Nasdaq in Bear Zone Again After Friday Sell-off

Stock after gyrating in the early hours of trading developed a downward trend and accelerated declines in the afternoon. 

The Nasdaq Composite declined 4.2% and the S&P 500 index fell 3.6% after the latest batch of earnings fell short of expectations. 

The Nasdaq Composite fell 13.3% in April, its worst performance since October 2008 and the S&P 500 declined 8.8%, the most since March 2020. 

In the year, S&P 500 is down 13.9% and the Nasdaq Composite has lost 22.1%. 

Both indexes closed at their new lows in the year. 

Friday marked the week of a busy earnings season with about 700 companies reporting. 

Nearly 130 companies in the S&P 500 index including leading tech companies dominated earnings news. 

More than 70% of the companies releasing earnings reported better-than-expected results estimated by Wall Street analysts but a familiar theme has started to take hold. 

Companies are battling falling demand volume, rising operating costs, and supply disruptions. 

However, most companies are passing on larger price increases to consumers higher than the increase in input and operating costs resulting in higher earnings. 

This theme was repeated across most of the companies reporting earnings in energy, retail, technology, manufacturing, and food and beverages and consumer products makers. 

The latest reading on inflation faced by consumers showed sustained and elevated inflation pressures. 

The core personal consumption expenditure price index, which measures how consumers spend across a wide range of products and services, increased 5.2% in March after rising at 5.3% in February. 

When compared to the previous core price index increased 0.3%. 

In Europe, market indexes in Paris and London gained 0.5% and in Frankfurt rose 0.8%. 

Crude oil traded higher in the day but closed down 35 cents to $105.02 a barrel. 

The U.S. 10-year bond yield edged up a fraction to close at 2.882%.  

Exxon Mobil Net Doubles Despite $3.4 Billion Russia Exit Charge

Exxon Mobil Corporation reported first quarter 2022 revenues increased 52% to $90.5 billion and net income doubled to $5.4 billion. 

In the quarter, diluted earnings per share increased to $1.28 from 64 cents a year ago.  

Earnings adjusted for identified items increased in the quarter to $8.8 billion and increased nearly $6 billion from a year ago after adjusting for $3.4 billion or 79 cents per diluted share after-tax charge related to the company's Russia Sakhalin-1 operation 

Capital and exploration charged in the quarter declined to $4.9 billion from $5.8 billion a year ago. 

Oil-equivalent production was 3.7 million barrels per day, down 4% from the fourth quarter of 2021 due to weather related unscheduled downtime, planned maintenance, lower entitlements associated with higher prices, and divestments. 

Excluding entitlement effects, government mandates, and divestments, oil-equivalent production was down 2%.

Net Zero Initiative 

The company plans to expand carbon capture capacity at its facility in LaBarge, Wyoming, adding up to 1.2 million metric tons to the nearly 7 million metric tons already captured at LaBarge each year. 

ExxonMobil announced plans for its first world-scale blue hydrogen plant in Baytown, Texas. 

The proposed plant would produce up to 1 billion cubic feet per day of blue hydrogen and include one of the world

Intel Revenues Declined on Weakening Demand, Apple Shift, and Supply Disruptions

Intel Corporation reported first quarter 2022 revenues decreased 7% to $18.4 billion and net income surged 141% to $8.1 billion. 

Diluted earnings per share increased by the same amount to $1.98 from 82 cents.  

In the quarter, the company generated $5.9 billion in cash from operations and paid dividends of $1.5 billion. 

In the quarter, gross margins declined to 50.4% from 55.2% in the previous year. 

Client computing revenues declined 13% to $9.3 billion, Datacenter and AI group revenues rose 22% to $6 billion, Network and Edge Group revenues rose 23% to $2.2 billion. 

Sales in the quarter were down partly because of lower demand for desktop and laptop computers, Apple shifted its chipmaking in-house, and computer device makers lowering inventories level. 

Accelerated Computing Systems and Graphic Group revenues 21% to $219 million and Mobileye unit sales rose 5% to $394 million. 

Intel Foundry Services revenues shot up 175% to $283 million. 

Guidance & Outlook 

For the second quarter, the semiconductor chipmaker guided revenues of $18 billion, gross margin of 48%, and 50 cents earnings per share. 

For 2022, the company guided total revenues of $76 billion, gross margin of 49%, and earnings per share of $4.19. 

