Market Update
European Markets Advance, Spain's Growth Slows, UK Retail Sales Fall
Bridgette Randall
24 Jun, 2022
New York City
European markets jumped after investors set aside inflation and growth worries.
Spain's economic growth slowed in the first quarter ending in March to 0.2% from 2.2% in the fourth quarter of 2021, according to the final revision released by the statistical office INE today.
The annual growth in the first quarter was revised down to 6.3% from 6.5% but higher than 5.5% in the fourth quarter.
Earlier in the month, The Bank of Spain lowered its 2022 growth estimate to 4.1% from 4.5% and 2023 growth estimate to 2.8% from 2.9%.
The U.K. retail sales in May declined 0.5% on a monthly basis after rising 0.4% in April, according to the Office of National Statistics.
Consumers retrenched after prices surged to record highs and food sales declined 1.6%.
Non-food sales were unchanged in May and excluding transportation fuel, retail sales fell 0.7% after rising 0.2% in April.
Retail sales decline eased to 4.7% in May from 5.4% in April, on an annual basis.
Excluding transportation fuel, the fall in retail sales slowed to 5.7% from 6.9% in April.
The DAX index rose 1.8% to 13,946.58, the CAC-40 index advanced 3.2% to 6,069.13, and the FTSE 100 index increased 2.5% to 7,191.66.
In the week, the indexes in Paris advanced 3.3%, in London gained 2.6%, and in Frankfurt nearly unchanged.
Zurich Insurance Group gained 3.9% to 417.10 Swiss franc after the insurance company agreed to sell its legacy life insurance business in Germany to Viridium Holding AG.
Saipem SpA plunged 19.7% to 24.34 euros after the oil and gas contractor said its finances will be exhausted by the end of the first quarter 2020 if the company fails to raise capital.
Lamprell Plc dropped 78.2% to 4.75 pence on the liquidity worries.
TUI AG declined 3.6% to 1.70 euros after the CEO of the German tourism and travel company abruptly resigned.
Asian Markets Extend Rally
Asian markets rebounded on the final day of the week supported by a sustained advance in the U.S. and weaker commodities prices.
The market sentiment turned positive and investors looked ahead to corporate results for the current quarter.
The Nikkei index in Japan closed higher led by gains in tech stocks.
The battered yen found support at 135.17 against a dollar after inflation gained for the second month in a row and stayed near a 7-year high.
Consumer price inflation in May increased to 2.5% from a year ago and on a seasonally adjusted monthly basis slowed to 0.2% from April after rising 0.4% in the month.
The inflation data were released by the internal affairs ministry today.
The Nikkei index in Tokyo added 1.2% to 26,491.97 and for the week increased 1.95%.
Tokyo Electron gained 4%, Advantest increased 3.5%, and Screen Holdings increased 2.6%.
Stocks in Hong Kong and Shanghai gained on the hopes that the technology crackdown is easing and the economic activities are on the rebound after two months of severe lockdowns across the nation.
Indexes in Hong Kong gained 1.3% to 21,273.34 and in Shanghai rose 1.6% to 3,320.15.
For the week, the Hang Seng advanced 3.7% and the SSE gained 1.0%.
Stocks in Mumbai advanced for the second day in a row following advances across Asia.
Investors looked beyond rate hikes and elevated commodities prices and focused on earnings growth in the current quarter.
Traders also took note of the latest comments from the RBI Governor Das.
Das commented that headline inflation is likely to stay above the central bank's target rate of 2% until December and moderate after.
"Inflation expectations influence not only households but also businesses and drive up pricing of food, manufactured goods and services.
If they expect inflation to be high, even companies will defer their investment plans," Das commented.
The Sensex index gained 462.25 or 0.9% to 52,727.98 and the Nifty 50 index increased 0.9% to 15,699.65.
For the week, the Sensex and the Nifty gained 2.8% and in the year so far declined 10.9%.
The Kospi index in Seoul rebounded 2.3% to 2,366.60 after hitting a 19-month low on recession worries in the previous session.
Naver Corp surged 5.8%, Samsung Electronics increased 1.7%, and SK Hynix closed up 1.6%.
Asian Markets Rebound, Japan Inflation at 7-Year High
Arjun Pandit
24 Jun, 2022
New York City
Asian markets rebounded on the final day of the week supported by a sustained advance in the U.S. and weaker commodities prices.
The market sentiment turned positive and investors looked ahead to corporate results for the current quarter.
The Nikkei index in Japan closed higher led by gains in tech stocks.
The battered yen found support at 135.17 against a dollar after inflation gained for the second month in a row and stayed near a 7-year high.
Consumer price inflation in May increased to 2.5% from a year ago and on a seasonally adjusted monthly basis slowed to 0.2% from April after rising 0.4% in the month.
The inflation data were released by the internal affairs ministry today.
