Coffee With Greta: PCE Inflation Cools
Register now for next week’s free pro trader Q&A on LinkedIn with Scott Redler on Fed Day! DJIA Futures: +7 (+0.02%) SPX Futures: +16 (+0.4%) NASDAQ Futures: +112 (+0.8%) Good morning friends! Futures are rising after the release of the Fed’s preferred inflation gauge. Let’s get right to it! PCE Inflation In-Line With Expectations The Fed’s preferred inflation gauge was in-line with expectations in September. The Bureau of Economic Analysis’ personal consumption expenditures (PCE) price index rose 0.4% monthly and 3.4% year over year. The core PCE price index rose 0.3% monthly and 3.7% annually. That was the lowest reading for the core PCE since August 2021. Consumer spending rose sharply during the month, up 0.7% vs 0.5% expected. Personal incomes increased 0.3% vs 0.4% expected Amazon Rallies On Blowout Earnings Amazon (AMZN) shares are up 5% ahead of the open after solidly beating Q3 expectations on the top and bottom line. Here’s how the tech giant’s results compared to analysts’ estimates: EPS: $0.94 vs $0.58 expected Revenue: $143.1 billion vs $141.4 billion expected Amazon Web Services revenue: $23.1 billion vs $23.2 billion expected Advertising revenue: $12.1 billion vs $11.6 billion expected Revenue jumped 13% year over year while net income more than tripled. E-commerce sales rose 7% from a year ago, digital ad revenue soared 26%, and Amazon Web Services revenue jumped 12%. Amazon forecast Q4 sales will be between $160 billion and $167 billion vs $166.6 billion expected. The midpoint of that guidance implies 9.6% growth. Intel Jumps On Earnings Beat, Strong Guidance Intel (INTC) shares are rallying 7.2% in premarket trade after beating Q3 expectations and issuing strong revenue guidance. Here’s how the chipmaker’s results compared to analysts’ estimates: Adjusted EPS: $0.41 vs $0.22 expected Revenue: $14.16 billion vs $13.53 billion expected Revenue fell 8% year over year while the company’s gross margin of 45.8% was flat. On the conference call, the CEO said Intel would cut costs by about $3 billion this year. The CFO said operating expenses were down 15% year over year in Q3, which boosted earnings. Intel forecast Q4 adjusted EPS of $0.23 on $14.6 billion to $15.6 billion in revenue vs $0.32 EPS on $14.31 billion in revenue expected. Ford Drops On Earnings Miss Ford (F) shares are down 3.7% ahead of the open after missing Q3 expectations on the top and bottom line. Here’s how the automaker’s results compared to analysts’ estimates: Adjusted EPS: $0.39 vs $0.45 expected Revenue: $41.18 billion vs $41.22 billion expected The CFO blamed that miss on the UAW strikes which began on September 15, saying Ford was “poised” to reach its previous earnings guidance prior to the strikes. The company’s traditional business, Ford Blue, earned $1.72 billion in Q3, the Ford Pro commercial business earned $1.65 billion, and the Model e EV unit lost $1.33 billion. The CFO said Ford will delay about $12 billion in previously announced EV investments due to lower-than-expected demand for its electric vehicles. He also said the new UAW deal reached this week would add $850 to $900 in costs per vehicle assembled and Ford will work to “find productivity and efficiencies and cost reductions throughout the company”. The company did not issue guidance. In Case You Missed It Pending home sales rose unexpectedly in September. The National Association of Realtors reported the number of contracts signed to purchase a home rose 1.1% last month. That was better than expectations for a 1.5% decrease but still marked the second-lowest reading on record. Pending sales were down 11% year over year. These sales are expected to close in 30 to 60 days and serve as a leading indicator for existing home sales.
