- Brian Turner
- 28 Jul, 2022
- New York City
The U.S. economy declined for the second quarter in a row largely on the account of fall in investments and weak government spending.
The GDP shrank at an annual rate of 0.9% following the 1.6% decline in the first quarter, the Bureau of Economic Analysis said Thursday.
Real GDP decreased less in the second quarter than in the first quarter reflecting an upturn in exports and a smaller decrease in federal government spending that were partly offset by larger declines in private inventory investment and state and local government spending, a slowdown in PCE, and downturns in nonresidential fixed investment and residential fixed investment.
Imports decelerated.
The decrease in private inventory investment was led by a decrease in retail trade driven by the weakness in general merchandise stores and lower level of activities at automobile dealers.
The decrease in residential fixed investment was led by a decrease in brokers' commissions as the home unit sales declined.
The decrease in federal government spending reflected a decrease in non-defense spending that was partly offset by an increase in defense spending.
The decrease in non-defense spending reflected the sale of crude oil from the Strategic Petroleum Reserve, which results in a corresponding decrease in consumption expenditures.
Because the oil sold by the government enters private inventories, there is no direct net effect on GDP.
The decrease in state and local government spending was led by a decrease in investment in structures.
The decrease in nonresidential fixed investment reflected decreases in structures and equipment that were mostly offset by an increase in intellectual property products.
The increase in imports reflected an increase in services (led by travel).
The increase in exports was driven by higher exports of industrial supplies and materials and services led by the rebound of international tourist arrivals.
The increase in PCE or personal consumption expenditure reflected an increase in services led by food services and accommodations as well as health care, partly offset by a decrease in goods led by food and beverages consumption.
- Barry Adams
- 27 Jul, 2022
- New York City
Stocks rallied on Wall Street after the Federal Reserve increased the key lending rate by a larger-than-expected amount.
The 75 basis points increase was welcomed by investors and reaffirmed the Fed's commitment in fighting inflation.
After the increase, the federal funds rate have a target rate range between 2.25% and 2.5%.
"The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run" and "anticipates that ongoing increases in the target range will be appropriate.
In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities," noted the accompanying statement released by the Federal Reserve.
Investors are anticipating a better read on the second quarter GDP before the market opens on Wednesday after the first quarter GDP declined at an annual rate of 1.6%.
The S&P 500 index increased 2.6% to 4,023.61 and the Nasdaq Composite index gained 4.1% to 12,032.42.
Futures of crude oil rose $3.11 to $98.11 a barrel and natural gas fell 32 cents to $8.66 a thermal unit but still hovered near the price last seen in 2008.
The yield on 10-year Treasury notes declined to 2.78% and on2-year notes fell to 2.98%.
The broad rally lifted stocks across all sectors led by a surge in tech stocks.
Investors also reacted to the latest batch of earnings releases.
Microsoft gained 6.7% to $268.40 after the company exceeded lowered earnings expectations.
Microsoft said quarterly net income growth slowed after cloud business growth slowed and video game business shrank.
June quarter sales increased 12% to $51.9 billion and rose in constant currencies 16% from a year ago.
Net income jumped 2% or 7% in constant currencies to $16.7 billion from a year ago.
Diluted earnings per share rose 3% to $2.23 from $2.17 a year ago.
For the full-year net revenues rose 18% to $198.3 billion, net income surged 19% to $72.7 billion and earnings per share rose 20% to $9.65.
Alphabet Inc jumped 7.7% to $113.05 after the parent of Google reported a decline in earnings but were ahead of the expectations set by some investors.
Alphabet reported its slowest quarterly revenues increase in two years as rising dollar and weakening economic backdrop impacted advertising environment.
Alphabet Inc said second quarter revenues increased 13% or 16% in constant currencies to $69.7 billion.
Net income fell to $16.0 billion from $18.5 billion and diluted earnings per share fell to $1.21 from $1.36 a year ago.
Chipotle Mexican Grill, Inc soared 12.7% $1.510.08 after the operator of fast food restaurants was able to increase customer price faster than the increase in food prices and wage costs.
PayPal Holdings Inc increased 12.2% to $86.47 after the activist investor Elliott Management acquired a stake in the payment processor. The news was first reported by the Wall Street Journal.