The Nikkei index in Tokyo added 1.2% to 26,491.97 and for the week increased 1.95%.
Tokyo Electron gained 4%, Advantest increased 3.5%, and Screen Holdings increased 2.6%.
Stocks in Hong Kong and Shanghai gained on the hopes that the technology crackdown is easing and the economic activities are on the rebound after two months of severe lockdowns across the nation.
Indexes in Hong Kong gained 1.3% to 21,273.34 and in Shanghai rose 1.6% to 3,320.15.
For the week, the Hang Seng advanced 3.7% and the SSE gained 1.0%.
Stocks in Mumbai advanced for the second day in a row following advances across Asia.
Investors looked beyond rate hikes and elevated commodities prices and focused on earnings growth in the current quarter.
Traders also took note of the latest comments from the RBI Governor Das.
Das commented that headline inflation is likely to stay above the central bank's target rate of 2% until December and moderate after.
"Inflation expectations influence not only households but also businesses and drive up pricing of food, manufactured goods and services.
If they expect inflation to be high, even companies will defer their investment plans," Das commented.
The Sensex index gained 462.25 or 0.9% to 52,727.98 and the Nifty 50 index increased 0.9% to 15,699.65.
For the week, the Sensex and the Nifty gained 2.8% and in the year so far declined 10.9%.
The Kospi index in Seoul rebounded 2.3% to 2,366.60 after hitting a 19-month low on recession worries in the previous session.
Naver Corp surged 5.8%, Samsung Electronics increased 1.7%, and SK Hynix closed up 1.6%.
U.S. Stocks and Bonds Rise After Powell Comments
Barry Adams
23 Jun, 2022
New York City
U.S. stocks opened higher and in volatile trading closed higher after weekly jobless claims were stable and the Fed Chairman Powell reiterated central bank's commitment in lowering inflation.
U.S. weekly jobless claims declined 2,000 to a seasonally adjusted 229,000 in the week ended June 18, the Labor Department said today.
The previous week's claims were revised 2,000 higher to 231,000.
The 4-week moving average was 223,500, an increase of 4,500 from the previous week's revised average.
The 4-week moving average of insured unemployment remained near 1%, historic multi-decade low.
The Fed Chairman Powell stressed how critical it is to tame inflation in his testimony to lawmakers on the second day of his testimony.
Accenture Lifts Annual Revenues Outlook, Lifts Dividend 10%
Scott Peters
23 Jun, 2022
New York City
Accenture, the worldwide professional services provider reported another quarter of revenues and earnings growth and stable operating margins.
Revenues increased by double digits on all business segments driven by strong demand for services and a surging backlog.
Accenture Plc revenues in the third quarter ending in May increased 22% to $16.2 billion.
Net income increased 16% to $1.82 billion from $1.57 billion a year ago.
Gross margin was stable and edged slightly lower to 32.9% from 33.2% a year ago and selling and general expenses fell to 16.8% from 17.2%.
Diluted earnings per share increased to $2.79 from $2.40 a year ago.
Operating cash flow for the quarter was $3.06 billion and after deducting property and equipment expenses of $195 million free cash flow was $2.87 billion, an increase from $2.24 billion a year ago.
Revenues by Geography
North America revenues increased 23% in local currencies and U.S. dollars from a year ago to $7.6 billion and revenues in Europe rose 20% to $5.35 billion, an increase of 30% in local currencies.
Revenues in other markets increased 22% in the U.S. dollar and 30% in local currencies from a year ago to $3.19 billion.
Revenues by Industry Groups
Financial services revenues increased 19% to $3.08 billion, communication, media and technology revenues rose 27% to $3.4 billion, resources and energy segment advanced 21% to $2.13 billion, and products segment gained 25% to $4.6 billion.
Revenues in the health & public services segment advanced 16% to $2.92 billion.
New Orders Rise 10%
New orders in the quarter increased 10% to $17.0 billion and jumped 15% in local currencies.
Consulting new orders increased 54% to $9.1 billion and outsourcing new bookings advanced 46% to $7.8 billion.
Total backlog of orders increased to $53.0 billion at the end of the quarter.
Stock Repurchase Activity
During the third quarter, Accenture repurchased 3.1 million shares for a total of $972 million, including approximately 2.9 million shares repurchased in the open market.
The company has repurchased in fiscal year three quarters 10.1 million shares for a total of $3.51 billion, including approximately 7.7 million shares repurchased in the open market.
The company still has $3.7 billion available as of the end of May towards the repurchase program.
Dividend Hiked 10%
Accenture hiked quarterly dividend 10% to 97 cents a share to shareholders on record at the close of July 14, 2022 and payable on August 15.
In the previous quarter, the company paid $614 million in dividends or 97 cents a share on May 13 to shareholders on record April 14, totaling $1.84 billion payments in the fiscal year.
