Market Update
Stocks Power Ahead Awaiting Earnings
Barry Adams
24 Oct, 2022
New York City
U.S. stocks extended last week's gains as investors await the latest batch of earnings and bond yields stayed near recent 14-year highs.
Apple, Inc, Alphabet, Amazon and Microsoft are among some 800 companies scheduled to release earnings this week.
Private survey showed the U.S. service sector contracted at the second fastest pace in October excluding the initial period of the coronavirus pandemic in 2020, according to S&P Global.
The PMI service index declined to 47.3 in October from 49.5 in September.
Any reading below 50 indicates contraction and above shows expansion.
Energy prices were volatile and natural gas prices recovered from multi-month lows.
Crude oil declined 45 cents to $84.51 a barrel and natural gas rose 52 cents to $5.91 a thermal unit.
The yield on 2-year Treasury notes increased to 4.50%, 10-year Treasury notes rose to 4.24% and 30-year Treasury bonds eased to 4.52%.
A narrow list of stocks enjoyed favor among investors with AutoZone, Genuine Parts Company and O'Reilly Auto traded at record highs.
CarMax, Crown Castle, Estee Lauder and Tesla closed at new 52-week lows.
On Wall Street, China linked stocks took a beating after the Chinese Communist Party appointed Xi Jinping for the third term, increasing the risk of stricter control on tech giants.
Alibaba, Baidu and Tencent Holdings dropped more than 11% and Pinduoduo plunged 24.5%.
China political reshuffle also heightened investor anxieties and companies with significant China business also closed down.
Starbucks Corporation fell 4.8% and the coffee chain operates more than 6,000 locations in China.
Casino operators Las Vegas Sands Corp dropped 10.6% to $34.92 and Wynn Resorts, Limited declined 3.6% to $56.61.
Tesla Inc declined 0.9% to $211.90 after the electric vehicle maker rolled back some of recent price increases in China
Tesla slashed starting price for the Model 3 Sedan to 265,900 renminbi ($36,615) from 279,900 renminbi ($38,553)
Tesla also lowered the starting price for the Model Y sports utility vehicle to 289,900 renminbi (39,931) from 316,900 renminbi (43,650).
European Indexes Jump 2%
The DAX index advanced 1.6% to 12,931.45, the CAC-40 index gained 1.6% to 6,131.35 and the FTSE 100 index increased 0.6% to 7,013.99.
The euro fell to 98.78 U.S. cents and the British pound edged up to $1.13.
Brent crude oil fell 23 cents to $93.22 a barrel and TTF natural gas declined 12.7% to $99.17 per MWh.
The yield on 10-year German bunds fell to 2.32%, French bonds eased to 2.86%, Italian bonds declined to 4.57% and the UK bonds to 3.72%.
Philips Electronics NV dropped as much as 5% but recovered to close down 2.2% to
Sunak's Rise Highlights UK's Embrace of Diversity and Success of Indian Community
Arjun Pandit
24 Oct, 2022
Mumbai
Rishi Sunak won the leadership race for the Conservative Party after Penny Mordaunt pulled out of the race just two minutes before the deadline and tweeted that Sunak had "her full support."
Former prime minister Boris Johnson dropped out of the race on Sunday night, paving the way for Sunak to lead the party.
Sunak, 42-year old, will become 57th Britain's prime minister and the youngest to lead the nation in more than 200 years.
Ironically, Sunak won the leadership race on Diwali, the festival of lights, celebrated by millions around the world and marks the triumph of good over evil and light over darkness.
Sunak was born in Southampton, UK and his Indian descent parents migrated to the UK in 1960s.
His father Yashvir was born in Kenya and his mother Usha, in Tanzania.
Sunak is the first British-Indian and Hindu to become prime minister of the U.K. and the leader of the Conservative Party, as the party and the island nation embrace cultural diversity after centuries of policies supporting racial divide.
Sunak's astonishing rise to lead the party in just seven years was marked by his appointment as Chancellor of the Exchequer by Johnson just before the Covid pandemic.
Sunak won praise both from labor unions and businesses for launching the furlough scheme by subsidizing 11.6 million jobs.
But his support for the "eat out to help out" policy drew severe criticism from some health experts for fueling the spread of the deadly virus.
As finance minister, Sunak racked up government borrowing by
European Markets Advance, Natural Gas Drops to 7-month Low
Bridgette Randall
24 Oct, 2022
Frankfurt
European markets traded higher and investors digested two private economic surveys and political developments in the region.
Economic activities in the eurozone declined deeper into recessionary territory in October, according to S&P Global.
The PMI index dropped to 47.1 in October from 48.1 in September, the survey showed.
In a separate report, the UK private sector activities declined to 47.2 in October from 49.1 in September, the S&P Global/CIPS Composite indicated.
Major averages accelerated gains following the rise in New York and the British pound held stable and UK gilt yields edged down after the election of Rishi Sunak as the next prime minister.
Sunak is the first British-Indian and Hindu to become prime minister of the U.K. and the leader of the Conservative Party, as the party and the island nation embrace cultural diversity after centuries of policies supporting racial divide.
