American Express Net Falls 6%, T&E Spending Reaches Pre-Pandemic Level in March

American Express reported first quarter 2022 total revenues net of interest expenses increased 29% to $11.8 billion, net income declined 6% to $2 billion, and diluted earnings per share fell to $2.73 from $2.74 a year ago.  

The financial services company lifted its quarterly dividend 21% to 52 cents a share. 

In the quarter, the company processed through its global network a total of $350 billion in transactions, an increase of 30% from a year ago. 

Transactions in the U.S. rose 31% to $244 billion and in international segment gained 26% to $106 billion.  

Average proprietary basic card member spending increased 26% from a year ago to $5,965 in the U.S. and jumped 31% to $4,165 in the international segment averaging an increase of 28% to $5,452. 

Total card member loans increased 27% to $88.8 billion. 

Proprietary card member base increased 5% in the U.S. to 39.8 million and rose 3% to 17.8 million and total increased 5% to 57 million. 

Kimberly-Clark Advances Higher Costs to Consumers, Lifts Sales Outlook

Kimberly-Clark reported first quarter 2022 sales increased 7% to $5.1 billion, net income declined 10% to $535 million, and diluted earnings per share fell by the same amount to $1..55 from $1.72 a year ago. 

Organic sales in the quarter increased 10% and estimated full-year sales growth in the range of 4% to 6% from the previous estimated range between 3% and 4%. 

Personal Care segment quarterly sales increased 11% to $2.7 billion on 8% price increase and volume improved 3%. 

Consumer Tissue segment quarterly sales increased 4% to $1.6 billion and net selling price increased 5% and volume improved 2 points. 

Professional segment revenues increased 4% to $0.8 billion on 4% increase in net selling price. 

In the quarter, the company completed purchase of majority and controlling stake in Think Inc for $181 million. The company made an initial minority investment in the maker of  reusable period and incontinence underwear in 2019. 

Outlook 

The company lifted its annual sales outlook to between 2% to 4% from the prior range between 1% to 2% and reaffirmed previous unadjusted earning per share outlook. 

Adjusted earnings per share estimate was revised higher to a range between $5.60 and $6.00. 

Schlumberger Positioned to Benefit from Multi-Year Investment Cycle

Schlumberger said first quarter 2022 revenues increased 14% to $6 billion, net income soared 70% to $510 million, and diluted earnings per share increased 71% to 36 cents from 21 cents a year ago.  

International revenues increased 10% to $4.6 billion and North America revenues rose 32% to $1.3 billion. 

Latin America led the revenue growth across all geographies as drilling activities ramped up in Mexico, Ecuador, Argentina, and Brazil. 

Europe/CIS/Africa grew primarily from higher Production Systems sales in Turkey and increased exploration drilling in offshore Africa

Movers: American Express, Gap, Kimberly-Clark, Snap, Schlumberger, Verizon

American Express was in focus after reporting better than expected $2.74 earnings per share after total revenues net of interest expense rose 29% from a year ago. Global spending volume in March reached a record high. 

Kimberly-Clark soared 10% after the consumer products maker said quarterly organic sales growth was 10% and revised its annual organic sales estimate range to between 4% to 6% from 3% to 4%. The company also reaffirmed its annual earnings per share outlook between $5.60 and $6.00. 

Snap Inc gained 4% after the social media platform reported quarterly revenues 38% to $1 billion and daily active users increased 18% to 332 million. 

Schlumberger added 5% after the oil services provider said quarterly revenues increased 14% and net income soared 70% to $510 million and the company lifted its dividend by 40% to 17.5 cents. 

Gap Inc plunged 11% after the fashion retailer revised its first quarter sales outlook to a decline in low to mid-teens from a year ago from the previous estimate of mid to high-single digit decline. The retailer also said Old Navy President and CEO Nancy Green will depart this week from the business.  

Verizon Communications Inc declined 5% after the mobile telephony and broadband services provider said total revenues increased 2.1% to $33.5 billion and net income fell 12.1% to $4.7 billion. 

Total wireless retail connections increased 22% from a year ago to 115.2 million and Fios internet connections increased 4.7% to 6.6 million.  

U.S. and Global Markets Adjust As Fed Plays Catch Up

The S&P 500 and Nasdaq Composite index futures point to lower opening as the Fed prepares to raise at a faster pace. 