Guidance and Outlook
Accenture guided in the fiscal year 2022 fourth quarter revenues in the range of $15.0 billion to $15.5 billion, an increase of 20% to 24% in local currency and reflecting the estimate of a negative 8% foreign-exchange impact compared with the fourth quarter of fiscal 2021.
For fiscal year 2022, the company anticipates revenues in local currencies to increase in the range of 25.0% to 26.5%, higher than the previous estimate between 24% and 26%.
The company also lifted its estimate of operating margin by 10 basis points to 15.2% for fiscal year 2022.
The company narrowed its fiscal year 2022 diluted earnings per share range to between $10.61 and $10.70 from the previous range between $10.61 and $10.81.
The company reiterated its estimate of operating cash flow in the fiscal year 2022 between $8.7 billion and $9.2 billion.
Company and Stock
Accenture is a professional services company headquartered in Dublin, Ireland and operating from New York provides professional services around the world.
Accenture worldwide employees total 710,000 including 300,000 in India.
Accenture Plc declined 0.6% to $284.71 and in the year so far has declined 29.9%.
Weekly Jobless Claims Fall 2,000
Brian Turner
23 Jun, 2022
New York City
U.S. weekly jobless claims declined 2,000 to a seasonally adjusted 229,000 in the week ended June 18, the Labor Department said today.
The previous week's claims were revised 2,000 higher to 231,000.
The 4-week moving average was 223,500, an increase of 4,500 from the previous week's revised average.
The 4-week moving average of insured unemployment remained near 1%, historic multi-decade low.
Movers: Accenture, Darden Restaurants, HB Fuller, KB Homes, Occidental, Steelcase, Worthington
Barry Adams
23 Jun, 2022
New York City
The S&P 500 and the Nasdaq Composite indexes opened higher and advanced in a volatile pattern as investors snapped up beaten down and leading tech stocks.
The S&P 500 increased 0.8% to 3,789.79 and the Nasdaq Composite advanced 1.3% to 11,196.28.
Apple Inc, Microsoft Corp, Alphabet Inc, Meta Platforms, and Amazon added between 1% and 1.8%.
Accenture Plc declined 0.6% to $284.71 after the information services provider said revenues in the third quarter ending in May increased 22% to $16.2 billion and net income increased 16% to $1.82 billion from a year ago.
Diluted earnings per share increased to $2.79 from $2.40 a year ago.
During the third quarter, Accenture repurchased 3.1 million shares for a total of $972 million, including approximately 2.9 million shares repurchased in the open market.
The company has repurchased in fiscal year three quarters 10.1 million shares for a total of $3.51 billion, including approximately 7.7 million shares repurchased in the open market.
Darden Restaurants, Inc declined 0.6% to $114.44 and the restaurant chain operator reported sales in the fourth quarter ending in May increased 14.2% to $2.6 billion.
Earnings in the quarter declined to $281.7 million from $368.5 million a year ago.
Blended same store sales in the quarter increased 11.7% from a year ago. Same store sales at Olive Garden rose 6.5%, LongHorn Steakhouse gained 10.6%, and the Fine Dining segment which includes Season's 52 stores advanced 34.5%.
For the fiscal year, total sales increased 33.8% to $9.63 billion and earnings rose about 51% to $952.8 million.
Diluted earnings per share increased to $7.39 from $4.77 a year ago.
H.B. Fuller Company declined 5.7% to $57.93 and the industrial products maker said net revenues in the quarter ending in May increased 20% to $993.3 million.
Net income declined 4% to $47.2 million or 86 cents a share from $49.1 million or 90 cents a year ago.
The company said raw materials costs are expected to be 20% higher in the current fiscal year compared to prices at the end of the fourth quarter 2021.
KB Home surged 8.7% to $28.49 and yesterday after the market closed the company reported sales in the second quarter ending in May increased 19% to $1.72 billion and net income soared 47% to $210 million.
The home builder delivered 3,469 homes, matching the deliveries in the quarter a year ago and average selling price increased 21% to $494,300.
The home builder guided sales in the fiscal year between $7.3 billion and $7.5 billion and average home selling price of $500,000.
Occidental Petroleum Corp gained 1.3% to $56.47 after Berkshire Hathaway increased investment by $500 million and lifted its stake to 16.3% in the oil refiner and explorer.
Berkshire now owns 152.7 million shares worth $8.5 billion in the company after adding a total of 9.5 million shares in the last week.
Berkshire also controls a large stake in Chevron
On Wednesday, President Joe Biden is expected to ask Congress to drop federal gasoline and diesel taxes for three months.
Weaker oil prices dragged down stocks in the energy complex.
Chevron and Marathon Oil dropped more than 1.5%, Exxon Mobil declined 1.6% and Schlumberger NV fell 3.7% after president Biden's administration urged Congress to drop federal tax on gasoline and diesel sales for the next three months.