For the year, the company plans to spend $27 billion.

The company guided that supply chain problems are persisting longer than anticipated and consumers are holding back from purchasing new computers on rising inflation. 

Movers: Amazon, Apple, Intel, KLA, Mohawk, Olin, Verisign

Amazon.com Inc dropped 12% after the online retailer reported its first quarterly loss in six years and quarterly revenue growth eased for the sixth quarter in a row. 

Amazon is facing two headwinds, slowing consumer spending, rising fuel and labor costs at its operations. 

Apple Inc muted its upside to 0.6% after the phone and computer maker reported better-than-expected earnings but guided higher costs and supply disruptions are likely to trim as much as $8 billion in revenues in the current quarter. 

Intel Inc dropped 6% after the chip maker reported better-than-expected earnings but issued a weak outlook for the current quarter. 

KLA Corp declined 0.1% after the semiconductor company reported third quarter net income of $730.6 million or $4.83 cents per share compared to $567.5 million or $3.66 a share in the period a year ago.  

The company confirmed supply chain issues facing the industry.  

Mohawk Industries Inc soared 13.7% after the flooring products maker reported better-than-expected sales and earnings in the March quarter. 

Earnings increased to $$245 million or $3.78 a share from $237 million or $3.36 a share in the quarter a year ago. 

Revenues in the quarter rose 13% from a year ago to $3 billion.

The company issued a strong sales outlook and guided a favorable market for its products as renovation market and new home construction market show no sign of slowdown despite the rising interest rates. 

Olin Corporation jumped 8.7% after the chemical products maker reported March quarter sales increased 29% to $2.46 billion. 

Earnings in the quarter rose to $393 million or $2.43 a share from $243.6 million or $1.51 a share. 

The company guided higher second quarter performance despite the rising raw materials and operating costs. 

The company also formed a joint venture with Plug Power to supply green hydrogen as early as 2023. 

Verisign Inc dropped 12.4% after the company said March quarter revenues rose 7.2% to $347 million and earnings per share increased 7.5% to $1.43 from $1.33 a year ago. 

Earnings increased to $158 million from $150 million in the period a year ago. 

The domain name registry guided 2022 revenues in the range of $1.42 billion and $1.435 billon and updated domain base growth between 1.75% and 3.5%. 

China-linked tech companies soared after local reports suggested that the government may drop or ease recent additional filing and monitoring requirements for the companies listed overseas.

Alibaba and New Oriental Education jumped 10% and JD.com gained 7%.  

U.S. Stocks Turn Lower After Latest Batch Of Earnings Disappoint

U.S. stocks turned lower after a string of disappointing earnings. 

After about 45 minutes of trading, the S&P 500 index declined 0.8% to 4,253.91 and the Nasdaq Composite index fell 0.6% to 12,798.88. 

Amazon dropped 12% after the online retailer reported its first quarterly loss in six years and quarterly revenue growth eased for the sixth quarter in a row. 

Amazon is facing two headwinds, slowing consumer spending, rising fuel and labor costs at its operations. 

Apple Inc muted its upside to 0.6% after the phone and computer maker reported better-than-expected earnings but guided higher costs and supply disruptions are likely to trim as much as $8 billion in revenues in the current quarter. 

Intel Inc dropped 6% after the chip maker reported better-than-expected earnings but issued a weak outlook for the current quarter. 

On the U.S. economic front, the latest report from the Commerce Department showed personal income rose less than expected but the spending was ahead of expectations. 

Personal income increased 0..5% in March after rising by upwardly revised 0.7% in February. 

Personal spending rose 1.1% in March after climbing by upwardly revised 0.6% in February. 

In Europe, the DAX index in Frankfurt gained 1.1%, the CAC-40 index in Paris advanced 0.9%, and the FTSE index in London jumped 0.8%. 

In Asia, markets were closed in Japan today, but the indexes in Hong Kong surged 4% and in Mumbai reversed earlier gain of 1% to close down 0.8%. 

The Japanese yen regained 0.55 to trade at 130.08 against the U.S. dollar and the euro edged slightly higher to trade at $1.0533. 

Apple Reports Record Sales, iPhone Sales Rise 9%

Apple Inc reported first quarter 2022 sales increased 11.7% to $124 billion from $111.4 billion a year ago. 

