Coffee With Greta: Big Tech Earnings Bounce
DJIA Futures: +67 (+0.2%) SPX Futures: +12 (+0.3%) NASDAQ Futures: +142 (+1.1%) Good morning friends! Futures are up as traders digest the first batch of big tech earnings. Let’s get right to it! Microsoft Rallies On Earnings Beat Microsoft (MSFT) shares are rallying 7.9% ahead of the open after beating fiscal Q3 expectations on the top and bottom line. Here’s how the tech giant’s results compared to analysts’ estimates: EPS: $2.45 vs $2.23 expected Revenue: $52.86 billion vs $51.02 billion expected For fiscal Q4, Microsoft forecast revenue between $54.85 billion and $55.85 billion, beating expectations for $54.84 billion. The CFO said, We will continue to invest in our cloud infrastructure, particularly AI-related spend, as we scale to the growing demand driven by customer transformation. And we expect the resulting revenue to grow over time.” Alphabet Tops Q1 Expectations Alphabet (GOOGL) shares are up 0.3% in premarket trade after reporting better-than-expected Q1 results. Here’s how the company’s results compared to analysts’ estimates: EPS: $1.17 vs $1.07 expected Revenue: $69.79 billion vs $68.9 billion expected It was the first time Alphabet has beat expectations since Q4 2021. YouTube ad revenue was better-than-expected at $6.69 billion while traffic acquisition costs were lower-than-expected at $11.72 billion. Google’s cloud service turned $7.45 billion in revenue during the quarter, slightly lower than expectations, but the segment was profitable for the first time on record. The cloud segment generated $191 million in operating income last quarter. Boeing Rises After Revenue Beat Boeing (BA) shares are up 3% ahead of the open after reporting mixed Q1 results. Here’s how the plane maker’s results compared to analysts’ estimates: Loss per share: $1.27 vs $1.07 expected Revenue: $17.92 billion vs $17.57 billion expected Sales were up 28% year-over-year with commercial airplane revenue surging 60%. Boeing said it plans to increase output of its 737 Max planes later this year to 38 a month from 31. It also plans to increase production of the 787 Dreamliner to five planes per month from 3 currently. With demand rising, the company expects to deliver a total of 400 to 450 737 planes this year. The CEO said, “This is an important year for us. As demand surges across our markets, we must focus together on execution and meeting our customer commitments.” Chipotle Smashes Q1 Expectations Chipotle Mexican Grill (CMG) shares are up 7.7% in premarket trade after solidly beating Q1 expectations. Here’s how the restaurant chain’s results compared to analysts’ estimates: EPS: $10.50 vs $8.92 expected Revenue: $2.37 billion vs $2.34 billion expected Higher menu prices and lower avocado prices helped improve Chipotle’s profit margins during the quarter. Same-store sales jumped 10.9% vs 8.6% expected. Chipotle forecast same-store sales growth in the mid-to-high single digits next quarter and for the full year, in line with expectations. The company also reiterated its plans to open between 255 and 285 new restaurants this year. Durable Goods Orders Jump Durable goods orders rose more than expected in March as demand for planes jumped. The Commerce Department reported durable goods orders rose 3.2% monthly vs expectations for a 0.5% gain. That increase was led by transportation orders which surged 9.1%. Excluding transportation, orders rose 0.3% monthly vs estimates for a 0.2% decline. February’s contraction was revised higher to -1.2% from -1% previously. Mortgage Demand Rebounds Despite High Rates Mortgage demand jumped last week despite rates hitting the highest level in a month. The Mortgage Bankers Association reported total application volume rose 3.7% weekly. Purchase applications were up 5% weekly and 28% lower year over year. Refinance applications rose 2% weekly and were down 51% annually. The average 30-year contract rate rose to 6.55% from 6.43%. In Case You Missed It Consumer confidence slipped to a 9-month low in April. The Conference Board’s consumer confidence index fell 2.7 points this month to 101.3. That was lower than economists’ estimates for the index to be unchanged at 104. The expectations index fell to 68.1 from 74. One-year inflation expectations improved to 6.2% from 6.3%. Home prices rose for the first time in seven months in February. The S&P Case-Shiller national home price index rose 0.2% monthly and 2% year over year. The largest annual gains were in Miami, Tampa, and Atlanta where prices rose 10.8%, 7.7%, and 6.6% respectively. New home sales surged in March as buyers turn to builders. The Census Bureau reported new sales jumped 9.6% last month to a seasonally adjusted annual rate of 683,000 units. That was better than expectations for 634,000 and the fourth straight monthly gain in new sales.
