Wall Street Today | Earnings Excitement Continues Across Tech, Payments and Airlines, Alphabet Breaks Records
RECAP
Major U.S. stock indexes are advancing after the latest economic data showed America defied projections of a recession last year. The economy grew at a stronger-than-expected pace in the fourth quarter, without an uptick in inflation.
The $S&P 500 Index(.SPX.US$ closed up 0.53% to 4,894. The $Nasdaq Composite Index(.IXIC.US$ closed up 0.18% to 15,5510, and the $Dow Jones Industrial Average(.DJI.US$ finished up 0.64% at 38,049.
The 10-year Treasury yields fell. The yield had risen for six of the past seven trading days, and on Wednesday settled at its highest level since Dec. 12. Weaker-than-expected labor market data helped lift bond prices.
Overseas markets were mixed. The Stoxx Europe 600 pared some losses after the European Central Bank kept interest rates on hold.
Stock indexes in Hong Kong and mainland China rose. Markets have been buoyed by recent moves to stimulate the Chinese economy, and expectations that there could be more to come.
MACRO
U.S. Economy Beats Expectations Again
The US economy expanded an annualized 3.3% in the last three months of 2023, much better than market forecasts of a 2% rise, and following a 4.9% rate in Q3, according to the advance estimate.
The sharp increase came due to contributions from consumer spending, increased inventories, exports, and government spending.
Personal consumption expenditures rose by 2.8% for the quarter. Consumer spending on goods and services saw a rise of 3.8% and 2.4%, respectively. Exports surged by 6.3%.
Gross private domestic investment also rose by 2.1%, while government spending and investment increased by 3.3%.
Considering full 2023, the US economy grew 2.5%, compared to 1.9% in 2022 and Fed's estimates of 2.6%. The figures showed the Fed's tightening campaign took a hit on the economy, but the toll was less severe than initially anticipated as a tight labour market continues to support consumer spending.
SECTORS
Airlines Climb with Earnigns Despite Losses from Boeing Disruptions
$Alaska Air(ALK.US$ warned that the grounding of its $Boeing(BA.US$ fleet would dent earnings by about $150 million this year and weigh on the company's ability to increase flying capacity. ALK rose after earnings, while Beoing fell/ Shares of $American Airlines(AAL.US$ and $Southwest Airlines(LUV.US$ climbed Thursday as both carriers reported quarterly results that topped analysts' expectations, and also mentioning the losses they felt from the 737 Max 9 disruption to their quarters.
Southwest reported a $219 million loss for its most recent quarter that, after stripping out one-time items, worked out to adjusted earnings of 37 cents a share, well above what analysts projected, according to FactSet. Revenue rose almost 11% to $6.82 billion, also above analysts' expectations.
American said its fourth-quarter net income dropped to $19 million from $803 million a year ago, though the company's adjusted earnings per share of 29 cents beat analysts' projections. Revenue slipped, but remained above analysts' forecasts.
FTC to Inquire about Microsoft's, Google's, and Amazon's AI Partnerships
Federal regulators are requesting information from $Microsoft(MSFT.US$, $Alphabet-C(GOOG.US$ and $Amazon(AMZN.US$ about their investments in artificial intelligence companies. The Federal Trade Commission said Thursday that its inquiry would examine recent investments and partnerships related to generative AI and major cloud-service providers.
COMPANIES
Intel Posts Q4 Earnings
$Intel(INTC.US$ reported quarterly earnings of $0.54 per share which beat the analyst consensus estimate of $0.45 by 20 percent. The company reported quarterly sales of $15.40 billion which beat the analyst consensus estimate of $15.16 billion by 1.61 percent. This is a 9.67 percent increase over sales of $14.04 billion the same period last year.
Visa Q1 2024 Adj EPS $2.41 Beats $2.34 Estimate, Sales $8.60B Beat $8.54B Estimate
$Visa(V.US$ reported quarterly earnings of $2.41 per share which beat the analyst consensus estimate of $2.34 by 2.99 percent. The company reported quarterly sales of $8.60 billion which beat the analyst consensus estimate of $8.54 billion by 0.71 percent. This is a 8.37 percent increase over sales of $7.94 billion the same period last year.
Tesla Shares Sink on Volume Growth Worries as Musk Says EV Maker Lacks Margin 'Crystal Ball'
$Tesla(TSLA.US$shares are skidding Thursday after the carmaker said growth would cool in 2024. The EV-maker's shares fell more than 10%. Tesla's profit margin took a hit last quarter, and Chief Executive Elon Musk reiterated his desire for greater control over the company.
PayPal CEO Sees 'Huge Monetization Opportunity' After Revamp, but Stock Drops
$PayPal(PYPL.US$ is betting it can give the business a jolt with a greater focus on checkout speed, marketing tools, personalization offers and artificial intelligence. It unveiled various new features themed around those concepts at an "innovation" event Thursday.
Apple Issues Changes to Operating System, App Store to Comply With EU Law
$Apple(AAPL.US$ said the changes to iOS, web browser Safari and its App Store for those in the EU reflect the European Commission's designation of the offerings as "core platform services" under the Digital Markets Act.
Source: Bloomberg, Dow Jones, CNBC, Reuters
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