Net income in the period rose 21% to $34.6 billion from $28.7billion and diluted earnings per share increased to $2.10 from $1.68 a year ago. 

By geography, sales in the Americas rose 11% to $51.5 billion from $46.3 billion, in Europe rose 9% to $29.7 billion, in Greater China increased 7% to $25.8 billion, in Japan declined 13.4% to $7.1 billion. and in the rest of Asia Pacific increased 20% to $9.8 billion. 

iPhone sales jumped 9% to $71.6 billion. 

Mac sales increased t22% to $10.8 billion from $8.8 billion.  

iPad sales decreased to $7.2 billion from $8.4 billion. 

Wearables and Home and accessories sales rose 13.9% to $14.7 billion. 

Services sales increased 24% to $19.5 billion. 

Amazon Grapples With Slowing Growth, Rising Costs

Amazon.com, Inc said first quarter 2022 revenues increased 7% to $116 billion, net loss was $3.6 billion compared to net income of $8.1 billion a year ago.   

Diluted loss per share in the quarter was $7.56 compared to profit of $15.79 a year ago.  

In the quarter, net sales growth in North America slowed to 8% from 40%, international sales declined 6% from 60% increase, and AWS sales rose 37% from 32% in the quarter a year ago. 

Worldwide quarterly sales growth has been steadily declining in the last five quarters from 42% in the last quarter of 2020 to 9% in the first quarter of 2022. 

North America segment sales growth has been also on slide from 40% to 8% in the same period.

Amazon also recorded a $7.6 billion loss on its investment in Rivian after the share of the electric maker declined in the quarter resulting in a loss of $3.8 billion. 

Outlook and Guidance 

The online retailer estimated second quarter sales to increase between 3% and 7% or to between $116.0 billion and $121.0 billion. 

Tech Rally Lifts Nasdaq 3%, S&P 500 2.5%

Tech stocks rebound lifted major averages higher, shrugging off the latest read on economic growth.

The S&P 500 index climbed 2.5% and Nasdaq Composite Index gained 3.0% after investors focused on better-than-expected earnings from Facebook parent Meta Platforms and Google's buyback plan.    

Gross domestic product in the first quarter declined 1.4% largely on the rising imports and supply disruption linked to the Omicron virus in January. 

Investors focused on the strength in consumer and business spending and looked ahead to a stronger rebound in the remaining quarters of year. 

Weekly jobless claims declined 5,000 to 180,000 at the end of last week and continuing claims of unemployment dropped to 1.4 million, the lowest in 51 years. 

After the close, Amazon and Apple are scheduled to release earnings. 

In Europe, market indexes in Frankfurt gained 1.4%, in London advanced 1.1%, and in Paris increased 1.0%. 

In Asian markets, the Nikkei index in Tokyo jumped 1.8%, the Hang Seng index in Hong Kong gained 1.6%, the Sensex index in Mumbai increased 1.2%, and the SSE index in Shanghai added 0.6%. 

The yen dropped to a new two-decade low after the central bank reiterated its low interest rate policy. 

Indonesia expanded its ban on exports of palm oil to include crude and refined varieties. 

Twitter's Global Daily Active Users Rise 16%

Twitter, Inc reported first quarter 2022 revenues increased 16% to $1.2 billion, net income in the quarter rose to $513 million from $68 million, and earnings per share increased to 61 cents from 8 cents a year ago. 

Net income of $513 million includes a pre-tax gain of $970 million from the sale of MoPub for $1.05 billion and income taxes related to the gain of $331 million. 

This compares to net income of $68 million, a net margin of 7% and diluted EPS of $0.08 in the same period of the previous year.

The average monetizable daily users increased 15.9% to 229 driven by 6.4% increase to 39.6 million and 18.1% increase in international users to 189.4 million.  

The company also corrected its previous daily active users between first quarter in 2019 and fourth quarter 2021. 

Twitter said it made an error after the company allowed users with multiple accounts to switch between accounts and overcounted users between 1.4 million and 1.9 million in that period. The error resulted from overcounting separate but linked accounts as individual accounts. 

Outlook and Guidance 

The company is no longer providing forward looking earnings estimates and withdrawing all provided goals and outlook.  

Weekly Initial Jobless Claims Fell to 180,000

Seasonally adjusted jobless claims declined last week to 180,000, in the week ending on April 23. 

The initial clams declined 5,000 from the previous week's revised claims up 1,000 to 185,000.   

