With Fed Minutes In Focus, Investors React to Latest Earnings

Barry Adams
22 Feb, 2023
New York City

Stocks lacked direction as investors mulled the amount of future interest rate hikes ahead of the release of minutes of meeting later in the day. 

The Fed minutes are scheduled to be released at 2:00 p.m. ET and investors are looking for clues about how long elevated rates are likely to stay.  

Rising bond yields have kept markets on the edge as investors are still uncertain about how high rates have to go to cool elevated inflation. 

Despite eight interest rate hikes over the last twelve months, inflation is far above the Fed's preferred rate of 2%. 

Stocks were under pressure a day after the worst single-day decline in 2023 and investors shifted focus to the latest batch of earnings.  

Toll Brothers surpassed expectations and expressed confidence in the strength of the housing demand highlighting demographic and migration trends to the South and the company's land portfolio. 

Palo Alto Networks jumped 11% after the company revised higher its full-year outlook and Coinbase fell despite the cryptocurrency exchange exceeding revenue expectations. 

CoStar Group plunged as much as 15% in early trading after the real estate marketplace operator forecasted revenue growth in fiscal 2023 of 13%, slightly higher than the previous fiscal year's growth rate of 12%. 

Intel Corporation declined 1% to $25.81 after the chipmaker announced a cut of 65.7% for its quarterly dividend to 12.5 cents from 36.5 cents, a first cut in dividend since 2000. 

The dividend is payable on June 1 to stockholders of record on May 17. 

The company also reaffirmed its 2023 first quarter adjusted earnings outlook of 15 cents and did not provide full-year guidance citing economic uncertainties.  

 

U.S. Indexes and Yields  

The S&P 500 index increased 1.81 points to 3,999.15 and the Nasdaq Composite index advanced 19.95 points to 11,512.26. 

The yield on 2-year Treasury notes edged lower to 4.66%, 10-year Treasury notes edged higher to 3.91% and 30-year Treasury bonds hovered near 3.92%.

Crude oil decreased $1.64 to $74.71 a barrel and natural gas futures increased 11 cents to $2.19 a thermal unit. 

 

U.S. Movers 

Toll Brothers Inc increased 3.7% to $57.77 after the luxury home builder reported better-than-expected earnings. 

Home sales in the fiscal first quarter ending in January increased 4% to $1.7 billion. 

In the quarter, the company delivered 1,826 homes, 5% fewer homes than in the previous year.

Net income increased to $191.5 million from $151.9 million and diluted earnings per share rose to $1.70 from $1.24 a year ago. 

Backlog value of homes fell 21% to $8.6 billion and the number of homes in the backlog dropped 32% to 7,733. 

The company reaffirmed its full-year fiscal 2023  guidance of an adjusted gross margin of 27.0% and $8.00 to $9.00 of earnings per share. 

 The homebuilder repurchased approximately 187,300 shares at an average price of $49.95 per share for a total purchase price  of approximately $9.4 million. 

CoStar Group Inc dropped 5.2% to $72.30 after the online real estate marketplace operator and information provider's current year outlook disappointed some investors. 

Revenue in the fourth quarter increased 13% to $573 million and net income increased 34% to $124 million from $94 million a year ago. 

Diluted earnings per share increased to 31 cents from 24 cents a year ago. 

The real estate company expects revenue in the range of $2.46 billion to $2.48 billion for the full-year of 2023, representing an increase of 13% from the previous year at the midpoint of the range. 

Revenue in the first quarter in the range of $575 million to $580 million, representing an increase of 12% from the previous year at the midpoint of the range.

The company also confirmed that it is no longer in discussion with News Corp regarding the purchase of Realtor.com.