Market Update
Movers: AMD, Corning, Franklin Resources, Match Group, Moody's, PayPal, Peloton, Sanmina, Snap
Scott Peters
01 Feb, 2023
New York City
Advanced Micro Devices traded 3% higher after the company's quarterly results were supported by the chip sales for data centers and specialty chips in its recent acquisition Xilinx.
Advanced Micro Devices said the company swung to a quarterly loss in the fourth quarter on $1.4 billion amortization charge for intangibles linked to Xilinx acquisition.
AMD said revenue in the fourth quarter increased 16% to $5.6 billion and net income dropped 98% to $21 million from $974 million and diluted EPS dropped to 1 cent from 80 cents a year ago.
Corning Inc declined 4% after the company reported a sharp fall in earnings largely on the account of restructuring charges and financial hedging costs.
Corning said revenue in the Q4 decreased 7% to $3.4 billion and the company swung to a net loss of $36 million from a profit of $287 million and diluted EPS was (0.04) compared to 56 cents a year ago.
Corning Inc said fourth quarter loss was primarily driven by restructuring charges and non-cash, mark-to-market adjustments associated with the currency hedging contracts and yen denominated debt.
Franklin Resources, Inc declined 1% after the investment management company said assets under management declined 12% to $1.4 trillion and long-term net asset outflow was $10.9 billion compared to inflow of $24.1 billion a year ago.
Franklin Resources said revenue in the fiscal first quarter 2023 rose 1% to $1.97 billion and net income dropped 29% to $165 .6 million and diluted EPS fell to 32 cents from 46 cents a year ago.
Match Group dropped 9% after the online dating sites operator reported a decline in paying subscribers.
Match Group said fourth quarter revenue declined 2% to $786 million and swung to a net income of $84.5 million from $168.7 million and diluted EPS was 31 cents from 60 cents a loss.
Match Group said Tinder direct revenue was flat over the prior year quarter with a 3% increase in paying subscribers to 10.8 million and fell 1% to 16.1 million across all sites.
Moody's Corp gained 2.2% after the bond rating agency said weak financial market conditions negatively impacted its quarterly results.
Moody's Corp said revenue in the fourth quarter fell 16% to $1.3 billion and net income plunged 71% to $246 million and diluted EPS dropped to $1.34 from $2.28 a year ago.
"Credit market activity remained muted across all sectors due to ongoing market uncertainty, central bank actions, high levels of corporate cash, as well as persistent inflationary and recessionary concerns," the company said in the earnings release.
Moody's Corp board increased quarterly dividend by 10% to 77 cents a share payable to shareholders on record February 24 on March 17.
PayPal Inc rose more than 3% after the payment processor said it plans to lower its staffing levels.
PayPal Inc said it plans to lay off 2,000 or about 7% of its staff amid rising economic uncertainties.
Peloton Interactive Inc jumped 5% after the fitness equipment maker reported quarterly sales improvement and narrower loss.
Revenue in the fiscal second quarter ending in December fell 30% from a year ago but rose 29% from the previous quarter to $793 million.
Net loss in the quarter shrank 24% to $335.4 million from $439.4 million and diluted loss per share fell to 98 cents from $1.39 a year ago.
Sanmina Corp said revenue in the fiscal first quarter 2023 ending in December rose 41% to $2.4 billion and net income soared 51% to $88.4 million and diluted EPS rose to $1.48 from 89 cents a year ago.
Snap Inc declined as much as 15% after the social media company reported a decline in revenue for third quarter in a row and sees no end in sight for the recent advertising revenue weakness.
Snap said daily active users increased 17% to 375 million including 2 million paying subscribers in the fourth quarter and the company generated a second full-year of free cash flow of $55 million.
Snap said Q4 revenue rose 0.1% to $1.3 billion and the company swung to a net loss of $288 million from a profit of $23 million and diluted EPS was 18 cents loss compared to 1 cent profit a year ago.
PayPal Inc said it plans to lay off 2,000 or about 7% of its staff amid rising economic uncertainties.
31 Jan, 2023
Slower Wage Growth and Stable Earnings Lifted Mood On Wall Street
Barry Adams
31 Jan, 2023
New York City
U.S. benchmark indexes advanced after General Motors earnings supported market enthusiasm and a closely monitored inflation indicator showed a slowdown.
Investors bid up stocks on the hopes that the Fed may pause future rate hikes after the widely anticipated rate hike of 25 basis points tomorrow.