Continue Reading -->Coffee With Greta: Meta Drags Down Tech
DJIA Futures: -27 (-0.1%) SPX Futures: -16 (-0.4%) NASDAQ Futures: -86 (-0.6%) Good morning friends! Futures are sliding as Meta’s ad-revenue warning drags on tech stocks. Let’s get right to it! Meta Slips On Ad Revenue Warning Meta Platforms (META) shares are down 3.7% ahead of the open despite crushing Q3 expectations. Here’s how the social media giant’s results compared to analysts’ estimates: EPS: $4.39 vs $3.63 expected Revenue: $34.15 billion vs $33.56 billion expected Daily active users: 2.09 billion vs 2.07 billion expected Monthly active users: 3.05 billion, as expected Average revenue per user: $11.23 vs $11.05 expected Revenue jumped 23% year over year while net income surged 164%. But Meta widened its Q4 revenue guidance range because of unpredictability over the war in the Middle East. On the conference call, the CFO said, “We have observed softer ads in the beginning of the fourth quarter, correlating with the start of the conflict, which is captured in our Q4 revenue outlook.” Meta expects revenue of $36.5 billion to $40 billion in Q4, which would mark 19% growth at the midpoint of the range. Full-year expenses are expected to fall between $87 billion and $89 billion vs $88 billion to $91 billion previously estimated. IBM Jumps On Earnings Beat IBM (IBM) shares are rising 1.4% in premarket trade after beating Q3 expectations on the top and bottom line. Here’s how the tech company’s results compared to analysts’ estimates: Adjusted EPS: $2.20 vs $2.12 expected Revenue: $14.75 billion vs $14.73 billion expected Total revenue was up 4.6% year over year. Revenue in IBM’s software segment, which includes its AI platform, jumped 7.8% from a year ago. Consulting revenue rose 5.6% to $ 5 billion, slower than expectations for 8.7% growth. Infrastructure revenue fell 2.4% to $3.3 billion, better than estimates for a 7.5% decline. IBM generated $1.7 billion in free cash flow during the quarter and maintained its full-year forecast for free cash flow of about $10.5 billion. Southwest Falls After Earnings Southwest Airlines (LUV) shares are down 2.1% ahead of the open after reporting Q3 earnings in-line with expectations. Here’s how the airline’s results compared to analysts’ estimates: Adjusted EPS: $0.38, as expected Revenue: $6.53 billion vs $6.57 billion expected Revenue rose 4.9% year over year while net income dropped 30%. Southwest said it plans to slow its capacity growth in 2024 as it sees moderating travel demand. The airline plans to expand its flight schedules 10% to 12% year over year in Q1 2024, down from its previous forecast for as much as 16% growth. For the full year, Southwest is planning on 6% to 8% capacity growth. Ford, UAW Reach Tentative Deal Ford Motor (F) shares are rising 2.8% in premarket trade after reaching a tentative deal with the United Auto Workers Union. The automaker announced the deal to end a nearly six-week strike by the union on Wednesday night. It reportedly includes 25% pay increases over the terms of the agreement and will increase the top wage to more than $40 per hour. It also includes a 68% increase for starting wages to over $28 an hour. The agreement also reinstates cost-of-living adjustments, a three-year path to top wages, and right to strike over plant closures. The UAW president said in a video, ″We told Ford to pony up and they did. We won things nobody thought was possible.” The deal must be approved by local UAW leaders and ratified by a simple majority of Ford’s 57,000 union-represented workers. Those currently on strike from Ford will return to work while the approval process occurs. Q3 GDP Expands More Than Expected The U.S. economy grew more than expected in the third quarter. The Commerce Department reported GDP rose at a 4.9% annualized pace last quarter, up from 2.1% in Q2. That was better than expectations for 4.7% growth. Consumer spending jumped 4%, gross private domestic investment surged 8.4%, and government spending and investment rose 4.6%. Consumer spending on goods was up 4.8% while spending on services rose 3.6%. Weekly Jobless Claims Rise Slightly Weekly jobless claims rose slightly more than expected last week. The Labor Department reported 210,000 Americans filed initial claims for unemployment benefits. That was up by 10,000 from the previous week and higher than expectations for 207,000. Continuing claims rose by 63,000 to 1.79 million in the week ending October 14. That was the fifth straight weekly increase and the highest level since May. In Case You Missed It New home sales rose more than expected in September as buyers turn to builders amid a shortage of existing homes for sale. The Census Bureau reported new sales surged 12.3% to a seasonally adjusted annual rate of 759,000 units last month. That was better than expectations for 680,000 units and marked the highest level of new home sales since February 2022. New sales were up 33.9% year over year. The median sales price of a new home sold last month fell to $418,800 from $430,300 in August. The supply of new homes for sale fell 10.4% to a 6.9-month supply.