Shopify Inc increased 11.7% to $35.24 despite the e-commerce platform operator reporting wider-than-expected loss and said losses in the current quarter are expected to rise.
Boeing Co declined 0.11% to $156.09 after the aerospace and defense contractor reported lower-than-expected revenues and wider-than-expected quarterly loss.
However, the company did not revise its production schedule for 737 MAX jets.
Hilton Hotels rose 7.5% to $129.25 after the hotel operator lifted its annual outlook citing a rebound in travel demand. The company also delivered better-than-expected quarterly results.
McDonald's Corp gained 0.7% to $258.89 after the fast food chain reported stronger-than-expected earnings.
Global comparable store sales increased 9.7% driven by the U.S. sales increase of 3.7% and systemwide sales increased 4.0% or 10.0% in constant currencies.
Consolidated revenues declined 3% to $5.7 billion and net income plunged 46% to $1.2 billion and diluted earnings per share fell by the same amount to $1.60 from a year ago.
- Scott Peters
- 27 Jul, 2022
- New York City
United Parcel Services increased 44 cents to $181.90 after the company reported June quarter sales increased 5.7% from a year ago to $24.8 billion.
Net income in the quarter increased 6.5% to $2.9 billion from $2.7 billion a year ago and diluted earnings per share increased to $3.25 from $3.05.
Supply chain revenues, which boomed during the pandemic era, rose only 0.7% to $4.2 billion.
Average revenues per package increased 2.3% to $7.61 and total international package revenues including export revenues rose14.8% lifting the consolidated average revenues increase to 11.9% to $13.72.
The price increases drove most of the revenue gains in the quarter.
U.S. Domestic Parcel Volume Falls
U.S. domestic package revenues increased 7.3% to $15.5 billion and international package revenues increased 5.3% to 5.1%.
Average daily parcel volume declined 9.2% driven by 13.4% fall in the U.S. and 4.4% in exports volumes.
U.S. domestic package revenue increase was driven by 11.9% increase in revenues per piece with fuel surcharge of 400 basis points increase and the remainder 790 basis points increase was driven by base rate increase, fuel prices, and mix improvements.
Average daily parcel volume in the U.S. declined 4.0% to 19.7 million from 20.5 million a year ago.
Dividends and Stock Repurchase
UPS said it plans to return to shareholders $5.2 billion in dividends and the company lifted its stock repurchase limit to $3.0 billion in 2022.
Outlook
The company reaffirmed its full-year revenues estimate of $102 billion and capital expenditure of 5.4% revenues or $5.5 billion.
UPS estimated full-year 2022 domestic revenues to increase 5.5% and international revenues to grow in low-single digits.
Supply chain revenues in the full-year are estimated to be near $9.0 billion and consolidated operating margin of 13.6%.
Free cash flow in 2022 is estimated around $9.0 billion.
- Scott Peters
- 27 Jul, 2022
- New York City
Visa Inc declined 2.2% to $207.67 after the payment processing network operator said June quarter revenues increased 19% to $7.3 billion.
Net income in the quarter increased 32% to $3.4 billion and diluted earnings per share rose 36% to $1.60 from $1.18 a year ago.
Payments volume in the quarter increased 12% in constant dollars from a year ago.
Cross-border volume excluding transactions within Europe surged 48% in constant dollars.
Total cross-border volume, including Europe, increased 40% in the quarter.
Total processed transactions in the quarter, which represent transactions processed by Visa, were 49.3 billion, a 16% increase from a year ago.
During the quarter, Visa repurchased 12.2 million shares of class A common stock at an average price of $202.16 a share for $2.5 billion.
- Brian Turner
- 27 Jul, 2022
- New York City
The Federal Reserve lifted its key lending rate range by 75 basis points, second rate hike in a row.
In a unanimous decision, policy makers agreed to lift the federal funds rate to 2.25% to 2.5% and held out for future rate hikes to warm off sky-high inflation.
Policymakers in an accompanying statement set the hawkish tone for future rate hikes and highlighted the Fed's commitment in bringing the inflation down to the Fed's target rate of 2%.
"The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run," The Fed's statement noted.
