Mega Cap Techs Drive Market Reversal, Twitter Says Yes to Musk

The S&P 500 and Nasdaq Composite indexes made a reversal in the afternoon trading after crude oil prices and bond yields eased and investors hunted for bargains ahead of earnings from large tech companies. 

The Nasdaq Composite fell to 12,727 and reversed to close up 1.3% to 13,004.85, a reversal of more than 2.5%. 

The S&P 500 index also reversed earlier losses at mid-day and gained 2% to close up 0.6%.  

Microsoft, Google parent Alphabet, Apple and other leading tech companies are scheduled to release earnings after the close tomorrow. 

Coca-Cola closed nearly unchanged after reporting better-than-expected quarterly earnings and reaffirmed its outlook for $10.5 billion free cash flow in the year. 

Oil complex stocks dropped as much as 6% and recovered to close down only 2% to 3% after crude closed down 3.5% near $100 a barrel price. 

Bond yield eased and the 10-year U.S. Treasury closed at 2.822%. 

Twitter Accepts Musk's $44 Billion Deal

Twitter Inc agreed to be acquired by a company wholly owned by Elon Musk, billionaire investor and CEO of Tesla Inc.  

The $54.20 a share in cash deal values the social media platform at $4 billion. The deal price is 38% premium to Twitter's closing price on April 1, 2022, before Musk made his 9% stake public. 

After the deal is completed in 2022, Twitter will operate as a private company.

Musk has secured $25.5 billion of fully committed debt and margin loan financing and is providing an approximately $21.0 billion equity commitment. 

There are no financing conditions to the closing of the transaction. 

Twitter plans to release its first quarter fiscal year 2022 results before the market opens on April 28, 2022 and will not hold an earnings conference call. 

PS Business Park Agrees to $7.6 B Blackstone Deal, Higher Rents May Follow

PS Business Parks, Inc agreed to be acquired by affiliates of Blackstone Real Estate for $187.50 a share or $7.6 billion including transaction cost. 

The deal hinges on the assumption that the commercial rents will recover after taking a beating during the two-year global Covid-19 pandemic. 

The purchase price represents a premium of approximately 15% to the volume weighted average share price over e the last 60 days.

The real estate development and management company primarily owns and manages industrial, business parks and trading multi-office properties suitable for small and medium size businesses. 

The deal will cover a 27 million square feet portfolio of properties located primarily in California, Texas, Northern Virginia and Miami, Florida.  

One of the prime properties in the portfolio is Miami International Commerce Center with 3.5 million square feet of space and home to 350 businesses in the City of Doral, Florida.   

The deal is expected to be completed in third-quarter of 2022 subject to shareholder approval. 

PSB has a 30-day go-shop period to look for a superior offer and has a right to terminate the definite merger subject to a termination fee. 

Public Storage, traded on the New York Stock Exchange, which holds approximately 25.9% of the outstanding shares of PSB common stock, has agreed to vote its shares in favor of the transaction. 

PSB stock jumped 12% to $188.17 and Public Storage stock fell 1.3% to $397.26. 

Last week, Blackstone agreed to acquire student housing real estate firm American Campus Communities for $13 billion. 

Following real estate mergers, generally the acquiring company hikes rents after about 18 months of completion of the transaction. 

Movers: Coca-Cola, Fiverr, GitLab, Phillips, Schlumberger, Snowflake, Twitter, Verizon

The Coca-Cola Company gave up early gains after reporting quarterly sales rose 16% and earnings surged 24% on price hikes and improved business mix. 

Fiverr soared 6% on speculation that the stock may be cheap on historic metrics and ahead of its earnings release in two weeks. 

GitLab surged 11% after KeyCorp raised its price target to $63 from $50 and assigned an "overweight" rating on the stock.

Koninklijke Philips NV plunged 12% after reporting lower than expected results and cited several threats to its annual outlook and expanded its recall of recently launched ventilators. 

Snowflake Inc jumped 9% after Wolfe Research highlighted a strong product cycle and assigned a rating of "outperform" after initiating coverage of the cloud computing software developer. 