Continue Reading -->Coffee With Greta: Mixed Big Tech Results
DJIA Futures: +67 (+0.2%) SPX Futures: -15 (-0.4%) NASDAQ Futures: -88 (-0.6%) Good morning friends! Futures are mixed as traders digest earnings from Microsoft and Alphabet. Let’s get right to it! Microsoft Pops On Earnings Microsoft (MSFT) shares are up 4.5% ahead of the open after beating fiscal Q1 expectations on the top and bottom line. Here’s how the tech giant’s results compared to analysts’ estimates: EPS: $2.99 vs $2.65 expected Revenue: $56.52 billion vs $54.50 billion expected Revenue rose nearly 13% year over year while net income surged 27%. Revenue in Microsoft’s Intelligent Cloud segment rose 19% from a year ago to $24.26 billion. Azure revenue surged 29% vs 26% growth expected. The CFO called for fiscal Q2 revenue in the range of $60.4 billion to $61.4 billion vs analysts’ estimates of $60.9 billion. She also said Azure revenue growth is expected to come in at 26% to 27% next quarter and then remain stable through the second half of the fiscal year. Alphabet Misses On Cloud Revenue Alphabet (GOOGL) shares are dropping 5.9% in premarket trade despite beating Q3 expectations as cloud revenue disappointed. Here’s how the tech giant’s results compared to analysts’ estimates: EPS: $1.55 vs $1.45 expected Revenue: $76.69 billion vs $75.97 billion expected YouTube ad revenue: $7.95 billion vs $7.81 billion expected Google Cloud revenue: $8.41 billion vs $8.64 billion expected Total revenue rose 11% year over year, the first quarter of double digit growth in more than a year. Although cloud revenue was weaker than expected, the segment still grew 22% from a year ago. Alphabet has focused on the cloud unit as it tries to compete with Amazon Web Services and Microsoft Azure. The unit is also key to the growth of generative artificial intelligence. Snap Tops Expectations Snap (SNAP) shares are up 1.7% ahead of the open after beating Q3 expectations on the top and bottom line. Here’s how the social media company’s results compared to analysts’ estimates: Adjusted EPS: $0.02 vs $0.04 loss expected Revenue: $1.19 billion vs $1.11 billion expected Global Daily Active Users: 406 million vs 405.7 million expected Average revenue per user: $2.93 vs $2.74 expected Revenue was up 8% from a year ago, marking a return to sales growth for Snap. Although Snap did not provide official guidance, the company’s internal forecast called for Q4 sales between $1.32 billion and $1.38 billion vs $1.33 billion expected by analysts. The company cited “the unpredictable nature of war” for its decision not to provide official guidance. Snap said it has “observed pauses in spending from a large number of primarily brand-oriented advertising campaigns immediately following the onset of the war in the Middle East.” Boeing Jumps On Revenue Beat Boeing (BA) shares are rising 3.3% in premarket trade despite reporting a steeper Q3 loss than expected. Here’s how the planemaker’s results compared to analysts’ estimates: Adjusted loss per share: $3.26 vs $2.96 expected Revenue: $18.10 billion vs $18.01 billion expected Revenue rose 13% year over year as commercial aircraft sales jumped 25%. Boeing cut its 737 Max delivery forecast for the year as it works through production flaws. The company now expects to deliver between 275 and 400 of the planes down from its previous estimate of 400 to 450. Boeing maintained its forecast for 2023 free cash flow of $3 billion to $5 billion. The planemaker’s conference call with analysts begins at 10:30 a.m. ET. Adjustable-Rate Mortgage Demand Jumps Mortgage demand remained stalled at the slowest pace in 28 years last week. The Mortgage Bankers Association reported total application volume dropped 1% from the week before. Purchase applications fell 2% weekly and 22% year over year while refinance applications dropped 2% weekly and 8% annually. But the adjustable-rate share of total mortgages jumped to 9.5%, the highest level in nearly a year. The average 30-year fixed contract rate rose to 7.90% from 7.70%. But the average 5/1 ARM rate rose to 6.99% from 6.52%.
