- Barry Adams
- 28 Jul, 2023
- New York City
Market averages traded higher after an alternative measure of inflation showed weakening inflation.
The S&P 500 index and the Nasdaq Composite index gained around 1% after the personal consumption price index rose at a slower pace of 3.0%.
Core PCE Index, which excludes food and energy, slowed to 4.1% in June, the U.S. Bureau of Economic Analysis reported Friday.
The alternative gauge of inflation measures inflation for longer trends but also understates inflation experienced by most households in urban areas.
On a monthly basis overall PCE Index and core PCE Index rose at a slower pace of 0.2%.
Core PCE Index rose at the slowest pace since September 2021 and PCE Index rose at the slowest pace since March 2021.
Leading energy companies, Exxon Mobil and Chevron reported large declines in sales and earnings reflecting lower energy prices compared to a year ago.
Intel soared more than 5% after the struggling chipmaker returned to profitability and Ford Motor Company declined after the company said electric vehicle sales are slower-than-expected because of high costs.
In overseas news, European markets traded sideways in cautious trading near record highs after second quarter economic growth stalled in Germany, expanded in France and slowed in Spain.
The Bank of Japan tweaked its yield curve control policy and let the yield on 10-year Japanese government bonds rise to a nine-year high of 0.55%.
The Central bank eased its ultra loose monetary policy after inflation picked up over the last six months and interest rate gap with the U.S. and Europe widened over the period, putting additional pressure on the Japanese yen.
U.S. Indexes & Yields
The S&P 500 index traded up 0.8% to 4,575.43 and the Nasdaq Composite rose 1.5% to 14,266.31.
The Dow Jones Industrial Average halted its 13-day winning streak, the longest rally since 1897 or 126 years ago.
The yield on 2-year Treasury notes increased to 4.90%, 10-year Treasury notes inched higher to 3.98% and 30-year Treasury bonds edged down to 4.04%.
Crude oil decreased $0.28 to $78.80 a barrel and natural gas prices increased 7 cents to $2.67 a thermal unit.
U.S. Stock Movers
Intel Corporation jumped 6.7% to $36.73 after the chipmaker returned to profitability in the second quarter after losses in previous two quarters in a row. The company's third quarter sales also suggested improving sales.
Procter & Gamble & Company added 1% to $153.60 after the household goods maker reported sales and earnings ahead of market expectations but issued a cautious fiscal 2024 sales.
Exxon Mobil Corp declined 1.8% to $103.54 after the largest oil company reported mixed quarterly results.
Revenue in the second quarter declined to $82.9 billion from $115.7 billion and net income attributable to shareholders fell to $7.9 billion from $17.9 billion and diluted earnings per share dropped to $1.94 from $4.21 a year ago.
Chevron Corp fell 0.8% to $158.50 after the oil company reported lower earnings from a year ago following a decline in energy prices.
Revenue in the second quarter fell to $48.9 billion from $68.7 billion and net income declined to $6.0 billion from $11.6 billion and diluted earnings per share dropped to $3.20 from $5.95 a year ago.
Sweetgreen Inc declined 11.5% to $13.60 after the salad chain reported weaker-than-sales and a net loss of $27.3 million or 24 cents a share in the second quarter.
Juniper Networks, Inc dropped 6.9% to $27.90 after the data networking products and systems maker reported second quarter earnings slightly ahead of market expectations but offered a lighter sales outlook in the third quarter.
- Inga Muller
- 28 Jul, 2023
- Frankfurt
Market averages in Europe traded lower and investors reacted to corporate earnings.
The DAX index decreased 0.07% to 16,396.17, the CAC-40 index fell 0.3% to 7,445.24 and the FTSE 100 index rose 0.1% to 7,701.35.
The yield on 10-year German bonds increased to 2.45%, French bonds traded higher to 3.01%, the UK gilts edged up to 4.34% and Italian bonds increased to 4.08%.
Natwest Group jumped 2.8% to 246.54 pence after the U.K.-based bank said first-half profit rose, benefiting from higher interest rates.
Standard Chartered Plc soared 4.8% 743.57 pence after the UK-based bank reported better-than-expected first-half earnings and announced a new $1 billion stock repurchase plan.
IAG Group SA increased 4.1% to 161.45 pence after the parent of British Air and Iberian Air reported better-than-expected quarterly earnings.
AstraZeneca plc jumped 3.8% to 11,110 pence after the UK-based drugmaker reported sales and earnings ahead of market expectations.
Euronext NV soared 6.6% to €68.85 after the stocks and derivatives exchange operator announced a €200 million stock repurchase program.
Hermes International SCA rose 3.6% to €2,004.50 after the maker of luxury fashion accessories reported higher-than-expected first-half earnings and second quarter sales.
Capgemini SE dropped 4.8% to €170.90 despite the IT services provider posting first-half sales increase of 7% and the company added it plans to invest $2 billion in Artificial Intelligence tools over the next three years.
- Bridgette Randall
- 28 Jul, 2023
- Frankfurt
European market indexes struggled to advance after a flood of economic data overshadowed corporate earnings.
Bond yields continued to advance and the euro, the pound and the Swiss franc edged lower after aggressive rate hike worries in the U.S. resurfaced.
The German economy stalled in the second quarter, the French economy rose more than expected and the Spanish economy slowed, the latest data from statistical agencies showed.
Germany's economy stalled in the second quarter after declining 0.1% in the first quarter and falling 0.4% in the final quarter of 2022, the Federal Statistics Office or DeStatis reported Friday.
The French economy expanded at a faster pace of 0.5% in the second quarter from the downwardly revised 0.1% increase in the first quarter, the statistical agency INSEE said in a report on Friday.
Improving international trade balance added 0.7 percentage point, weaker domestic consumption subtracted 0.4 percentage point and gross fixed capital formation rose 0.1% following a 0.4% decline.
