Equity Indexes Wrap: Big Tech Tumbles on Google Earnings; Health Care Shines in Otherwise Bleak Session
January 31, 2024 04:19 PM EST
The Dow
Boeing (BA) shares rose 5.3% after the jet maker posted a narrower-than-expected loss in the fourth quarter and suspended its forward guidance amid a Federal Aviation Administration review of its safety standards compliance.
UnitedHealth Group (UNH) advanced 1.6%, buoyed by upbeat earnings reports from healthcare peers.
Microsoft (MSFT) shares slipped 2.7% despite reporting better-than-expected sales and earnings in the fourth quarter amid continued strong demand for its AI products. The stock had gained nearly 70% in the year leading up to this week’s report, making Microsoft the most valuable company in the world.
Shares of Apple (AAPL) fell 1.9% ahead of its quarterly earnings report tomorrow afternoon.
The S&P 500
Paramount Global (PARA) jumped 6.7% following reports media entrepreneur Byron Allen had offered to acquire all outstanding stock and debt for $30 billion.
Cencora (COR) added 5.5% after the pharmaceutical wholesaler reported better-than-expected quarterly earnings and raised its full-year outlook. Competitors Cardinal Health (CAH) and McKesson (MCK) gained 2.1% and 2%, respectively.
Boston Scientific Corp. (BSX) climbed 3% after topping analyst estimates with its quarterly earnings and current-quarter sales guidance.
Mastercard (MA) gained 0.8% after its better-than-expected earnings report.
MarketAxess Holdings (MKTX) tumbled 17.8% despite its quarterly earnings surpassing analysts’ estimates.
Rockwell Automation (ROK) sank 17.7% after it missed quarterly earnings estimates and cut its full-year guidance.
Teradyne (TER) fell 7.6% after reporting a decline in fourth-quarter and full-year sales amid lower demand for chip-testing equipment.
Regional banks faltered after peer New York Community Bancorp (NYCB) reported a surprise loss in the fourth quarter. Zions Bancorp (ZION) fell 5.7%, while Comerica (CMA) lost 5.4%, and Citizens Financial (CFG) slipped 4.7%.
Thermo Fisher Scientific (TMO) slid 5% after the company forecast lower-than-expected 2024 earnings.
The Nasdaq 100
Automatic Data Processing (ADP) gained 3% after its quarterly earnings report beat Wall Street estimates on the top and bottom lines.
Qualcomm (QCOM) added 1.7% ahead of its earnings report after the bell.
Alphabet (GOOGL) led the index lower, tumbling 7.4% after its quarterly ad sales and margins fell short of analyst estimates, overshadowing higher than expected earnings and cloud growth.
Lululemon Athletica (LULU) shares sank 5.7% while Roper Technologies (ROP) lost 4.4% after forecasting disappointing 2024 earnings.
PayPal (PYPL) fell 3.7% after it said Tuesday it would cut 9% of its workforce.
Advanced Micro Devices (AMD) slid 2.7% after its current-quarter sales guidance fell short of estimates.
Other tech mega caps followed Alphabet lower—Meta (META) and Amazon (AMZN) fell 2.5% and 2.4%, respectively. Both will report quarterly earnings after the bell tomorrow.
Novartis Stock Slumps After Drugmaker’s Earnings, Guidance Fall Short of Expectations
January 31, 2024 03:00 PM EST
Novartis (NVS) announced fourth-quarter results and guidance Wednesday that fell short of analyst’s expectations, and the company also ended a study on an experimental blood cancer treatment. American Depositary Receipts (ADRs) of the Swiss drugmaker were down in afternoon trading in New York.
The company posted fourth-quarter core net income of $3.13 billion, with revenue up 8% to $11.43 billion, missing projections on both accounts.
Novartis said sales were driven by “continued strong performance” from its Entresto heart medicine, which were 26% higher in constant currency—removing impact of non-U.S. dollar conversions and foreign exchange fluctuations. Sales for Kisqali were up 76%, Kesimpta sales rose 73%, Cosentyx grew 21% and Pluvicto sales were 53% higher in constant currency terms.
