U.S. and Global Stocks Power Ahead as Investor Sentiment Improves

Barry Adams
28 Oct, 2022
New York City

Benchmark indexes extended weekly gains after investors interpreted latest readings on inflation and consumer health and detected signs of optimism in the latest batch of earnings.  

Chevron and Exxon Mobil reported a multi-fold jump in earnings after energy prices soared in the latest quarter. 

Apple soared 8% after the company's latest quarterly earnings were ahead of lowered expectations and sales in China rose despite the widespread lockdowns.  

Amazon.com dropped as much as 10% after the online retailer said fourth quarter revenue growth is likely to be weak. 

The S&P 500 index increased 1.2% to 3,854.89 and the Nasdaq Composite rose 1.2% to 10,925.61. 

For the week, the S&P 500 index jumped 4.1% and the Nasdaq Composite gained 2.1%. 

Crude oil edged down $1.04 to $88.05 a barrel and natural gas decreased 18 cents to $5.68 a thermal unit. 

Bond yields rose after a measure of inflation was elevated but steady in September, indicating stubborn inflation seeping into a broader economy. 

The yield on 2-year Treasury notes rose to 4.41%, 10-year Treasury notes jumped to 3.997% and 30-year bonds increased to 4.12%. 

 

PCE Price Index Held Steady but Elevated 

Personal Consumption Expenditure price index, a measure of inflation, rose 0.3% in September from the previous month.

The PCE index jumped 6.2% from a year ago and matched the rise in the previous month, according to the data released by the Bureau of Economic Analysis.

The PCE index, excluding food and energy, rose 0.5% on a monthly basis and jumped 5.1% from a year ago.  

 

Pending Home Sales Plunge 10% In September

Pending home sales fell for the fourth month in a row after rising mortgage rates and elevated prices kept buyers away. 

Pending home sales in September declined 10.5% from August and plunged 31% from a year ago, the National Association of Realtors said in a statement today. 

"Persistent inflation has proven quite harmful to the housing market," said NAR Chief Economist Lawrence Yun. 

"The Federal Reserve has had to drastically raise interest rates to quell inflation, which has resulted in far fewer buyers and even fewer sellers," added Yun. 

The pending home sales index is at a low last seen in June 2010, excluding the onset of the coronavirus pandemic in April 2020. 

Home prices across the nation are still 40% higher than pre-pandemic 2019 levels. 

 

U.S. Stock Movers 

Amazon.com, Inc plunged 20.4% to $88.20 after the online retailer guided weak fourth quarter outlook. 

Third quarter revenue increased 15% to $127.1 billion from $110.8 billion and North America segment sales increased 20% to $78.8 billion. 

Net income in the quarter decreased to $2.9 billion or 28 cents from $3.2 billion or 31 cents a diluted share. 

Amazon guided fourth quarter sales between $140.0 billion and $148.0 billion, an increase between 2% and 8% from a year ago. 

This guidance anticipates an unfavorable impact of approximately 460 basis points from foreign exchange rates. 

Apple Inc declined 1.1% to $143.81 after the computing and telecom devices maker reported fiscal fourth quarter results ending on September 24. 

Revenue in the quarter rose 8% to $90.1 billion from $84.4 billion a year ago. 

Net income in the quarter rose to $20.7 billion from $20.5 billion and diluted earnings per share increased to $1.28 to $1.24 a year ago. 

Sales in the Americas rose to $39.8 billion from $36.8 billion and Greater China rose to $15.5 billion from $14.6 billion a year ago. 

iPhone sales jumped to $42.6 billion from $38.9 billion a year ago. 

Apple declared a cash dividend of 23 cents a share payable on November 10, 2022 to shareholders of record as of the close of business on November 7, 2022.

Chevron Corp gained 2.1% to $181.65 after the energy explorer and refiner said quarterly earnings nearly doubled. 

Revenue in the quarter jumped to $66.6 billion from $44.7 billion a year ago. 

Net income in the third quarter nearly doubled to $11.2 billion from $6.1 billion and diluted earnings per share jumped to $5.78 from $3.19 a year ago. 

Exxon Mobil Corp jumped 2.2% to $109.90 after the energy company reported a surge in revenue and profit.

Total revenue in the third quarter jumped to $112.1 billion from $73.8 billion a year ago. 

Net income in the period advanced to $20.2 billion from $6.94 billion and diluted earnings per share shot up four-fold to $4.68 from $1.57 a year ago.   

The company declared a fourth quarter dividend of 91 cents a share payable to shareholders on record on December 9th. 

Intel Corp jumped 7.3% to $28.12 after the semiconductor chipmaker posted better-than-expected quarterly results but the company lowered its full-year sales outlook. 

Revenue in the third quarter declined 20% to $15.3 billion from $19.2 billion a year ago. 

Net income in the quarter plunged 85% to $1.0 billion from $6.8 billion and diluted earnings per share dropped to 25 cents from $1.67 a year ago. 

The company lowered its full-year 2022 revenue outlook between $63 billion and $64 billion from the previous range between $65 billion and $68 billion. 

The company also took a $664 million restructuring charge in the quarter and said it plans to aggressively cut operating costs. 

 

European Markets Jump 4% In Volatile Week 

European markets lacked direction but extended weekly gains in volatile trading and the ECB lifted its main rate by a large-size for the second time in a row. 

Investors also weighed accelerating inflation in the region's two largest economies. 

In addition, Germany's economy unexpectedly expanded in the third quarter but the French economic growth slowed. 

Inflation in Germany and France Accelerates 

Germany's consumer price inflation accelerated in October to 10.4% from 10.0% in September, Destatis said in a report Friday. 

The annual inflation accelerated after goods prices rose at a faster pace of 17.8% from 17.2%, food prices increased 20.3% from 18.7% and high energy prices jumped 43% from 43.9%. 

Service prices rose at a faster pace 4.0% from 3.6% in the previous month and rent price increased to 1.8% from 1.7%. 

October inflation on a monthly basis increased to 0.9%. 

The French inflation rose 6.2% in October from 5.6% in September, the statistical office INSEE reported Friday. 

The October inflation was the strongest since 1985. 

Another report from the Destatis showed that the German economy unexpectedly rose in the third quarter.

 

German GDP Expands, French Growth Slows 

Germany's GDP rose 0.3% in the third quarter after rising 0.1% in the second quarter. 

Most economists were anticipating 0.2% contraction in the third quarter.  

French economy expanded at a slower pace of 0.2% from the second quarter when the economy logged 0.5% growth, the statistical office INSEE reported Friday. 

The stagnant household spending and weaker exports dented the growth in the third quarter.  

 

European Markets and Indexes 

The DAX index rose 0.2% to 13,243.33, the CAC-40 index increased 0.5% to 6,273.06 and the FTSE 100 index declined 0.4% to 7,047.67. 

For the week, the DAX and the CAC-40 jumped 4% and the Swiss SMI index gained 3.3% and the FTSE 100 advanced 1%. 

The yield on 10-year German Bunds increased to 2.09%, French bonds rose to 2.62%, the UK Gilt increased to 3.45% and Italian bonds to 4.19%. 

The euro traded at 99.59 U.S. cents and the British pound inched up to $1.15. 

Brent crude decreased to $1.01 to $95.92 a barrel and TTF natural gas futures rose 2.5% to 110.45 euros a MWh. 

 

Europe Stock Movers 

Swiss Re dropped 2.4% to 75.42 Swiss francs after the company posted net loss in the third quarter and in the nine-month period of fiscal 2022. 

Danone SA gained 2.9% to