Fed policymakers also guided future rate hikes as anticipated by financial markets.
Fed Chairman Jerome Powell said at a press conference after the rate decision that he does not believe the U.S. is currently in a recession.
Fed's action may appear aggressive but the policymakers are severely lagging the inflation. It may take several sustained rate increases and other measures to bring down the raging inflation forces.
The Consumer Price Index has stayed above the Fed's target rate of 2% for 18 months in a row, and the Fed's action may do little to bring down rising food and fuel prices.
Much of the inflationary forces are driven by the supply side factors that are less influenced by the Federal Reserve's decisions.
Investors are worried that the Fed's aggressive moves may force the economy into a recession despite the strong labor market.
Home prices are still rising despite the elevated mortgage rates and record high home prices.
After the rate decision, the yield on 10-year Treasury notes declined to 2.76% and 2-year notes traded down to 2.98%.
- Barry Adams
- 27 Jul, 2022
- New York City
Stocks surged on Wall Street after Alphabet and Microsoft exceeded lowered earnings expectations.
The Federal Reserve is set to announce its rate decision at the end of a 2-day meeting at 2:00 p.m. ET.
Investors are anticipating rate hike by at least 50 basis points.
The S&P 500 index increased 1.1% to 3,966.15 and the Nasdaq Composite index gained 2.1% to 11,802.69.
Futures of crude oil rose $2.32 to $97.31 a barrel and natural gas fell 29 cents to $8.70 a thermal unit but still hovered near the price last seen in 2008.
The yield on 10-year Treasury notes declined to 2.76% ahead of the Fed's rate decision.
Alphabet Inc jumped 6.4% to $110.45 after the parent of Google reported a decline in earnings but were ahead of the expectations set by some investors.
Alphabet reported its slowest quarterly revenues increase in two years as rising dollar and weakening economic backdrop impacted advertising environment.
Alphabet Inc said second quarter revenues increased 13% or 16% in constant currencies to $69.7 billion.
Net income fell to $16.0 billion from $18.5 billion and diluted earnings per share fell to $1.21 from $1.36 a year ago.
Boeing Co declined 1.01% to $154.05 after the aerospace and defense contractor reported lower-than-expected revenues and wider-than-expected quarterly loss.
However, the company did not revise its production schedule for 737 MAX jets.
Chipotle Mexican Grill, Inc soared 15.3% $1.517.98 after the operator of fast food restaurants was able to increase customer price faster than the increase in food prices and wage costs.
Total revenue in the quarter ending in June increased 17.0% to $2.2 billion and comparable restaurant sales increased 10.1%
Diluted earnings per share increased 40.2% to $9.25 from $6.60 a year ago.
Chipotle opened 42 new restaurants with 32 locations including a Chipotlane.
Hilton Hotels rose 4.5% to $125.80 after the hotel operator lifted its annual outlook citing a rebound in travel demand. The company also delivered better-than-expected quarterly results.
Microsoft Corp gained 4.6% to $263.50 after the company exceeded lowered earnings expectations.
Microsoft said quarterly net income growth slowed after cloud business growth slowed and video game business shrank.
June quarter sales increased 12% to $51.9 billion and rose in constant currencies 16% from a year ago.
Net income jumped 2% or 7% in constant currencies to $16.7 billion from a year ago.
Diluted earnings per share rose 3% to $2.23 from $2.17 a year ago.
For the full-year net revenues rose 18% to $198.3 billion, net income surged 19% to $72.7 billion and earnings per share rose 20% to $9.65.
PayPal Holdings Inc increased 11.5% to $85.70 after the activist investor Elliott Management acquired a stake in the payment processor. The news was first reported by the Wall Street Journal.
Shopify Inc increased 5.9% to $33.40 despite the e-commerce platform operator reported wider-than-expected loss and said losses in the current quarter are expected to rise.
United Parcel Services increased 44 cents to $181.90 after the company reported June quarter sales increased 5.7% from a year ago to $24.8 billion.
Net income in the quarter increased 6.5% to $2.9 billion from $2.7 billion a year ago and diluted earnings per share increased to $3.25 from $3.05.
The company reaffirmed its full-year revenues estimate of $102 billion and capital expenditure of 5.4% revenues or $5.5 billion.