 Verizon Communications Inc declined 4% after Goldman Sachs downgraded the stock to "neutral" from "buy" rating citing recent large subscriber losses and high valuation. 

Twitter Inc gained more than 4% after media reports suggested that the company may finalize its takeover deal with Elon Musk-led consortium of investors as early as today and ahead of its earnings release on Thursday.

Oil complex stocks trade down after crude oil fell more than 4% in New York and in international markets on the global slowdown worries. 

Exxon Mobil declined 5%, Schlumberger dropped 10%, Chevron Corp, BP Plc, and Shell Plc dropped 4%, 

Coca-Cola Sales Rise 16%, Net Jumps 24%

The Coca-Cola Company reported first-quarter 2022 revenues increased 16% to $10.5 billion, net income rose 24% to $2.8 billion, and diluted earnings per share rose 23% to 64 cents from 52 cents a year ago. 

The revenue growth was driven by 7% increase in price and business mix and 11% increase in concentrate sale partly driven by shipment calendar and partially offset by one day less in the quarter. 

Revenues in North America increased 22% on 5% growth in case volume, in Latin America rose 34% and 9%, and in Europe, Middle East & Africa gained 22% and  11% respectively. 

Operating margin improved to 32.5% from 30.2% a year ago and cash flow from operations declined to $620 million from $1.6 billion and free cash flow fell to $420 million from $1.4 billion.  

Guidance and Outlook 

The company reaffirmed its organic sales growth range between 7% and 8%. 

The company expects commodities price increase in the mid-single digit percentage increase on a comparable basis. 

For the full-year, on a constant currency basis, the company expects comparable EPS growth between 8% and 10% and adjusted earnings per share increase between 5% and 6% from $2.31 in 2021.  

In the second quarter, comparable net revenues (non-GAAP) are expected to include an approximate 4% currency headwind based on the current rates and including the impact of hedged positions, in addition to a 3% tailwind from acquisitions.

 Comparable EPS (non-GAAP) percentage growth is expected to include an approximate 4% currency headwind based on the current rates and including the impact of hedged positions. 

The suspension of Russian business is expected to decrease full-year revenues between 1% and 2%, unit case volume by 1%, and non-GAAP earnings per share to fall by 4 cents. 

Russia-related impacts on financial results are included in the full-year estimates. 

Stocks Extend April Sell-off as Stagflation Prospects Rise

Benchmark indexes in New York trading extended April losses as investors confront a new reality of prolonged supply chain disruptions on the rising coronavirus cases in China. 

Over the weekend, China reported a surge in new coronavirus cases in the capital city of Beijing and announced new testing and lockdown measures in business districts. 

Shanghai, the financial capital, remains in a prolonged lockdown and reported at least 100 new deaths linked to Covid-virus and food supplies in the city worsened. 

In Monday's trading, Shanghai index dropped 5% and declined to a 2-year low and the Hong Kong index plunged 4% and extended loses to a 5-year low. 

After 30 minutes of trading, the S&P 500 index declined 1.2% and the Nasdaq Composite fell 0.7%. 

For the month, the Nasdaq Composite is down 10% and the S&P 500 6%. 

About 700 companies are scheduled to release earnings this week including 160 companies in the S&P 500. 

Coca-Cola advanced 2% and reported better-than-expected quarterly earnings before the markets opened in New York.  

Crude oil declined 5% on the growing prospect of global slowdown and traded at $97.22 a barrel and Brent crude dropped 4.9% to $101.60 in international trading. 

The U.S. 10-year Treasury yield eased to 2.78% as investors are increasingly factoring the slowing economy coupled with the rising inflation leading to a stagflation. 

Indexes in Japan and China Plunge, Yen at Two-Decade Low

Asian markets fell sharply after 3% losses in New York in Friday's trading. 

In Tokyo, the benchmark Nikkei index declined 1.9% and the Japanese yen traded above 129 to a dollar. The yen has fallen to a 2-decade low and dropped 10% against the U.S. dollar, euro, and the British pound since the U.S. Fed began raising rates on March 16. 