Continue Reading -->Coffee With Greta: Awaiting Big Tech Earnings
DJIA Futures: +158 (+0.5%) SPX Futures: +24 (+0.6%) NASDAQ Futures: +82 (+0.6%) Good morning friends! Futures are rising as traders assess the latest batch of Q3 earnings and wait for big tech results. Let’s get right to it! Coca-Cola Tops Q3 Expectations, Hikes Outlook Coca-Cola (KO) shares are up 3% ahead of the open after beating Q3 expectations on the top and bottom line. Here’s how the beverage giant’s results compared to analysts’ estimates: Adjusted EPS: $0.74 vs $0.69 expected Revenue: $11.91 billion vs $11.44 billion expected Net sales rose 8% year over year while organic revenue jumped 11%. Prices were 9% higher than a year ago but Coke said in July it is done hiking prices further. For the full-year, the company now expects comparable EPS growth of 7% to 8% vs 5% to 6% previously. Coke expects organic revenue growth of 10% to 11% vs 8% to 9% previously. General Motors Beats Q3 Estimates General Motors (GM) shares are rising 1.3% in premarket trade after beating Q3 expectations on the top and bottom line. Here’s how the automaker’s results compared to analysts’ estimates: Adjusted EPS: $2.28 vs $1.88 expected Revenue: $44.13 billion vs $43.68 billion expected Net income was down 7.3% from a year ago while revenue increased 5.4%. Adjusted earnings in North America fell 9.5% year over year while international adjusted EPS rose by 7%. GM pulled its full-year forecast amid uncertainty about the impact of the ongoing UAW strikes. The CFO also said the company was pulling its near-term targets for electric vehicles due to slower-than-expected demand. GM previously set goals to sell 400,000 EVs in North America from 2022 through mid-2024. 3M Jumps On Earnings Beat, Guidance Hike 3M (MMM) shares are rallying 4.6% ahead of the open after beating Q3 expectations and raising its guidance. Here’s how the consumer goods giant’s results compared to analysts’ estimates: Adjusted EPS: $2.68 vs $2.34 expected Revenue: $8.31 billion vs $7.99 billion expected The company raised its full-year outlook following the beat. 3M now expects adjusted EPS between $8.95 and $9.15 this year vs $8.60 to $9.10 previously. The company forecast adjusted total sales growth of -5% vs previous guidance for -5% to -1%. Spotify Jumps On Q3 Beat Spotify (SPOT) shares are jumping 5.1% in premarket trade after topping Q3 expectations on the top and bottom line. Here’s how the music streaming giant’s results compared to analysts’ estimates: Adjusted EPS: €0.33 vs €0.22 loss expected Revenue: €3.36 billion vs €3.33 billion expected This marked Spotify’s first quarterly profit in more than a year. The company also topped subscriber expectations. Spotify said it had 574 million monthly active users during the quarter and 226 million premium subscribers, both ahead of estimates. The company forecast Q4 operating profit of €37 million on revenue of €3.7 billion, with a gross margin of 26.6%. Spotify expects monthly active users to increase to 601 million this quarter and premium subscribers to climb to 235 million.
Continue Reading -->Coffee With Greta: Yields Surge
DJIA Futures: -133 (-0.4%) SPX Futures: -15 (-0.4%) NASDAQ Futures: -57 (-0.4%) Good morning friends! Futures are tumbling as the 10-year Treasury yield surges. Let’s get right to it! 10-Year Yield Pushes Back Above 5% The 10-year Treasury yield jumped above 5% again today. That yield is currently up 6 basis points at 4.98% after pushing back above 5% earlier this morning. The 2-year yield is flat at 5.11%. Yields have been hovering around the highest levels seen since 2007 as investors assess the Fed’s higher-for-longer interest rate plan. Many analysts believe the surge in yields has eliminated the need for the Fed to hike again before year-end. CME Group’s FedWatch Tool shows 98.4% of traders anticipating no rate hike at next week’s meeting. Traders Await Big Tech Earnings This will be an important week of earnings with most of the major mega-cap tech companies set to report results. Here are the highlights of this week’s scheduled companies: Tuesday AM: Coca-Cola (KO), General Electric (GE), 3M (MMM), General Motors (GM), Spotify (SPOT) Tuesday PM: Microsoft (MSFT), Alphabet (GOOGL), Snap (SNAP) Wednesday AM: Boeing (BA) Wednesday PM: Meta Platforms (META), IBM (IBM) Thursday AM: United Parcel Service (UPS), Southwest Airlines (LUV) Thursday PM: Amazon (AMZN), Intel (INTC), Chipotle Mexican Grill (CMG), Ford Motor (F) Friday AM: Chevron (CVX), Exxon Mobil (XOM) Chevron Agrees To Buy Hess Chevron (CVX) shares are down 2.4% ahead of the open after announcing it agreed to buy Hess (HES) for $53 billion. HES shares are flat, down 0.02%. The takeover will be an all-stock transaction and is the second proposed oil mega-merger this month. The total deal value is $60 billion, including debt. Hess shareholders will receive 1.025 CVX shares for every HES share they own. Textainer Surges On Private Takeover Deal Textainer (TGH) shares are rallying 42.8% in premarket trade after announcing a private takeover deal this morning. Investment firm Stonepeak offered the shipping container leasing company an all-cash deal at $50 per share. The $2.1 billion deal values Textainer at more than $7 billion, debt included. The transaction is expected to close in Q1 2024. Apple Slips Amid Supplier Investigation In China Apple (AAPL) shares are down 0.9% ahead of the open amid reports its biggest supplier, Foxconn, is under tax investigation in China. China’s state-run Global Times newspaper reported that Chinese authorities recently conducted inspections at Foxconn’s businesses in Guangdong and Jiangsu provinces. The natural-resources department reportedly conducted on-site investigations into the company’s land use in the Henan and Hubei provinces. Foxconn manufactures Apple products in three of those provinces. The probe comes after Foxconn’s founder announced in August that he would run for president in Taiwan. He resigned from the company’s board but still holds a 12.5% stake. He’s currently fourth in the polls for the January election.