Sunak Wins UK PM Race, Meloni Appointed Italian PM
Rishi Sunak won the leadership race for the Conservative Party after Penny Mordaunt pulled out of the race just two minutes before the deadline and tweeted that Sunak had "her full support."
Former prime minister Boris Johnson dropped out of the race on Sunday night, paving the way for Sunak to lead the party.
Giorgia Meloni was sworn in as Italy's first woman prime minister on Saturday.
European Indexes Jump 2%
The DAX index advanced 1.8% to 12,965.60, the CAC-40 index gained 1.9% to 6,148.85 and the FTSE 100 index 7,018.39.
The euro fell to 98.38 U.S. cents and the British pound edged up to $1.13.
Brent crude oil gained $1.23 to $92.30 a barrel and TTF natural gas declined 18% to $94.80 per MWh.
The yield on 10-year German bunds fell to 2.32%, French bonds eased to 2.86%, Italian bonds declined to 4.59% and the UK bonds to 3.81%.
Philips Electronics NV dropped as much as 5% but recovered to close down 2.2% to
Wall Street Rally Despite Elevated Bond Yields
Barry Adams
24 Oct, 2022
New York City
U.S. stocks opened higher on Monday following a week of volatile trading and bond yields edged lower.
Energy prices turned lower and natural gas prices dropped to a new 3-month low on weakening demand and falling exports to Europe.
Crude oil declined $2.12 to $82.91 a barrel and natural gas fell 7 cents to $4.87 a thermal unit.
The yield on 2-year Treasury notes rose to 4.49%, 10-year Treasury notes fell to 4.18% and 30-year Treasury bonds eased to 4.32%.
European Markets Advance, Bond Yields Ease
European markets traded higher and investors digested two private economic surveys and political developments in the region.
Economic activities in the eurozone declined deeper into recessionary territory in October, according to S&P Global.
The PMI index dropped to 47.1 in October from 48.1 in September, the survey showed.
In a separate report, the UK private sector activities declined to 47.2 in October from 49.1 in September, the S&P Global/CIPS Composite indicated.
Sunak Wins UK PM Race, Meloni Appointed Italian PM
In political developments, Rishi Sunak won the leadership race for the Conservative Party after Penny Mordaunt pulled out of the race two minutes before the deadline and tweeted that Sunak had "her full support."
Former prime minister Boris Johnson pulled out of the race on Sunday night, paving the way for Sunak to lead the party.
Giorgia Meloni was sworn in as Italy's first woman prime minister on Saturday.
The DAX index advanced 1.8% to 12,965.60, the CAC-40 index gained 1.9% to 6,148.85 and the FTSE 100 index 7,018.39.
The euro fell to 98.38 U.S. cents and the British pound edged up to $1.13.
Brent crude oil gained $1.23 to $92.30 a barrel and TTF natural gas declined 18% to $94.80 per MWh.
The yield on 10-year German bunds fell to 2.32%, French bonds eased to 2.86%, Italian bonds declined to 4.59% and the UK bonds to 3.81%.
China GDP Expansion Slows, Xi Jinping Wins Historic Third Term
China's third quarter GDP rose 3.9%, better-than-expected 3.4%, according to the National Bureau of Statistics of China.
For the first nine-months of 2022, GDP has expanded 3%, less than the target rate of 5.5% set by the government.
The latest economic release did not mention the government target rate and was delayed until the Chinese Communist Party Congress ended.
Xi Jinping was appointed as the head of the party for the third time, matching only to the tenure of the founder Mao Zedong.
Tech Stocks Plunge in China Trading, Korea Supports Bond Market
The Nikkei 225 average increased 0.3% to 26,974.90, the Hang Seng index plunged 6.4% to 15,180.69 and Shanghai Composite Index dropped 2.0% to 2,977.56.
Chinese market indexes plunged after Xi Jinping tightened his grip on power and tech stocks led the decliners. Alibaba, Tencent and Baidu plunged more than 11% on the worries that stricter policies for tech companies may hamper growth.
Markets in India were closed to celebrate Diwali and the arrival of new year tomorrow.
The Kospi index in Seoul, Korea gained 1.0% to 2,236.16 after the government offered credit market support of 50 trillion won or $34.7 billion, providing a temporary relief from bond market defaults and support real estate sector.
Weekly Gains: Nasdaq Up 5.8%, S&P 500 Rises 4.7%
Barry Adams
21 Oct, 2022
New York City
Stocks staged a sharp rebound on Wall Street on the hopes that the Federal Reserve may slow the pace of future rate hikes and avoid economic recession.
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 gulf between the Fed's target inflation rate of 2% and the current rate above 8% has also stoked the fears that the central bank may not be able to avoid a recession.
However, in today's trading stocks staged a rebound on the hope that the Fed may try to avoid a recession and not continue its aggressive rate hike campaign.
The S&P 500 index rose 2.4% to 3,752.75 and the Nasdaq Composite jumped 2.3% to 10,859.72.