The weaker yen and weak domestic economy is forcing more Japanese companies to look for markets in Asia and worldwide. But weaker yen also lifts energy and fuel prices at home in resource-poor Japan. 

In China, the Shanghai index plunged more than 5% and the Hong Kong index dropped nearly 4% led by tech and financial stocks. 

China confirmed that Covid virus has spread to more locations in Beijing in the last week undetected and infection cases are rising rapidly in the city. 

Most of Shanghai, the financial hub, remains in a prolonged lock down and at least 100 new deaths have been reported since Friday in the city. 

The Sensex in Mumbai, India declined 1% and extended 2-day losses to 3% on the rising prospect of a rate hike and persistent worries of commodities and energy prices linked inflation. 

Covid related cases are also on the rise in Uttar Pradesh, Maharashtra, Delhi and the National Capital Region. 

France Re-elects President Macron to Lead 14-Year Stagnant Economy and Narrow Inequality

French President Emmanuel Macron won a second term in office in a deeply divided country struggling with economic troubles, immigration divisions, and high youth unemployment. 

President Macron won 58.6% or 18.8 million votes significantly ahead of his only rival Marine Le Pen garnering only 41.4% or 13.3 million votes, according to the data released by the interior ministry. 

Approximately 28% of total voters stay away from casting ballots, highest rate of abstention since 1969. 

Macaron is the first French president to be reelected since Jacque Chirac in 2002. 

Macron acknowledged the difficulty of uniting the country in his victory speech on a stage erected in front of the  Eiffel Tower and added  "many voted for me not because they support my ideas but to keep out those of the far-right. I want to thank them and know I owe them a debt in the years to come."

France has struggled with economic growth for more than two decades and the annual growth has been less than 2% in most years and crossed 3% only in 2 years since 2000. 

The France's $2.7 trillion GDP is still below the level in last reached in 2007. 

The unemployment rate in France has hovered around 8% and youth unemployment has been near 9% in the first 5-year term on Macron. 

The election was fought as choice between more globalization, pro-European policies, and stability in in government offered by Macron administration against the fight for inflation, subsidies to poor and young voters, and more government programs to support working class. 

Two years of pandemic followed by Ukraine war has brought the economic issue to the forefront in the presidential election. 

French voters are suffering from the rising food and energy prices, lack of jobs, and a surge in cost of living especially among the poor had forced many people to look for an alternative to the current administration. 

Voters have also been upset with the high rate immigration from Africa and Muslim countries and many in working class feel that immigrants are getting the jobs that their children deserve. 

The government's assistance program in helping immigrants and refugees settle in the country has also sparked a deep division in smaller cities and rural areas.  

About 5.7 million or 8% of French population adhere to Muslim faith and their share is expected to grow to about 11% by 2030, according to French media estimates. 

Macron's impressive victory by a large margin may be short-lived and voters are scheduled to elect members of National Assembly on June 12 and Jun 19. 

Le Pen is seeking a national alliance of all opposition parties and offer a united front in the legislative election. 

Macron's mandate may firm up or change after the National Assembly election depending on where the power balance hangs between parties in the legislative body. 

However, leaders in Europe were quick to welcome the French election results and offered strong support to president Macron. 

" We need a solid Europe and a France totally committed to a more sovereign and more strategic European Union," said European Council President Charles Michel. 

"Wonderful news for all of Europe," said Italian Prime Minister Mario Draghi.  

The leaders of European Commission, Sweden, Lithuania, Greece, and Spain were quick to acknowledge Macron's victory as victory for Europe. 

President Macron was elected as the youngest French president at the age of 39 in 2017. defeating Marine Le Pen with 66% of votes in the second round.  

Danaher Quarterly Revenues Advanced 12%, Net Income Up 1%

Danaher Corp said first quarter 2022 net revenues increased 12% to $7.7 billion, net income increased 1% to $1.7 billion, and diluted earnings per share $2.31 compared to $2.29 a year ago.  