Continue Reading -->Coffee With Greta: Rate Worries Continue
DJIA Futures: -92 (-0.3%) SPX Futures: -13 (-0.3%) NASDAQ Futures: -59 (-0.4%) Good morning friends! Futures are slipping after the 10-year Treasury yield crossed a key threshold for the first time in 16 years. Let’s get right to it! 10-Year Yields Tops 5% Treasury yields are down this morning after the 10-year crossed a key threshold late on Thursday. The 2-year yield is down 3 basis points at 5.14% while the 10-year yield is down 5 basis points at 4.94%. The 10-year hit 5.001% around 5:00 p.m. ET on Thursday, the first time it’s crossed 5% since July 20, 2007. The late jump in yields on Thursday came after a speech by Fed Chair Jerome Powell. Yields initially pulled back after the speech before turning higher later in the afternoon. Powell Recap Fed Chair Jerome Powell spoke at the Economic Club of New York on Thursday. Powell said, “Inflation is still too high, and a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal. We cannot yet know how long these lower readings will persist, or where inflation will settle over coming quarters.” He added, “my colleagues and I are united in our commitment to bringing inflation down sustainably to 2 percent.” Powell did not commit to any future policy path for the bank but other Fed officials have said in recent days that they can be patient amid the rise in Treasury yields. CME Group’s FedWatch Tool shows no expectations for another rate hike in November or December. Oil Extends Gains Oil prices are up this morning and on track for the second straight week of gains amid the war between Israel and Hamas. West Texas Intermediate crude futures are up 1.4% at $90.60 bbl while Brent crude futures are up 1.2% at $93.50 bbl. The U.S. Department of Energy said Thursday it is seeking to buy 6 million barrels of crude for delivery to the Strategic Petroleum Reserve in December and January. The SPR was drained in response to high oil prices last year. But high prices are expected to persist through the fourth quarter after Saudi Arabia and Russia extended their supply cuts to the end of the year. Solar Stocks Plunge Solar stocks are dropping this morning after SolarEdge Technologies (SEDG) cut its quarterly outlook. SEDG shares are plunging 28.1% ahead of the open. After the close on Thursday, the company cut its Q3 outlook and said it expects “significantly lower” Q4 revenue due to a slowdown in solar-power installations in Europe. SolarEdge expects Q3 revenue to range between $720 million and $730 million vs $880 million to $920 million previously. Q3 adjusted gross margins are expected to be between 20.1% and 21.1% vs 28% to 31% previously. And adjusted operating income is now expected to be in a range of $12 million to $31 million vs $115 million to $135 million. SolarEdge reports earnings after the close on November 1. The guidance cut is dragging down other solar stocks as well, with Enphase Energy (ENPH) dropping 15.1% and SunPower (SPWR) down 9.7%. In Case You Missed It Existing home sales fell less than expected in September. The National Association of Realtors reported existing sales dropped 2% last month to a seasonally adjusted annual rate of 3.96 million units vs 3.9 million expected. Sales were down 15.4% year over year, the slowest pace since October 2010. Supply continued to be an issue with 1.13 million homes for sale at the end of September, representing a 3.4-month supply at the current sales pace. The median price of a home sold last month rose 2.8% year over year to $394,300. But high rates are squeezing buyers with the average 30-year rate currently hovering near 8%.