France's consumer price inflation slowed to 4.3% in July from 4.5% in June and inflation was the weakest since February 2021 when prices rose at 3.6%.
Spain's GDP slowed in the second quarter to 0.4% from a year ago, the statistical agency INE noted in its economic update.
Swedish GDP contracted more-than-expected in the second quarter after rebounding in the previous quarter, Statistics Sweden noted in its report on Friday.
GDP contracted 1.5% on a sequential basis and dropped 2.4% from a year ago, and several factors negatively impacted economic growth including weakening exports in June and falling retail sales in the quarter.
Retail sales in June fell 0.3% from the previous month and declined 4.4% from a year ago and jobless rate rose to 9.2% in the month from 7.9% in the previous month, the statistical agency noted in separate reports released on Friday.
Europe Indexes & Yields
The DAX index decreased 0.07% to 16,396.17, the CAC-40 index fell 0.3% to 7,445.24 and the FTSE 100 index rose 0.1% to 7,701.35.
The yield on 10-year German bonds increased to 2.45%, French bonds traded higher to 3.01%, the UK gilts edged up to 4.34% and Italian bonds increased to 4.08%.
The euro edged lower to $1.09, the British pound to $1.283 and the U.S. dollar fetched 87.00 Swiss cents
Brent crude decreased $0.25 to $83.99 a barrel and the Dutch TTF natural gas increased €1.93 to €26.50 per MWh.
Europe Stock Movers
Natwest Group jumped 2.8% to 246.54 pence after the U.K.-based bank said first-half profit rose, benefiting from higher interest rates.
Standard Chartered Plc soared 4.8% 743.57 pence after the UK-based bank reported better-than-expected first-half earnings and announced a new $1 billion stock repurchase plan.
IAG Group SA increased 4.1% to 161.45 pence after the parent of British Air and Iberian Air reported better-than-expected quarterly earnings.
AstraZeneca plc jumped 3.8% to 11,110 pence after the UK-based drugmaker reported sales and earnings ahead of market expectations.
Euronext NV soared 6.6% to €68.85 after the stocks and derivatives exchange operator announced a €200 million stock repurchase program.
Hermes International SCA rose 3.6% to €2,004.50 after the maker of luxury fashion accessories reported higher-than-expected first-half earnings and second quarter sales.
Capgemini SE dropped 4.8% to €170.90 despite the IT services provider posting first-half sales increase of 7% and the company added it plans to invest $2 billion in Artificial Intelligence tools over the next three years.
- Barry Adams
- 27 Jul, 2023
- New York City
Market averages turned lower after two strong economic reports raised worries that the central bank may continue its rate tightening at the next meeting in September.
The yield on 10-year Treasuries traded above 4% and investors debated rate path after second quarter GDP accelerated at a faster annual pace.
Strong business investments bolstered the economic growth and consumer spending slowed but still expanded, resulting in acceleration of economic growth in the second quarter.
In addition, durable goods rose at the fastest pace in June in nearly three years after transportation orders surged.
International trade deficit in goods and services was $69 billion in May, a decline of $5.5 billion from the revised $74.4 billion in April, the Bureau of Economic Analysis reported Thursday.
Exports in May declined 0.8% to$247.1 billion and imports fell 2.3% to $316.1 billion.
Stocks traded volatile after the latest batch of earnings from more than 300 companies showed mixed picture.
L3Harris Technologies, Northrop Grumman, Honeywell and Chipotle Mexican Grill declined after weaker-than-expected quarterly results and Meta Platforms, Royal Caribbean, Southwest Airlines, Morningstar, KLA Corp, Lam Research and McDonald's rose after earnings exceeded market expectations.
Second Quarter GDP Advanced at 2.4% Annual Rate
The U.S. economy expanded at 2.4% annual pace in the second quarter, faster than 2.0% in the first quarter, the Bureau of Economic Analysis reported Thursday.
The worries of economic recession were set aside after GDP expanded for the third quarter in a row after shrinking for two quarters in a row in 2022.
The growth accelerated after nonresidential fixed investment accelerated to 7.7% from 0.6% but consumer spending slowed sharply to 1.6% from 4.2%
Goods consumption growth slowed sharply to 0.7% from 6.0% but spending on services, remained healthy, slowed to 2.1% from 3.2% in the previous quarter,
Public spending, which includes spending by government at all levels, rose at a slower pace of 2.6% from 5.0% in the previous quarter.
International trade deficit weighed on the GDP data and subtracted 0.12 percentage points after exports fell 10.8% but imports declined by a lesser 7.8%.
GDP report also showed price pressures are easing and the personal consumption expenditures price index slowed to annual rate of 2.6% from 4.2% in the previous quarter.
Transportation Orders Drive Durable Goods Orders Higher In June
Durable goods orders rose 4.7% in June from the previous month, the fastest pace of increase since July 2020, the U.S. Census Bureau reported Thursday.
New orders for durable goods for May were revised higher to an increase of 2.0%.
Orders rose for the fourth month in a row and transportation orders soared 12.1% after non-defense aircraft and parts orders jumped 69.4%.
Orders excluding transportation rose 0.6%, excluding defense jumped 6.2%.
Orders for non-defense capital goods excluding aircraft, a closely watched barometer for business spending plans, increased 0.2% after a downwardly revised 0.5% in May.
Two economic reports provided yet another signal that the U.S economy is resilient, despite multiple rate hikes.
Rates have risen by 500 basis points and the U.S. economy is still growing at above 2% annual rate, supporting the case that the Fed has more flexibility in pausing rates and may be able to cool inflation further without dipping the economy into a recession.
U.S. Indexes & Yields
The S&P 500 index traded down 0.7% to 4,547.59 and the Nasdaq Composite fell 0.6% to 14,049.18.
The Dow Jones Industrial Average halted its 13-day winning streak, the longest rally since 1897, 126 years ago.