The 4-week moving average was 179,750, an increase of 2,250 from the previous week's revised average. 

The previous week's average was revised up by 250 from 177,250 to 177,500. 

The advance seasonally adjusted insured unemployment rate was 1.0% for the week ending April 16, unchanged from the previous week's unrevised rate.

The advance number for seasonally adjusted insured unemployment during the week ending April 16 fell 1,000 to 1,408,000. 

This is the lowest level for insured unemployment since February 7, 1970 when it was 1,397,000.

The previous week's level was revised down by 8,000 from 1,417,000 to 1,409,000.

The 4-week moving average was revised lower 24,500 to 1,455,000. This is the lowest level for this average since March 14, 1970 when it was 1,435,250. 

The previous week's average was revised down by 2,250 from 1,481,750 to 1,479,500. 

The advance number of actual initial claims under state programs, unadjusted, totaled 202,983 in the week ending April 23, an increase of 5,005 (or 2.5 percent) from the previous week.

There were 611,236 initial claims in the comparable week in 2021. 

U.S. First Quarter GDP Shrank at 1.4% Pace

The U.S. GDP fell unexpectedly at 1.4% pace after adjusting for inflation in the first quarter of 2022. 

The unexpected decline was driven by a large trade deficit, surging inflation, and the rise of omicron virus in the beginning of the year. 

Moreover, the government assistance payments in the form of forgivable loans to businesses, grants to state and local governments, and social benefits to households all decreased as provisions of several federal programs expired or tapered off.

The decline was also driven by a decrease in government spending and defense expenses, fall in exports and rise in imports and a deceleration in private inventory investments. 

The GDP growth suffered from a 0.3 percentage point decline after the defense spending fell 8.5%. 

Most of the factors that drove the GDP growth to negative are likely to reverse before the year's end. 

Current dollar GDP expanded at 6.5% annual rate to a level of $24.38 trillion. 

The price index for gross domestic purchases increased 7.8% in the first quarter, compared with an increase of 7.0% in the fourth quarter.

The PCE price index increased 7.0%, compared with an increase of 6.4%. Excluding food and energy prices, the PCE price index increased 5.2%, compared with an increase of 5.0%.

The real disposable income declined 2% compared with a decrease of 5.6% in the fourth quarter. 

The economy expanded at 5.7% in 2021 and in the fourth quarter rose at 6.9% annual pace. 

Movers: Caterpillar, Comcast, Meta, McDonald's, PayPal, Teladoc, ServiceNow, Qualcomm

Caterpillar Inc fell 1.7% after the construction equipment maker said first-quarter revenues increased 14% to $13.6 billion but operating profit margin declined to 13.7% from 15.3% a year ago. 

Cheesecake Factory eased 0.01% after the restaurant chain operator reinstated its quarterly dividend and share repurchase program. 

Fiscal first-quarter 2022, ending on March 29, sales rose 26% to $793.7 million, net income surged five-fold to $23.2 million from $3.8 million, and diluted earnings per share was 45 cents compared to a loss of 3 cents.

Comcast Corp declined 3.2% after the media company said revenues increased 14% to $31 billion and net income rose 6.6% to $3.5 billion. 

Ford Motor Company gained 0.9% after the automaker said revenues declined 5% to $34.5 billion and net loss of $3.1 billon primarily attributable to investment valuation in Rivian. Adjusted earnings before interest and taxes was $2.3 billion. 

The market share declined to 4.8% from 5.3% a year ago and the company shipped 966,000 vehicles or 6% fewer a year ago.  

Meta Platforms, Inc increased 14.3% after the social media platform operator said monthly daily active users across all platforms increased 6%. 

First-quarter 2022 total revenues increased 7% to $27.9 billion, net income declined 21% to $7.5 billion, and diluted earnings per share fell 18% to $2.72 from $3.30 a year ago. 

McDonald's Corporation gained 1.4% after the restaurant chain operator said first-quarter sales increased 11% and global comparable sales increased 12% driven by 3.5% increase in U.S. location. 

First-quarter 2022 total revenues increased 11% to $5.7 billion, earnings decreased 28% to $1.1 billion, and earnings per share fell to $1.48 from $2.05. 

PayPal Holdings Inc added 2.8% after the payment processing company said it added a net new 2.4 million accounts and processed a total payment volume of $323 billion. 