Bond markets around the world took note of the hawkish tone of the latest comments from Fed Chairman Jerome Powell as the central bank prepares to increase rates at a faster pace. 

The U.S. Fed had brushed off rising energy and food prices and a surge in home prices as transitory for more than two years and is now playing catch up. 

Stock markets are expected to remain volatile as investors adjust to higher rates and faster increases in rates in the next two years. Consumer price and wholesale price indexes indicate inflation between 6% and 7%, significantly above the preferred range of between 2% and 3% set by the Fed. 

In Asia, Nikkei index closed down 1.6% and March inflation rose 0.8%, 26-month high, and surged 2.2% excluding the cheap mobile plans introduced last April. 

Moreover, the Japanese yen traded at a 20-year low of 129 to a U.S. dollar. 

10-year bond yields in  India gained 0.6% to 7,17% and the Sensex index dropped 1.3% after foreign investors lightened holdings in index stocks. 

European markets traded lower led by 1.5% decline in CAC 40 and DAX indexes. Bond yields of Germany, France, Italy and the U.K. rose between 25 and 60 basis points after Powell's comments. 

Snap Daily Active Users Grows 18%, Revenues Surpass $1 Billion

Snap Inc said first quarter 2022 revenues increased 38% to $1.06 billion, net loss expanded 25% to $359 million, diluted loss per share increased 16% to 22 cents to 19 cents. 

Daily active users increased 18% to 332 million and average revenues per user increased 17% to $3.20. Daily active user increased 5% to 98 million in North America. 

Total daily time spent by Snapchatters aged 25 and older engaging with shows and publisher content increased by more than 25% from a year ago. 

Q2 2022 Outlook 

Genuine Parts Lifts Earnings Outlook On Record Quarterly Sales

Genuine Parts Company said first quarter 2022 revenues rose 19% to $5.3 billon, net income increased 15% to,$246 million, and diluted earnings per share advanced 15% to $1.72 from $1.50  a year ago. 

The company lifted its annual diluted earnings per share outlook to a range of $7.56 to $7.71 from $7.45 to $7.60 and retained free cash flow outlook to between $1.2 billion and $1.4 billion.  

Union Pacific Net Rises 29%, Guided Lower Operating Ratio

Union Pacific Corp said first quarter 2022 revenues increased 17% to $5.8 billion, net income increased 22% to $1.63 billion, and earnings per share rose 29% to $2.57 from $2.00 a year ago. 

Operating revenue of $5.9 billion was up 17% driven by higher fuel surcharge revenue, volume growth, core pricing gains, and a positive business mix.

Average revenues per car increased 12% to $2.711 and operating performance ratio improved 70 basis points to 59.4%.

The railroad operator  repurchased 11.0 million shares in first quarter 2022 at an aggregate cost of $2.8 billion. 

The company reaffirmed its earlier guidance of dividend payout target of 45% of earnings and capital spending plan of $3.3 billion and share repurchase in line with 2021. 

Powell's Comments Spark Stock Reversal and Yield Advance

The S&P 500 and Nasdaq Composite turned lower and accelerated decline in the final hour of trading after Fed Chairman Powell showed the urgency in controlling inflation. 

The comments sparked a sharp reversal on Wall Street and the S&P 500 declined 1.5% and Nasdaq Composite dropped 2.2%. 

Airlines traded higher after United Airlines, American Airlines, and Alaska Air reported better than expected quarterly results and also guided strong passenger traffic recovery in March. United soared as much as 10% and American Air gained 6% before trimming gains at close. 

Tesla Inc also jumped as much as 11% after the automaker reported gains in revenues, earnings, and deliveries and highlighted the lack of debt on its balance sheet.

Twitter Inc was in focus after Elon Musk, the largest shareholder and CEO of Tesla, said he has arranged the $46.5 billion financing needed to purchase the company and he may launch a tender offer. 

Bond Yields Rise After Powell Suggests Faster Rate Hikes Possibilities

U.S. Treasury yields climbed after tough talks from Fed Chairman Jerome Powell signaled faster rate increase, maybe likely at the next policy meeting in May. 