The yield on 2-year Treasury notes increased to 4.93%, 10-year Treasury notes inched higher to 4.00% and 30-year Treasury bonds edged down to 4.04%.
Crude oil decreased $0.79 to $78.80 a barrel and natural gas prices decreased 8 cents to $2.64 a thermal unit.
U.S. Stock Movers
Meta Platforms Inc jumped 6.8% to $319.08 after the company reported better-than-expected earnings on the back of strong advertising revenue.
Chipotle Mexican Grill, Inc plunged 9.0% to $1,900 after the fast-casual food chain operator reported mixed quarterly results.
total revenue increased 13.6% to $2.5 billion and comparable store sales rose 7.4%.
Net income in the quarter jumped to $341.8 million from $259.9 million and diluted earnings per share jumped to $12.32 from $9.25 a year ago.
Chipotle guided third quarter comparable restaurant sales to increase in the low to mid-single digit and full-year sales are expected to increase in mid to high-single digit.
The company plans to open between 255 and 285 stores, including between 10 to 15 relocations to add drive throughs, depending on construction, utility and permit delays.
McDonald's Corp increased 1.8% to $296.94 after the burger chain reported better-than-expected revenue and adjusted earnings.
Global same store sales increased 11.7% and the U.S. comparable store sales rose 10.3% compared to 3.7% a year ago because of promotional meals celebrating the 52nd birthday of McDonald's character Grimace.
European Stocks and Bond yields Turn Higher After Rate Hike
European markets traded higher and the European Central Bank hiked rates for the ninth time in a row.
The ECB raised main rates by 25 basis points to 4.25%, the highest rate since October 2008 and deposit facility rate by 25 basis points to 3.75%, a 22-year high.
The rates will be effective from August 2.
The European Central Bank is also widely anticipated to lift its key lending rate by 25 basis points as inflation still hovers above 5% in the Euro Area.
The central bank acknowledged in the statement that increases in rates are increasingly "dampening demand" but inflation is still too high and will come down gradually over the remainder of the year.
"While some measures show signs of easing, underlying inflation remains high overall.
The past rate increases continue to be transmitted forcefully: financing conditions have tightened again and are increasingly dampening demand, which is an important factor in bringing inflation back to target," the ECB noted in the statement.
The central bank has tightened rates by 425 basis points since July 2022, the fastest pace of rate increase in its history.
The central bank cautioned in the statement and said inflation is expected to "remain too high for too long" without further elaborating
Market participants reacted to the latest batch of earnings after automakers, aviation and financial sector companies released earnings.
The Federal Reserve hiked its key lending rate range by 25 basis point to between 5.25% and 5.5% and held out for more hikes in the future if the economy demanded.
Despite the eleven rate hikes over the last sixteen months, inflation is still hovering near 5%, significantly above the Fed's target rate of 2%.
Spain's Jobless Rate at 15-year Low, Retail Sales Edged Higher
Spain's jobless rate fell to 11.6% in the second quarter of 2023 from 13.3% in the previous three-month period, the lowest since 2008, the National Statistics Institute INE reported Thursday.
The jobless rate in the second quarter was 12.5%.
The number of unemployed people decreased by 365,000 to 2.76 million, while the number of employed rose by 604,000 to 21.1 million.
The labor force participation rate edged up to 59% in the second quarter from 58.6% in the previous quarter.
Spain's retail sales edged up slightly in June amid rising demand for non-food products, the INE reported in a separate report Thursday.
Seasonally adjusted retail sales increased 6.4% in June, after rising 6.1% in May.
Sales of non-food products soared 14.8% but food items sales rose at a slower pace of 1.5%.
Europe Indexes & Yields
The DAX index increased 1.7% to 16,406.03, the CAC-40 index advanced 2.1% to 7,465.24 and the FTSE 100 index rose 0.2% to 7,692.76.
The yield on 10-year German bonds decreased to 2.49%, French bonds traded lower to 2.99%, the UK gilts edged down to 4.31% and Italian bonds increased to 4.07%.
The euro edged higher to $1.11, the British pound to $1.29 and the U.S. dollar fetched 85.69 Swiss cents
Brent crude increased $1.15 to $84.06 a barrel and the Dutch TTF natural gas increased €0.84 to €28.43 per MWh.
Europe Stock Movers
Barclays Plc declined 3.9% to 157.64 pence and the bank said it expects to earn less interest income in the UK on the higher interest rates and stubborn inflation.
BNP Paribas SA jumped 3.5% to €60.16 after the company announced its plan to start stock repurchase starting next month.
Airbus SE declined 2.3% to €130.0 after the aircraft maker reported a fall in net income for the fist-half.
Ipsen SA increased 1.5% to €112.10 after the pharmaceutical company lifted its annual outlook.
Safran SA jumped 1.8% to €147.80 after the jet engine maker revised higher its full-year outlook for the current fiscal year.
Volkswagen AG declined 2.6% to €145.40 after the automaker lowered its annual estimate and Mercedes Benz Group AG jumped 2.5% to €71.64 after the luxury automaker revised higher its full-year estimate.
Nestle SA jumped 1.9% to CHF 107.28 after the Swiss food and beverage company increased its organic sales growth estimate.
- Scott Peters
- 27 Jul, 2023
- New York City
Meta Platforms Inc jumped 6.8% to $319.08 after the company reported better-than-expected earnings on the back of strong advertising revenue.
Total revenue increased 11% to $31.9 billion from $28.8 billion and net income declined 16.8% to $7.8 billion from $6.7 billion and diluted earnings per share dropped to $2.98 from $2.46 a year ago.
The company repurchased $793 million of Class A common stock in the first quarter and as of June 30, 2023, the company had $40.91 billion available and authorized for repurchases.
Chipotle Mexican Grill, Inc plunged 9.0% to $1,900 after the fast-casual food chain operator reported mixed quarterly results.
total revenue increased 13.6% to $2.5 billion and comparable store sales rose 7.4%.
