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Markets took another tumble today out of the gate. The major indices fought back and closed near session highs, but still well-off breakeven. The Dow finished down -375 points, -0.98%, which was the worst of the bunch. Elsewhere, the S&P 500 dropped -0.46%, the Nasdaq was off -0.64% and the small-cap Russell 2000 -0.76%. All four indices are still positive for the week, with one more day of trading to go.
Early morning whiffs of “stagflation” from economic prints joined with disappointing early morning Q1 reports. This created a major downdraft in sentiment, even as it likely increased the Fed’s willingness to finally move on interest rate levels now that data is showing signs of economic strain. Q1 GDP and the latest Trade Deficit numbers comingled with earnings misses from CaterpillarCAT and airline majors American AAL and Southwest LUV.
After the close, we see some big-time companies reporting. MicrosoftMSFT posted a routine beat on both top and bottom lines (it has one earnings miss in the past five years), with earnings of $2.94 per share outpacing the $2.81 in the Zacks consensus. Revenues of $61.9 billion in the quarter topped expectations of $60.6 billion, for +17% growth year over year. Operating income grew +23% from a year ago to $27.6 billion for the quarter.
Microsoft’s cloud business (Azure) also gained +23% year over year, to $35.1 billion, including $26.7 billion from its “intelligent cloud” unit, up +21% from the year-ago quarter. Business productivity ramped up +12% to $19.6 billion. Shares are up +5% in late trading on the news, adding to the +7.6% gains year to date and +35% over the past year. Guidance is likely to be spelled out in the conference call, which is about to get underway.
AlphabetGOOGL also beat expectations on its top and bottom lines. Earnings of $1.89 per share sailed past the Zacks consensus by 40 cents per share, and left in the dust the year-ago earnings tally of $1.17 per share. Revenues, subtracting traffic acquisition costs (TAC), came in at $67.59 billion, easily ahead of the $66.04 billion analysts were looking for (the company reported a top-line headline of $80.54 billion). Advertising, especially with YouTube, came in stronger than expected. The company also announced its first-ever dividend yield of 20 cents per share. Shares are up +12.8% in the late session.
Taking the cake this afternoon is Snap, Inc.SNAP. The social media mainstay swung to positive earnings of +$0.03 per share from expectations for -$0.05, and topping the year-ago +$0.01 per share. Revenues of $1.19 billion grew +21% year over year, well ahead of the $1.12 billion Zacks consensus estimate, on +10% year-over-year growth in Daily Active Users, which came in at 422 million. Spotlight content grew +125% from a year ago. Shares of SNAP are up an eye-popping +29% in the after-market.
IntelINTC, however, is headed the opposite direction. Although the chip-making giant beat on its Q1 bottom line — earnings of 18 cents per share versus expectations for 13 cents — it was marginally short on revenues to $12.7 billion ($12.76 billion in the Zacks consensus). But what is sending the shares down -8% in late trading is next-quarter guidance: earnings of 10 cents per share on $12.5-13.5 billion in sales are well short of the previously expected 24 cents per share and $13.54 billion in revenues, respectively.
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If approved, batoclimab will be marketed as a pre-filled syringe for convenient self-administration, eliminating the need for frequent and costly clinic visits and thus reducing costs.
eBay's focus on enhanced user experience, strength in marketplace business, opportunities in the fast-growing mobile commerce, and collectible market prospects remains a positive.
Zillow Group’s growth can be attributed to its Premier Agent Business, new construction marketplaces and increasing traffic at its mobile apps as well as websites.
Medifast is encountering difficulties in attracting customers, primarily because of a range of macroeconomic elements, such as a rapidly changing economy, inflation, shifts in social media algorithms and fierce competition.
Huntsman is seeing pressure from lower selling prices. The company also faces headwinds from weak demand in Europe and China. Elevated input costs may also hurt margins.
Alibaba's business structure involves certain risks due to the strict laws in China, which along with lower mobile monetization, increasing competition and integration risks are concerns.
Intensifying competition is likely to make Atlassian resort to competitive pricing in an effort to maintain and gain further market share. A decelerating customer growth rate, softened IT spending and integration risks are other concerns.
American Eagle remains well placed on the back of cost-reduction efforts, strength in Aerie and a solid online show. Also, its Real Power Real Growth value creation plan bodes well.
Netflix’s growing subscriber base, driven by content strength, focus on originals across various genres and languages, rapid international expansion and partnerships with telcos are key drivers.