Continue Reading -->The 20 Best Stocks of 2023
What are the best-performing stocks in 2023? AI stocks like C3.ai (AI)? Biotechs like Prometheus Biosciences Inc. (RXDX)? You’re about to find out. We fired up our scanner to find the 20 biggest gainers of 2023. We limited the list to stocks with market caps over $1 billion to eliminate the most speculative names And we found: Several takeovers Multiple biotech and pharma names One megacap semiconductor stock Several companies with little Wall Street coverage Our list starts at #20 and works its day down to #1. Dig in! *Data sourced from KoyFin on 4/25/2023 #20: Altair Engineering Inc. (ALTR): +54.0% Altair Engineering Inc. is a software company that provides advanced simulation and optimization solutions, helping businesses improve product design, engineering, and performance, while reducing development costs and time-to-market. The stock is covered by just 10 analysts, according to KoyFin. #19: West Pharmaceutical Services Inc. (WST): +54.1% West Pharmaceutical Services Inc. is a medical device company that develops and manufactures drug delivery systems and packaging solutions, helping to ensure the safety, efficacy, and convenience of pharmaceutical products. Aside from its huge earnings gap in February, driving by a huge beat, WST has been gently gliding higher with very little volatility. Impressive! #18: National Instruments Corporation (NATI): +57.3% National Instruments Corporation is a technology company that designs and manufactures electronic measurement and automation equipment, providing advanced solutions for industries such as aerospace, defense, automotive, and electronics. National Instruments was acquired by Emerson Electric (EMR) for $8.2 billion in April. #17: agilon health inc. (AGL): +57.4% agilon health inc. is a health care services company that partners with primary care physicians and health systems to provide value-based care solutions, focusing on improving health outcomes and reducing costs for patients and payers. This is one of the more interesting charts we’ve seen. agilon has a knac for huge drops… and huger rallies back up. #16: Seagen Inc. (SGEN): +57.9% Seagen Inc. is a biotechnology company that develops and commercializes novel cancer therapies, leveraging cutting-edge science and technology to improve patient outcomes and advance cancer treatment. #15: World Wrestling Entertainment Inc. (WWE): +59.1% World Wrestling Entertainment Inc. (WWE) is a media and entertainment company that produces and distributes live and pre-recorded sports entertainment programming, including professional wrestling events, TV shows, and digital content. On April 3, 2023, Endeavor Group Holdings (EDR) announced it was acquiring WWE for $9.3 billion. #14: UWM Holdings Corporation (UWMC) +66.0% UWM Holdings Corporation is a mortgage lending company that offers a range of loan products and services to homebuyers and homeowners, leveraging technology and innovation to simplify the mortgage process and provide an exceptional customer experience. The housing market is slowing, but UWM stock has shown remarkable momentum in 2023. #13: Samsara Inc. (IOT): +67.3% Samsara Inc. is an Internet of Things (IoT) company that provides fleet management, asset tracking, and industrial monitoring solutions, helping businesses optimize their operations and reduce costs through advanced technology. Samsara has nearly tripled off last year’s lows thanks to some big revenue and earnings beats. #12: e.l.f. Beauty Inc. (ELF): +69.6% e.l.f. Beauty Inc. is a cosmetic and beauty products company that offers affordable, high-quality makeup and skincare products, with a focus on inclusive and diverse beauty standards. e.l.f. put in a string of big earnings beats, setting the stage for big gains this year. #11: Align Technology Inc. (ALGN) +70.4% Align Technology Inc. is a medical device company that designs and manufactures clear aligners and other orthodontic products, providing innovative and effective solutions for patients seeking to improve their oral health and smile. Align had a big earnings beat in February to send it soaring, and it’s right back at those highs in late April. #10: Apellis Pharmaceuticals Inc. (APLS) +71.6% Apellis Pharmaceuticals Inc. is a clinical-stage biopharmaceutical company that develops and commercializes novel therapies for the treatment of complement-mediated diseases, using a proprietary platform that leverages advanced science and technology. #9: Qualtrics International Inc. (XM) +72.9% Qualtrics International Inc. is a software