Net income in the quarter jumped to $341.8 million from $259.9 million and diluted earnings per share jumped to $12.32 from $9.25 a year ago.
Chipotle guided third quarter comparable restaurant sales to increase in the low to mid-single digit and full-year sales are expected to increase in mid to high-single digit.
The company plans to open between 255 and 285 stores, including between 10 to 15 relocations to add drive throughs, depending on construction, utility and permit delays.
McDonald's Corp increased 1.8% to $296.94 after the burger chain reported better-than-expected revenue and adjusted earnings.
Global same store sales increased 11.7% and the U.S. comparable store sales rose 10.3% compared to 3.7% a year ago because of promotional meals celebrating the 52nd birthday of McDonald's character Grimace.
Royal Caribbean Cruises Ltd surged 8.7% to $109.70 after the cruise company reported better-than-expected quarterly results and lifted its annual estimate on the back of revenue acceleration.
Revenue in the second quarter soared to $3.5 billion from $2.2 billion and the company swung to a net income of $462.2 million from a loss of $520 million and diluted earnings per share was $1.70 from a loss of $2.05 a year ago.
Cruise company said bookings in the quarter were significantly ahead of pre-Covid 2019 levels and customer deposits were at a record high $5.7 billion.
"Demand for 2023 sailings has significantly exceeded expectations and bookings for 2024 sailings are up significantly versus all prior years at record prices.
Demand from the North American consumer has remained incredibly strong throughout the year, and booking volumes from European consumers who are booking European cruises this summer have accelerated," the company noted in the earning release.
Morningstar Inc soared 7.2% to $230.80 after the company reported quarterly results ahead of market expectations.
Revenue in the second quarter increased 7.3% to $504.7 million and consolidated net income increased 19.9% to $36.1 million from $30.1 million and diluted earnings per share increased to 84 cents from 70 cents a year ago.
Revenue for Pitchbook, M&A database, subscription increased 21% to $121 million, Morningstar Data gained 79% to $69.4 million and Morningstar Direct rose 9% to $49.9 million.
eBay Inc declined 9.3% to $44.25 after gross merchandise volume declined 2% to $18.2 billion in the second quarter.
Revenue in the second quarter increased 5% to $2.5 billion from $2.4 billion and the online commerce platform swung to a profit of $172 million from a loss of $536 million and diluted earnings per share from continuing operations was 32 cents from a loss of 96 cents a year ago.
The company returned $383 million to shareholders, including $250 million of share repurchases and $133 million paid in cash dividends.
The company forecasted third quarter organic revenue on a currency neutral basis between $2.46 billion and $2.52 billion, an increase between 2% and 4% from a year ago and diluted earnings per share between 67 cents and 72 cents.
- Brian Turner
- 27 Jul, 2023
- New York City
The U.S. economy expanded at 2.4% in the second quarter, faster than 2.0% in the first quarter, the Bureau of Economic Analysis reported Thursday.
The worries of economic recession were set aside after GDP expanded for the third quarter in a row after shrinking for two quarters in a row in 2022.
The growth accelerated after nonresidential fixed investment accelerated to 7.7% from 0.6% but consumer spending slowed sharply to 1.6% from 4.2%
Goods consumption growth slowed sharply to 0.7% from 6.0% but spending on services, remained healthy, slowed to 2.1% from 3.2% in the previous quarter,
GDP report also showed price pressures are easing and the personal consumption expenditures price index slowed to annual rate of 2.6% from 4.2% in the previous quarter.
- Brian Turner
- 27 Jul, 2023
- New York City
Durable goods orders rose 4.7% in June from the previous month, the fastest pace of increase since July 2020, the U.S. Census Bureau reported Thursday.
New Orders
New orders for durable goods for May were revised higher to an increase of 2.0%.
Orders rose for the fourth month in a row and transportation orders soared 12.1% after non-defense aircraft and parts orders jumped 69.4%.
Orders excluding transportation rose 0.6%, excluding defense jumped 6..2%.
Shipments
Shipments of durable goods rose 0.3% to $284.2 billion, increased three of the last four months, following a 2% increase in May.
Capital Goods
Non-defense new orders for capital goods increased 16.9% to $106.6 billion and shipments rose 0.1% to $83.4 billion.
Orders for non-defense capital goods excluding aircraft, a closely watched barometer for business spending plans, increased 0.2% after a downwardly revised 0.5% in May.
Defense new orders for capital goods fell 22% to $12.2 billion in June but shipments increased 2.9% to $13.6 billion.
The reports on durable goods orders and GDP provided yet another signal that the U.S economy is resilient despite multiple rate hikes.
Rates have risen by 500 basis points and the U.S. economy is still growing at above 2% annual rate, supporting the case that the Fed has more flexibility in pausing rates and may be able to cool inflation further without dipping the economy into a recession.
- Barry Adams
- 27 Jul, 2023
- New York City
Market averages traded higher after the latest GDP and durable goods data showed resilient economy and weakening inflation forces.
The U.S. economy expanded at 2.4% in the second quarter, faster than 2.0% in the first quarter, the Bureau of Economic Analysis reported Thursday.
The worries of economic recession were set aside after GDP expanded for the third quarter in a row after shrinking for two quarters in a row in 2022.
The growth accelerated after nonresidential fixed investment accelerated to 7.7% from 0.6% but consumer spending slowed sharply to 1.6% from 4.2%
Goods consumption growth slowed sharply to 0.7% from 6.0% but spending on services, remained healthy, slowed to 2.1% from 3.2% in the previous quarter,
GDP report also showed price pressures are easing and the personal consumption expenditures price index slowed to annual rate of 2.6% from 4.2% in the previous quarter.
Durable goods orders rose 4.7% in June from the previous month, the fastest pace of increase since July 2020, the U.S. Census Bureau reported Thursday.