The employment cost index rose at a slower pace of 1.0% in the final quarter of 2022, the closely watched index by the Fed may support the Fed-pivot to smaller and slower rate hikes in the future.
Investors reacted favorably to the latest batch of earnings after Caterpillar, General Motors, UPS, McDonald's, International Paper and Sanmina reported earnings that met or exceeded investors expectations.
PayPal Holdings and Workday Inc were the latest tech companies to report layoffs amid rising economic uncertainties.
PayPal said it plans to lay off about 2,000 or 7% of its staff and Workday plans to eliminate about 3% or500 of jobs.
Benchmark indexes are having a strong start in 2023 and the S&P 500 index gained 5% and the Nasdaq Composite index advanced 10% in January.
U.S. Compensation Costs Growth Slowed
The U.S. compensation costs for civilian workers increased 1% in the final three months of 2022 from the previous quarter, the third slowdown in a row, the Bureau of Labor Statistics said Tuesday.
Wages and salaries, which is about 70% of employment costs in the period rose 1% after rising at 1.3% in the previous quarter.
Benefits cost increased 0.8% in the final quarter after rising 1.0% in the previous quarter,
On an annual basis, total compensation costs increased 5.1% in the fourth quarter, slower than 5.0% in the third quarter and declined 1.3% after adjusting for inflation.
IMF Lifts Global Growth Estimate
The IMF revised global growth slightly on the resilient consumer demand in the U.S. and Europe despite the elevated energy prices and four-decade high inflation.
The U.S. economy is expected to grow at 1.3%, China at 5.0% and India at 6.0%.
Of the 22 largest economies in the world, only the UK's economy is expected to shrink by 0.6% in 2023, according to the data released by the IMF.
U.S. Indexes Trend Lower
Benchmark indexes closed the first month of 2023 on a strong note, raising hopes of a market rebound in 2023.
The S&P 500 index increased 0.3% to 4,043.0 and the Nasdaq Composite index advanced 0.3% to 12,002,03.
Both indexes are up for the third month in the last four months.
Crude oil prices hovered near a three-week low on the worries that despite the U.S. and European Union sanctions Russian energy supplies are growing.
Moreover, the global demand recovery is expected to be slower than previously anticipated as business activities in China struggle to recover after the ending of zero-covid restrictions.
Crude oil increased to $1.03 to $78.93 a barrel and natural gas declined 4 cents to $2.71 a thermal unit.
The yield on 2-year Treasury notes declined to 4.21%, 10-year Treasury notes fell to 3.52% and 30-year Treasury bonds eased to 3.65%.
U.S. Stock Movers
McDonald's Corp declined 2.5% after the fast food chain operator reported a rise in sales driven by price increase and new stores.
McDonald's reported a strong quarterly sales increase after global comparable sales increased 12.6% and in the U.S. rose 10.6%.
Revenue in the fourth quarter declined 1% to $5.9 billion from $6.0 billion and net income increased 16% to $1.9 billion from $1.6 billion.
Diluted earnings per share rose to $2.59 from $2.18 a year ago.
Revenue in 2022 was flat at $23.2 billion and net income fell 18% to $6.2 billion from $7.5 billion a year ago.
Caterpillar Inc declined 3.3% to $253.01 after the company reported a rise in sales and earnings but missed analysts' expectations.
Caterpillar said fourth quarter revenue increased 20% to $16.6 billion from $13.8 billion on higher sales volume and price increase.
Net income in the quarter declined to $1.45 billion from $2.12 billion and diluted earnings per share fell to $2.79 from $3.91 a year ago.
Construction machinery sales increased 34% in North America and soared 39% in Latin America.
General Motors jumped 1.7% to $38.06 after the vehicle maker reported better-than-expected quarterly earnings.
Fourth quarter revenue increased 28.4% to $43.1 billion after the company sold more vehicles in the U.S.
Net income in the quarter increased 14.8% to $1.99 billion from $1.74 billion and diluted earnings per share rose to $1.39 from $1.16 a year ago.
European Markets Cautious Ahead of Rate Decisions
European markets traded lower ahead of key rate decisions from the European Central Bank and the Bank of England.
Despite the constant drumbeat of gloom and doom, the economies in the Euro Area expanded avoided a recession on the back of resilient consumer spending.
Germany's retail sales declined 6.4% in December from the year ago, the Federal Statistics Office reported Tuesday.
Euro Area Economy Expanded In 2022
The Euro Area economy unexpectedly expanded at 0.1% on the quarter in the fourth quarter and following 0.3% in the third quarter, Eurostat, the statistical office of the European Union reported Tuesday.