COVID-19 related testing drove sales higher by 4%. 

Operating margins declined 80 basis points to 28.3% from 29.1% in the quarter a year ago. 

Life Sciences segment revenues rose 9.5% to $3.9 billion and operating profit margin declined 370 basis points to 28.8%. 

Diagnostics segment revenues increased 21.5% to $2.6 billion and operating margin improved 480 basis points to 33.5%. 

Environmental & Applied Solutions segment revenues rose 2.5% to $1.16 billion and operating margin fell 480 basis points to 20.3%. 

The Washington, D.C. based conglomerate manufactures industrial, medical and commercial products including leading brands Beckman Coulter, Leica, and Sciex. 

Guidance and Outlook 

The company guided non-GAAP base business core revenues growth which excluding acquisitions and currency translations in the second quarter in the mid-single digit percent range, which includes an approximately 200 to 300 basis point headwind from the COVID-19 related shutdowns in China.

For the full year 2022, the company continues to expect non-GAAP base business core revenue growth will be in the high-single digit percent range.

Pool Corp's Earnings Surge With Hikes in Prices, Inventories, Total Debt

Pool Corp reported first quarter 2022 revenues increased 33% to $1.4 billion, net income soared 82% to $179.3 million, and diluted earnings per share rose 82% to $4.23 from $2.32 a year ago. 

The revenue growth marked the 36th consecutive quarter of growth following a surge of 57% in the quarter a year ago. 

Sales at existing businesses rose 26%supported by price increase between 10% and 12%, 5% pull forward both from the customers ordering ahead and extra selling days in the quarter compared to a year ago. 

Gross margin improved to 49% and rose to 38% at existing businesses (excluding recent acquisitions) benefitting from inventory build up in prior year to meet rising demand. 

Operating margin improved to 16.7% in the quarter from 12.1% in the prior year's quarter. Operating margin improved to 16.5% at the existing businesses. 

 To avoid supply chain delays, the wholesale distributor began ordering inventories in the second half of 2021 and raised inventory levels 68% to $1.6 billion. The inventory levels reflect the impact of inflation and recent acquisitions. 

Total outstanding increased to $1.5 billion from $1.1 billion to fund recent acquisitions and support higher working capital. 

Guidance and Outlook

The company lifted its annual earnings estimate outlook to between $18.34 to $19.39 from the previous estimate range between $17.19 and $17.94. 

Higher Gold Prices Fail to Lift Newmont Earnings

Newmont Corporation said first quarter 2022 revenues increased 4.5% to $3.02 billion, net income declined 20% to $448 million, and diluted earnings per share fell to 56 cents from 72 cents a year ago. 

Gold costs applicable to sales per ounce increased 18% to $890 from $752 a year ago and including all-in sustaining costs rose 11% to $1,156 from $1,039. 

Capital expenditures in the quarter increased about 8% from a year ago to $437 million and free cash flow fell to $252 million from $442 million  a year ago. 

Attributable gold production fell 8% from a year ago to 1.34 million ounces primarily due to  lower mill throughput at CC&V, Tanami, Porcupine and Nevada Gold Mines, lower ore grades milled at Pe

Boston Beer's Seltzer Demand Deceleration Delivers Quarterly Loss

The Boston Beer Company said first quarter 2022 net revenues dropped 21% to $430.1 million, net loss was $2 million compared to $65.6 million profit, and diluted loss per share was 16 cents compared to earnings of $5.26. 

First quarter depletion, a measure of demand in the distribution system, decreased 7% and shipment fell 25.1% but the craft brewer estimated full-year depletion and shipment growth between 4% and 10%. 

The company's depletions rate for its flagship brand Samuel Adams were similar in comparable quarters but depletion rates were smaller than expected in hard seltzer products Truly Hard Seltzer, Angry Orchard, and Dogfish Head brands.

Shipment volume for the quarter was approximately 1.7 million barrels, a 25.1% decrease from the prior year, reflecting decreases in the Company's Truly Hard Seltzer, Twisted Tea, Angry Orchard, and Dogfish Head brands, partially offset by increases in its Samuel Adams brand.

