Equity Indexes Wrap: Semiconductor Stocks Soar on TSMC Earnings; Humana’s Medical Costs Sink Health Insurers
January 18, 2024 04:11 PM EST
The Dow
Boeing (BA) jumped 4.2% after Indian carrier Akasa Air placed an order for 150 planes, a welcome piece of good news for the jet maker that has been dealing with a weeks-long grounding of more than 150 737 Max 9 jets.
Apple (AAPL) gained 3.3% as the company pulled a blood-oxygen level feature from certain Apple Watches to comply with a federal import ban. Bank of America also upgraded the stock to “buy,” citing the potential of its nascent augmented reality headset business and artificial intelligence to accelerate growth.
Intel (INTC) shares climbed 1.5% after chipmaker Taiwan Semiconductor Manufacturing Co. (TSM) reported better-than-expected quarterly earnings and offered an upbeat forecast, spurring a rally in semiconductor stocks.
UnitedHealth Group (UNH) sank 1.6%, one of several health insurers to tumble today on peer Humana’s slashed earnings estimates.
The S&P 500
Airline stocks took off, with American Airlines (AAL) leading the way with its 6.9% gain. Southwest Airlines (LUV) rose 6.8% and United Airlines (UAL) climbed 5%.
Discover Financial Services (DFS) tumbled 10.8% after its quarterly earnings report missed analyst estimates as it doubled credit loss provisions. Credit services provider Synchrony Financial (SYF) fell 1.9%.
Humana (HUM) tumbled 8% to a 2-year low after cutting its 2023 earnings outlook, citing higher-than-expected medical costs associated with Medicare patients. Peers CVS Health (CVS) and Centene Corp. (CNC) fell 4% and 1.8%, respectively.
Ford (F) slid 2.4%, falling for a second day after being downgraded to “neutral” by analysts at UBS.
The Nasdaq 100
Fastenal (FAST) jumped 7.2% after its quarterly earnings and sales topped Wall Street estimates.
KLA Corp (KLAC), which makes semiconductor fabrication equipment, rose 4.9%, lifted by the rising tide of today’s chip stock rally. Peers Applied Materials (AMAT) and ASML Holdings (ASML) each gained 4.5%.
Chipmaker Marvell Technologies (MRVL) added 4.4% and Qualcomm (QCOM) rose 4.3%. Broadcom (AVGO) climbed 3.7%.
Most of the Magnificent Seven rose today, with Meta (META) climbing 2.1%, Alphabet (GOOGL) adding 1.4%, and Amazon (AMZN) up 1.2%.
The exception: Tesla (TSLA), shares of which fell 1.7%, continuing to slide after the EV maker slashed prices across Europe yesterday.
Humana Stock Plunges More Than 10% to Two-Year Low on Medicare Medical Cost Warning
January 18, 2024 03:36 PM EST
Humana Inc. (HUM) shares plunged Thursday after the health insurance provider warned that full-year profit will be negatively affected by higher medical-care costs for Medicare patients.
The company slashed its 2023 earnings per share (EPS) outlook to $26.09 from the previous estimate of $28.25. The new EPS figure is also below analysts’ forecasts.
Humana said in a regulatory filing Thursday that it “anticipated the higher level of medical utilization experienced during the third quarter in its Medicare Advantage business would continue for the remainder of the year.”
The company added that in the fourth quarter, it saw Medicare Advantage cost trends increasing from higher-than-expected in-patient use and rising non-patient expenses, predominantly in the categories of physician, outpatient surgeries, and supplemental benefits.
Shares of Humana were down 7.7% to $413 late Thursday afternoon, trading at their lowest level in two years.
Bitcoin Falls to 1-Month Low After First Week of ETF Trading
January 18, 2024 02:35 PM EST
The price of Bitcoin fell more than 3% Thursday to about $41,300, its lowest point since mid-December, weeks before the Securities and Exchange Commission (SEC) approved 11 spot Bitcoin ETFs, opening the door for billions of dollars to flow into the asset.
The market’s reaction to last week’s approval has vindicated proponents of one investment strategy: Buy the rumor, sell the news. Between mid-October, when the SEC chose not to appeal a court decision forcing it to reconsider Grayscale’s rejected Bitcoin ETF application, and January 11, the first day of spot ETF trading, Bitcoin rose 73% as investors became convinced approval was guaranteed. In the week since the ETFs started trading, Bitcoin has tumbled about 10%.
Apple Supplier TSMC Surges on Better-Than-Expected Outlook, Anticipated AI Gains in 2024
January 18, 2024 01:46 PM EST
Taiwan Semiconductor Manufacturing Company’s (TSM) American depositary receipts (ADRs) surged over 7% in intraday trading Thursday after the company released a better-than-expected outlook for 2024, anticipating gains from the artificial intelligence (AI) boom.
The chipmaker reported fourth-quarter fiscal 2023 earnings per share (EPS) of $1.44 on revenue of $19.62 billion, down from the same period a year ago, but in line with analyst projections and slightly above the company’s previous forecast of between $18.8 billion and $19.6 billion.
The company also said it expects between $18 billion and $18.8 billion in revenue in the first quarter of 2024, more than $1.25 billion higher than its revenue in the first quarter of 2023. For the full year, TSMC said it anticipates revenue to rise in the low to mid-20% range as the broader semiconductor market improves.
BlackRock’s Spot Bitcoin ETF Now Holds More Than $1 Billion Worth of Bitcoin
January 18, 2024 12:48 PM EST
The iShares Bitcoin Trust (IBIT) from BlackRock (BLK) now holds more than $1 billion worth of bitcoin, reaching the milestone just five days after the exchange-traded fund (ETF) began trading on Jan. 11.