In 2022, after adjusting for seasonality factors and calendar days, the Euro Area economy expanded at 3.5% and the European Union economy rose 3.6%, according to the preliminary report released by Eurostat.
Ireland' economy surged 3.5% in the final quarter from the previous three months and jumped 15.7% from a year ago.
Ireland has been a leading beneficiary of U.K.'s leaving from the European Union after many U.S. corporations shifted operations or financial assets to the nation.
Economies of Germany contracted 0.2% and Italy shrank 0.1% but those of Spain expanded 0.2% and France increased 0.1% respectively, according to national statistics.
Italy GDP Contracts In Fourth Quarter
Italy's GDP shrank in the final quarter of 2022 after expanding for seven quarters in a row, ISTAT or the National Statistics Office reported Tuesday.
Elevated inflation dragged real consumer spending in the final quarter after consumers retrenched and focused on basics.
On a quarterly basis, gross domestic product declined 0.3% in the December quarter after rising 0.5% in the September quarter.
On a yearly basis, GDP growth slowed to 1.7% in the fourth quarter from 2.6% in the previous quarter.
In 2022, Italy's GDP after adjusting for seasonal factors and calendar expanded 3.9%, slower than 6.6% in 2021.
European Market Indexes Traded Down
The DAX index fell 0.4% to 15,069.20, the CAC-40 index declined 0.3% to 7,061.98 and the FTSE 100 index dropped 0.5% to 7,748.14.
European Bond Yields Advanced
The yield on 10-year German Bunds hovered near 2.27%, French bonds traded near 2.74%, the UK Gilts traded at 3.30% and Italian bonds bounced around 425%.
Europe Stock Movers
UBS Group AG declined 2% to 19.42 Swiss francs after the financial services provider said revenue declined but earnings rose in the fourth quarter.
UBS said fourth quarter revenue declined 9% to $8.0 billion from $8.2 billion a year ago.
Net income in the quarter rose to $1.65 billion from $1.34 billion and diluted earnings per share rose to 50 cents from 38 cents a year ago.
In 2022, the Swiss bank repurchased $5.6 billion of its stock and the company said it plans to buy back $5 billion of its shares in 2023.
The company also proposed a dividend of 55 cents to shareholders on record April 13 and payable on April 14, subject to the approval from the company's board at the shareholder meeting on April 5.
UniCredit SpA soared 11.5% to €17.75 after the Italian bank reported record fourth quarter profit and the bank said it plans to return €5.3 billion to investors.
Revenue in the fourth quarter increased 25.4% to €5.4 billion and net income rose to €1.04 billion from €338 million a year ago.
Assets under management declined 11.7% from a year ago and flat from the previous quarter to €193.5 billion.
Gross bad loans declined 20.3% from the previous quarter and dropped 46.6% from the previous year to €2.4 billion.
Ricardo Plc fell 2% to 534.20 pence after the company reiterated its fiscal year outlook.
Leoni AG declined 15% to €5.97 after the cable and harness maker said chief executive Aldo Kemper will depart the company as of March 31.
The company is undergoing restructuring and struggling with a heavy debt load of €1.7 billion and equity of €178 million.
Tele2 AB declined 3.9% to kr90.20 after the telecom service provider headquartered in Stockholm said 2023 revenue is estimated to grow in "low single-digit" in end user service and operating earnings adjusted for leased assets.
End-user service revenue increased 3% from a year ago to SEK 5.1 billion due to strong performance in the Baltics and business-to-business customers in Sweden.
Net profit increased to SEK 1.25 billion from SEK 953 million and earnings per share rose to SEK 1.82 from SEK 1.39 a year ago.
Asian Markets Closed Down
Asian markets traded lower following weak overnight trading in New York. Caution prevailed ahead of rate decisions from the US Federal Reserve and central banks in Europe and UK.
The Nikkei index declined 0.4% to 27,327.11 and the yen weakened to 130.02 against the U.S. dollar.
The Shanghai composite index fell 0.4% to 3,255.67 and the Hang Seng index declined 1.03% to 21,842.33.
Stocks lacked direction in Mumbai trading ahead of the release of the Union Budget tomorrow.
India's real GDP is estimated to grow between 6% and 6.8% in the next fiscal year ending in March 2024, the survey released in the Parliament by the central government Tuesday.
The Sensex index in Mumbai advanced 49.49 points to 59,549.90 and the Nifty index increased 13.2 points to 17,662.15.
The rupee edged lower to 81.41 against the U.S. dollar.