decreased $1.69 to $79.93 a barrel and natural gas futures decreased 17 cents to $3.26 a thermal unit.
Treasury Yield Hovered Near Recent Lows
Bond yields were under pressure after the S&P Global US Composite PMI weakened to 46.6 in January from 45.0 in December.
The private sector activities contracted for the seventh month in a row, the flash estimate showed.
While the input price inflation picked up pace in January, the rate of final output price charged to customers was unchanged.
The yield on 2-year Treasury notes inched lower to 4.21%, 10-year Treasury notes hovered near 3.46% and 30-year Treasury bonds traded down to 3.62%.
US Stock Movers
Johnson & Johnson declined 1% to $166.71 after the healthcare company reported quarterly results that met investors expectations but the company's forward guidance was weaker-than-anticipated.
Sales in the quarter declined 4.4% to $23.71 billion from $24.80 billion in the similar quarter last year, primarily because of lower Covid-19 vaccine sales and unfavorable exchange rate.
Net earnings declined 25.9% to $3.52 billion or $1.33 per share from $4.74 billion or $1.77 per share in the quarter a year ago.
US sales rose 2.9% to $12.52 billion and international sales dropped 11.5% to $11.19 billion from last year.
The company estimated adjusted earnings per share in a range of $10.45 to $10.65 and adjusted operating earnings per share in a range of $10.40 to $10.60.
Verizon Communications Inc increased 80 cents to $39.75 after the company reported mixed quarterly results.
Lockheed Martin Corp gained 1.4% or $5.98 after the defense contractor reported sales and adjusted earnings ahead of expectations.
Raytheon Technologies Corp increased 1.8% or $1.69 to $97.92 after the defense contractor benefitted from arms sales for Ukraine and the company said it plans to reorganize in three business units.
European Markets Pause On Rate Hike Worries
European markets were on the backfoot after aggressive rate hike worries returned following the release of business activities index.
Stocks lacked direction in choppy trading after natural gas prices plunged but the rebound in business activities rekindled the worries of aggressive rate hikes at the next policy meetings in February and March.
European Business Activities Rebound
The S&P Global Composite Purchasing Managers' Index increased to 50.2 in January 2023 from 49.3 in December 2022 after falling for six months in a row.
The rebound in service activities in pharmaceuticals, healthcare and technology and smaller contraction in manufacturing activities improved the index.
European Market Indexes Paused
European indexes paused as investors weighed earnings optimism and weakening energy prices against the rate hike worries.
The DAX index decreased 0.3% to 15,057.73, the CAC-40 index traded up a fraction to 7,032.26 and the FTSE !00 index decreased 0.4% to 7,755.79.
Dollar Hovers Near 9-month Low
The U.S. dollar hovered near a 9-month low on the hopes that the Federal Reserve will moderate its aggressive rate hike posture and pivot to smaller rate increases at the meeting next week.
The euro inched lower to $1.08, the British pound traded near $1.228 and the Swiss franc hovered near 92.63 U.S. cents.
Bond Yields Advanced On Rate Hike Worries
The yield on 10-year German Bunds increased to 2.20%, French bonds to 2.64%, the UK Gilts to 3.33% and Italian bonds to 3.997%.
Natural Gas Prices Drops 10%
Natural gas prices fell for the second day in a row and dropped near a 16-month low as cold snap faded and warmer-than-usual temperatures are expected to return this week.
Brent crude oil decreased 12 cents to $88.06 a barrel and the Dutch TTF natural gas dropped 9.7% to €59.60 per MWh.
French Services Contracted In January
The French service sector contracted for the third month in a row, S&P Global Service PMI data showed Tuesday.
French Service PMI declined to 49.2 in January 2023 from 49.5 in December 2022, third monthly decline in a row and the sharpest pace since March 2021.
New order flows declined on the persistent economic uncertainties and higher inflation and rising borrowing costs but on the positive side new job addition rate improved.
British Manufacturing Weakness Persists
The British manufacturing sector continued to face headwinds amid persistent high inflation and energy prices and economic uncertainties, data from the Confederation of British Industries showed Tuesday.
