S&P 500 Gains and Losses Today
October 26, 2023 05:07 PM EDT
Here are the stocks in the S&P 500 that gained and lost the most today, and the stories behind the market movers.
Dow Drops as GDP Growth Spurs Interest Rate Fears
October 26, 2023 04:40 PM EDT
After rallying in the afternoon to nearly break even, the Dow Jones Industrial Average dove in the last hour of trading to close down 251 points, or about 0.8%, after a strong U.S. gross domestic product (GDP) figure stoked fears the Federal Reserve will need to keep rates high for longer than expected to cool the U.S. economy.
In the last seven sessions, the Dow has fallen by 200 or more points in four of them and risen in just one.
IBM (IBM) shares jumped nearly 4.9% after it modestly topped analyst estimates in its earnings report. CEO Arvind Krishna said on a conference call that its generative artificial intelligence (AI) offerings could generate $1 billion in annual revenue at the third quarter’s booking rate.
Verizon (VZ) shares moved higher by 2.5% after it beat earnings expectations earlier this week on solid home and business internet sales.
Shares of Merck & Co. (MRK) gained nearly 1.9% in value as the pharmaceutical maker’s third-quarter earnings beat expectations on rising sales of its lung cancer treatment Keytruda, HPV vaccine Gardasil, and, surprisingly, Covid-19 antiviral Legavrio, sales of which jumped 47%.
Microsoft (MSFT) shares fell almost 3.8% to lead the Dow 30 lower, giving back all of yesterday’s gains. Shares rose more than 3% yesterday after the company reported strong revenue growth in its cloud business.
Furthering the tech’s woes, Apple (AAPL) shares declined by 2.5% while Cisco Systems (CSCO) shares dropped by 2%. Intel (INTC) shares fell 0.9% ahead of its earnings report after the bell. Salesforce (CRM) dipped 0.4%.
Shares of Nike (NKE) fell 3.4% and Visa (V) slid 2.4%.
-Terry Lane
Southwest Airlines Earnings Sink on Rising Fuel and Labor Expenses
October 26, 2023 03:56 PM EDT
Southwest Airlines (LUV) shares lost ground after the carrier reported profit was dragged down by higher fuel and labor costs.
The biggest domestic U.S. carrier reported third-quarter fiscal 2023 earnings sank 30.3% from a year ago to $193 million, or $0.38 per share, in line with estimates. Revenue rose 4.9% to $6.53 billion, slightly less than forecasts.
Southwest noted that fuel costs reached $2.78 per gallon, at the high end of its expectations because of increasing oil prices. Costs for salaries, wages, and benefits jumped 17.5% to $2.73 billion.
Shares of Southwest Airlines were down 1% late in the session Thursday, on track to close at a nine-and-a-half-year low.
-Bill McColl
American Tower Propels Real-Estate Sector Higher
October 26, 2023 02:55 PM EDT
Real estate was far and away the best-performing sector of the session Thursday afternoon, with the S&P 500’s real estate stocks gaining more than 2.4% last of the late afternoon.
Those gains were driven by a more than 7% increase in American Tower’s (AMT) share price after the cell tower owner reported a 6% increase in revenue and 9% growth in attributable adjusted funds from operations.
The company also said company veteran Steve Vondran, who joined the company in 2000 and has served as President of the U.S. Tower Division, would replace Tom Bartlett as CEO effective Feb. 1, 2024.
Fellow cell tower owners Crown Castle Inc. (CCI) and SBA Communications Corp. (SBAC) both rose more than 5% Thursday, as did data center owner Equinix Inc. (EQIX).
Merck Beats Earnings Estimates on Strong Keytruda and, Surprisingly, Covid Drug Sales
October 26, 2023 01:53 PM EDT
Merck & Co. (MRK) shares rose 3% Thursday after its third-quarter results beat Wall Street estimates on strong sales of its lung cancer drug Keytruda, HPV vaccine Gardasil, and Covid treatment Lagevrio.
Revenue grew 7% to just under $15.96 billion. Adjusted net income rose 15% to $5.4 billion, or $2.13 a share. Analysts had expected revenue of about $15.3 billion and earnings of less than $2 a share.
Sales of Keytruda and Gardasil, Merck’s best-selling drugs, increased by double-digit percentages in the quarter. While Merck’s Covid antiviral, Lagevrio, bucked the industry trend and saw a nearly 50% increase in sales, which Merck attributed to rising demand in Japan.
Covid-related sales were a dark spot on competitors’ Johnson & Johnson’s (JNJ) and Pfizer’s (PFE) earnings reports. Pfizer said it was writing down billions of dollars worth of Covid vaccine and antiviral inventory after watching demand for both plummet in the second quarter. While Johnson & Johnson’s Covid vaccine revenue fell more than 91% year-over-year in the third quarter.
Mattel and Hasbro Shares Tumble After Warning About Holiday Toy Sales
October 26, 2023 01:11 PM EDT
Shares of Mattel (MAT) and Hasbro (HAS) plummeted Thursday as the two toymakers warned of soft sales during the key holiday shopping season.
Mattel CEO Anthony DiSilvestro said the industry was dealing with “a challenging macroenvironment with higher volatility that may impact consumer demand.” The company indicated that it expects its full-year sales will be comparable to the $5.44 billion it made last year.
The news dampened some of the enthusiasm following a boom in demand for Mattel’s Barbie dolls, fueled by the hit “Barbie” movie. Third-quarter Barbie sales jumped 16% to $605 million and helped Mattel post $1.92 billion in revenue, a 9% year-over-year increase that exceeded forecasts.