company that provides experience management solutions, helping organizations measure and improve customer, employee, product, and brand experiences through advanced data analytics and insights. Note that on May 13, Qualtrics accepted a $12.5 billion offer to go private. #8: Meta Platforms Inc. (META) +73.9% Meta Platforms Inc. (formerly Facebook) is a social media and technology company that operates a range of digital platforms and products, connecting billions of people around the world and providing a wide range of services and experiences. Meta has benefited from a strong Q4 earnings report and aggressive cost-cutting by CEO Mark Zuckerberg. #7: Lantheus Holdings Inc. (LNTH) +76.3% Lantheus Holdings Inc. is a medical imaging company that develops and manufactures diagnostic imaging agents and medical imaging equipment, with a focus on providing high-quality and safe imaging solutions for patients and health care providers. #6: Prometheus Biosciences Inc. (RXDX) +76.7% Prometheus Biosciences Inc. is a biopharmaceutical company that develops and commercializes novel therapeutics for the treatment of inflammatory bowel disease, leveraging advanced technology platforms and deep scientific expertise. On April 17, 2023, Merck (MRK) announced it was buying Prometheus for $10.8 billion. #5: Oak Street Health Inc. (OSH): +81.1% Oak Street Health Inc. is a primary care provider that offers personalized, preventive health care services to seniors, with a focus on improving health outcomes and reducing health care costs. On February 8, CVS (CVS) announced it was acquiring Oak Street Health (OSH) in a $10.6 billion deal. #4: NVIDIA Corporation (NVDA): +83.5% NVIDIA Corporation is a technology company that designs and manufactures high-performance graphics processing units (GPUs), providing advanced computing solutions for industries such as gaming, artificial intelligence, and scientific research. The semiconductor sector has been remarkable strong in 2023, so it’s no surprise that Nvidia has surged. #3: DraftKings Inc. (DKNG): +87.9% DraftKings Inc. is a digital sports entertainment and gaming company that operates fantasy sports contests, sports betting, and online casino games, providing users with real-time experiences and unique gaming opportunities. March Madness has been a big growth driver for Draft Kings in
Continue Reading -->Coffee With Greta: Earnings Rush
DJIA Futures: -75 (-0.2%) SPX Futures: -19 (-0.4%) NASDAQ Futures: -59 (-0.5%) Good morning friends! Futures are down as traders digest the latest earnings and look ahead to results from big tech names later today. Let’s get right to it! First Republic Tumbles After Earnings First Republic Bank (FRC) shares are dropping 21% ahead of the open despite beating Q1 expectations as deposits plunged. Here’s how the regional bank’s results compared to analysts’ estimates: EPS: $1.23 vs $0.85 expected Revenue: $1.21 billion vs $1.15 billion expected The bank said its deposits tumbled 40% in the quarter to $104.5 billion. That was lower than analysts’ expectations for deposits to be about $145 billion. But First Republic said deposit flows have since stabilized. The bank said, “Deposit activity began to stabilize beginning the week of March 27, 2023, and has remained stable through Friday, April 21, 2023. Total deposits were $102.7 billion as of April 21, 2023, down only 1.7% from March 31, 2023, primarily reflecting seasonal client tax payments that occur each April.” The bank also announced new cost cutting efforts which include cuts to executive compensation, condensing office space, and reducing head count by 20% to 25% in Q2. GM Tops Q1 Expectations, Hikes Guidance General Motors (GM) shares are up 2.7% in premarket trade after beating Q1 expectations on the top and bottom line and raising its 2023 guidance. Here’s how the automaker’s results compared to analysts’ estimates: Adjusted EPS: $2.21 vs $1.73 expected Revenue: $39.99 billion vs $38.96 billion expected GM now expects full-year adjusted EPS of $6.35 to $7.35 vs $6 to $7 previously. The automaker also raised its expectations for adjusted automotive free cash flow to between $5.5 billion and $7.5 billion from $5 billion to $7 billion previously. McDonald’s Shares Rise After Earnings Beat McDonald’s (MCD) shares are up 1% ahead of the open after beating Q1 expectations. Here’s how the fast food giant’s results compared to analysts’ estimates: Adjusted EPS: $2.63 vs $2.33 expected Revenue: $5.9 billion vs $5.59 billion expected McDonald’s reported same-store sales growth of 12.6% across all three