Federal tax on regular gasoline is 18 cents and diesel 24 cents a gallon.
Lower tax at the pump could provide relief to consumers but it can also lift the fuel demand worsening tight supply.
Steelcase Inc was nearly unchanged at $10.47 after the furniture maker said sales in the first quarter ending May 27 increased 33% to $740.7 million and net loss declined to $11.2 million from $28.1 million a year ago.
Diluted loss per share declined t0 10 cents from 24 cents a year ago.
The company guided second quarter diluted earnings per share between 6 cents and 10 cents.
United Airlines dropped 4.6% to $35.06 and the international air carrier trimmed daily domestic 50 flights from Newark Liberty International Airport.
The airline has delays on capacity constraints and airport construction.
Worthington Industries increased 6.8% to $43.14 after the steelmaker reported sales in the fourth quarter ending in May increased 50% to $1.52 billion.
Net income in the quarter declined 29% to $80.0 million and earnings per share fell to $1.61 from $113 million or $2.15 a year ago.
Net debt at the end of the quarter increased $34.0 million from a year ago to $744.6 million.
European Movers: Air Liquid, Gamesa, Generali, Siemens Energy
Bridgette Randall
23 Jun, 2022
Frankfurt
The DAX index fell 1.04% to 13,027.62, the CAC-40 index declined 0.2% to 5,907.52, and the FTSE 100 index dropped 0.5% to 7,055.07.
Oil companies extended losses after crude oil prices declined 2% in the region.
In volatile trading BP Plc and Shell Plc traded sideways with a negative bias.
Mining companies declined for the second day on the recession worries in the U.S.
Antofagasta Glencore, Anglo American declined between 1% and 4%.
Siemens Energy dropped 3.2% to 15.27 euros and Air Liquid edged down 0.5% to 129.56 euros after the two companies announced a joint venture to make industrial scale hydrogen electrolyzers.
Siemens Gamesa Renewable Energy SA was nearly unchanged at 17.85 euros after the wind turbine maker won an order of 60 turbines to supply Moray West Wind Farm located in Scotland.
Assicurazioni Generali gained 0.2% to 19.99 euros after the Italian insurance company announced a group organization structure.
S&P, Nasdaq Advance 1%, Mortgage Rates Continue to Rise
Barry Adams
23 Jun, 2022
New York City
U.S. stocks opened higher and in volatile trading advanced after investors added positions in all sectors.
Investors disregarded fears of economic recession and elevated energy prices.
U.S. weekly jobless claims declined 2,000 to a seasonally adjusted 229,000 in the week ended June 18, the Labor Department said today.
The previous week's claims were revised 2,000 higher to 231,000.
The 4-week moving average was 223,500, an increase of 4,500 from the previous week's revised average.
The 4-week moving average of insured unemployment remained near 1%, historic multi-decade low.
The S&P 500 increased 0.8% to 3,789.79 and the Nasdaq Composite advanced 1.3% to 11,196.28.
The yield on 10-year Treasury notes declined 14 basis points to 3.018% but mortgage rates stayed increased to 5.81%, a 14-year high according to the latest weekly data from Freddie Mac survey.
30-year fixed-rate mortgage averaged 5.81% with an average 0.8 point as of June 23, 2022, up from last week when it averaged 5.78%.
A year ago at this time, the 30-year fixed-rate averaged 3.02%.
Futures of crude oil fell 61 cents to $105.51 a barrel and natural gas fell 43 cents to $6.41 a unit.
The S&P 500 and the Nasdaq Composite indexes opened higher and advanced in a volatile pattern as investors snapped up beaten down and leading tech stocks.
Apple Inc, Microsoft Corp, Alphabet Inc, Meta Platforms, and Amazon added between 1% and 1.8%.
Occidental Petroleum Corp gained 1.3% to $56.47 after Berkshire Hathaway increased investment by $529 million and lifted its stake to 16.3% in the oil refiner and explorer.
Berkshire now owns 152.7 million shares worth $8.5 billion in the company after adding a total of 9.5 million shares in the last week.
Berkshire also controls a large stake in Chevron
On Wednesday, President Joe Biden is expected to ask Congress to drop federal gasoline and diesel taxes for three months.
Weaker oil prices dragged down stocks in the energy complex.
Chevron and Marathon Oil dropped more than 1.5%, Exxon Mobil declined 1.6% and Schlumberger NV fell 3.7% after president Biden's administration urged Congress to drop federal tax on gasoline and diesel sales for the next three months.
Federal tax on regular gasoline is 18 cents and diesel 24 cents a gallon.
Lower tax at the pump could provide relief to consumers but it can also lift the fuel demand worsening tight supply.
KB Home surged 8.7% to $28.49 and yesterday after the market closed the company reported sales in the second quarter ending in May increased 19% to $1.72 billion and net income soared 47% to $210 million.