Chairman Powell spoke at a meeting of the IMF and World Bank in Washington, D.C. and said the inflation was expected to peak around this time in the year and then come down in the rest of the year and then slowdown further in 2023. However, these expectations have been disappointed in the past 

He added, "it may be that the actual peak was in March, but we don't know that. and went on to add that we will be raising rates expeditiously to get to levels that are more neutral "

Powell also confirmed that Fed policy tools are limited in tackling supply side issues or energy and commodities prices but the central bank has a toolkit in tackling demand related issues. 

Federal Reserve Chair Jerome Powell, IMF Chief Kristalina Georgieva, and European Central Bank Christine Lagarde hold talks during the International Monetary Fund and World Bank Spring Meetings in Washington.

AutoNation Net Jumps After Gross Margin on New Vehicle Doubles to $6,112

AutoNation said first quarter 2022 revenues increased 14% to $6.8 billion, net income surged 51% to $362.1 million, and earnings per share increased 103% to $5.78 from $2.85 a year ago. 

New vehicle unit sales in the quarter declined 19% to 56,442 and used vehicle sales rose 11% to 79,763. 

Used vehicles sales in the quarter rose 47% from a year ago but new vehicle sales declined 6% from a year ago. New vehicle gross profit more than doubled to $6,112 from $3,373 a year ago and used vehicle gross profit declined 10% in the same period to $1,566.   

During the quarter, the auto retailer repurchased 3.5 million shares for $381 million and repurchased a total of 4.8 million shares for $581 million in the year-to-date as of April 19, 2022. 

Alaska Air Net Loss Expands, Offers Brighter Outlook

Alaska Air Group said first quarter 2022 revenues increased 111% to $1.68 billion, net loss increased 10% to $143 million, and diluted loss per share increased 10% to $1.14 from $1.05 a year ago. 

Passenger load factor increased to 76.8% from 51.8%, revenues per available seat mile increased to 11.30 cents from 7.11 cents, and fuel cost per gallon increased to $2.61 from $1.77 a year ago. 

American Airlines Revenues Recover 84% to Comparable Quarter in 2019

American Airlines reported first quarter 2022 total operating revenues doubled to $8.9 billion, net loss increased 30% to 1.7 billion, and diluted loss per share rose 28% to $2.52 from $1.97 a year ago. 

The airline said it was profitable excluding net special items in March and expects to be profitable in the second quarter based on the current demand trends and fuel price forecast.

Passenger load factor increased to 77.9% in the quarter from 66.3% a year ago and revenues per available sear mile increased to 14.4 cents from 9.5 cents a year ago. 

The airline guided second quarter capacity to reach between 92% and 94% of its capacity in the comparable quarter in 2019. 

The airline also said it is working on a plan to pay down its debt of $15 billion by the end of 2025. 

Weekly Jobless Claims Fall to 184,000

Initial jobless claims declined to 184,000 for the week ending April 16. the prior week's claims were revised higher up 1,000 to 186,000  

Continued claims for the week ending April 2 were 1.62 million, a decline of 88,031 from the previous week and sharp fall from 17.4 million claims a year ago. 

Unemployment rate has declined to 3.6% from the record high 13.6% in the second quarter of 2020 but there are still 408,000 fewer people in the labor force and the labor participation rate is still 1% lower than the pre-pandemic rate. 

Earnings Optimism Lifts Nasdaq and S&P 500

U.S. stock indexes open higher as investors digest the latest earnings from American Airlines, United Airlines, and Tesla. Airlines are estimating profit in the current quarter and in the full-year as passenger traffic rebounds.     

Tesla reported a surge in revenues and earnings after vehicle deliveries rose despite the supply chain disruptions.     Investors are awaiting to hear comments from Fed Chairman Jerome Powell this afternoon hoping to get more clues on the next course of Fed actions in tackling elevated inflation.     

U.S. Treasury 10-year bond yield climbed to 2.85% as real interest rates continue to hover deep in the negative territory with the reported consumer price index indicating inflation at 6.5%.     

In Europe, DAX and CAC 40 indexes are up more than 1.5% and FTSE 100 index is trading 0.3% higher.     

In Asian markets, the Sensex index in India soared 1.5% after a 3-day market sell-off, Nikkei index in Tokyo closed up 1.2% but the Hang Seng index in Hong Kong closed down 1.2%.