of its divisions, fueled by higher menu prices. The company’s U.S. traffic rose for the third consecutive quarter. PepsiCo Hikes Outlook After Earnings Beat PepsiCo (PEP) shares are up 1.7% in premarket trade after beating Q1 expectations and raising its full-year outlook. Here’s how the beverage giant’s results compared to analysts’ estimates: Adjusted EPS: $1.50 vs $1.39 expected Revenue: $17.85 billion vs $17.22 billion expected Net sales rose 10.2% year over year while organic revenue jumped 14.3%. Sales volumes in PepsiCo’s beverage business rose 1% and declined 3% in its food segment. Overall volumes were down 2% while prices were up 16%. PepsiCo now expects full-year 2023 organic revenue growth of 8% vs 6% previously. 3M Beats Q1 Estimates, Announces Layoffs 3M (MMM) shares are up 1.3% ahead of the open after beating Q1 expectations on the top and bottom line. Here’s how the industrial giant’s results compared to analysts’ estimates: Adjusted EPS: $1.92 vs $1.60 expected Revenue: $7.7 billion vs $7.5 billion expected 3M maintained its full-year outlook for sales to drop 3% year over year and EPS between $8.50 and $9. The CEO said, “we continued our relentless focus on serving customers and aggressively managed costs” during Q1. As part of its cost cutting efforts, 3M announced plans to cut 6,000 more jobs globally in addition to the 2,500 announced in January. UPS Misses Q1 Expectations UPS (UPS) shares are down 4.9% in premarket trade after missing Q1 expectations. Here’s how the shipping giant’s results compared to analysts’ estimates: Adjusted EPS: $2.20 vs $2.21 expected Revenue: $22.93 billion vs $23.01 billion expected The CEO said, “In the first quarter, deceleration in U.S. retail sales resulted in lower volume than we anticipated, and we faced ongoing demand weakness in Asia. Given current macro conditions, we expect volume to remain under pressure. We will remain focused on driving productivity.” UPS now expects 2023 sales of $97 billion, down from its previous forecast of $97 billion to $99.2 billion. Operating profit margin is expected to be 12,8% vs the previous outlook for 12.8% to 13.6%. JetBlue Forecasts Profit After Q1 Earnings Beat JetBlue (JBLU) shares are up 2.2% ahead of the open after reporting a smaller Q1 loss than expected and forecasting a profit in Q2. Here’s how the airline’s results compared to analysts’ estimates: Adjusted loss per share: $0.34 vs $0.38 expected Revenue: $2.33 billion vs $2.32 billion expected Expenses surged more than 22% year over year to $2.57 billion. JetBlue’s fuel bill jumped 34% from a year ago. The airline expects adjusted EPS of $0.35 to $0.45 in Q2 with revenue growth of 4.5% to 8.5%, topping analysts’ expectations. The CEO said, “For the second quarter, we expect strong revenue growth to continue as demand remains robust and as we see continued momentum from our commercial initiatives. We are forecasting a solidly profitable quarter, and we remain confident in our full-year earnings outlook.”
Continue Reading -->Tech Earnings Time
We have small red arrows around the world as we head into the busiest week of earnings. The SPX was in the same spot 2 years ago and at the start of 2023. The year of the range that is squeezing out the excess of 2020. The Recession that’s been predicted for 9 months still isn’t here. We’ll see how we react to earnings this week. We can’t get too bearish if 4090 holds. SPY held the $410 area a few times. This range feels vulnerable at times but is still intact. We should get some type of move because it’s a big earnings week. Pivot resistance is $412.68. QQQ still has a big cup & handle type look. We need some good earnings to resolve it. A strong move this week above $317.40 then $321 sets it in motion. A move and close below $314 and all of a sudden it fails. Have plans for both scenarios. Now let’s look at some tech names, including some of this week’s big earnings reports: GOOGL reports Tuesday. Expectations are low. $109 is a big pivot area. If you want to take a call spread, I’d perhaps look at a $107/$112.50 or $110/$115. The risk-reward is decent if you think it reacts well. MSFT also reports Tuesday and has high expectations. $292-$294 is a big area to watch. It needs to get and stay above that to react well post-earnings. A $295/$305 call spread may work. META held the 21 day Friday with a low of $209.58 to trade against. It reports Wednesday after the close. Expectations here are pretty high. We’ll see if there’s a play Wednesday. I’d trim today and see if it holds $213.41. AMZN ignited last Wednesday and started to act better. It hit $108.15 We’ll see how it reacts into earnings Thursday. AAPL is trying to consolidate higher. GS said results should be better than feared but earnings aren’t till next week. See if $164.49 can act as upper support. Scott Redler Positions Disclosure as of 2023-04-24 at 10.10.15 AM