UPS said it plans to return to shareholders in $5.2 billion in dividends and lifted its stock repurchase limit to $3.0 billion in 2022.
Visa Inc declined 2.2% to $207.67 after the payment processing network operator said June quarter revenues increased 19% to $7.3 billion.
Net income in the quarter increased 32% to $3.4 billion and diluted earnings per share rose 36% to $1.60 from $1.18 a year ago.
Payments volume in the quarter increased 12% in constant dollars from a year ago.
Cross-border volume excluding transactions within Europe surged 48% in constant dollars.
Total cross-border volume, including Europe, increased 40% in the quarter.
Total processed transactions in the quarter, which represent transactions processed by Visa, were 49.3 billion, a 16% increase from a year ago.
During the quarter, Visa repurchased 12.2 million shares of class A common stock at an average price of $202.16 a share for $2.5 billion.
- Barry Adams
- 27 Jul, 2022
- New York City
Stocks surged on Wall Street after Alphabet and Microsoft exceeded lowered earnings expectations.
The Federal Reserve is set to announce its rate decision at the end of a 2-day meeting at 2:00 p.m. ET.
Investors are anticipating rate hike by at least 50 basis points.
Many economists are also looking for the Fed to take an aggressive stand and lift the rates by 75 basis points and front-load future rake hikes.
The Fed has been lagging inflation for at least two years and the consumer price index, a measure of inflation, has exceeded the Fed's target rate of 2% for 18 months in a row.
The CPI index for May and June hovered near 8.6% rate.
The S&P 500 index increased 1.1% to 3,966.15 and the Nasdaq Composite index gained 2.1% to 11,802.69.
Futures of crude oil rose $2.32 to $97.31 a barrel and natural gas fell 29 cents to $8.70 a thermal unit but still hovered near the price last seen in 2008.
The yield on 10-year Treasury notes declined to 2.76% ahead of the Fed's rate decision.
Microsoft gained 4.6% to $263.50 after the company exceeded lowered earnings expectations.
Microsoft said quarterly net income growth slowed after cloud business growth slowed and video game business shrank.
June quarter sales increased 12% to $51.9 billion and rose in constant currencies 16% from a year ago.
Net income jumped 2% or 7% in constant currencies to $16.7 billion from a year ago.
Diluted earnings per share rose 3% to $2.23 from $2.17 a year ago.
For the full-year net revenues rose 18% to $198.3 billion, net income surged 19% to $72.7 billion and earnings per share rose 20% to $9.65.
Alphabet Inc jumped 6.4% to $11.45 after the parent of Google reported a decline in earnings but were ahead of the expectations set by some investors.
Alphabet reported its slowest quarterly revenues increase in two years as rising dollar and weakening economic backdrop impacted advertising environment.
Alphabet Inc said second quarter revenues increased 13% or 16% in constant currencies to $69.7 billion.
Net income fell to $16.0 billion from $18.5 billion and diluted earnings per share fell to $1.21 from $1.36 a year ago.
Chipotle Mexican Grill, Inc soared 15.3% $1.517.98 after the operator of fast food restaurants was able to increase customer price faster than the increase in food prices and wage costs.
PayPal Holdings Inc increased 11.5% to $85.70 after the activist investor Elliott Management acquired a stake in the payment processor. The news was first reported by the Wall Street Journal.
Shopify Inc increased 5.9% to $33.40 despite the e-commerce platform operator reported wider-than-expected loss and said losses in the current quarter are expected to rise.
Boeing Co declined 1.01% to $154.05 after the aerospace and defense contractor reported lower-than-expected revenues and wider-than-expected quarterly loss.
However, the company did not revise its production schedule for 737 MAX jets.
Hilton Hotels rose 4.5% to $125.80 after the hotel operator lifted its annual outlook citing a rebound in travel demand. The company also delivered better-than-expected quarterly results.
- Scott Peters
- 26 Jul, 2022
- New York City
Alphabet reported its slowest quarterly revenues increase in two years as rising dollar and weakening economic backdrop impacted advertising environment.
Alphabet Inc said second quarter revenues increased 13% or 16% in constant currencies to $69.7 billion.