The company also said it anticipates full-year sales to grow by a mid-single-digit percentage, and core operating income to rise by a high-single-digit percentage. Those were below forecasts as well.
Novartis ADRs were down 4.3% at $103 Wednesday afternoon. The stock had hit an all-time high earlier this month, and even with today’s declines, they were up about 20% in the past year.
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Fed Holds Key Interest Rate Steady, Says More Progress on Inflation Needed To Cut Rates
January 31, 2024 02:30 PM EST
As widely expected, the Federal Reserve on Wednesday held its key fed funds rate steady at a 22-year high of a 5.25%-5.50% range Wednesday.
While the Federal Open Market Committee added language to its official statement referring to rate cuts, it said it was too soon to make them. It did, however, abandon the idea of raising rates again. Wednesday’s statement was the first since March 2022 to lack any language suggesting that more rate hikes are on the table.
Financial markets are anticipating the Fed’s next move, and investors will closely watch Fed chair Jerome Powell’s press conference Wednesday afternoon for clues about whether the central bank will cut the fed funds rate at its meeting in March.
As of Wednesday afternoon, just after the Fed statement, markets were pricing in a 47% chance of that happening, according to the CME Group’s FedWatch tool, which forecasts interest rate movements based on fed funds futures trading data. Before the statement, markets were pricing in a 56% chance of a rate-cut at the March meeting.
Paramount Stock Jumps on $30 Billion Byron Allen Buyout Offer
January 31, 2024 01:39 PM EST
Paramount Global (PARA) stock jumped Wednesday after media entrepreneur Byron Allen offered $30 billion for the company’s outstanding stock and debt.
According to Bloomberg, the deal would involve Allen paying $28.58 per voting share and $21.53 for each non-voting share. That brings the total value of outstanding shares to $14.3 billion.
The remainder of the $30 billion offer would go toward existing debt. The bid by Allen Media Group comes a little more than a month after Allen reiterated a $3.5 billion offer to purchase BET Media Group from Paramount.
In a statement to Bloomberg, Allen Media Group said, in part, “This $30 billion offer, which includes debt and equity, is the best solution for all of the Paramount Global shareholders, and the bid should be taken seriously and pursued.”
Allen isn’t the only interested party sizing up Paramount. Just last month, Paramount Global Chief Executive Officer Bob Bakish met with Warner Bros. Discovery (WBD) CEO David Zaslav to discuss a potential merger.
Paramount was the best-performing stock in the S&P 500 Wednesday afternoon, rising about 8.4% to trade at $14.83. Still, the stock has lost more than a third of its value over the past year.
Mondelez Stock Falls as Maker of Oreo Cookies, Ritz Crackers Provides Weak Outlook
January 31, 2024 01:09 PM EST
Shares of Mondelez International (MDLZ) lost ground Wednesday as the big snack producer’s volumes declined and it gave a weaker-than-expected outlook because of global issues.
The maker of Oreo Cookies and Ritz crackers said it expects full-year organic net revenue to grow 3% to 5%, after rising more than 14% in 2023. The company blamed the lower numbers on “greater than usual volatility as a result of geopolitical uncertainty.”
In its fourth quarter, Mondelez reported earnings per share (EPS) of $0.84, with revenue up 7.1% to $9.31 billion. Both exceeded forecasts.
Mondelez officials told analysts that the company anticipates high-single-digit percentage price hikes this year, mainly because of the soaring price of cocoa.
Mondelez shares were down 0.7% at $75.80 Wednesday afternoon. Despite today’s losses, shares of Mondelez International are nearly 16% higher over the past year.
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Mastercard Gains as Q4 Earnings Get Consumer Spending Boost
January 31, 2024 12:47 PM EST
Mastercard Inc.’s (MA) fourth-quarter earnings got a boost from robust consumer spending. Shares were 1.5% higher in afternoon trading on Wednesday.
The payments giant reported net income of $2.8 billion or $2.97 per diluted share. Excluding the impact of losses on certain equity investments, adjusted net income stood at $2.99 billion or $3.18 per share, higher than analyst expectations and up 17% compared to the year-ago quarter.
Revenue rose 12.5% to $6.55 billion, primarily driven by gross dollar volume and cross-border volume growth in its payments network.