Continue Reading -->What’s On Tap for Traders: April 24-29
We’re coming off an exciting week of trading with disappointing earnings from Netflix (NFLX) and Tesla (TSLA) and upside surpises from the banks. Now let’s look at what’s ahead this week. Click this image for a full calendar: (click to enlarge) Tech Earnings Season Rages On Tech has been remarkably strong in 2023 and QQQ is still crushing SPY by more than 2:1: As of Friday at 1:34 p.m. ET And that’s after earnings-driven declines in Tesla (TSLA), Netflix (NFLX), and the semiconductors this week. But we’re just getting started. We’re coming up on a pivotal week with plenty of big tech earnings reports including Tuesday: Microsoft (MSFT), Google (GOOGL) Wednesday: Meta Platforms (META), eBay (EBAY), Texas Instruments (TXN) Thursday: Amazon (AMZN), Intel (INTC) AI has been the #1 buzzword on the Street, which has close eyes on Microsoft and Google for opposing reasons. Investors want to know how far Microsoft is ahead, and how far Google is behind. Meanwhile, Meta has a lot to prove with the stock up over 75% this year. And Amazon is in close focus as a barometer for the consumer. On Friday, JP Morgan reiterated its stance that Amazon is the best internet play right now, so we’ll see how things pan out Thursday. David Prince of T3 Live’s Inner Circle rode up Amazon this week so follow him for more insights on the stock: $AMZN Has been a wonderful ride. I trimmed much of my position today given my 108s are up huge. We have 3-4 big cap reports b4 their print and might very well buy $AMZN on any pullbacks pre thur night. — The Inner Circle Trading Group DP David Prince (@epictrades1) April 21, 2023 A Big Regional Bank Report While bank earnings are mostly behind us, there’s still a biggie to watch Monday morning – even though it’s a regional name. Of course we’re talking about First Republic Bank (FRC), which is 90% off its February highs thanks to the regional bank crisis: This week, Charles Schwab (SCHW) — also caught up in the decline — bounced hard after its Monday morning earnings report: Traders will be eager to see if FRC is going the way of Schwab… or Signature Bank. Energy Earnings Energy has lagged in 2023 after crushing strength in 2021 and 2022, as you can see in this chart going back to January 2021: Exxon (XOM) and Chevron (CVX) report earnings on Friday, which will show us the strength of the industry. Even More Earnings… On top of those, we’ll get plenty of reads on the economy from the likes of: Monday: Coca-Cola (KO) Tuesday: Visa (V), Pepsi (PEP), McDonald’s (MCD), Danaher (DHR), UPS (UPS) Wednesday: Boeing (BA), T-Mobile (TMO) Thursday: Mastercard (MA), Honeywell (HON), Caterpillar (CAT) A Light US Economic Calendar We had few important US economic data points last week, but things get busier this week with: Tuesday: S&P Home Prices, Consumer Confidence, New Home Sales Wednesday: Durable Goods, Trade Balance, Retail Inventories Thursday: GDP, Pending Home Sales Friday: PCE Price Index, Personal Spending, Michigan Sentiment The PCE Price Index is a biggie because it’s one of the Fed’s prime inflationary indicators and could thus impact monetary policy. Overseas Action Speaking of inflation, Germany, France, Spain, Australia, and Singapore will reports CPI numbers this week, giving us a better read on global inflation trends. Germany, France, Spain, and Canada also report their Q1 GDP figures. Sentiment Is as Confusing as Ever The AAII Sentiment Survey shows that just 27.2% of investors are bullish, well below-the long-term average of 37.5%. That’s flat from last week: According to AAII, “bullish sentiment remains below its historical average of 37.5% for the 71st time out of the past 73 weeks.” Pretty bearish… right? Yes. But CNN’s Fear & Greed Index shows that traders are greedy: Permabulls always say everyone’s bearish. Permabears always say everyone’s bullish. The truth is somewhere in the middle… Video of the Week: Scott Redler on the Pro Trading Lifestyle Scott Redler of T3 Live’s Alpha Team VTF® talks to Greta Wall about his life in trading: Go here to sign up for Greta’s next event with T3 Trading’s Derrick Oldensmith. Sami Abusaad’s Gap Trading Webinar Want to learn Sami Abusaad’s gap trading secrets? Go here.