Continue Reading -->Coffee With Greta: Ahead of Powell
DJIA Futures: +9 (+0.03%) SPX Futures: +4 (+0.1%) NASDAQ Futures: +40 (+0.3%) Good morning friends! Futures are rising as traders look ahead to a speech by the Fed Chair later today. Let’s get right to it! Yields Surge Ahead of Powell Treasury yields are surging as the market awaits comments from Fed Chair Jerome Powell. The 10-year yield is up 5 basis points at 4.95% after pushing closer to 5% earlier this morning. That yield crossed the 4.9% mark for the first time since 2007 on Wednesday. Many analysts believe the recent surge in Treasury yields has done some of the Fed’s job for them, removing the need for another rate hike this year. All ears will be on Powell at 12:00 p.m. ET to see if he strikes a more dovish tone than he did in the press conference after the last meeting. The Fed’s next rate decision is on November 1. Netflix Surges On Subscriber Beat Netflix (NFLX) shares are surging 13.9% ahead of the open after beating Q3 expectations and reporting a strong jump in subscribers. Here’s how the streaming giant’s results compared to analysts’ estimates: EPS: $3.73 vs $3.49 expected Revenue: $8.54 billion, as expected Subscribers: 247.15 million vs 243.88 million expected The company added 8.76 million global subscribers during the quarter vs estimates for 5.49 million. Netflix said its ad-tier memberships grew nearly 70% from the previous quarter. The company also announced price increases. The ad-tier plan will remain $6.99 per month, basic will increase to $11.99 from $9.99, premium will increase to $22.99 from $19.99, and the standard plan will remain at $15.49. Tesla Slumps After Earnings Tesla (TSLA) shares are dropping 6.9% in premarket trade after missing Q3 expectations across the board. Here’s how the electric automaker’s results compared to analysts’ estimates: Adjusted EPS: $0.66 vs $0.73 expected Revenue: $23.35 billion vs $24.1 billion expected It was the first quarter Tesla has missed on both the top and bottom line since Q2 2019. Gross profit declined 22% year over year while the company’s total operating margin came in at 7.6% vs 17.2% a year ago. On X (Twitter), the company said, “Cybertruck production remains on track for later this year, with first deliveries scheduled for November 30th at Giga Texas.” But CEO Elon Musk warned during the conference call, “It is going to require immense work to reach volume production and be cashflow positive at a price that people can afford. I just want to temper expectations for Cybertruck. It’s a great product, but financially, it will take a year to 18 months before it is a significant positive cash flow contributor.” American Airlines Earnings American Airlines (AAL) shares are up 1.3% ahead of the open after beating Q3 earnings expectations. Here’s how the airline’s results compared to analysts’ estimates: Adjusted EPS: $0.38 vs $0.25 expected Revenue: $13.48 billion vs $13.52 billion expected On a non adjusted basis, American lost $545 million during the quarter, its first loss since Q1 2022. Capacity rose 7% year over year but higher costs squeezed profit. American cut its full-year forecast, partly due to higher fuel prices. The airline now expects full-year adjusted EPS between $2.25 and $2.50 vs $4 to $3.75 previously. American expects a full-year adjusted operating margin of 7% vs 10% previously. Weekly Jobless Claims Beat Weekly jobless claims fell unexpectedly last week. The Labor Department reported 198,000 Americans filed initial claims for unemployment benefits. That was down by 13,000 from the previous week’s revised level and lower than 210,000 expected. Continuing claims rose by 32,000 to 1.734 million vs 1.710 million expected in the week ending October 7.
Continue Reading -->Coffee With Greta: Waiting For TSLA, NFLX
Register now for today’s free trading Q&A on LinkedIn with David Prince! DJIA Futures: -92 (-0.3%) SPX Futures: -21 (-0.5%) NASDAQ Futures: -104 (-0.7%) Good morning friends! Futures are lower as earnings season picks up steam and traders look ahead to Tesla (TSLA) and Netflix (NFLX) after the close. Let’s get right to it! Morgan Stanley Profits Drop Morgan Stanley (MS) shares are dropping 3.4% ahead of the open after topping Q3 expectations but profits were down year over year. Here’s how the investment bank’s results compared to analysts’ estimates: EPS: $1.38 vs $1.28 expected Revenue: $13.27 billion vs $13.23 billion expected Profit fell 9% from a year ago while revenue rose 2%. Stronger than expected trading revenue helped offset misses in other divisions. Morgan Stanley’s bond trading revenue came in at $1.95 billion, about $200 million more than analysts were expecting. Equity trading revenue of $2.51 billion beat expectations by about $100 million. But the wealth management division’s revenue of $6.4 billion missed estimates by more than $200 million. Investment banking produced $938 million in revenue vs $1.11 billion expected. United Airlines Falls On Weak Guidance United Airlines (UAL) shares are down 4.8% in premarket trade after beating Q3 expectations but issuing weak guidance. Here’s how