New orders for durable goods for May were revised higher to an increase of 2.0%.
Orders rose for the fourth month in a row and transportation orders soared 12.1% after non-defense aircraft and parts orders jumped 69.4%.
Orders excluding transportation rose 0.6%, excluding defense jumped 6..2%.
Orders for non-defense capital goods excluding aircraft, a closely watched barometer for business spending plans, increased 0.2% after a downwardly revised 0.5% in May.
Two economic reports provided yet another signal that the U.S economy is resilient, despite multiple rate hikes.
Rates have risen by 500 basis points and the U.S. economy is still growing at above 2% annual rate, supporting the case that the Fed has more flexibility in pausing rates and may be able to cool inflation further without dipping the economy into a recession.
U.S. Indexes & Yields
The S&P 500 index traded down 0.2% to 4,568.26 and the Nasdaq Composite fell 0.1% to 14,101.27.
The Dow Jones Industrial Average extended its winning streak to 14th day, the longest rally since 1897, 126 years ago.
The yield on 2-year Treasury notes decreased to 4.86%, 10-year Treasury notes inched lower to 3.86% and 30-year Treasury bonds edged down to 3.91%.
Crude oil decreased $0.79 to $78.80 a barrel and natural gas prices decreased 8 cents to $2.64 a thermal unit.
U.S. Stock Movers
Meta Platforms Inc jumped 6.8% to $319.08 after the company reported better-than-expected earnings on the back of strong advertising revenue.
Chipotle Mexican Grill, Inc plunged 9.0% to $1,900 after the fast-casual food chain operator reported mixed quarterly results.
total revenue increased 13.6% to $2.5 billion and comparable store sales rose 7.4%.
Net income in the quarter jumped to $341.8 million from $259.9 million and diluted earnings per share jumped to $12.32 from $9.25 a year ago.
Chipotle guided third quarter comparable restaurant sales to increase in the low to mid-single digit and full-year sales are expected to increase in mid to high-single digit.
The company plans to open between 255 and 285 stores, including between 10 to 15 relocations to add drive throughs, depending on construction, utility and permit delays.
McDonald's Corp increased 1.8% to $296.94 after the burger chain reported better-than-expected revenue and adjusted earnings.
Global same store sales increased 11.7% and the U.S. comparable store sales rose 10.3% compared to 3.7% a year ago because of promotional meals celebrating the 52nd birthday of McDonald's character Grimace.
- Inga Muller
- 27 Jul, 2023
- Frankfurt
European markets traded higher and the European Central Bank lifted rates by 25 basis points to a 22-year high as expected.
The DAX index increased 0.9% to 16,282.34, the CAC-40 index advanced 1.3% to 7,412.32 and the FTSE 100 index rose 0.3% to 7,699.89.
The yield on 10-year German bonds decreased to 2.44%, French bonds traded lower to 2.99%, the UK gilts edged down to 4.28% and Italian bonds increased to 4.10%.
Barclays Plc declined 3.9% to 157.64 pence and the bank said it expects to earn less interest income in the UK on the higher interest rates and stubborn inflation.
BNP Paribas SA jumped 3.5% to €60.16 after the company announced its plan to start stock repurchase starting next month.
Airbus SE declined 2.3% to €130.0 after the aircraft maker reported a fall in net income for the fist-half.
Ipsen SA increased 1.5% to €112.10 after the pharmaceutical company lifted its annual outlook.
Safran SA jumped 1.8% to €147.80 after the jet engine maker revised higher its full-year outlook for the current fiscal year.
Volkswagen AG declined 2.6% to €145.40 after the automaker lowered its annual estimate and Mercedes Benz Group AG jumped 2.5% to €71.64 after the luxury automaker revised higher its full-year estimate.
Nestle SA jumped 1.9% to CHF 107.28 after the Swiss food and beverage company increased its organic sales growth estimate.
- Bridgette Randall
- 27 Jul, 2023
- Frankfurt
European markets traded higher and the European Central Bank hiked rates for the ninth time in a row.
The ECB raised main rates by 25 basis points to 4.25%, the highest rate since October 2008 and deposit facility rate by 25 basis points to 3.75%, a 22-year high.
The rates will be effective from August 2.
The central bank acknowledged in the statement that increases in rates are increasingly "dampening demand" but inflation is still too high and will come down gradually over the remainder of the year.
"While some measures show signs of easing, underlying inflation remains high overall.
The past rate increases continue to be transmitted forcefully: financing conditions have tightened again and are increasingly dampening demand, which is an important factor in bringing inflation back to target," the ECB noted in the statement.
The central bank has tightened rates by 425 basis points since July 2022, the fastest pace of rate increase in its history.
But, the central bank cautioned in the statement and said inflation is expected to "remain too high for too long" without further elaborating
Market participants reacted to the latest batch of earnings after automakers, aviation and financial sector companies released earnings.
The Federal Reserve hiked its key lending rate range by 25 basis point to between 5.25% and 5.5% and held out for more hikes in the future if the economy demanded.
Despite the eleven rate hikes over the last sixteen months, inflation is still hovering near 5%, significantly above the Fed's target rate of 2%.
Spain's Jobless Rate at 15-year Low, Retail Sales Edged Higher
Spain's jobless rate fell to 11.6% in the second quarter of 2023 from 13.3% in the previous three-month period, the lowest since 2008, the National Statistics Institute INE reported Thursday.
The jobless rate in the second quarter was 12.5%.
The number of unemployed people decreased by 365,000 to 2.76 million, while the number of employed rose by 604,000 to 21.1 million.
The labor force participation rate edged up to 59% in the second quarter from 58.6% in the previous quarter.
Spain's retail sales edged up slightly in June amid rising demand for non-food products, the INE reported in a separate report Thursday.
Seasonally adjusted retail sales increased 6.4% in June, after rising 6.1% in May.
Sales of non-food products soared 14.8% but food items sales rose at a slower pace of 1.5%.