Continue Reading -->Coffee With Greta: Traders Digest Earnings, Recession Fears
DJIA Futures: +28 (+0.1%) SPX Futures: -1 (-0.01%) NASDAQ Futures: -28 (-0.2%) Good morning friends! Futures are flat as traders digest earnings and the latest data showing the economy is headed for a recession. Let’s get right to it! Procter & Gamble Tops Fiscal Q3 Expectations Procter & Gamble (PG) shares are up 2.4% ahead of the open after beating fiscal Q3 expectations on the top and bottom line. Here’s how the consumer goods giant’s results compared to analysts’ estimates: EPS: $1.37 vs $1.32 expected Revenue: $20.07 billion vs $19.32 billion expected Organic sales jumped 7% year over year but sales volume fell 3% as consumers opted for cheaper alternatives. But higher prices helped offset that lower volume. P&G’s prices were up 10% year over year after the company raised prices again during the quarter. The company now expects fiscal 2023 organic sales growth of 6%, up from 4% to 5% previously. Tesla Hikes Prices After Share Slump Tesla (TSLA) shares are up 0.5% in premarket trade after the electric automaker raised prices on some its vehicles Thursday night. The Model S and Model X prices were raised by $2,500 each. The Model S now starts at $87,490 and the Model X at 97,490. The vehicles are still cheaper than they were at the end of the first quarter but the adjustments come just two days after Tesla lowered the prices on its Model Y and Model 3 gain. Tesla shares dropped 9.7% on Thursday, the largest drop since January 3. That decline came after CEO Elon Musk suggested the company will continue cutting prices after reporting Q1 earnings. Musk told analysts, “We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and higher margin.” Coming Up: Services, Manufacturing PMI S&P Global releases its April flash readings for both the services and manufacturing PMIs today. The services index is expected to fall to 51.5 from 52.6 last month while the manufacturing index is expected to decline to 49 from 49.2. These surveys are used to determine the health of the economy by sector. Any reading above 50 signals growth while a reading below 50 signals contraction. In Case You Missed It The latest data signals the U.S. economy is headed for a recession this year. The Conference Board’s leading economic indicators index sank 1.2% in March vs expectations for a 0.7% decline. It was the biggest drop in three years and the 12th consecutive monthly decline. Existing home sales slowed more than expected in March. The National Association of Realtors reported existing sales fell 2.4% last month to a seasonally adjusted annual rate of 4.44 million units vs 4.48 million expected. Home sales were down 22% year over year as high mortgage rates and low supply put pressure on buyers.
Continue Reading -->Coffee With Greta: Tesla Drops
DJIA Futures: -182 (-0.5%) SPX Futures: -31 (-0.7%) NASDAQ Futures: -121 (-0.9%) Good morning friends! Futures are dropping as traders digest the latest Q1 earnings reports. Let’s get right to it! Tesla Drops As Profits, Margins Decline Tesla (TSLA) shares are tumbling 8.3% ahead of the open despite reporting Q1 results that were mostly in line with expectations. Here’s how the electric automaker’s results compared to analysts’ estimates: Adjusted EPS: $0.85 as expected Revenue: $23.33 billion vs $23.21 billion expected Net income tumbled 24% year over year while total revenue rose 24%. Tesla said “underutilization of new factories” stressed its margins during the quarter. Ebitda profit margins dropped to 18.3% in Q1 from 27% a year ago while operating margins fell to 11%. The Q1 results came after Tesla cut its vehicle prices for the sixth time this year earlier on Wednesday. The company said it expects “ongoing cost reduction of our vehicles, including improved production efficiency at our newest factories and lower logistics costs, and remain focused on operating leverage as we scale.” It said pricing will continue to “evolve upwards or downwards, depending on a number of factors.” IBM Earnings IBM (IBM) shares are up 1.2% in premarket trade after beating Q1 profit expectations. Here’s how the company’s results compared to analysts’ estimates: Adjusted EPS: $1.36 vs $1.26 expected Revenue: $14.25 billion vs $14.35 billion expected Net income jumped 26% year over year while revenue increased 0.4%. IBM’s total expenses and other income declined 4% as the company took steps to operate more efficiently. The company said it expects 3% to 5% revenue growth this year and maintained its guidance for $10.5 billion in 2023 free cash flow. Philly Fed Manufacturing Index Contracts Further A key manufacturing gauge slipped further into contraction in April. The Philadelphia Fed’s manufacturing index fell by 8.1 points to negative 31.3 this month. That was the eight straight negative reading and worse than expectations for the index to improve to negative 20. Any reading below zero signals contraction in business activity in the manufacturing sector. Weekly Jobless Claims Rise Weekly jobless claims rose more than expected last week in a sign of rising layoffs. The Labor Department reported 245,000 Americans filed initial unemployment claims, up by 5,000 from the previous week. That was higher than expectations for 244,000. Continuing claims rose by 61,000 to 1.87 million in the week ending April 8, the highest level since November 2021. Coming Up: Existing Home Sales The National Association of Realtors reports existing home sales for March at 10:00 a.m. ET. That report is expected to show the pace of sales slowed to a seasonally adjusted annual rate of 4.48 million units from 4.58 million in February. The housing market has remained under pressure in 2023 due to high mortgage rates, low supply, and high prices. In Case You Missed It Meta Platforms (META) started its latest round of job cuts on Wednesday. The company started laying off employees in technical roles after announcing the cuts in March. The cuts are part of a plan to lay off 10,000 workers this year in addition to the 11,000 announced back in November. Meta is expected to incur $3 billion to $5 billion in restructuring costs related to the layoffs.