the airline’s results compared to analysts’ estimates: Adjusted EPS: $3.65 vs $3.35 expected Revenue: $14.48 billion vs $14.44 billion expected United said higher fuel costs and a halt to its Tel Aviv flights will eat into profits in the current quarter. The company forecast Q4 adjusted EPS of $1.50 to $1.80 vs analysts’ estimates of $2.06. For the full-year that would put adjusted earnings between $9.55 and $9.85 per share, down from its previous forecast of $11 to $12 per share. Jet fuel prices have surged nearly 25% since the start of the summer. United said Q4 revenue will rise 9% year over year if its Israel flights remain suspended through the end of the year and 10.5% if the suspension lasts only through October. Costs, excluding fuel, are expected to rise between 3.5% and 5%. Procter & Gamble Beats Q3 Estimates Procter & Gamble (PG) shares are up 2.2% ahead of the open after beating fiscal Q1 expectations on the top and bottom line. Here’s how the consumer goods maker’s results compared to analysts’ estimates: EPS: $1.83 vs $1.72 expected Revenue: $21.87 billion vs $21.58 billion expected Net sales rose 6% year over year with organic revenue up 7%. P&G widened its fiscal 2024 revenue outlook, anticipating foreign exchange rates to be a larger drag than previously expected. The company forecast revenue growth of 2% to 4% vs its previous forecast of 3% to 4%. P&G reiterated its full-year forecast for organic revenue growth. Home Construction Rebounds New home construction rebounded in September following a sharp drop the previous month. The Commerce Department reported housing starts rose 7% last month to a seasonally adjusted annual rate of 1.36 million units. That was in line with expectations for an SAAR of 1.36 million units. Single-family starts rose 3.2% while multi-family starts jumped 17.1%. Building permits fell less than expected, down 4.4% to a rate of 1.47 million units. Economists were anticipating a 6% decline to 1.45 million units. Single-family permits rose 1.8% while multi-family permits dropped 14%. Permits are a forward looking indicator for housing starts. Mortgage Demand Drops Mortgage demand dropped to a 28-year low last week as rates neared 8%. The Mortgage Bankers Association reported total application volume fell 6.9% from the previous week, the lowest total since 1995. Purchase applications dropped 6% weekly and 21% annually. Refinance applications tumbled 10% weekly and 12% annually. The average 30-year contract fixed rate increased to 7.70% from 7.67%, the highest rate since November 2000. The adjustable-rate mortgage share was 9.3%, the highest in 11 months as more borrowers turn to these loans which offer lower upfront rates. In Case You Missed It Homebuilder sentiment dropped to a 10-month low in October as mortgage rates continue to soar. The National Association of Homebuilders Housing Market Index dropped 4 points to 40 vs 44 expected. September’s index was also revised lower from 44 to 43. Any reading below 50 is considered negative. Sentiment about current sales conditions fell 4 points to 46, 6-month sales expectations dropped 5 points to 44, and buyer traffic fell 4 points to 26.
Continue Reading -->Coffee With Greta: Interest Rate Woes
Register now for tomorrow’s free trading Q&A on LinkedIn with David Prince! DJIA Futures: -84 (-0.3%) SPX Futures: -17 (-0.4%) NASDAQ Futures: -88 (-0.6%) Good morning friends! Futures are slipping as traders grow concerned over higher rates. Let’s get right to it! Retail Sales Beat U.S. retail sales were much stronger than expected in September. The Commerce Department reported retail sales rose 0.7% last month to $704.9 billion. That was more than double expectations for a 0.3% gain. Core retail sales also jumped 0.6%, triple expectations for a 0.2% increase. August retail sales were also revised higher to show a 0.8% gain from 0.6% initially. Miscellaneous retailers saw the largest increase in spending last month, up 3% from August. Online spending jumped 1.1% while car dealers saw a 1.1% increase in sales. There were only categories that logged a decline in sales last month. Electronics and appliance stores sales fell 0.8%, sales at clothing stores fell 0.8%, and sales at building material stores fell 0.2%. Bank of America Tops Q3 Expectations Bank of America (BAC) shares are up 1% ahead of the open after beating Q3 expectations on the top and bottom line. Here’s how the bank’s results compared to analysts’ estimates: EPS: $0.90 vs $0.82 expected Revenue: $25.32 billion vs $25.14 billion expected Profit jumped 10% year over year while revenue climbed 2.9%> Bank of America’s interest income rose 4% from a year ago, topping estimates by roughly $300 million. Consumer banking deposits fell 8% during the quarter but the segment posted a 6% increase in revenue. CEO Brian Moynihan said, “We did this in a healthy but slowing economy that saw U.S. consumer spending still ahead of last year but continuing to slow.” Goldman Sachs Beats Q3 Estimates Goldman Sachs (GS) shares are up 0.5% in premarket trade after beating Q3 expectations on the top and bottom line. Here’s how the