Europe Indexes & Yields
The DAX index increased 0.9% to 16,282.34, the CAC-40 index advanced 1.3% to 7,412.32 and the FTSE 100 index rose 0.3% to 7,699.89.
The yield on 10-year German bonds decreased to 2.44%, French bonds traded lower to 2.99%, the UK gilts edged down to 4.28% and Italian bonds increased to 4.10%.
The euro edged higher to $1.11, the British pound to $1.29 and the U.S. dollar fetched 85.69 Swiss cents
Brent crude increased $0.85 to $83.76 a barrel and the Dutch TTF natural gas increased €0.87 to €28.41 per MWh.
Europe Stock Movers
Barclays Plc declined 3.9% to 157.64 pence and the bank said it expects to earn less interest income in the UK on the higher interest rates and stubborn inflation.
BNP Paribas SA jumped 3.5% to €60.16 after the company announced its plan to start stock repurchase starting next month.
Airbus SE declined 2.3% to €130.0 after the aircraft maker reported a fall in net income for the fist-half.
Ipsen SA increased 1.5% to €112.10 after the pharmaceutical company lifted its annual outlook.
Safran SA jumped 1.8% to €147.80 after the jet engine maker revised higher its full-year outlook for the current fiscal year.
Volkswagen AG declined 2.6% to €145.40 after the automaker lowered its annual estimate and Mercedes Benz Group AG jumped 2.5% to €71.64 after the luxury automaker revised higher its full-year estimate.
Nestle SA jumped 1.9% to CHF 107.28 after the Swiss food and beverage company increased its organic sales growth estimate.
- Barry Adams
- 26 Jul, 2023
- New York City
Market averages traded slightly lower after the Fed raised rates to the highest level in 22 years.
The Federal Reserve lifted its fed funds rate range by 25 basis points to between 5.25% and 5.50%, taking the rates to the highest level since January 2001.
The Fed's move was widely anticipated and rates rose for the eleventh time since March 2022.
Fed funds rates are interest rates for transactions between banks but higher rates filter down to other rates charged by banks to consumers and businesses.
Often higher rates are immediately increased for borrowers but banks are slow in paying higher deposit rates.
Fed's credibility is on line because despite the sharp decline in overall inflation to near 5% from as high as 9%, core inflation has stayed near 5% rate after ten rate hikes over the last sixteen months.
The Fed has repeatedly reiterated that the central bank is committed to lowering inflation to 2% but has failed to specify by when.
Moreover, how will households and businesses cope with housing prices that are at least 100% higher and most services costs at least 50% more over the last three years.
Goods inflation has spread deeper into the economy and service inflation stayed stubbornly high and the Fed is not likely to erase price gains of the last three years by increasing rates in increments of 25 basis points.
Stocks were under pressure as investors digested a fresh batch of earnings and all eyes were on the Fed.
Investors reacted to Big Tech earnings and Microsoft and Google parent Alphabet reported rising revenues and earnings in its cloud segments.
U.S. Indexes & Yields
The S&P 500 index traded down 0.2% to 4,568.26 and the Nasdaq Composite fell 0.1% to 14,101.27.
The yield on 2-year Treasury notes decreased to 4.86%, 10-year Treasury notes inched lower to 3.86% and 30-year Treasury bonds edged down to 3.91%.
Crude oil decreased $0.79 to $78.80 a barrel and natural gas prices decreased 8 cents to $2.64 a thermal unit.
U.S. Stock Movers
Microsoft Corp declined 3.3% to $339.58 after the company said revenue in the fiscal fourth quarter ending in June increased 8% to $56 b.2illion and net income soared to $20.08 billion from $16.74 billion a year ago.
Microsoft stock declined after Azure revenue growth slowed to 26% from 27% in the previous quarter and 40% from a year ago.
Cloud segment revenue increased 15% to $23.99 billion.
Alphabet Inc soared 6.2% to $130.73 after the company reported better-than-expected earnings and revenue.
Second quarter revenue increased 7% to $74.6 billion and ad revenue rose 3.3% to $58.1 billion and net income rose to $18.37 billion from $16 billion and diluted earnings per share increased to $1.44 from $1.21 a year ago.
Revenue from the cloud segment which includes its Workspace segment jumped 26%.
Euro Area Lending Growth Slowed to 7-year Low, European Markets Down
European market indexes traded down in cautious trading as investors digested a mixed batch of earnings and awaited rate decisions.
The Federal Reserve is set to lift its interest rates by 25 basis points later today and the European Central Bank is expected to follow a similar rate hike on Thursday.
Investors welcomed China's decision to provide more support to moribund property sector, but measures are likely to fall short in reviving demand and ease financial pressure on home developers.
Closer to home, bank lending to households in the Euro Area continued to decline to the slowest pace in seven years after demand for credit fell on rising interest rates.
Bank lending to households in the Euro Area rose 1.7% from a year ago to €6.87 trillion in June 2023, the lowest growth rate since May 2016.
On the other hand, lending to companies increased 3%, the slowest rate of growth since November 2021.
The overall private sector credit growth, including households and non-financial corporations, decelerated to 2% in June, the slowest pace since August 2016.
Europe Indexes & Yields
The DAX index decreased 0.5% to 16,131.46, the CAC-40 index fell 1.4% to 7,315.07 and the FTSE 100 index fell 0.2% to 7,676.89.
The yield on 10-year German bonds decreased higher to 2.43%, French bonds traded lower to 2.99%, the UK gilts edged down to 4.28% and Italian bonds increased to 4.08%.
The euro edged higher to $1.10, the British pound to $1.28 and the U.S. dollar fetched 86.99 Swiss cents
Brent crude increased $0.70 to $82.94 a barrel and the Dutch TTF natural gas increased €3.34 to €29.28 per MWh.