The home builder delivered 3,469 homes, matching the deliveries in the quarter a year ago and average selling price increased 21% to $494,300.
The home builder guided sales in the fiscal year between $7.3 billion and $7.5 billion and average home selling price of $500,000.
Growth Worries Plague European Markets
European markets extended losses for the second day in a row on the worries that the region's economy is slowing faster than anticipated.
The eurozone private sector expanded at the slowest pace in a year after service sector growth eased and the manufacturing sector contracted for the first time in two years.
The flash composite output index dropped to a 16-month low of 51.9 in June from 54.8 in the previous month, the preliminary data from S&P Global.
Separate surveys also showed a sharp decline in business activities in France and Germany, two largest economies in the currency block.
The DAX index fell 1.04% to 13,027.62, the CAC-40 index declined 0.2% to 5,907.52, and the FTSE 100 index dropped 0.5% to 7,055.07.
Oil companies extended losses after crude oil prices declined 2% in the region.
In volatile trading BP Plc and Shell Plc traded sideways with a negative bias.
Mining companies declined for the second day on the recession worries in the U.S.
Antofagasta Glencore, Anglo American declined between 1% and 4%.
Siemens Energy dropped 3.2% to 15.27 euros and Air Liquid edged down 0.5% to 129.56 euros after the two companies announced a joint venture to make industrial scale hydrogen electrolyzers.
Siemens Gamesa Renewable Energy SA was nearly unchanged at 17.85 euros after the wind turbine maker won an order of 60 turbines to supply Moray West Wind Farm located in Scotland.
Assicurazioni Generali gained 0.2% to 19.99 euros after the Italian insurance company announced a group organization structure.
Asian Markets Extend Gains
Across Asia, market indexes closed higher after energy prices eased.
Crude oil prices in Asia declined for the second day and extended 2-day losses to 5.5% and natural gas prices dropped 0.6% in the region on the worries of a global recession.
Indexes in China gained on local media reports suggesting that the government is considering extending the tax break for electric vehicles.
Separately, an executive committee also approved a plan for fintech and large digital payment network operators.
The Nikkei index in Japan closed marginally higher and resource stocks led the decliners.
The Nikkei index in Tokyo added 0.08% to 26,171.25 and indexes in Hong Kong gained 1.3% to 21,273.34 and in Shanghai rose 1.6% to 3,320.15.
Sumitomo Metal Mining dropped 6% and Inpex Corp fell 2.6%.
In Mumbai, stocks advanced for the second day after the latest minutes of a meeting from the monetary policy committee stressed the direction of inflation rather than its level.
The Sensex index gained 709.54 or 0.9% to 52,265.23 and the Nifty 50 index advanced 0.93% to 15,556.65.
Automakers led the gainers on earnings optimism in the current quarter.
European Markets Turn Lower On Growth Slow Down Worries
Bridgette Randall
23 Jun, 2022
New York City
European markets extended losses for the second day in a row on the worries that the region's economy is slowing faster than anticipated.
The euro zone private sector expanded at the slowest pace in a year after service sector growth eased and the manufacturing sector contracted for the first time in two years.
The flash composite output index dropped to a 16-month low of 51.9 in June from 54.8 in the previous month, the preliminary data from S&P Global.
Separate surveys also showed a sharp decline in business activities in France and Germany, two largest economies in the currency block.
The DAX index fell 1.04% to 13,027.62, the CAC-40 index declined 0.2% to 5,907.52, and the FTSE 100 index dropped 0.5% to 7,055.07.
Oil companies extended losses after crude oil prices declined 2% in the region.
In volatile trading BP Plc and Shell Plc traded sideways with a negative bias.
Mining companies declined for the second day on the recession worries in the U.S.
Antofagasta Glencore, Anglo American declined between 1% and 4%.
Siemens Energy dropped 3.2% to 15.27 euros and Air Liquid edged down 0.5% to 129.56 euros after the two companies announced a joint venture to make industrial scale hydrogen electrolyzers.
Siemens Gamesa Renewable Energy SA was nearly unchanged at 17.85 euros after the wind turbine maker won an order of 60 turbines to supply Moray West Wind Farm located in Scotland.
Assicurazioni Generali gained 0.2% to 19.99 euros after the Italian insurance company announced a group organization structure.
Asian Markets Extend Gains
Across Asia, market indexes closed higher after energy prices eased.
Crude oil prices in Asia declined for the second day and extended 2-day losses to 5.5% and natural gas prices dropped 0.6% in the region on the worries of a global recession.
Indexes in China gained on local media reports suggesting that the government is considering extending the tax break for electric vehicles.
Separately, an executive committee also approved a plan for fintech and large digital payment network operators.
The Nikkei index in Japan closed marginally higher and resource stocks led the decliners.
The Nikkei index in Tokyo added 0.08% to 26,171.25 and indexes in Hong Kong gained 1.3% to 21,273.34 and in Shanghai rose 1.6% to 3,320.15.