Operating income in the quarter rose to $19.5 billion from $19.4 billion a year ago.
Operating margin declined to 28% from 31% a year ago on higher operating costs.
Net income fell to $16.0 billion from $18.5 billion and diluted earnings per share fell to $1.21 from $1.36 a year ago.
Segment Breakdown
Total advertising revenues increased to $56.3 billion from $50.4 billion and traffic acquisition costs increased to $12.2 billion from $10.9 billion a year ago.
Google search revenues increased to $40.7 billion from $35.8 billion and ads on the YouTube channel increased to $7.3 billion from $7.0 billion a year ago.
Google cloud revenues increased to $6.3 billion from $4.6 billion, an increase of 37% from a year ago.
Google headcount increased by about 30,000 to 174,014.
- Scott Peters
- 26 Jul, 2022
- New York City
Microsoft said quarterly net growth slowed after cloud business growth slowed and videogame business shrank.
Microsoft said June quarter sales increased 12% to $51.9 billion and rose in constant currencies 16% from a year ago.
Operating income in the quarter rose 8% or 14% in constant currencies to $20.5 billion.
Net income jumped 2% or 7% in constant currencies to $16.7 billion from a year ago.
Diluted earnings per share rose 3% to $2.23 from $2.17 a year ago.
For the full-year net revenues rose 18% to $198.3 billion, net income surged 19% to $72.7 billion and earnings per share rose 20% to $9.65.
Segment Revenues
Cloud revenues increased 20% to $20.9 billion and revenues in productivity and business process segment rose 13% to $16.6 billion.
Revenues in personal computing increased 2% to $14.4 billion but Xbox and related revenues fell 6%.
Search and news advertising revenue excluding traffic acquisition costs increased 18% and LinkedIn revenues increased 26%.
Azure and other cloud services reported sales surge of 40% from a year ago.
Share Buyback Program
Microsoft returned $12.4 billion to shareholders including stock repurchases and dividends in the fourth quarter of fiscal year 2022, an increase of 19% from a year ago.
- Scott Peters
- 26 Jul, 2022
- New York City
General Motors declined 2.8% to $33.75 and the vehicle maker said June quarter revenues increased 4.6% to $35.8 billion and net income plunged 40% to $1.7 billion from $2.8 billion a year ago.
The company blamed the earnings fall on China lockdown and parts shortages preventing the automaker from shipping 100,000 vehicles.
The automaker said it has secured materials needed to make one million electric vehicles by 2025.
General Motors guided full-year net income between $9.6 billion and $11.2 billion and adjusted operating earnings between $13.0 billion and $15.0 billion.
The company also guided full-year diluted earnings per share between $5.76 and $6.76 and adjusted earnings per share between $6.50 and $7.50.
- Scott Peters
- 26 Jul, 2022
- New York City
Coca-Cola Company gained 1.8% to $63.33 after the beverage maker said second quarter revenues rose 12% to $11.3 billion and net income dropped 28% to $1.9 billion from $2.6 billion a year ago.
Diluted earnings per share declined to 44 cents from 61 cents a year ago.
The concentrate volume sales increase of 4 percentage points and acquisition related sales increase of 2 percentage points was offset by 6 percentage points decline in sales from the stronger dollar.
The increase in price and volume mix of 12 percentage points drove all of the total sales increase in the quarter.
Unit case volumes across all geographies rose 8% and in the North America rose 2%.
The company guided organic revenues in the full-year to increase between 12% and 13%, an increase from the previous estimate between 7% and 8%.
Coca-Cola guided its adjusted earnings per share based on constant currency to increase to between 14% and 15% from the previous estimate of between 8% and 10%.
- Scott Peters
- 26 Jul, 2022
- New York City
UBS AG dropped 10.9% to $15.04 after the Swiss bank reported sharply lower-than-expected earnings in its latest quarter.
Total revenues in the June quarter were essentially flat at $8.9 billion and net income gained 5% to $2.1 billion from $2.01 a year ago.
Many analysts were looking for earnings to fall between $2.2 billion and $2.45 billion in an informal poll conducted by Ticker.com in the U.S. and Switzerland.
Diluted earnings per share rose to 61 cents from 55 cents a year ago.
