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Coffee With Greta: Big Tech Earnings + The Fed

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DJIA Futures: +48 (+0.1%)

SPX Futures: -24 (-0.5%)

NASDAQ Futures: -171 (-1.0%)

Good morning friends!

Futures are mixed as traders digest big tech earnings, new jobs data, and look ahead to the Fed decision.

Let’s get right to it!

Private Job Growth Slows

Job growth in the U.S. private sector slowed more than expected in January. 

Payroll firm ADP reported private employers added 107,000 jobs in the first month of the year vs 150,000 expected. 

That was a decline from the downwardly revised 158,000 in December. 

The information services sector was the only to report a drop, losing 9,000 workers. 

Leisure and hospitality added 28,000 workers, trade, transportation and utilities added 23,000, and construction rose by 22,000.

ADP’s report showed a 5.2% annual increase in wages in January. 

This data comes ahead of the official jobs report from the Labor Department on Friday which is expected to show the U.S. economy added 185,000 and the unemployment rate rising to 3.8%.

Microsoft Slips After Earnings

Microsoft (MSFT) shares are down 0.5% ahead of the open after beating fiscal Q2 expectations on the top and bottom line but issuing soft guidance.

Here’s how the tech giant’s results compared to analysts’ estimates: 

  • EPS: $2.93 vs $2.78 expected
  • Revenue: $62.02 billion vs $61.12 billion expected

Total revenue rose 17.6% year over year. 

Microsoft’s Intelligent Cloud segment reported $25.88 billion in revenue, up 20% from a year ago and higher than $25.29 billion expected. 

Revenue from Azure and other cloud services jumped 30% year over year vs 27.5% growth expected. 

Microsoft forecast fiscal Q3 revenue between $60 billion and $61 billion, putting the middle of the range at $60.5 billion vs $60.93 billion expected. 

Alphabet Slides On Disappointing Ad Revenue

Alphabet (GOOGL) shares are falling 5.7% in premarket trade after reporting lower than expected Q4 ad revenue. 

Here’s how the tech giant’s results compared to analysts’ estimates: 

  • Adjusted EPS: $1.64 vs $1.59 expected
  • Revenue: $86.31 billion vs $85.33 billion expected
  • Google Cloud Revenue: $9.19 billion vs $8.94 billion expected
  • Overall Ad Revenue: $65.52 billion vs $65.94 billion expected
  • YouTube Ad Revenue: $9.2 billion vs $9.21 billion expected

Alphabet’s total revenue jumped 13% year over year, the fastest quarter of growth since early 2022. 

Google Cloud saw growth of 26% during the quarter. 

AMD Drops On Weak Forecast

Advanced Micro Devices (AMD) shares are down 4.6% ahead of the open after reporting Q4 earnings that were in line with expectations and issuing soft guidance. 

Here’s how the chipmaker’s results compared to analysts’ estimates: 

  • Adjusted EPS: $0.77, in line with estimates
  • Revenue: $6.17 billion vs $6.12 billion expected

AMD forecast Q1 sales of $5.4 billion, plus or minus $300 million. 

That was short of analysts’ expectations for $5.73 billion. 

AMD’s CEO said, “For 2024, we expect the demand environment to remain mixed.”

Starbucks Misses Expectations

Starbucks (SBUX) shares are up 5% in premarket trade despite reporting weaker than expected fiscal Q1 earnings and revenue.

Here’s how the coffee giant’s results compared to analysts’ estimates:

  • Adjusted EPS: $0.90 vs $0.93 expected
  • Revenue: $9.4 billion vs $9.59 billion expected

Revenue rose 8% year over year.

Global same-store sales rose 5% from a year ago, missing expectations for 7.2% growth. 

North American same-store sales also rose 5%. 

International same-store sales growth of 7% fell short of expectations for 13.2% growth. 

Boeing Beats Q4 Estimates

Boeing (BA) shares are up 1.8% ahead of the open after beating Q4 expectations. 

Here’s how the planemaker’s results compared to analysts’ estimates:

  • Adjusted loss per share: $0.47 vs $0.78 expected
  • Revenue: $22.02 billion vs $21.11 billion expected

Revenue rose 10% year over year and Boeing had $2.95 billion in free cash flow during the quarter. 

The company declined to provide 2024 guidance amid the latest controversy with its Max 9 planes. 

The CEO said, “While we often use this time of year to share or update our financial and operational objectives, now is not the time for that. We will simply focus on every next airplane while doing everything possible to support our customers, follow the lead of our regulator and ensure the highest standard of safety and quality in all that we do. Ultimately – that is what will drive our performance.”

In Case You Missed It

  • The number of job openings in the U.S. rose unexpectedly in December. The Labor Department’s job openings and labor turnover survey (JOLTS) shows there were 9.026 million available jobs in the final month of 2023. That was higher than 8.714 million expected and the first month above 9 million since September. The data shows the U.S. labor market continuing to maintain strength amid the Fed’s tightening efforts.
  • Consumer confidence jumped to a two-year high this month. The Conference Board’s consumer confidence index rose to 114.8 in January from 108 in December. That slightly missed economists’ expectations for a reading of 115. It is the highest level of consumer confidence since December 2021. Confidence in current economic conditions rose to 161.3 from 147.2. The six-month expectations index rose to 83.8 from 81.9.
  • U.S. home prices cooled in November. The S&P Case-Shiller national home price index fell 0.2% monthly from October. It was the first monthly drop since January 2023. National prices were still 5.1% higher compared to November 2022. The 10-city index rose 6.2% year over year while the 20-city index rose 5.4% annually.

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