Sumitomo Metal Mining dropped 6% and Inpex Corp fell 2.6%.
In Mumbai, stocks advanced for the second day after the latest minutes of meeting from the monetary policy committee stressed the direction of inflation rather than its level.
The Sensex index gained 709.54 or 0.9% to 52,265.23 and the Nifty 50 index advanced 0.93% to 15,556.65.
Automakers led the gainers on earnings optimism in the current quarter.
Asian Markets Advance On Oil Weakness
Arjun Pandit
23 Jun, 2022
New York City
Across Asia, market indexes closed higher after energy prices eased.
Crude oil prices in Asia declined for the second day and extended 2-day losses to 5.5% and natural gas prices dropped 0.6% in the region on the worries of a global recession.
Indexes in China gained on local media reports suggesting that the government is considering to extend tax break for electric vehicles.
Separately, an executive committee also approved a plan for fintech and large digital payment network operators.
The Nikkei index in Japan closed marginally higher and resource stocks led the decliners.
The Nikkei index in Tokyo added 0.08% to 26,171.25 and indexes in Hong Kong gained 1.3% to 21,273.34 and in Shanghai rose 1.6% to 3,320.15.
Sumitomo Metal Mining dropped 6% and Inpex Corp fell 2.6%.
In Mumbai, stocks advanced for the second day after the latest minutes of meeting from the monetary policy committee stressed the direction of inflation rather than its level.
The Sensex index gained 709.54 or 0.9% to 52,265.23 and the Nifty 50 index advanced 0.93% to 15,556.65.
Automakers led the gainers on earnings optimism in the current quarter.
KB Home Sales Jump 19% and Home Backlog Value Soars 43%
Scott Peters
22 Jun, 2022
New York City
KB Home sales and earnings rose despite supply chain disruption challenges and rising mortgage rates.
Consolidated sales in the second quarter ending in May increased 19% to $1.72 billion and net income soared 47% to $210 million.
Diluted earnings per share surged 55% to $2.32 from $1.50 a year ago.
The home builder delivered 3,469 homes, matching the deliveries in the quarter a year ago and average selling price increased 21% to $494,300.
Price increase played a key role in lifting gross margin 390 basis points to 25.3% offset by higher construction cost and elevated lumber prices and increased expenses to support current operations.
Selling, general and administrative expenses as a percentage of housing revenues improved 30 basis points to 9.8%, primarily reflecting lower external sales commissions and increased operating leverage from higher revenues, partly offset by higher expenses to support growth.
Operating income margin Improved 410 Basis Points to 15.4% and net order value increased 4% to $2.12 Billion and ending backlog value soared 43% to $6.12 Billion.
Regional Sales
Average sales price in the West Coast region increased to $739,800 from $622,000, in the Southwest region rose to $424,000 from $360,900, in the Central region advanced to $387,000 from $317,000, and in the Southeast region escalated to $359,000 from $293,000.
The home builder delivered 1,029 homes in the West Coast region, 685 in the Southeast region, 1,117 in the Central region, and 638 in the Southeast region.
The company delivered a total of 3,469 homes compared to 3,504 a year ago.
The home builder received 1,088 new home orders in the West Coast region, 719 in the Southwest region, 1,300 in the Central region, and 807 in the Southeast region.
The company received a total of 3,914 new home orders totaling $2.12 billion compared to 4,300 totaling $2.04 billion a year ago.
Total home order backlog increased to 12,331 homes valued at $6.1 billion compared to 10,034 homes valued at $4.3 billion.
Guidance and Outlook
The home builder guided sales in the fiscal year between $7.3 billion and $7.5 billion and average home selling price of $500,000.
In the fiscal year 2022, the company guided homebuilding operating income as a percentage of revenues in the range of 16.0% to 16.6%, housing gross profit margin in the range of 25.6% to 26.2%, assuming no inventory-related charges.
Selling, general and administrative expenses as a percentage of housing revenues are estimated in the range of 9.3% to 9.7%.
The home builder also guided for a tax rate of 25.0% and return on equity to exceed 27%.
Company and Stock
KB Home is headquartered in Los Angeles, California and has built 655,000 homes in the company's 65-year history.
In regular trading hours before the release of earnings news, KB Home stock increased 2.4% to $26.23.
In the year so far, KB Home stock has declined 39.2% to $26.23.
Stocks Lacked Direction as Powell Testifies to Congress
Barry Adams
22 Jun, 2022
New York City
Stocks in volatile trading struggled to advance after the Fed Chairman reiterated the central bank's commitment to fight inflation.
Fears of an economic recession weighed on investor sentiment after the Fed Chairman Jerome Powell reaffirmed central banks commitment in fighting inflation.
"We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so.
We have both the tools we need and the resolve it will take to restore price stability on behalf of American families and businesses," Powell told Congress on Wednesday.