Guidance and Outlook 

The company estimated full-year 2022 non-GAAP earnings between $11 and $16 a share on a fully diluted basis. 

HCA Healthcare Lowers Annual Outlook, Higher Labor Costs Depress Quarterly Earnings

HCA Healthcare said first quarter 2022 revenues increased 7% to $14.9 billion, net income declined 8.4% to $1.3 billion, and diluted earnings per share was $.412 compared to $4.14 a year ago. 

In the quarter, the company operated 182 hospitals with 48,892 beds available for the service. Number of equivalent admissions increased 3.5% to 859,290 and revenue per admission increased 3.6% to $17,392. 

Average length of stay was stable at 5.29 days and occupancy based on weighted average beds in service increased to 71.3% from 70.1%. 

Emergency room visits increased 11.7% from a year ago to 2.06 million.  

Outlook and Guidance 

The hospital operator lowered its full year earnings and revenues range. 

The annual revenues range was revised down to between $59.5 billion to $61.5 billion from the previous estimate of $60 billion to $62 billion. 

Annual net income attributable to shareholders range was revised down to between $4.95 billion and $5.34 billion from the previous estimated range between $5.55 billion and $5.83 billion. 

The diluted earnings per share range was revised lower between $16.40 and $17.60 from $18.40 to $19.20.  

The company announced a quarterly dividend of 56 cents a share payable on June 20, 2022 to shareholders of record at the close of business on June 16, 2022. 

Rate and Inflation Worries, Supply Disruptions Compound Investor Anxieties

Stock sell-off in the final hour intensified and major averages closed down for the third consecutive week in a row. 

Weak earnings in the healthcare sector compounded investor anxieties after hawkish comments from Fed Chairman Powell a day ago. 

The S&P 500 and the Dow fell 2.8% and the Nasdaq Composite index closed down 2.6% in a broad market sell-off. Tech, healthcare, financials and consumer sector stocks participated in the decline for the second day in a row. 

The Dow Jones Average extended losses for the fourth week in a row and the S&P 500 and the Nasdaq Composite indexes declined for the third week in a row. 

For the week, the Dow fell 1.9%, the S&P 500 declined 2.8%, and the Nasdaq Composite dropped 3.8%.

In the year so far, the Nasdaq has fallen 17.9% and the S&P 500 is down 11%, and the Dow has declined 8%.

Mining and metal sector stocks were also on the defensive on the worries that a faster rise in rates may negatively impact the demand. Nucor and Freeport-McMoRan declined more than 6%. 

Nucor in Thursday's trading reached a new record high after reporting strong earnings. 

Apparel retailers fell sharply after Gap expanded its range of sales decline in the quarter just completed on the troubles in its Old Navy division. 

American Eagle, TJX, Nordstrom, Dillard's, Macy's, Ross Stores, Abercrombie & Fitch, Ralph Lauren fell between 3% and 9%. 

At least 700 companies are scheduled to release earnings next week including  Apple, Amazon, Facebook parent Meta, Microsoft, and Google parent Alphabet. 

Apparel Retailers Tank on Gap Troubles, Hospital Stocks Fall on HCA and Intuitive Surgical Earnings

Intuitive Surgical fell 13% after reporting better than expected first-quarter revenues increased 15% t0 $1.49 billion and net income declined 14% to $366 million. The company also offered a cautious outlook on supply chain disruptions. 

HCA Healthcare plunged 21% after the hospital operator reported flat earnings per share and lowered annual outlook to a range between $16.40 and $17.60 a share from the previous estimated range between $18.40 and $19.20 a share. 

DexCom, DaVita, and Universal Health dropped between 6% and 12% after HCA lowered its earnings outlook and cited rising labor cots. 

Dillard's dropped 12% and American Eagle Outfitters plunged 10% after Gap Inc revised higher sales loss range in the latest quarter ahead of earnings call next week. Gap also said Old Navy CEO and President Nancy Green will no longer lead the division. 

Cap Inc stock plunged 20%.