For the week, the S&P 500 increased 4.7% and the Nasdaq Composite added 5.8%.
Major averages registered best weekly gains since June.
Crude oil increased 48 cents to $84.98 a barrel and natural gas fell 36 cents to $4.98 a thermal unit.
The yield on 2-year Treasury notes decreased to 4.58%, 10-year Treasury notes eased to 4.28% and 30-year bonds fell to 4.34%.
On the earnings front, American Express declined 2% despite reporting higher-than-expected quarterly earnings and lifting annual outlook.
Snap Inc plunged 28.2% 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 4.5% after the wireless communication company reported smaller-than-expected post-paid net subscribers.
CSX Corp rose 1.7% after the railroad operator posted better-than-expected earnings on higher shipping volumes and improvement in freight rates.
European Markets Extend Gains, Rate and Recession Worries Linger
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 0.3% to 12,730.90 the CAC-40 index fell 0.9% to 6,035.39 and the FTSE 100 index advanced 0.4% to 6,969.73.
For the week, the DAX index increased 2.4%, the CAC-40 index gained 2.6% and the FTSE 100 index gained 2.1%.
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 2.43%, French bonds to 2.98%, the UK Gilts to 4.05% and Italian bonds to 4.76%.
Adidas AG declined 9.5% to
European Markets Extend Weekly Gains, Bond Yields Rise
Bridgette Randall
21 Oct, 2022
Frankfurt
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 0.3% to 12,730.90 the CAC-40 index fell 0.9% to 6,035.39 and the FTSE 100 index advanced 0.4% to 6,969.73.
For the week, the DAX index increased 2.4%, the CAC-40 index gained 2.6% and the FTSE 100 index gained 2.1%.
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 2.43%, French bonds to 2.98%, the UK Gilts to 4.05% and Italian bonds to 4.76%.
Adidas AG declined 9.5% to
Movers: American Express, CSX, Schlumberger, Snap, Tenet Healthcare, Verizon, Whirlpool
Scott Peters
21 Oct, 2022
New York City
American Express Company fell 5.4% to $134.84 and the company said third quarter revenues increased 24% to $13.6 billion driven by 21% increase in card member spending.
Net income in the quarter increased 3% to $1.88 billion from $1.83 billion and diluted earnings per share rose to $2.47 from $2.27 a year ago.
Travel and entertainment spending surged 57% from a year ago and international spending increased beyond pre-pandemic levels for the first time both on a nominal and constant-dollar basis.
CSX Corp rose 1% to $27.35 after the railroad company posted stronger-than-expected third quarter revenues and earnings on higher shipping volume and improved freight rate.
Third quarter revenue increased 18% to $3.9 billion driven by higher fuel surcharge, pricing gains, a 2% increase in volumes, and an increase in storage and other revenues.
Net income increased 15% to $1.1 billion from $968 million and diluted earnings per share rose to 52 cents from 43 cents a year ago.
Schlumberger NV advanced 8.4% to $49.50 after the company said third quarter revenues increased 28% to $7.5 billion.
International revenue increased 26% to $5.9 billion and 37% increase in North America revenue to $1.5 billion.
Net income increased to $919 million from $562 million and diluted earnings per share advanced to 63 cents from 39 cents a year ago.
Higher prices and improvements in operating leverage drove the gains in the quarter.
Snap Inc plunged 30.4% to $7.52 after the social media company reported weaker-than-expected third quarter revenue of $1.13 billion and higher-than-expected adjusted profit of 8 cents a share.
The stock plunged after the company guided no increase in advertising revenue in the current quarter. The forecast also dragged down Meta Platforms by 2.5%, Twitter by 4% and Pinterest by 7.5%.
Tenet Healthcare Corp plunged 30.5% to $37.80 after the company said third quarter revenue edged down to $4.8 billion from $4.49 billion a year ago.
Net income in the quarter declined to $131 million from $448 million and diluted earnings per share fell to $1.16 from $4.12 a year ago.
Same hospital admissions declined 5.3%, outpatients visits dropped 6.9%, emergency room visits eased 4.1% and hospital surgeries dropped 3.6%.
The company lowered its full-year net income outlook in the range between $366 million and $441 million from between $371 million and $546 million released during the second quarter results.
Verizon Communications Inc declined 4.5% to $35.33 after the wireless communication company said third quarter consolidated revenues increased 4% to $34.2 billion on 10% increase in wireless revenues.
Net income in the quarter dropped 23.3% to $5.0 billion.
In the quarter, the company added 2.6 million wireless postpaid and added 61,000 broadband wireline connections.
The company guided wireless services revenue in the full-year 2022 to grow between 8.5% and 9.5%.
Whirlpool fell 0.2% to $130.65 after the company said third quarter sales declined 12.8% to $4.78 billion from $5.5 billion a year ago.
Net income in the quarter dropped to $143 million from $471 million and diluted earnings per share fell to $2.61 from $7.51 a year ago.
The company guided full-year revenue to be down 9% to $20.1 billion and lowered diluted earnings per share to $5.0 from between $9.50 and $11.50.
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.