Europe Stock Movers
Deutsche Bank AG increased 1.3% to €10.54 after the largest German bank reported a fall in second quarter earnings.
RWE AG rallied 1.8% to €40.67 after the German utility company raised its full-year earnings outlook.
MTU Aero Engines AG dropped 2.8% to €207.0 after the company warned that the Geared Turbofan inspection program will negatively impact its free cash flow.
Puma SE advanced 3.6% to €57.90 after the German footwear company reported a 11% jump in sales in the second quarter.
LVMH declined 4.5% to €815.20 after the luxury goods maker reported a surprise fall in sales in the U.S. amid economic uncertainties.
Danone SA declined 2.7% to €55.21 after the French dairy products maker said it will separate its Russia operation in July and take a one-time charge of €700 million.
Renault SA declined 1.5% to €38.94 and the French automaker finalized its restructured alliance with Nissan.
Orange SA dropped 2.6% to €10.45 after the French telecom network operator said consolidated net income in the first-half declined by €378 million to €1.09 billion.
Rolls-Royce Holdings Plc soared 20.3% to 183.56 pence after the aircraft engine maker raised its full-year operating profit estimate by about 45%.
Natwest Group Plc declined 3.5% to 242.50 pence and chief executive officer Alison Rose resigned and said he made "a serious error of judgement" in talking to a reporter about finances of UK politician Nigel Farage.
Llyods Banking Group Plc fell 3.2% to 44.64 pence after the UK-banking group reported first-half earnings below market expectations.
- Scott Peters
- 26 Jul, 2023
- New York City
Microsoft Corp declined 3.3% to $339.58 after the company said revenue in the fiscal fourth quarter ending in June increased 8% to $56 b.2illion and net income soared to $20.08 billion from $16.74 billion a year ago.
Microsoft stock declined after Azure revenue growth slowed to 26% from 27% in the previous quarter and 40% from a year ago.
Cloud segment revenue increased 15% to $23.99 billion.
Alphabet Inc soared 6.2% to $130.73 after the company reported better-than-expected earnings and revenue.
Second quarter revenue increased 7% to $74.6 billion and ad revenue rose 3.3% to $58.1 billion and net income rose to $18.37 billion from $16 billion and diluted earnings per share increased to $1.44 from $1.21 a year ago.
Revenue from the cloud segment which includes its Workspace segment jumped 26%.
Boeing Company increased 4.9% to $224.75 after the aircraft maker reported better-than-expected second quarter earnings and aircraft deliveries rose
Revenue increased 18% to $19.7 billion and the company swung to a let loss of $149 million from $193 million and diluted earnings per share was ($0.25) from 32 cents a year ago.
Aircraft deliveries increased to 136 from 121 in the quarter a year ago and aircraft backlog at the end of the quarter was 4,800 worth $440 billion.
The company reaffirmed operating cash flow guidance between $4.5 and $6.5 billion and free cash flow estimate between $3.0 and $5.0 billion.
Coca-Cola Company increased 0.6% to $62.62 after the company reported quarterly results.
Net revenue in the second quarter ending in June increased 11% to $11.9 billion and consolidated net income soared 33% to $2.5 billion from $1.9 billion and diluted earnings per share 59 cents from 44 cents a year ago.
Cash flow from operations increased by $83 million to $4.6 billion for the six months ending in June but free cash flow declined $45 million to $4.0 billion in the respective period.
Unit case volumes declined 1% in North America and fell 5% in Europe, Middle East and Africa but rose 4% in Latin America.
The company revised its full-year organic revenue growth outlook to a new range between 8% and 9% and the company estimated commodity inflation in mid single-digit on a comparable basis including hedged position.
Union Pacific Corp soared 10.3% to $237.23 despite the company reporting a decline in revenue in its latest quarter.
Revenue in the second quarter declined 5% to $6 billion from $6.3 billion and net income fell 14% to $1.6 billion from $1.8 billion and diluted earnings per share dropped to $2.57 from $2.93 a year ago.
The company proposed a dividend payment of $1.30 a share, same as previous quarter and no share repurchases are planned for the remainder of the year.
The company appointed Jim Vena as chief executive as of August 14 and also appointed Doyle Simons and Doyle Wiehoff to its Board of Directors, effective immediately.
Teladoc Health Inc soared 25.5% to $28.60 after the online healthcare provider reported better-than-expected quarterly results.
Revenue in the second quarter increased 10% to $652.4 million and net loss shrank to $65 million from $3.1 billion and diluted loss per share fell to 40 cents from $19.22 a year ago.
The prior year's quarter included a non-cash goodwill charge of $3.03 billion or $18.78 a share.
The company guided revenue in the third quarter between $650 million and $675 million and net loss per share between 50 cents and 40 cents and membership level at about 86 million.
The online healthcare provider estimated revenue for the full-year 2023 between $2.6 billion and $2.675 billion and diluted loss per share between $1.25 and $1.60.
- Barry Adams
- 26 Jul, 2023
- New York City
Stocks were under pressure as investors digested a fresh batch of earnings and all eyes were on the Fed.
Investors reacted to Big Tech earnings and Microsoft and Google parent Alphabet reported rising revenues and earnings in its cloud segments.
The Federal Reserve is set to announce its rate decision and its view on the economy later this afternoon and investors are factoring in a rate hike of 25 basis points.
Investors will also be looking for clues how high rates are likely to go by the end of the year and Fed's views on inflation and inner-working of the economy.
Fed's credibility is on line because despite the sharp decline in overall inflation to near 5% from as high as 8%, core inflation has stayed near 5% rate after ten rate hikes over the last fifteen months.
The Fed has repeatedly reiterated that the central bank is committing to lowering inflation to 2% but has failed to specify by when.
Moreover, how will households and businesses cope with housing prices that are now at least 100% and most services costs at least 50% higher over the last three years.
Goods inflation has spread to service inflation and the Fed is not likely to erase price gains over the last three years by increasing rates by 25 basis points increments.