First quarter revenues increased 7% to $6.6 billion but earnings per share declined to 43 cents from 92 cents a year ago. 

ServiceNow Inc advanced 7.3% after the digital workflow company said total revenues in the first quarter rose 27% to $1.7 billion but net income plunged to $75 million from $352 million and earnings per share declined to 37 cents from $1.73 a year ago. 

Southwest Airlines increased 3.2% and said first quarter operating revenues declined 8.8% to $4.7 billion and reported quarterly loss of $278 million. 

The airline also guided second quarter revenues to increase between 8% and 12% and load factor around 88%. 

Teladoc Health Inc plunged 44.3% after the online health service provider said first quarter revenues increased 25% to $565 million and $6.6 billion of loss in the quarter linked to goodwill impairment charges. 

The company guided second quarter revenues between $580 million and $600 million and net loss per share between 72 cents and 60 cents. 

Qualcomm, Inc increased 6.6% the wireless chipmaker reported fiscal second quarter revenues increased 41% to $11.1 billion on higher sales for android phone chips. 

Earnings per share rose 68% to $2.57 from $1.53 a year ago.  

McDonald's Global Comparable Sales Rise 12%, U.S. Sales Up 3.5%

McDonald's reported first-quarter 2022 total revenues increased 11% to $5.7 billion, earnings decreased 28% to $1.1 billion, and earnings per share fell to $1.48 from $2.05. 

Sales at company owned and operated restaurants increased 7% to $2.3 billion and revenues from franchised restaurants rose 13% to $3.3 billion. 

Systemwide sales increased 10% or rose 14% on constant currency basis. 

Global comparable sales increased 11.8% driven by 3.5% increase in the U.S., 20.4% rise in international company-operated restaurants, and 14.7% jump in international franchise restaurants.  

Sales at U.S. locations was driven by higher menu prices, strong marketing promotions, and growth in digital channels. 

Digital systemwide sales surpassed $5 billion and rose to 30% in the top six markets. 

Nasdaq Futures Jump 2% in Pre-Market Trading

U.S. stocks are pointing to a higher opening as investors digest latest wave of earnings. 

Futures of the Nasdaq Composite and S&P 500 indexes show an opening as high as 2% after Meta Platforms reported better-than-expected earnings. 

Meta Platforms, the parent of Facebook and Instagram. is trading 15% higher in pre-market trading. 

Comcast, Cheesecake Factory, Qualcomm are expected to open sharply higher after beating estimates. 

McDonald's jumped 2.4% in the pre-market trading after reporting revenues rose 11% to $5.67 billion but earnings declined to $1.1 billion or $1.48 per share from $1.54 billion or $2.05 a share. 

PayPal is trading higher 2% after beating the earnings estimated but offered a slightly weaker current quarter outlook. 

European markets are ahead between 1.% and 1.3% as investors focus on domestic earnings and look beyond the war in Ukraine. 

Asian markets closed higher led by a 1.7% rise in the Nikkei and Hang Seng. The Sensex index in Mumbai jumped 1.3%. 

Crude oil in international markets was nearly unchanged but traded with a slight negative bias. 

Cheesecake Net Jumps Five-fold, Reinstates Dividend and Buyback

The Cheese Cake Factory Incorporated reported fiscal first-quarter 2022, ending on March 29, sales rose 26% to $793.7 million, net income surged five-fold to $23.2 million from $3.8 million, and diluted earnings per share was 45 cents compared to a loss of 3 cents. 

Comparable sales at restaurants across all its brands increased 8.2% driven by 20.7% increase at its namesake brand.  

Off-premise sales were about 25% of total sales. 

Cheesecake Factory Restaurants revenues surged 41% to $609.8 million from $499 million. 

North Italia revenues soared 36% to $52.7 million from $32.8 million a year ago. 

The restaurant chain now expects to open as many as 15 to 16 new restaurants in fiscal 2022, including as many as four Cheesecake Factory restaurants, four to five North Italia restaurants, and as many as seven FRC restaurants, including three to four Flower Child locations. 

This includes a Flower Child which opened subsequent to the first quarter-end in Fort Worth, Texas. 

The company reinstated its quarterly dividend at 27 cents a share and its stock repurchase program. 

The company added one and operated a total of 208 restaurants and total restaurant operating weeks increased to 2,704 from 2,678.