Continue Reading -->Coffee With Greta: Stocks Drop After Netflix Earnings
DJIA Futures: -113 (-0.3%) SPX Futures: -26 (-0.6%) NASDAQ Futures: -112 (-0.9%) Good morning friends! Futures are falling as traders digest the latest batch of earnings and Treasury yields pop on inflation concerns. Let’s get right to it! Netflix Reports Mixed Q1 Results, Delays Crackdown On Password Sharing Netflix (NFLX) shares are down 2.6% ahead of the open after reporting mixed Q1 results. Here’s how the streaming giant’s results compared to analysts’ estimates: EPS: $2.88 vs $2.86 expected Revenue: $8.16 billion vs $8.18 billion expected Netflix also announced it is delaying the rollout of its password-sharing crackdown in the U.S. after seeing an impact on subscriber growth from the initiative in international markets. That crackdown was supposed to begin late in the first quarter but the company is now planning to do it in the second quarter. Netflix estimates 43% of its global user base share accounts and claims that has affected its ability to invest in new content. Users will be required to set a “primary location” for their account and can then establish up to two “sub accounts” for extra fees. The company said it has seen increased revenue as a result of the paid-sharing option in markets where it has already been rolled out. United Airlines Beats Q1 Expectations, Forecasts Q2 Profit United Airlines (UAL) shares are slipping 0.7% in premarket trade despite reporting better-than-expected Q1 results. Here’s how the carrier’s results compared to analysts’ estimates: Loss per share: $0.63 vs $0.73 expected Revenue: $11.43 billion vs $11.42 billion expected United’s revenue per available seat mile jumped more than 22% year over year. Unit costs rose 4% annually due to higher fuel prices, but were down 0.1% when stripping out fuel. The airline expects to report adjusted earnings of $3.50 to $4 per share in the second quarter as the peak summer travel season begins. United also expects revenue to rise 14% to 16% year over year with capacity up 18.5%. Morgan Stanley Drops Despite Earnings Beat Morgan Stanley (MS) shares are falling 4.0% ahead of the open despite beating Q1 expectations on the top and bottom line. Here’s how the bank’s results compared to analysts’ estimates: EPS: $1.70 vs $1.62 expected Revenue: $14.52 billion vs $13.92 billion expected Earnings were down 19% year over year while revenue fell 2%. Morgan Stanley’s wealth management revenue jumped 11% from a year ago to $6.56 billion, in line with estimates. Fixed-income trading revenue beat expectations at $2.58 billion and equities trading revenue also topped estimates at $2.73 billion. Investment banking revenue tumbled 24% annually to $1.25 billion but still topped estimates for $1.2 billion. U.K. Inflation Surges The U.K. released its March consumer price index overnight, which showed inflation surging. The U.K. CPI rose 10.1% year over year vs expectations for 9.8%. On a monthly basis, the CPI rose 0.8% vs 0.5% expected. The high inflation reading sent U.S. Treasury yields higher overnight, pushing down stocks. The 2-year yield is up 5 basis points at 4.25% while the 10-year yield is also up 5 basis points at 3.63%. Mortgage Demand Drops As Rates Jump Mortgage demand tumbled last week as rates increased. The Mortgage Bankers Association reported purchase applications dropped 10% weekly and were down 36% year over year. Refinance applications fell 6% weekly and 56% annually. The drop came as the average 30-year fixed rate increased to 6.43% from 6.30% the previous week. MBA’s deputy chief economist said, “Affordability challenges persist and there is limited for-sale inventory in many markets across the country, so buyers remain selective on when they act.”
