Coffee With Greta: Fed’s Fave Inflation Gauge Jumps

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DJIA Futures: +14 (+0.04%)

SPX Futures: +17 (+0.4%)

NASDAQ Futures: +85 (+0.7%)

Good morning friends!

Futures are mostly higher as the market digests fresh inflation data and strong big tech earnings.

Let’s get right to it!

PCE Inflation Pushes Higher

Inflation pressures in the U.S. economy pushed higher in June. 

The Bureau of Economic Analysis’ Personal Consumption Expenditures (PCE) price index jumped 1% monthly and surged 6.8% year over year. 

That was higher than expectations for a 0.9% monthly gain and an increase from the 6.3% annual pace in May.

That’s the highest headline reading since January 1982. 

The core PCE price index – which is the Fed’s preferred inflation gauge – rose 0.6% monthly and 4.8% annually. 

That was higher than economists’ expectations for 0.5% monthly and up from 4.7% annually in May. 

The data shows high inflation pressures persisting even as the Fed has begun aggressive rate hikes. 

Apple Tops Fiscal Q3 Expectations

Apple (AAPL) shares are up 2.8% ahead of the open after beating fiscal Q3 expectations on the top and bottom line. 

The iPhone maker reported earnings of $1.20 per share on $83 billion in revenue. 

That was better than analysts’ expectations for EPS of $1.16 on $82.81 billion in revenue. 

iPhone revenue rose 3% annually to $40.67 billion vs $38.33 billion estimated. 

Apple declined to provide fiscal Q4 guidance but CEO Tim Cook told CNBC, “we expect revenue to accelerate in the September quarter despite seeing some pockets of softness.”

Amazon Surges On Strong Q2 Sales

Amazon (AMZN) shares are surging 10.5% in premarket trade after better-than-expected Q2 results.

The online retail giant reported a loss of $0.20 per share on $121.23 billion in revenue, up 7% year-over-year. 

That was better than analysts’ expectations for $119.3 billion in sales. 

The profit loss included a $3.9 billion non-operating expense related to Amazon’s stake in Rivian (RIVN).

CEO Andy Jassy said, “Despite continued inflationary pressures in fuel, energy, and transportation costs, we’re making progress on the more controllable costs we referenced last quarter, particularly improving the productivity of our fulfillment network.”

Amazon Web Services revenue rose 33% to $19.7 billion, in line with expectations.

Online sales fell 4% to $50.9 billion while physical store sales rose 12% to $4.7 billion. 

Amazon projected Q3 sales between $125 billion and $130 billion vs analysts’ estimates for $126.7 billion. 

Roku Craters After Weak Q2

Roku (ROKU) shares are plummeting 22.8% ahead of the open after weak Q2 results.

The streaming giant reported a loss of $0.82 per share on $764 million in revenue. 

That was worse than analysts’ expectations for a loss of $0.69 per share on $805 million in revenue.

Roku blamed that weak performance on inflation and supply chain issues. 

The company warned of a continued slowdown in the advertising market due to “an economic environment defined by recessionary fears.”

Roku said, “We believe this pullback mirrors the start of the pandemic in 2020, when marketers prepared for macro uncertainties by quickly reducing ad spend across all platforms.”

The company withdrew its full-year growth estimate citing market volatility.

Intel Sinks After Q2 Earnings Miss, Weak Guidance

Intel (INTC) shares are sinking 11% in premarket trade after missing Q2 expectations on the top and bottom line.

The chipmaker reported adjusted earnings of $0.29 per share on $15.32 billion in revenue. 

That missed analysts’ expectations for adjusted EPS of $0.70 on $17.92 billion in revenue. 

Revenue tumbled 22% year over year.

CEO Pat Gelsinger said, “The sudden and rapid decline in economic activity was the largest driver, but the shortfall also reflects our own execution issues.”

For the third quarter, Intel forecast adjusted earnings of $0.35 per share on $15 billion to $16 billion in revenue. 

The company also lowered its full-year forecast.

Intel expects full-year adjusted earnings of $2.30 per share and revenue between $65 billion and $68 billion. 

That was down from prior guidance and lower than analysts’ estimates for $3.42 EPS on $73.34 billion in revenue.

Procter & Gamble Slides On Profit Miss, Weak Outlook

Procter & Gamble (PG) shares are are falling 3.5% ahead of the open after missing fiscal Q4 profit expectations and releasing weak fiscal 2023 guidance. 

The consumer goods giant reported adjusted earnings of $1.21 per share on $19.52 billion in revenue. 

That was shy of analysts’ expectations for EPS of $1.22 but higher than estimates for $19.4 billion in revenue. 

The CEO said, “As we look forward to fiscal 2023, we expect another year of significant headwinds.”

The company expects fiscal 2023 earnings to be flat to up about 4%, which would be around $5.93 per share at the midpoint. 

Analysts were expecting fiscal 2023 EPS of $6.02.

Big Oil Companies Report Record Profits

Exxon Mobil (XOM) shares are up 2.2% while Chevron (CVX) shares are up 2.8% after both companies reported record profits in Q2. 

Exxon reported adjusted earnings of $4.14 per share vs $3.74 per share expected.

But revenue fell short at $115.68 billion vs analysts’ estimates for $132.7 billion. 

Chevron beat expectations on the top and bottom line with adjusted EPS of $5.82 on $68.76 billion in revenue. 

That was better than analysts’ estimates for EPS of $5.10 on $59.29 billion in revenue. 

The record-high profits came as oil prices remained high in the quarter and U.S. gas prices hit record highs in June.

Oil Prices Climb On Supply Worries

Oil prices are climbing higher as focus turns to next week’s OPEC+ meeting and low expectations the group will boost production. 

West Texas Intermediate crude futures are up about 2% to over $98 bbl while Brent crude futures are up 1.9% to over $109 bbl. 

But both contracts are still on track for a second straight monthly loss.

Gas Prices Continue Pullback

U.S. gas prices fell for the 44th day in a row today.

AAA shows the national average for regular gas fell nearly 2 cents overnight to $4.255/gal.

The national average for diesel also fell more than 2 cents overnight to $5.319/gal.

In Case You Missed It

  • Treasury Secretary Janet Yellen said the U.S. economy is not in a recession on Thursday. Her comments came after the Commerce Department reported GDP contracted 0.9% annually in Q2. That was the second straight quarterly contraction. Yellen said, “job creation is continuing, household finances remain strong, consumers are spending and businesses are growing.”

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