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  • Dow posts longest winning streak in nearly 6 years; Nasdaq slumps over 2%

    Dow posts longest winning streak in nearly 6 years; Nasdaq slumps over 2%

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    U.S. stocks finished mostly lower Thursday, with the Nasdaq and S&P 500 dragged down by disappointing earnings, while the Dow Jones Industrial Average rose for a ninth straight day for its longest winning streak in nearly six years.

    How stocks traded

    • The S&P 500
      SPX,
      -0.68%
      fell 30.85 points, or 0.7%, to close at 4,534.87.

    • The Dow
      DJIA,
      +0.47%
      rose 163.97 points, or 0.5%, to finish at 35,225.18. The winning streak is its longest since a nine-day run that ended on Sept. 20, 2017, according to Dow Jones Market Data.

    • The Nasdaq Composite
      COMP,
      -2.05%
      ended at 14,063.31, down 294.71 points, or 2.1%.

    What drove markets

    After lagging behind the S&P 500 and Nasdaq for most of the year, the Dow Jones Industrial Average has climbed over the past two weeks. The blue-chip gauge is now heading for its longest streak of daily gains since Sept. 20, 2017, according to Dow Jones Market Data.

    It’s the latest milestone as value stocks and other lagging sectors of the market appear to be playing “catch up,” said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest Wealth Management, during a phone interview with MarketWatch. Although the Dow’s year-to-date gains are still well behind those of the S&P 500, with the blue-chip gauge up 6.6% since Jan. 1, FactSet data show.

    On Wednesday, the S&P 500 and Nasdaq closed at their highest levels in nearly 16 months.

    “We’re finally seeing the rotation to value,” he said. “The Dow is playing catch up with the S&P 500 and the Nasdaq.”

    See: Stock-market bubble trouble? Check out the 3-year view on Nasdaq, S&P 500 returns.

    Technology stocks were lagging following earnings from Netflix Inc.
    NFLX,
    -8.41%
    released late Wednesday, which showed that revenue fell short. Shares fell 8.4%.

    Tesla Inc.
    TSLA,
    -9.74%
    shares fell 9.7% after the electric vehicle maker beat Wall Street expectations for its second quarter but not in the blowout fashion that some market observers were expecting.

    “Netflix missed sales estimates and issued lower-than-expected Q3 guidance, while Tesla’s results showed shrinking profitability with squeeze on margins,” said Henry Allen, strategist at Deutsche Bank.

    Semiconductor shares also took it on the chin, with the PHLX Semiconductor Index
    SOX,
    -3.62%
    falling 3.6%. The drop came after Taiwan Semiconductor Manufacturing Co. 
    TSM,
    -5.05%
    topped second-quarter earnings expectations but reported margins that contracted, while providing a somewhat downbeat outlook.

    Meanwhile, shares of IBM Corp.
    IBM,
    +2.14%
    and Johnson & Johnson
    JNJ,
    +6.07%
    drove the Dow higher after both companies beat earnings expectations.

    Bad news for Netflix seemed to infect other megacap technology names, as Alphabet Inc. Class A
    GOOGL,
    -2.32%
    and Alphabet Inc.
    GOOG,
    -2.65%
    retreated, as did shares of Apple Inc.
    AAPL,
    -1.01%
    and Microsoft Corp.
    MSFT,
    -2.31%
    after the latter hit a record this week.

    Investors also digested earnings from American Airlines Group Inc.
    AAL,
    -6.24%
    and Blackstone Inc.
    BX,
    -0.61%
    which reported before the opening bell. After the close, investors will hear from Capital One Financial Corp.
    COF,
    -2.52%    ,
    CSX Corp.
    CSX,
    -0.27%
    and First Financial Bancorp
    FFBC,
    -0.54%    ,
    along with a few others.

    In U.S. economic data, weekly jobless benefit claims data showed the number of Americans applying for first-time unemployment benefits fell to a two-month low. Meanwhile, the Philadelphia Fed’s gauge of manufacturing activity came in at negative 13.5 in July, up from 13.7 during the prior month.

    Existing home sales fell in June, while leading index of economic indicators dropped 0.7% in June, falling for the 15th month in a row.

    Companies in focus

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  • The nation’s biggest banks are gearing up for more consumer struggles ahead

    The nation’s biggest banks are gearing up for more consumer struggles ahead

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    JPMorgan Chase & Co. Chief Executive Jamie Dimon on Friday said the U.S. economy was basically doing OK, even if customers were spending “a little more slowly.”

    But with rivals like Bank of America Corp., Goldman Sachs Group Inc. and American Express Co. set to report quarterly results this week, recession agita still prevails.

    For evidence, look no further than JPMorgan’s
    JPM,
    +0.60%
    own quarterly results. The bank’s second-quarter profit blew past expectations, but it set aside $2.9 billion during the second quarter to cover potentially bad loans, amid concerns that more consumers could run into more difficulty paying their bills on time as higher prices manage to stick at stores.

    That figure was well up from $1.1 billion in the same quarter last year, although still far below the billions it stowed away when the pandemic first hit. Similarly, Wells Fargo & Co.
    WFC,
    -0.34%
    on Friday set aside $1.7 billion for loan losses in this year’s second quarter, nearly triple what it was a year ago.