Continue Reading -->Coffee With Greta: More Big Bank Earnings
DJIA Futures: +33 (+0.1%) SPX Futures: +21 (+0.5%) NASDAQ Futures: +110 (+0.8%) Good morning friends! Futures are mostly higher as traders digest the latest batch of earnings. Let’s get right to it! Bank of America Earnings Beat Bank of America (BAC) shares are up 2.3% ahead of the open after beating Q1 expectations on the top and bottom line. Here’s how the consumer bank’s results compared to analysts’ expectations: EPS: $0.94 vs $0.82 expected Revenue: $26.39 billion vs $25.13 billion expected Net interest income jumped 25% year over year due to higher interest rates. CEO Brian Moynihan said, “Every business segment performed well as we grew client relationships and accounts organically and at a strong pace. Our results demonstrate how our company’s decade-long commitment to responsible growth helped to provide stability in changing economic environments.” Bank of America boosted its loan-loss reserves by $931 million during the quarter. Goldman Sachs Earnings Mixed Goldman Sachs (GS) shares are slipping 3.4% in premarket trade after reporting mixed Q1 results. Here’s how the investment bank’s results compared to analysts’ estimates: EPS: $8.79 vs $8.10 expected Revenue: $12.22 billion vs $12.79 billion expected Profit dropped 18% year over year while revenue fell 5%. The revenue miss was blamed on a $470 million hit the bank took tied to the sale of consumer loans. Goldman’s fixed income trading revenue dropped 17% to $3.93 billion, about $230 million short of estimates. Equities trading revenue slipped 7% to $3.02 billion vs $2.9 billion expected. Investment banking revenue tumbled 26% to $1.58 billion but topped estimates of $1.44 billion. Johnson & Johnson Beats Expectations, Hikes Outlook Johnson & Johnson (JNJ) shares are up 1.4% ahead of the open after beating Q1 expectations on the top and bottom line. Here’s how the pharmaceutical giant’s results compared to analysts’ estimates: Adjusted EPS: $2.68 vs $2.50 expected Revenue: $24.75 billion vs $23.67 billion expected The company also raised its full-year outlook following the beat. Johnson & Johnson now expects 2023 revenue of $97.9 billion to $98.9 billion, up by about $1 billion from its previous outlook. The company expects full-year EPS of $10.60 to $10.70 vs $10.45 to $10.65 previously. The CEO told CNBC, If you think about how we started the year and guidance in January, we were responsibly cautious. First-quarter growth was much stronger than even fourth-quarter growth for all three business units, and our positions kind of change to responsibly optimistic at this point. We feel very good about 2023.” Housing Starts, Building Permits Fall New home construction in the U.S. fell less than expected in March. The Census Bureau reported housing starts fell 0.8% last month to a seasonally adjusted annual rate of 1.42 million units. That was down from 1.43 million in February but higher than 1.40 million expected. Starts were down 17.2% year over year. Single-family starts rose 2.7% while multi-family starts tumbled 6.7%. The slowdown is expected to continue as building permits dropped more than expected. The number of new permits issued last month dropped 8.8% to a seasonally adjusted annual rate of 1.41 million units vs 1.45 million expected. Permits plunged 24.8% year over year. Single-family permits rose 4.1% monthly while multi-family permits dropped 24.3%.
Continue Reading -->A Big Earnings Week
We have mostly green arrows around the world as we get ready for earnings season to continue. JPM kicked it off with a strong move Friday. SPX is above the 8 day and as long as it holds the 4102 area, it’s hard to get too bearish. 4163 is the recent high. 4195 is the February high. Know what you own and why during earnings season because you can get outsized moves in both directions. Now let’s dig into some individual names: NFLX reports Tuesday. It’s pretty tight. I’m not sure if I will play it yet. Last quarter it led tech with a gap and go. This time it might be hard. To see $379, it will have to get and stay above $379. We’ll discuss on Tuesday. In order to see $320, it needs to get and stay below $332. TSLA is tricky when it doesn’t lead tech. Expectations are lower since the deliveries missed. Earnings are on Wednesday. I’m not sure if I’ll play it. Until then, see if it holds the $180 area Recent resistance area is $189-$191. AMZN perked up again as it cleared the 8 day. I did nibble a little. If this is any good, it shouldn’t really get back below $101ish. I managed it decent on Friday. META continues to ride the 8 day as it made a new weekly high of $222.11 Friday. I did sell mine after buying the weakness. If you have this on as a swing, use $217 as key active support. I’d think the $217 area will hold if this is going to keep leading. JPM’s beat almost felt too obvious as most flows from regional banks went to the majors. It had a big gap and go Friday and hit $139.12. It might need to digest a few sessions. See it holds $134.90. SCHW reports today. It should be interesting as they are trying to ease investor concerns. It hasn’t bounced much. Active support is $48, then $45. Pivot resistance is $53. Scott Redler Positions Disclosure as of 2023-04-17 at 9.02.07 AM
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