Dow Drops Despite Solid Earnings from Microsoft
October 25, 2023 04:49 PM EDT
The Dow Jones Industrial Average fell 105 points, or about 0.3%, as Microsoft’s solid earnings report wasn’t enough to counteract the negative sentiment that dragged most stocks lower.
Travelers Companies (TRV) jumped 4.3%, making it the best performer of the Dow 30, after insurance peer Chubb Ltd. (CB) beat earnings estimates on higher premiums.
Microsoft (MSFT) shares moved higher by 3.1% after it reported better-than-expected earnings for the 2024 fiscal first quarter, including 29% growth in its Azure cloud business.
Intel (INTC) plunged more than 5.1%, adding to losses suffered earlier in the week on reports Nvidia (NVDA) is developing a computer processing unit with Arm (ARM) designs, challenging Intel’s core PC business.
Shares of Salesforce (CRM) declined 3.5%. The stock fell earlier in the week following a downgrade from Piper Sandler on concerns about over-optimistic AI business forecasts. Dow Inc. (DOW) shares fell 3.5% a day after its quarterly earning report revealed lower sales volumes.
Boeing (BA) shares fell 2.5% after it lowered its 737 Max aircraft delivery forecast for the year as it struggles with production defects.
Apple (AAPL) shares declined 1.4% after a representative said it would support a national “right-to-repair” law that could make it easier for independent shops to repair Apple devices.
Shares of IBM (IBM) slid 0.5% ahead of its earnings report after the bell, while Honeywell (HON) shares fell 1.9% in advance of its report tomorrow morning.
-Terry Lane
Boomers’ Record Wealth Could Be a Boon to Senior-Exposed Stocks
October 25, 2023 03:58 PM EDT
Buy Boomers and sell Millennials. That’s the advice of Bank of America equity analysts who, in a research note released Wednesday, said investors should consider stocks of businesses that cater to older clientele, whose spending has proved resilient in the face of higher prices and rates.
According to BofA internal data, Baby Boomers and their elders, Traditionalists, are the only generational groups increasing consumption. Meanwhile, Millennials’ spending has recently fallen as their credit card delinquencies have risen.
Boomers’ finances are being girded by the equity they have built up in their houses, which they likely bought with money borrowed at historically low rates. On the flip side, Millennials are the majority of first-time homebuyers in the least affordable housing market in decades.
People over 50 are prioritizing travel and entertainment over other forms of discretionary spending like tech and apparel, according to an AARP survey cited by BofA. Cruise lines, which skew older, could benefit the most from Boomers’ healthy personal finances. BofA also highlighted health care, senior housing, and death services as potential market bright spots.
Worldline’s Lower Guidance Tanks Digital Payments Stocks
October 25, 2023 03:09 PM EDT
Digital payments companies were some of the market’s worst-performing stocks Wednesday after French payments company Worldline SA (WRDLY) cut its revenue outlook, citing a pullback in consumer spending in Germany, its largest market.
Worldline American depositary receipts (ADRs) plunged nearly 60% Wednesday, dragging other fintech firms with them. Affirm Holdings (AFRM) shares fell 15%, while Block (SQ) lost 8% and PayPal (PYPL) dropped 4%.
Digital payments companies face an uncertain future. Inflation and the Federal Reserve’s interest rate hikes have dramatically increased the cost of living, but most of all for younger consumers who are the most likely to use digital services.
Their savings have been hit by years of above-trend inflation and market volatility; they’ve just resumed payments on more than $1 trillion in student loans; and rates on mortgages and car loans have jumped to multi-decade highs, further squeezing their finances.
Midday Market Movers
October 25, 2023 02:18 PM EDT
General Dynamics Corp. (GD): Shares of the defense contractor rose 4% after its third-quarter report topped Wall Street estimates on the top and bottom lines. Strong demand also increased its order backlog to a record of nearly $96 billion.
Moody’s Corp. (MCO): Shares of the credit rating agency rose 3% after it reported revenue grew 15% in the third quarter and adjusted earnings rose 31% to $2.43 a share. Both surpassed analysts’ estimates.
Affirm Holdings Inc. (AFRM): Shares of the digital payments company fell 16% after French peer Worldline lowered its full-year revenue outlook, tanking payments companies like PayPal Holdings Inc. (PYPL), down 5%, and Block Inc. (SQ), down 8%.
Automatic Data Processing Inc. (ADP): Shares of the payroll and Human Resources services company fell almost 10% after it lowered its outlook for its administrative outsourcing unit, saying growth came in under expectations after slowing in the third quarter.
T-Mobile US Beats Earnings Estimates as It Adds More Customers Than Expected
October 25, 2023 12:51 PM EDT
T-Mobile U.S. (TMUS) reported better-than-expected profit and boosted the low end of its guidance as the mobile phone provider added more customers than anticipated.
The third-largest U.S. wireless company posted third-quarter fiscal 2023 earnings per share (EPS) of $1.82, beating estimates. Revenue fell 1.2% from the same period a year ago to $19.25 billion, in line with forecasts.
T-Mobile added 850,000 postpaid mobile phone customers, while analysts were looking for a gain of 780,400. The company indicated its $4 billion in free cash flow was the highest in its history.
Shares of T-Mobile U.S. whipsawed between losses and gains early in the session before stabilizing to trade little changed midday Wednesday.
-Bill McColl
Waste Management Shares Gain on Price Hikes
October 25, 2023 12:09 PM EDT
Shares of garbage disposal company Waste Management (WM) surged 6% Wednesday after it beat earnings estimates on wider margins boosted by price hikes.