Though the Fed expressed its strong commitment to fight inflation, prices have been rising at a faster pace for more than a year.
The consumer price index has been rising at more than the Fed's target rate of 2% for the last seventeen months in a row.
The S&P 500 fell 0.1% to 3,759.89 and the Nasdaq Composite declined 0.1% to 11053.08.
The popular market indexes opened lower and managed to climb above the flatline after one hour of trading.
For the next two hours, the indexes registered gains in the session but began to waver around mid-day and dipped briefly in the negative territory but quickly rebounded.
For the next three hours indexes advanced in choppy trading and near the close began to lose momentum. In the final five minutes of the session, the indexes sank and closed down for the day.
The yield on 10-year Treasury notes declined 14 basis points to close at 3.164%.
Futures of crude oil fell 3.8% to $105.34 a barrel and natural gas rose a fraction to $6.81 a unit.
On Wednesday, President Joe Biden is expected to ask Congress to drop federal gasoline and diesel taxes for three months.
Weaker oil prices dragged down stocks in the energy complex.
Chevron and Marathon Oil dropped more than 4%, Exxon Mobil declined 4%. Schlumberger NV fell 6% after president Biden's administration urged Congress to drop federal tax on gasoline and diesel sales for the next three months.
Federal tax on regular gasoline is 18 cents and diesel 24 cents a gallon.
Lower tax at the pump could provide relief to consumers but it can also lift the fuel demand worsening tight supply.
After the market closed today, KB Home reported sales in the second quarter ending in May increased 19% to $1.72 billion and net income soared 47% to $210 million.
The home builder delivered 3,469 homes, matching the deliveries in the quarter a year ago and average selling price increased 21% to $494,300.
The home builder guided sales in the fiscal year between $7.3 billion and $7.5 billion and average home selling price of $500,000.
European Markets Accelerate Declines
European markets accelerated declines after the U.K. inflation surged more than expected.
Consumer price index rose 9.1% in May from 9.0% in April, according to the latest data from the Office for National Statistics.
Month to month price increase slowed to 0.7% from 2.5% in April, the report stated.
The DAX index fell 1.1% to 13,144.28, the CAC-40 index declined 0.8% to 5,916.68, and the FTSE 100 index dropped 0.9% to 7,089.22.
Oil companies traded lower after crude oil prices declined 6% in the region.
BP Plc fell 3.1%, Shell Plc decreased 3.6%, and Repsol S.A. declined 4.3%.
BASF SE declined 5.8% to 43.56 euros after the chemical company said business in the second-half is likely to face considerable downturn.
Asian Markets Turn Lower
Markets in Asia closed lower following weak commodities prices and European markets.
Crude oil prices in Asia declined 4% and natural gas prices dropped between 2% and 3% on the global recession worries.
The Nikkei index in Tokyo declined 0.4% to 26,149.55 and indexes in Hong Kong dropped 2.6% to 21,008.34 and in Shanghai fell 1.2% to 3,267.20.
The Sensex index lost 709.54 or 1.4% to 51,822.53 and the Nifty 50 index dropped 225.50 or 1.44% to 15,413.30.
Movers: Altria, Airbnb, Coinbase, Kohl's, La-Z-Boy, Revlon
Barry Adams
22 Jun, 2022
New York City
Altria Group plunged 9.1% to $41.56 after the President Biden's administration is planning to place a maximum nicotine limit in cigarettes.
Separately, the Food and Drugs Administration is preparing to order Juul Labs to remove its e-cigarettes off the shelves from the U.S. market. The news was first reported by the Wall Street Journal.
Airbnb Inc declined 1.3% to $100.99 and the stock was downgraded to "market perform" from "market outperform" by JMP Securities citing current price reflects the post-pandemic travel rebound.
BASF SE declined 5.6% to $11.48 after the chemical company said business in the second-half is likely to face considerable downturn.
Carlsberg AS declined 1.6% to $24.43 after the alcoholic beverage maker said CFO Heine Dalsgaard has resigned to move to another company backed by a private-equity firm.
Dalsgaard will remain in the position till the end of 2022.
Clariant AG declined 3.7% to $18.78 Swiss francs after the company said it plans to trim its business divisions from five to three.
Coinbase Global dropped 7.5% to $53.20 after the rival cryptocurrency exchange Binance.US dropped the spot bitcoin trading fee.
Binance.US charged 0.1% spot bitcoin trading fee and Coinbase charged 0.5% for trading fees plus a flat fee of up to $2.99 per trade.
Credit Agricole SA declined 0.9% to $4.83 and the French-banking group released its strategic roadmap with a target of one million new retail customers and net income of 6 billion euros by 2025.
Hugo Boss gained 3.0% to $10.66 and the U.K. based Frasers Group increased its stake in the fashion designer and retailer.