“We delivered strong earnings and revenue growth for the full year 2023, driven by healthy consumer spending, cross-border volume growth of 24 percent, and the solid execution of our strategy,” said Michael Miebach, CEO of Mastercard.
Mastercard shares were up 1.5% at $452 Wednesday afternoon, bringing their 12-month return to 22%.
New York Community Bancorp Earnings Drag Down Regional Bank Stocks
January 31, 2024 12:04 PM EST
Regional bank stocks tumbled Wednesday, led by New York Community Bancorp (NYCB), which swung to a net loss in the fourth quarter and slashed its dividend as it prepares to meet higher regulatory standards following its acquisition of certain Signature Bank assets last March.
The bank posted a $260 million net loss in the fourth quarter after earning $207 million in the third quarter and $172 million a year ago. Interest income declined 4% from the prior quarter to $1.4 billion, while interest expense rose 18% to $707 million. That, plus a 790% increase in the bank’s provisions for credit losses, caused net interest income to shrink 77% quarter-over-quarter.
For the full year, the bank’s net income totaled $2.3 billion, a 265% increase from 2022. But stripping out one-time charges and a $2.2 billion windfall from its Signature Bank acquisition, net income declined 4% to $609 million.
The bank’s Signature transaction wasn’t without its drawbacks—the acquisition brought the bank’s assets to more than $100 billion, launching it into the ranks of Category IV banks. That designation brings with it more stringent capital and liquidity requirements and regulatory scrutiny.
As such, the bank cut its dividend to 5 cents a share, a more than 70% reduction.
“We believe this is the prudent decision as it will allow us to accelerate the building of capital to support our balance sheet as a Category IV bank,” said CEO Thomas Cangemi in a press release.
Shares of New York Community Bancorp on Wednesday sank 35% to $6.68, their lowest level since March’s regional banking crisis. The broader regional banking sector followed NYCB lower, with the SPDR S&P Regional Banking ETF (KRE) down 3.8% midday.
Boeing Suspends Its Guidance Amid 737 Max Fallout, Posts Narrower Q4 Loss
January 31, 2024 11:05 AM EST
Boeing (BA) shares rose over 3% in early trading Wednesday after the aircraft maker reported a smaller loss than expected for the fourth quarter, though it suspended its forward guidance amid safety concerns.
For the fourth quarter, Boeing reported revenue of $22.02 billion, above analyst expectations. The company’s net loss of $30 million was an improvement on a $663 million loss for the same period a year ago. Boeing reported a loss of 47 cents per share versus a loss of $1.75 per share in the year-ago quarter.
However, the aircraft maker said it would suspend its forward guidance for 2024 as it continues to address safety issues and concerns following a mid-flight incident involving a Boeing 737 Max 9 earlier this month. In its earnings release, Boeing said it “continues to cooperate transparently” with the Federal Aviation Administration (FAA) during its investigation.
The company did deliver production guidance, saying it would cap 737 MAX production at 38 planes per month until the FAA has completed its quality checks. Boeing said it will build five 787 Dreamliners per month, with a plan to increase that number to 10 per month.
Boeing shares were 4.7% higher at $209.90 Wednesday, but have lost more than 16% of their value over the past month.
Novo Nordisk Stock Hits Record High as Wegovy Maker Sees Up To 26% Sales Growth This Year
January 31, 2024 10:33 AM EST
The American depositary receipts (ADRs) of Novo Nordisk (NVO), the market leader in weight-loss drugs, rose sharply in early trading Wednesday, hitting an all-time high, after the Danish company said it expects sales growth this year of between 18% and 26% in constant exchange terms.
The company also reported better-than-forecast sales that were 36% higher last year at 232.3 billion kroner ($33.8 billion) on the back of buoyant demand for its weight loss drug Wegovy and diabetes drug Ozempic.
“Our focus in 2024 will be on reaching more patients, progressing and expanding our pipeline as well as the continued significant expansion of our production capacity,” Lars Fruergaard Jørgensen, president and CEO of the company, said in the company’s earnings statement.
The stock gained more than 50% last year as booming demand for its key drugs garnered it the title of Europe’s most valuable company.