IBIT’s was a quick sprint to $1 billion, but not the fastest. SPDR Gold Trust (GLD) pulled in $1 billion in just three days back in 2004, according to Bloomberg Senior ETF Analyst Eric Balchunas.
Despite significant outflows, Grayscale Bitcoin Trust (GBTC) still accounts for nearly 90% of the market, according to data shared by Bloomberg Analyst James Seyffart. BlackRock’s IBIT and the Fidelity Wise Origin Bitcoin Fund (FBTC) have been the most prominent alternatives for investors exiting GBTC following their approval last week by the U.S. Securities and Exchange Commission (SEC).
Birkenstock Stumbles on First Post-IPO Earnings Report
January 18, 2024 11:51 AM EST
Shares of Birkenstock (BIRK) fell after its first earnings report since going public in October left investors wanting more.
The German sandal maker reported revenue of 1.492 billion euros ($1.62 billion) in its 2023 fiscal year, up 20% from 2022, with growth driven by both higher prices and volumes. Sales growth was most substantial in the Americas, where sales rose 20%, and fastest in Asia, where revenue increased 24%.
Net profit, meanwhile, of 75 million euros ($81 million) was nearly 60% lower than in 2022 as selling and administrative expenses surged.
Birkenstock forecast sales growth in 2024 would slow slightly from 2023 and warned margins are likely to contract as it ramps up production at a new factory in Pasewalk, Germany. It’s also aiming to spend about 150 million euros ($163 million) in 2024 to increase production capacity and expand its retail footprint.
“The added capacity will help fulfill future demand, and the Company is on schedule to realize the benefits of this capacity expansion later in fiscal year 2024 and the upcoming years,” the company said in a press release Thursday.
Birkenstock shares fell about 10% on Thursday to about $45, bringing the stock below its $46 IPO price and halving its post-IPO gains.
Google CEO Warns Staff of More Job Cuts, Says Company to Unveil AI Goals This Week
January 18, 2024 10:49 AM EST
Google is planning additional job cuts this year, as the firm pivots further into fast-growing areas such as artificial intelligence (AI).
In a memo sent to employees Wednesday, Sundar Pichai, chief executive officer of Google-parent Alphabet (GOOGL), said that pursuing the company’s priority areas in 2024 would require “removing layers to simplify execution and drive velocity.”
In the memo, Pichai said the headcount reductions in 2024 won’t be on the same scale as last year when the company let go of 12,000 employees or around 6% of its workforce. He also noted that the company will unveil its AI goals for 2024, as well as its objectives and key results, this week.
Shares in Google’s parent company Alphabet were up 1% at about $143 Thursday morning.
Discover Financial Services Stock Drops After Weak Q4—Key Technical Levels to Monitor
January 18, 2024 10:12 AM EST
Shares in Discover Financial Services (DFS) fell in early trading Thursday after the online banking and payments company’s quarterly earnings came up short of analysts’ expectations. The company also cautioned about tougher conditions facing consumers, prompting it to increase its bad debt provision.
Discover Financial’s bottom line came in at $388 million, or $1.54 per share in the fourth quarter compared with $1.025 billion, or $3.74 per share, in the prior year.
The company said its provision for credit losses, which are loans the bank thinks it won’t be able to recover, increased to $1.9 billion in the December quarter, up $1 billion from the same period last year. However, the company said its sour loan provisions were toward the low end of its expected range.
Source: TradingView.com.
Since bottoming out at about $80 early in the fourth quarter, Discover’s share price made an impulsive move higher throughout December to trade toward the top end of its 2023 range.
On Thursday, the stock tumbled about 8% to find support just above $100 where the 50-day moving average sat poised to cross above the 200-day moving average and form a bullish golden cross signal.
Stocks Making the Biggest Moves Premarket
January 18, 2024 09:25 AM EST
Gains:
- Taiwan Semiconductor Manufacturing Co. (TSM): Shares of the Taiwanese chipmaker jumped 8% after it reported better-than-expected quarterly sales and earnings and forecast strong revenue growth on AI demand the year.
- Hertz Global Holdings Inc. (HTZ): Shares of the car rental company rose 4% after Morgan Stanley upgraded the stock to “overweight” and praised its recent decision to rethink the size of its electric vehicle fleet.
- Apple Inc. (AAPL): Shares of the consumer tech giant rose 2% after Bank of America analysts upgraded the stock to “buy” from “neutral,” citing potential upside from its services and Vision Pro businesses.
Losses:
- Humana Inc. (HUM): Shares of the health insurer tumbled 13% after it cut its 2023 earnings outlook on higher medical costs, echoing quarterly results from UnitedHealth Group (UNH) last week.
- Birkenstock Holding Plc (BIRK): Shares of the newly public sandal maker fell more than 10% after the company warned global expansion efforts could put pressure on earnings, overshadowing above-forecast quarterly sales and an upbeat revenue forecast.
- Discover Financial Services (DFS): Shares of the financial services provider plummeted 7% after reporting it more than doubled its credit loss provisions in the fourth quarter, dealing a blow to earnings.
Stock Futures Rise as TSMC Earnings Top Estimates
January 18, 2024 08:43 AM EST
Futures contracts connected to the Dow Jones Industrial Average were down about 0.2% in premarket trading.
S&P 500 futures rose 0.4%.
Nasdaq 100 futures were up 0.9%.