Fee generating assets in its global wealth management unit, fee-generating assets decreased by 12% or $169.5 billion to $1,244 billion, almost entirely driven by market decline and foreign currency effects.
The earnings were supported by a one-time gain of $848 million from the sale of its minority stake in its real estate joint venture in Japan with Mitsubishi.
Investment banking revenues declined 14% to $2.1 billion and wealth management unit revenues dropped to $4.7 billion from $4.8 billion a year ago.
UBS said assets under management declined $12 billion, mostly driven by outflows in equities assets.
- Barry Adams
- 26 Jul, 2022
- New York City
Benchmark indexes traded lower ahead of the Fed's rate decision on Wednesday followed by the GDP data on Thursday.
The S&P 500 index declined 1.1% to 3,921.26 and the Nasdaq Composite index fell 1.9% to 11,569.95.
Futures of crude oil declined $1.20 to $95.10 a barrel and natural gas rose 22 cents to $8.95 a thermal unit.
Natural gas futures surged Russia controlled Gazprom throttled down gas flow to 20% of capacity of the Nord Stream 1.
3M increased 6.3% to $142.72 after the company reported better-than-expected earnings and said it plans to separate its healthcare unit as a separate independent company.
Coca-Cola Company gained 1.8% to $63.33 after the beverage maker said second quarter revenues rose 12% to $11.3 billion and net income dropped 28% to $1.9 billion from $2.6 billion a year ago.
Diluted earnings per share declined to 44 cents from 61 cents a year ago.
The concentrate volume sales increase of 4 percentage points and acquisition related sales increase of 2 percentage points was offset by 6 percentage points decline in sales from the stronger dollar.
The increase in price and volume mix of 12 percentage points drove all of the total sales increase in the quarter.
Unit case volumes across all geographies rose 8% and in the North America rose 2%.
The company guided organic revenues in the full-year to increase between 12% and 13%, an increase from the previous estimate between 7% and 8%.
Coca-Cola guided its adjusted earnings per share based on constant currency to increase to between 14% and 15% from the previous estimate of between 8% and 10%.
General Electric increased 6.9% to $73.10 after the company reported higher earnings and cash flow on the recovery in its aviation engine business.
General Motors declined 2.8% to $33.75 and the vehicle maker said June quarter revenues increased 4.6% to $35.8 billion and net income plunged 40% to $1.7 billion from $2.8 billion a year ago.
The company blamed the earnings fall on China lockdown and parts shortages preventing the automaker from shipping 100,000 vehicles.
The automaker said it has secured materials needed to make one million electric vehicles by 2025.
General Motors guided full-year net income between $9.6 billion and $11.2 billion and adjusted operating earnings between $13.0 billion and $15.0 billion.
The company also guided full-year diluted earnings per share between $5.76 and $6.76 and adjusted earnings per share between $6.50 and $7.50.
Shopify plunged 15.5% to $31.02 after the e-commerce platform operator announced a layoff of 10% or about 1,000 employees.
Walmart Inc declined 7.9% to $121.62 after the retailer lowered its outlook for the fiscal year second quarter and said consumers are sticking to basic necessities because of high food and energy prices.
The shifting consumer pattern is also forcing the retailer to mark down several items including apparel and other discretionary items.
- Bridgette Randall
- 26 Jul, 2022
- New York City
European markets traded down ahead of the U.S. GDP data and interest rate decision.
Stocks in Frankfurt edged lower after Russia -controlled Gazprom throttled down natural gas flow to 20% of the capacity of Nord Stream 1 pipeline network.
The DAX index fell 0.8% to 13,102.31, the CAC-40 index declined 0.4% to 6,210.59, and the FTSE index was nearly unchanged 7,306.28.
Lindt & Spruengli increased to 107,825 Swiss francs after the chocolate maker released a stock repurchase plan of up to one billion swiss francs.
For the full-year, the chocolate maker revised its sales growth outlook to between 8% and 10% from the previous estimate between 6% and 8%.
Organic sales in the first half of 2022 ending in June increased 12.3% to 1.99 billion Swiss francs and operating profit rose 33.4% to 185.2 million Swiss francs.