U.S. Indexes & Yields
The S&P 500 index traded down 0.2% to 4,560.46 and the Nasdaq Composite fell 0.1% to 14,127.97.
The yield on 2-year Treasury notes decreased to 4.86%, 10-year Treasury notes inched lower to 3.86% and 30-year Treasury bonds edged down to 3.91%.
Crude oil decreased $0.79 to $78.83 a barrel and natural gas prices decreased 5 cents to $2.67 a thermal unit.
Stock Movers
Microsoft Corp declined 3.3% to $339.58 after the company said revenue in the fiscal fourth quarter ending in June increased 8% to $56 b.2illion and net income soared to $20.08 billion from $16.74 billion a year ago.
Microsoft stock declined after Azure revenue growth slowed to 26% from 27% in the previous quarter and 40% from a year ago.
Cloud segment revenue increased 15% to $23.99 billion.
Alphabet Inc soared 6.2% to $130.73 after the company reported better-than-expected earnings and revenue.
Second quarter revenue increased 7% to $74.6 billion and ad revenue rose 3.3% to $58.1 billion and net income rose to $18.37 billion from $16 billion and diluted earnings per share increased to $1.44 from $1.21 a year ago.
Revenue from the cloud segment which includes its Workspace segment jumped 26%.
- Inga Muller
- 26 Jul, 2023
- Frankfurt
Deutsche Bank AG increased 1.3% to €10.54 after the largest German bank reported a fall in second quarter earnings.
RWE AG rallied 1.8% to €40.67 after the German utility company raised its full-year earnings outlook.
MTU Aero Engines AG dropped 2.8% to €207.0 after the company warned that the Geared Turbofan inspection program will negatively impact its free cash flow.
Puma SE advanced 3.6% to €57.90 after the German footwear company reported a 11% jump in sales in the second quarter.
LVMH declined 4.5% to €815.20 after the luxury goods maker reported a surprise fall in sales in the U.S. amid economic uncertainties.
Danone SA declined 2.7% to €55.21 after the French dairy products maker said it will separate its Russia operation in July and take a one-time charge of €700 million.
Renault SA declined 1.5% to €38.94 and the French automaker finalized its restructured alliance with Nissan.
Orange SA dropped 2.6% to €10.45 after the French telecom network operator said consolidated net income in the first-half declined by €378 million to €1.09 billion.
Rolls-Royce Holdings Plc soared 20.3% to 183.56 pence after the aircraft engine maker raised its full-year operating profit estimate by about 45%.
Natwest Group Plc declined 3.5% to 242.50 pence and chief executive officer Alison Rose resigned and said he made "a serious error of judgement" in talking to a reporter about finances of UK politician Nigel Farage.
Llyods Banking Group Plc fell 3.2% to 44.64 pence after the UK-banking group reported first-half earnings below market expectations.
- Bridgette Randall
- 26 Jul, 2023
- Frankfurt
European market indexes traded down in cautious trading as investors digested a mixed batch of earnings and awaited rate decisions.
The Federal Reserve is set to lift its interest rates by 25 basis points later today and the European Central Bank is expected to follow a similar rate hike on Thursday.
Investors welcomed China's decision to provide more support to moribund property sector, but measures are likely to fall short in reviving demand and ease financial pressure on home developers.
Closer to home, bank lending to households in the Euro Area continued to decline to the slowest pace in seven years after demand for credit fell on rising interest rates.
Bank lending to households in the Euro Area rose 1.7% from a year ago to €6.87 trillion in June 2023, the lowest growth rate since May 2016.
On the other hand, lending to companies increased 3%, the slowest rate of growth since November 2021.
The overall private sector credit growth, including households and non-financial corporations, decelerated to 2% in June, the slowest pace since August 2016.
Europe Indexes & Yields
The DAX index decreased 0.8% to 16,086.84, the CAC-40 index advanced 1.8% to 7,280.52 and the FTSE 100 index fell 0.5% to 7,647.59.
The yield on 10-year German bonds decreased higher to 2.43%, French bonds traded lower to 2.99%, the UK gilts edged down to 4.28% and Italian bonds increased to 4.08%.
The euro edged higher to $1.10, the British pound to $1.28 and the U.S. dollar fetched 86.99 Swiss cents
Brent crude increased $0.20 to $82.94 a barrel and the Dutch TTF natural gas increased €1.14 to €32.69 per MWh.
Europe Stock Movers
Deutsche Bank AG increased 1.3% to €10.54 after the largest German bank reported a fall in second quarter earnings.
RWE AG rallied 1.8% to €40.67 after the German utility company raised its full-year earnings outlook.
MTU Aero Engines AG dropped 2.8% to €207.0 after the company warned that the Geared Turbofan inspection program will negatively impact its free cash flow.
Puma SE advanced 3.6% to €57.90 after the German footwear company reported a 11% jump in sales in the second quarter.
LVMH declined 4.5% to €815.20 after the luxury goods maker reported a surprise fall in sales in the U.S. amid economic uncertainties.
Danone SA declined 2.7% to €55.21 after the French dairy products maker said it will separate its Russia operation in July and take a one-time charge of €700 million.
Renault SA declined 1.5% to €38.94 and the French automaker finalized its restructured alliance with Nissan.
Orange SA dropped 2.6% to €10.45 after the French telecom network operator said consolidated net income in the first-half declined by €378 million to €1.09 billion.
Rolls-Royce Holdings Plc soared 20.3% to 183.56 pence after the aircraft engine maker raised its full-year operating profit estimate by about 45%.
Natwest Group Plc declined 3.5% to 242.50 pence and chief executive officer Alison Rose resigned and said he made "a serious error of judgement" in talking to a reporter about finances of UK politician Nigel Farage.
Llyods Banking Group Plc fell 3.2% to 44.64 pence after the UK-banking group reported first-half earnings below market expectations.