Hasbro reduced its full-year guidance as slowing toy demand cut into its sales. Consumer Products sales fell 18% year-over-year to $957 million in the third quarter, in part because of “soft industry trends.”
Shares of Hasbro were down close to 10% Thursday afternoon, while shares of Mattel lost more than 7%.
-Bill McColl
Midday Market Movers
October 26, 2023 12:02 PM EDT
Align Technology Inc. (ALGN): Shares of the orthodontic product maker tumbled more than 23% after it cut its full-year sales outlook, citing “deteriorating trends, including decreased patient visits and increased patient appointment cancellations, along with fewer orthodontic case starts overall.”
Western Digital Corp. (WDC): Shares of the maker of data storage devices fell more than 12% after SK Hynix Inc. voiced opposition to Western Digital’s proposed acquisition of Japanese computer memory company Kioxia Holdings, of which SK Hynix is a major shareholder.
Whirlpool Corp. (WHR): The home appliance maker’s shares tumbled more than 12% after it lowered its full-year earnings guidance on narrower margins. The company now expects full-year earnings of about $16 per share, compared with prior estimates of between $16 and $18 a share.
Masco Corp. (MAS): Shares of the home improvement and building products maker gained 6% after it raised its full-year earnings outlook after reporting wider margins from cost controls and favorable sales mix helped offset declining sales last quarter.
International Business Machines (IBM): Shares of the tech company rose more than 5% after its third-quarter earnings beat analysts’ expectations on the top and bottom lines. The company swung to a profit, reporting net income of $1.7 billion after losing $3.2 billion in the year-ago quarter.
UPS Trims Its Outlook After Steep Decline in 3Q Profit as Labor and Fuel Costs Rise
October 26, 2023 11:00 AM EDT
United Parcel Service (UPS) on Thursday reported steep declines in revenue and profit for the third quarter, as demand for the company’s services declined amid economic and labor-related challenges. The company also trimmed its guidance for the full year, sending shares lower in early trading.
The package delivery company’s revenue fell 13% year-over-year to $21.1 billion, which fell short of analysts’ expectations. Adjusted earnings of $1.57 a share came in higher than the consensus view but represented a 48% decline from a year ago.
Chief Executive Officer Carol Tomé said that traffic UPS lost to other carriers while it negotiated a new labor contract with Teamsters-represented workers over the summer had started to return.
However, the company cut its full-year revenue target to between $91.3 billion and $92.3 billion, and sliced its adjusted operating margin projection to 10.8% to 11.3%, citing the global economic uncertainty.
UPS shares were down about 4% as of 11 a.m. ET Thursday, trading near their lowest level since July 2020. They have lost nearly 20% of their value year-to-date.
-Nathan Reiff
Mastercard Beats Earnings as Consumer Spending Drives Transaction Volume
October 26, 2023 10:10 AM EDT
Mastercard Inc.’s (MA) third-quarter fiscal results came in ahead of expectations, with the payments processor reporting a second consecutive quarter of profit growth on continued strong consumer spending trends.
Mastercard posted net income of $3.2 billion, or $3.39 per share, representing an increase of 28% on a year-over-year basis. The company’s revenue also climbed, growing 14% year-over-year to $6.5 billion for the quarter, as transaction volumes also grew.
Higher interest rates have also been a boon for payment processors like Mastercard, which is able to charge higher interest rates to its credit card customers in the process. However, the company forecast weaker revenue growth on uncertainty around interest rates and the economy.
Shares were down more than 4% Thursday morning, but are up more than 15% from this time last year.
-Nathan Reiff
Europe Holds Rates Steady After 10 Consecutive Rate Hikes
October 26, 2023 09:28 AM EDT
The European Central Bank (ECB) on Thursday held benchmark eurozone interest rates steady for the first time in over a year, ending a streak of 10 consecutive rate hikes that brought the bank’s deposit rate to a record 4%.
Eurozone inflation fell to 4.3% in September, a dramatic drop from August’s reading of 5.2%. The ECB is hoping that its past interest rate hikes will continue to work their way through the economy, tightening financial conditions and dampening demand.
The ECB, like the Fed, reiterated its “data-dependent” approach, keeping the door open for further rate hikes should inflation prove stickier than expected.
Consumer Spending Turbocharges U.S. GDP Growth
October 26, 2023 09:14 AM EDT
Consumer spending sent U.S. GDP surging, according to the Bureau of Economic Analysis’s first estimate of third-quarter GDP.
The U.S. economy grew at an annualized rate of 4.9% from July through September, more than the 4.5% that economists were expecting, and well above the 2.1% increase in the prior quarter. Accelerating GDP growth was attributed primarily to a broad increase in consumer spending on goods and services.
The personal consumption expenditures (PCE) price index—the Fed’s preferred inflation gauge—increased 2.9% after rising 2.5% in the second quarter. But core inflation, which strips out volatile food and energy prices, decelerated to an annual rate of 2.4% from the prior quarter’s rate of 3.7%.
Stock futures swung higher after the release, signaling the era of “bad news is good news”—in which strong economic growth and low unemployment were interpreted as more reason for the Federal Reserve to raise interest rates—may be coming to an end.
Stock Futures Fall Further as Tech Rout Continues
October 26, 2023 08:32 AM EDT
Futures contracts connected to the Dow Jones Industrial Average were 0.4% lower in premarket trading.
S&P 500 futures lost 0.6%.
And Nasdaq 100 futures dropped 0.9%, continuing yesterday’s tech sell-off.