Rolls Royce gained 1.5% to 93.34 pence after the aerospace and defense company appointed private equity partner and BP executive Tufan Erginbilgic as its chief executive .
Tufan will take up his new role on January 1, 2023, succeeding Warren East,
In February, East announced his intention to step down at the end of this year
Net income jumped 36.2% from a year ago to 138.4 million Swiss francs.
Stratec SE declined 11.9% to 84.60 euros after the maker of in-vitro diagnostics systems maker estimated first-half sales of 137.2 million euros compared to 155.8 million a year ago.
UBS AG dropped 10.9% to $15.04 after the Swiss bank reported sharply lower-than-expected earnings in its latest quarter.
Total revenues in the June quarter was essentially flat at $8.9 billion and net income gained 5% to $2.1 billion from $2.01 a year ago.
Many analysts were looking for earnings to fall between $2.2 billion and $2.45 billion in an informal poll conducted by Ticker.com in the U.S. and Switzerland.
Diluted earnings per share rose to 61 cents from 55 cents a year ago.
Fee generating assets in its global wealth management unit, fee-generating assets decreased by 12% or $169.5 billion to $1,244 billion, almost entirely driven by market decline and foreign currency effects.
The earnings were supported by one-time gain of $848 million from the sale of its minority stake in its real estate joint venture in Japan with Mitsubishi.
Investment banking revenues declined 14% to $2.1 billion and wealth management unit revenues dropped to $4.7 billion from $4.8 billion a year ago.
UBS said assets under management declined $12 billion, mostly driven by outflows in equities assets.
Zalando SE declined 9.8% to 25.99 euros on no corporate news. The e-commerce stocks in Europe were under pressure after the Canada-based Shopify announced a plan to layoff 10% or 1,000 employees.
- Barry Adams
- 26 Jul, 2022
- New York City
Benchmark indexes traded lower ahead of the Fed's rate decision on Wednesday followed by the GDP data on Thursday.
The S&P 500 index declined 1.1% to 3,921.26 and the Nasdaq Composite index fell 1.9% to 11,569.95.
Futures of crude oil declined $1.20 to $95.10 a barrel and natural gas rose 22 cents to $8.95 a thermal unit.
Natural gas futures surged Russia controlled Gazprom throttled down gas flow to 20% of capacity of the Nord Stream 1.
Separately, the EU member states agreed to lower natural gas consumption by 15% for the next eight months.
Russia supplies about 40% of natural gas needs of the European Union 27 member states and alternative supplies from Norway, U.S., Qatar and Algeria are likely to fall far short of the region's needs.
The yield on 10-year Treasury notes declined to 2.78% ahead of the Fed's rate decision tomorrow after a two-day meeting.
Investors are looking for the Fed to raise between 50 and 75 basis points to stem the sky-high inflation hovering near 8.6% for the last two months.
The inflation measure, Consumer Price Index, has been above the Fed's preferred target rate of 2% for the last 18 months in a row.
Walmart Inc declined 7.9% to $121.62 after the retailer lowered its outlook for the fiscal year second quarter and said consumers are sticking to basic necessities because of high food and energy prices.
The shifting consumer pattern is also forcing the retailer to mark down several items including apparel and other discretionary items.
Shopify plunged 15.5% to $31.02 after the e-commerce platform operator announced a layoff of 10% or about 1,000 employees.
3M increased 6.3% to $142.72 after the company reported better-than-expected earnings and said it plans to separate its healthcare unit as a separate independent company.
General Electric increased 6.9% to $73.10 after the company reported higher earnings and cash flow on the recovery in its aviation engine business.
General Motors declined 2.8% to $33.75 and the vehicle maker said June quarter revenues increased 4.6% to $35.8 billion and net income plunged 40% to $1.7 billion from $2.8 billion a year ago.
The company blamed the earnings fall on China lockdown and parts shortages also prevented the automaker from shipping 100,000 vehicles.
The vehicle maker said it has secured materials needed to make one million electric vehicles by 2025.
General Motors guided full-year net income between $9.6 billion and $11.2 billion and adjusted operating earnings between $13.0 billion and $15.0 billion.
The company also guided full-year diluted earnings per share between $5.76 and $6.76 and adjusted earnings per share between $6.50 and $7.50.