Waste Management reported net income of $663 million, a 4% increase from the same quarter last year. Core prices, a measure of the efficacy of the company’s pricing changes, was 6.6% last quarter, outpacing cost increases by about 100 basis points—or 1 percentage point.
Waste Management’s margin expansion underscores the success companies are having passing higher costs along to clients and consumers, who have kept the economy afloat this year with their surprisingly robust spending.
Visa Narrowly Beats Earnings Expectations on Higher Transaction Volume, Resilient Consumer Spending
October 25, 2023 11:34 AM EDT
Visa’s (V) fiscal fourth-quarter earnings results beat analyst predictions as transaction volume increased amid an uptick in consumer spending as inflation cools.
Visa earnings by the numbers
- Net income: $4.7 billion vs. $4.7 billion expected, according to analyst estimates compiled by Visible Alpha
- Adjusted earnings per share: $2.33 (in line with expectations)
- Net revenue: $8.6 billion (in line with expectations)
- Payments volume: Up 9% (in line with expectations)
“Throughout the year, we have seen resilient consumer spending, ongoing recovery of cross-border travel spend versus 2019 and continued growth across our new flows and value-added services businesses,” CEO Ryan McInerney said in a statement.
One concern for Visa going forward: Credit card delinquencies have risen throughout the year and credit card debt in the U.S. topped $1 trillion for the first time in the second quarter.
Visa shares were about 1% higher late Wednesday morning.
-Nathan Reiff
Alphabet Shares Sink on Slower Cloud Growth
October 25, 2023 10:56 AM EDT
Alphabet (GOOGL) shares fell Wednesday after the company reported slower-than-expected growth at its Google Cloud unit, overshadowing a rebound in advertising revenue.
Alphabet earnings by the numbers
- Net income: $19.7 billion vs $18.5 billion expected, according to analyst estimates compiled by Visible Alpha.
- Adjusted earnings per share: $1.55 vs. $1.46 expected
- Revenue: $76.7 billion vs. $76 billion expected
- Google advertising revenue: $59.6 billion vs. $59.1 billion expected
- Cloud revenue: $8.4 billion vs. $8.6 billion expected
Alphabet shares sank more than 8% early Wednesday.
Microsoft Shares Jump on Earnings Beat, Surprising Cloud Growth
October 25, 2023 09:53 AM EDT
Microsoft’s (MSFT) fiscal first-quarter earnings beat analysts’ expectations as the company’s Azure cloud computing segment grew more than predicted.
Microsoft earnings by the numbers
- Net income: $22.3 billion vs. $19.8 billion expected, according to analyst estimates compiled by Visible Alpha.
- Adjusted earnings per share: $2.99 vs. $2.65 expected
- Revenue: $56.5 billion vs. $54.6 billion expected
- Cloud revenue: $31.8 billion vs. $30.9 billion expected
Shares jumped nearly 4% in early trading Wednesday.
Stocks Making the Biggest Moves Premarket
October 25, 2023 09:25 AM EDT
Gains:
- Deutsche Bank AG (DB): Shares of the German bank rose more than 6% after it better-than-expected earnings and said it expected full-year sales to come in at the top of its prior guidance.
- Microsoft Corp. (MSFT): Shares of the tech giant jumped nearly 5% after it reported cloud growth accelerated last quarter, helping it grow net income by 27% year-over-year.
- Boeing Co. (BA): Shares of the aircraft maker rose 3% after it reported its net loss narrowed from a year ago, overshadowing a simultaneous announcement that it will deliver fewer 787 Max jets this year than previously expected.
Losses:
- Texas Instruments Inc. (TXN): Shares of the semiconductor company fell more than 6% after it reported lower-than-expected sales last quarter and forecast a weak fourth quarter.
- Alphabet Inc. (GOOGL): Shares tumbled more than 5% after the company reported slower-than-expected growth in its all-important cloud computing unit.
- Thermo Fisher Scientific Inc. (TMO): The health tech company’s shares fell almost 4% after it lowered its full-year guidance for the second consecutive quarter, citing the “current macroeconomic environment.” The company now expects revenue of $42.7 billion and adjusted earnings per share to total $21.50, compared with estimates of $45.3 billion and $23.70, respectively, at the end of the first quarter.
5 Things to Know Before Markets Open
October 25, 2023 08:53 AM EDT
Here’s what investors need to know to start their day:
- Microsoft (MSFT) grew its Azure cloud computing segment more than forecasted last quarter, helping boost its earnings and send its stock 5% higher in premarket trading.
- Shares of Google-parent Alphabet (GOOG) dropped more than 6% in premarket trading after revenue growth at the search giant’s cloud division disappointed.
- Visa (V) reported a 19% year-over-year increase in net income to top Wall Street estimates on the top and bottom lines.
- Shares of Instagram-parent Meta Platforms (META) traded 0.5% lower premarket after a coalition of 33 states sued the tech giant, alleging the company’s social media platforms harm children and teenagers.
- New home sales are expected to have increased slightly in September to an annualized rate of 680,000, from 675,000 in August. That data will be released by the Census Bureau at 10 a.m. ET.
-Terry Lane
Stock Futures Mixed Following Microsoft, Google Earnings
October 25, 2023 08:32 AM EDT
Futures contracts connected to the Dow Jones Industrial Average were almost 0.3% higher in premarket trading, buoyed by Microsoft and Boeing earnings beats.
S&P 500 futures contracts were traded about 0.2% lower, weighed on by Alphabet shares galling premarket.
Nasdaq 100 futures fell nearly 0.5%.