The company has 3.425 million shares of common stock, representing 4.9% and 18.289 million shares of common stock via the sale of put options, representing 26.0% of Hugo Boss's total share capital, the investment group said in a press release today.
Kohl's Corporation dropped 9.5% to $38.23 after CNBC reported Franchise Group is said to lower its acquisition offer price closer to $50 a share from $60 a share citing higher inventories forcing the retailer to markdown more items.
LA-Z-Boy Incorporated surged 9.01% to $24.78 after the furniture retailer said fourth quarter revenues in the quarter ending in April soared 32% to $685 million and net income jumped 53.4% to $57.5 million.
Diluted earnings per share increased to $1.33 from 81 cents a year ago.
Mowi ASA dropped 4.8% to $22.22 Norwegian krone after the company repurchased its own 994,692 shares to meet the requirement to complete option remuneration to senior executives granted at 157.53 Norwegian krone.
The seafood company operates farms in Norway, Ireland, U.K., Canada, and Chile.
Revlon Inc soared 38.9% to $8.49 and extended its rally since the company filed to go public last week.
Movers: BASF, Carlsberg, Clariant, Credit Agricole, Hugo Boss, Mowi
Bridgette Randall
22 Jun, 2022
New York City
European markets traded lower on recession worries and rising inflation in the region.
The DAX index fell 2.0% to 13,027.62, the CAC-40 index declined 1.8% to 5,859.51, and the FTSE 100 index dropped 1.5% to 7,045.08.
Oil companies traded lower after crude oil prices declined 6% in the region.
BP Plc fell 3.6%, Shell Plc decreased 3.6%, and Repsol S.A. declined 4.8%.
BASF SE declined 5.6% to 43.30 euros after the chemical company said business in the second-half is likely to face considerable downturn.
Credit Agricole SA declined 2.2% to 9.19 euros and the French-banking group released its strategic roadmap with a target of one million new retail customers and net income of 6 billion euros by 2025.
Hugo Boss gained 0.7% to 48.70 euros and Frasers Group increased its stake in the fashion designer and retailer.
The company has 3.425 million shares of common stock, representing 4.9% and 18.289 million shares of common stock via the sale of put options, representing 26.0% of Hugo Boss's total share capital, the company said in a press release today.
Clariant AG declined 1.5% to 17.98 Swiss francs after the company said it plans to trim its business divisions from five to three.
Mowi ASA dropped 7.2% to 219.70 Norwegian krone after the company repurchased its own 994,692 shares to meet the requirement to complete option remuneration to senior executives granted at 157.53 Norwegian krone.
The seafood company operates farms in Norway, Ireland, U.K., Canada, and Chile.
Carlsberg AS declined 1.2% after the company said its CFO Heine Dalsgaard has resigned to move to another company backed by a private-equity firm.
Dalsgaard will remain in the position till the end of 2022.
European Markets Declined After UK Inflation Accelerated and Oil Fell
Bridgette Randall
22 Jun, 2022
New York City
European markets accelerated declines after the U.K. inflation surged more than expected.
Consumer price index rose 9.1% in May from 9.0% in April, according to the latest data from the Office for National Statistics.
Month to month price increase slowed to 0.7% from 2.5% in April, the report stated.
The DAX index fell 2.0% to 13,027.62, the CAC-40 index declined 1.8% to 5,859.51, and the FTSE 100 index dropped 1.5% to 7,045.08.
Oil companies traded lower after crude oil prices declined 6% in the region.
BP Plc fell 3.6%, Shell Plc decreased 3.6%, and Repsol S.A. declined 4.8%.
BASF SE declined 5.6% to 43.30 euros after the chemical company said business in the second-half is likely to face considerable downturn.
Credit Agricole SA declined 2.2% to 9.19 euros and the French-banking group released its strategic roadmap with a target of one million new retail customers and net income of 6 billion euros by 2025.
Hugo Boss gained 0.7% to 48.70 euros and Frasers Group increased its stake in the fashion designer and retailer.
The company has 3.425 million shares of common stock, representing 4.9% and 18.289 million shares of common stock via the sale of put options, representing 26.0% of Hugo Boss's total share capital, the company said in a press release today.
Clariant AG declined 1.5% to 17.98 Swiss francs after the company said it plans to trim its business divisions from five to three.
Asian Markets Turn Lower
Markets in Asia closed lower following weak commodities prices and European markets.
Crude oil prices in Asia declined 4% and natural gas prices dropped between 2% and 3% in the region on the worries of a global recession.
The Nikkei index in Tokyo declined 0.4% to 26,149.55 and indexes in Hong Kong dropped 2.6% to 21,008.34 and in Shanghai fell 1.2% to 3,267.20.
The Sensex index lost 709.54 or 1.4% to 51,822.53 and the Nifty 50 index dropped 225.50 or 1.44% to 15,413.30.