Novo Nordisk ADRs were up 4.1% at $113.52 on Wednesday morning.
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Treasury Yields Dip Ahead of Fed Rate Decision
January 31, 2024 10:16 AM EST
Treasury yields turned sharply lower Wednesday morning just hours before Federal Reserve officials announced the first interest rate decision of the year after two reports pointed to a U.S. economy on the path toward a soft landing.
The yield on benchmark 10-year Treasurys fell 9 basis points to 3.94%, dipping below 4% for the first time in over two weeks. Shorter-term bond yield fell even further, with the 3-year slipping to 13 basis points to also dip below 4%.
The Federal Reserve is widely expected to hold interest rates steady at this meeting. For that reason, economists and investors will be looking to officials’ language, scrutinizing it for any hints about how soon they’ll cut rates.
The Fed has signaled as many as three interest rate cuts this year. Investors, once convinced cuts would start in March, have since tempered their expectations. But two reports Wednesday added to conviction the U.S. economy is coming in for a soft landing, raising hopes of rate cuts sooner rather than later.
U.S. private employers added fewer jobs than expected in January, according to payroll provider ADP’s monthly report, which is considered a precursor to Friday’s government jobs report. And compensation costs rose at a slower pace than expected in the fourth quarter, a sign that a cooling labor market is easing inflationary pressures.
AMD Stock Slumps on Disappointing Sales Forecast—Key Price Levels to Watch
January 31, 2024 09:25 AM EST
Advanced Micro Devices (AMD) shares fell sharply in pre-market trading Wednesday after the chipmaker issued current-quarter sales guidance that missed analysts’ expectations amid softening demand for its PC chips and central processing units (CPUs).
The Santa Clara, California company said it expects first-quarter sales of about $5.4 billion, plus or minus $300 million, falling short of the $5.73 billion mark Wall Street was looking for. AMD projects its PC chips business to record a decline in sales growth from the December quarter and its data center revenue to remain flat in the period.
Growth in graphics processing unit (GPU) sales is expected to help offset slowing CPU demand. The company said it now sees 2024 AI GPU chip sales of $3.5 billion, up substantially from its earlier forecast of $2 billion.
Since briefly dipping below the 200-day moving average in late October, AMD shares have tracked steadily higher, with trading volume increasing in the lead-up to the company’s earnings. If the stock undergoes an earnings-driven retracement, keep an eye on a three-month trendline that may potentially provide support around $160. A failure to hold this key chart level could mark the start of a possible trend reversal.
AMD was down 4.3% at $164.70 shortly before the opening bell on Wednesday.
Stocks Making the Biggest Moves Premarket
January 31, 2024 09:01 AM EST
Gains:
- Paramount Global (PARA): Shares jumped more than 13% following reports media mogul Byron Allen had made a $14 billion offer to buy all outstanding shares of the entertainment company.
- Starbucks Corp. (SBUX): Shares of the coffeehouse chain rose nearly 5% despite its quarterly results missing estimates on the top and bottom lines amid a U.S. boycott and sluggish demand in China.
- Boeing Co. (BA): The jet maker’s shares rose 2% after it posted a narrower-than-expected loss in the fourth quarter.
Losses:
- Alphabet Inc. (GOOGL): Shares fell more than 5% after the company’s fourth-quarter advertising sales fell short of analysts’ estimates, overshadowing beats on total revenue and earnings.
- Advanced Micro Devices Inc. (AMD): Shares of the chipmaker slipped more than 4% after its current-quarter sales forecast fell short of Wall Street’s expectations.
- Tesla Inc. (TSLA): Shares of the electric vehicle maker slid more than 2% after a Delaware judge voided the $56 billion compensation package CEO Elon Musk was given by the company’s board in 2018.
Stock Futures Mixed Following Microsoft, Google Earnings
January 31, 2024 08:28 AM EST
Futures contracts connected to the Dow Jones Industrial Average were about 0.1% higher in premarket trading on Wednesday.
S&P 500 futures slipped 0.4%.
Nasdaq 100 futures were climbing about an hour before markets opened, but were still down about 0.9%.
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