investment bank’s results compared to analysts’ estimates: EPS: $5.47 vs $5.31 expected Revenue: $11.82 billion vs $11.19 billion expected Profit tumbled 33% from a year ago while revenue was down 1%. Bond trading revenue slipped 6% to $3.38 billion, topping analysts’ estimates by $600 million. Goldman Sachs said strength in interest rate products and mortgages helped to offset declines in trading revenue. Johnson & Johnson Earnings Beat Johnson & Johnson (JNJ) shares are up 1.2% ahead of the open after topping expectations in the third quarter. Here’s how the pharmaceutical giant’s results compared to analysts’ estimates: Adjusted EPS: $2.66 vs $2.52 expected Revenue: $21.35 billion vs $21.04 billion expected This marks Johnson & Johnson’s first quarterly report since it complete the separation from its consumer health spinoff Kenvue (KVUE). J&J’s pharmaceutical sales totaled $13.89 billion in the quarter, up 5% year over year. The medical devices business brought in $7.46 billion in sales, up 10% from a year ago. The company hiked its full-year outlook after the Q3 beat. J&J now expects 2023 sales between $83.6 billion and $84 billion vs $83.2 billion to $84 billion previously. The company forecast full-year adjusted EPS of $10.07 to $10.13 vs $10.00 to $10.10 previously. Tupperware Replaces CEO Tupperware (TUP) shares are rallying 8.9% in premarket trade after replacing its CEO. The company announced it was replacing CEO Miguel Fernandez effective immediately this morning. Laurie Ann Goldman, previous CEO of Avon North America and Spanx, was named CEO, president and a board member. Tupperware said Goldman would “support the company’s continued turnaround strategy and execution.” The company also announced a “board refreshment” as four directors stepped down and three were added. The chair of the board said, “Now is the right time to bring in new leadership, and Laurie Ann is exceptionally well-suited to advance our long-term strategy and accelerate growth.” Wyndham Pops On Takeover Offer Wyndham Hotels & Resorts (WH) shares are surging 13.2% ahead of the open after a proposed takeover from Choice Hotels (CHH). Choice proposed to acquire Wyndham for about $7.8 billion today. The takeover would be a cash and stock deal and would create a new U.S. budget hotel giant. Wyndham shareholders would receive $90.00 per share, including $49.50 in cash and 0.324 shares of CHH common stock, for every WH share they own.
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Register now for this week’s free trading Q&A on LinkedIn with David Prince! DJIA Futures: +208 (+0.6%) SPX Futures: +25 (+0.6%) NASDAQ Futures: +55 (+0.4%) Good morning friends! Futures are higher as traders gear up for a busy week of earnings. Let’s get right to it! Busy Earnings Week This will be an important week of earnings for traders with several key names scheduled to report. Here are the highlights: Tuesday AM: Bank of America (BAC), Goldman Sachs (GS), Johnson & Johnson (JNJ) Tuesday PM: United Airlines (UAL) Wednesday AM: Morgan Stanley (MS), Procter & Gamble (PG) Wednesday PM: Tesla (TSLA), Netflix (NFLX) Thursday AM: AT&T (T), American Airlines (AAL) Thursday PM: Taiwan Semiconductor (TSM) Pfizer Slashes Guidance Pfizer (PFE) shares are slipping 0.2% ahead of the open after slashing its full-year guidance. The pharmaceutical giant cut its outlook for both earnings and revenue this year on Friday. Pfizer now expects 2023 sales between $58 billion and $61 billion vs $67 billion to $70 billion previously. The company said that lower revenue outlook was “solely due to its Covid products”. Pfizer expects revenue from its Covid treatment, Paxlovid, to come in $7 billion lower than previously estimated and vaccine sales to be $2 billion lower than previously expected. The company forecast full-year adjusted EPS of $1.45 to $1.65 vs $3.25 to $3.45 previously. Rite Aid Files For Bankruptcy Rite Aid (RAD) shares are dropping 5.6% in premarket trade after filing for Chapter 11 bankruptcy protection. The drugstore chain submitted that filing in New Jersey on Sunday and said it would begin restructuring to significantly reduce its debt. Rite Aid said it reached a restructuring deal with its creditors which includes closing underperforming stores. Lenders also agreed to extend $3.45 billion in new funding to “provide sufficient liquidity” through the restructuring. Rite Aid also appointed Jeffrey Stein as its new CEO, Chief Restructuring Officer, and a member of the Board on Sunday. Charles Schwab Earnings Beat Charles Schwab (SCHW) shares are up 0.3% ahead of the open after beating Q3 profit expectations. Here’s how the financial services company’s results compared to analysts’ estimates: Adjusted EPS: $0.77 vs $0.74 expected Revenue: $4.606 billion vs $4.615 billion expected Revenue dropped 16% year over year while net income tumbled 31%. Net interest revenue was down 23.5%, asset management and administration fee revenue rose 16.9%, and trading revenue dropped 17.4%. Schwab’s bank deposits fell to $284.4 billion from $304.4 billion in Q2.
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