The order book balance declined 11 points in January to -17 from December, the weakest since February 2021 according to the latest Industrial Trends Survey.
The price expectations for the next three months eased to +41 from +52 in December on the easing of supply chain constraints and labor shortages and falling natural gas prices.
UK Borrowings Soared In December
The UK budget deficit widened to the record December-level after the government revved up energy subsidies and higher rates lifted interest payments.
Public sector net borrowing, excluding government controlled banks, increased to £27.4 billion, record high since monthly records began in January 1993, the Office for National Statistics reported Tuesday.
December’s borrowing was £16.7 billion higher from the previous year and £9.8 billion higher than the latest official forecast published by the Office for Budget Responsibility.
Central government debt interest payable increased to £17.3 billion in December 2022, the highest December payment since monthly records began.
Europe Stock Movers
Associated British Foods Plc declined 2.2% to 1,829.0 pence after the owner of Primark said revenue in the 16-week period ending on January 7 rose 20% to £6,698 million.
Revenue in constant currency rose 16% and the stronger U.S. dollar drove the nominal exchange rate based revenues.
"We continue to encounter significant cost pressures but inflation has become less volatile and recently some commodity costs have declined.
Consumer spending has proven to be more resilient in this trading period than anticipated at the start of the financial year," the company said in its latest trading update.
For the full year, the company estimated "result overall is unchanged with a significant growth in sales, and adjusted operating profit and adjusted earnings per share to be lower than the previous financial year."
Technip Energies NV declined 1.9% to €16.93 despite the company winning a contract in Saudi Arabia.
Saudi Arabia-based Aramco awarded a contract to modernize sulfur recovery facilities to the French engineering and technology company.
Marston's Plc increased 6.2% to 43.42 pence after the pubs operator said sales increased during holiday period.
Comparable sales in the 16-week period ending on January 21 increased 20% from the previous year.
Comparable sales in the five-day holiday period, Christmas Eve, Christmas Day, Boxing Day, New Year’s Eve and New Year’s Day, jumped 26% and sales in the similar period two-years ago rose 12.9%.
The company said total retail sales at the company owned and managed and franchised pubs were up 14.0% on last year and up 7.3% from the fiscal year 2020.
Beverage sales continued to outperform food sales.
Tech Stocks Drive Nikkei Higher Second Day In a Row
Benchmark index in Tokyo closed higher following a surge in tech stocks tracking gains in New York trading.
The Nikkei index closed at 5-week high on the back of a rebound in tech stocks and investors awaited corporate earnings.
The Nikkei 225 index increased 1.5% to 27,299.19 and the yen firmed 18 cents to 130.48 against the U.S. dollar.
GS Yuasa Corp increased 3.8% to ¥2,255.0 after the company announced a joint venture with Honda Motor Corp to make advanced Lithium-Ion batteries.
Honda Motor Corp increased 1.2% to ¥3,129.0.
Most markets in the region were closed to celebrate the Lunar New Year.
Markets in mainland China, Hong Kong, Taiwan, Singapore, Malaysia and South Korea were closed.
India Awaits Union Budget Measures
Indian stocks lacked direction ahead of the Republic day holiday on Thursday and investors reacted to latest earnings from vehicles makers Maruti Suzuki and TVS Motor.
Investors are also awaiting the central government budget next week and looking for clues on incentives to accelerate the manufacturing sector and infrastructure spending.
The Sensex index increased 0.06% or 37.08 to 60,978.75 and the Nifty index traded down 0.25 points to 18,118.30.
The rupee closed down 11 paisa to 81.59 against the U.S. dollar.
Maruti Suzuki said revenue in the December quarter increased 27% to ₹29,905 crore and net income rose 66.4% to ₹2,135 crore and diluted earnings per share jumped to ₹77.84 from ₹33.48 a year ago.
TVS Motor said the December quarter revenue increased 15% to ₹6,076 crore and net income increased to ₹352 crore from ₹288 crore and diluted earnings per share rose to ₹7.42 from ₹6.07 a year ago.