    The figures underscore the anxiety over the second half of this year, when many economists expect the economy to tilt into a recession. However, for the 500 companies in the S&P 500 index, Wall Street analysts still expect profit growth.

    Any downturn could be exacerbated by the pressure investors have put on companies, potentially via more layoffs and money-saving technology, to keep prices high and cut costs to replicate the abnormally large profit-margin gains they put up in 2021 and 2022. Businesses have indeed kept prices high, at least for many basic necessities, in an effort to cover their own higher costs and to pad profits.

    When Bank of America
    BAC,
    -1.89%
    reports this week, the results will narrow the lens on lending and spending in the U.S. Results from Morgan Stanley
    MS,
    -0.50%
    and Goldman Sachs
    GS,
    -0.76%
    will fill in the gaps on trading and deal-making. American Express
    AXP,
    -0.49%
    will give a more detailed breakdown of what consumers are still spending their money on, after Delta Air Lines Inc.
    DAL,
    -2.35%
    — which has a partnership with AmEx — said that travel demand remained “robust.”

    Banks shoveled more money into their reserve stockpiles in 2020 to bulk up against the pandemic’s shutdown of the economy. A year later, they started releasing those funds as the economy reopened and recovered. FactSet expects the broader banking sector to plump up its cash cushion during this year’s second quarter to account for more late loan payments or potential defaults.

    In a report on Friday, FactSet said the 15 banking-industry companies in the S&P 500 Index tracked by the firm were on pace to set aside $9.9 billion to cover losses from souring loans in the second quarter. That’s more than double the amount set aside a year ago. And if that $9.9 billion figure, based on actual and projected financial figures, ends up as the actual figure at the end of the quarter, it would mark the highest since the beginning of the pandemic and the third highest in five years, according to FactSet data.

    “The U.S. economy continues to be resilient,” Dimon said in a statement on Friday. “Consumer balance sheets remain healthy, and consumers are spending, albeit a little more slowly. Labor markets have softened somewhat, but job growth remains strong.”

    However, he noted difficulties in JPMorgan’s investment banking segment. And he said consumer savings were slowly eroding as inflation endures.

    As the nation’s biggest bank, JPMorgan has flexed its financial muscle this year, swallowing up First Republic after that bank got into trouble. But as it consolidates power and influence, building thicker armor against shocks to the economy, its financial results might not always reflect the struggles of its smaller rivals, where difficulties are likely felt more acutely. Analysts at Raymond James said that while JPMorgan remained a “best in breed” bank, its outlook pointed to “heightened challenges for smaller banks.”

    See also: Jamie Dimon says U.S. consumers are in ‘good shape.’ This evidence may prove otherwise.

    This week in earnings

    For the week ahead, 60 S&P 500 companies, including five from the Dow, will report quarterly results, according to FactSet. Two big oil companies, Halliburton Co.
    HAL,
    -2.28%
    and Baker Hughes Co.,
    BKR,
    -0.95%
    will report, as oil prices fall from levels seen last year. Results from two transportation giants — trucking company J.B. Hunt Transport Services
    JBHT,
    -0.42%
    and railroad operator CSX Corp.
    CSX,
    -0.27%
    — will also be a proxy for how much people are buying things and having them shipped. United Airlines Holdings Inc.
    UAL,
    -3.42%
    and American Airlines Group
    AAL,
    -1.68%
    will also report.

    The call to put on your calendar

    Netflix results: Hollywood shutdown, ‘slow-growth’ expectations. Hollywood’s writers — and now its actors — have gone on strike, and Netflix Inc.
    NFLX,
    -1.88%
    reports second-quarter results on Wednesday. The streaming platform will likely face questions over how much content it has left in the tank, as the strike upends studio-production schedules and leaves viewers with vast expanses of reruns. Still, Macquarie analyst Tim Nollen said that the production standstill “may ironically drive even more viewers to streaming services.”

    The writers and actors argue that the studio industry — increasingly consolidated, increasingly publicly traded, increasingly oriented around a handful of film franchises — has profited immensely while skimping on things benefits and streaming residuals. But after a decade-long rise, and a recent shift in investor focus from subscriber growth to profit growth, Netflix has emerged as one of the biggest production powerhouses in the business. And after years of flooding customers with new films and shows, it’s trying to squeeze out sales via more boring ways: things like a password-sharing crackdown and ads.

    Daniel Morgan, senior portfolio at Synovus Trust Co., said Netflix still faced a plenty of streaming competition amid “muted” subscriber growth. But Wedbush analyst Michael Pachter said investors should look at Netflix as a profitable, albeit more mature company.

    “We think Netflix is well-positioned in this murky environment as streamers are shifting strategy, and should be valued as an immensely profitable, slow-growth company,” Pachter said in a research note on Friday.

    “Even while the ad-supported tier is not yet directly accretive (we think it will be accretive over time), the ad-tier should continue to reduce churn and draw new subscribers to the service,” he continued.

    The number to watch

    Tesla sales. Electric-vehicle maker Tesla Inc. also reports second-quarter results on Wednesday. And like streaming, some analysts say the fervor for EVs has faded.

    However, they also said that Tesla
    TSLA,
    +1.25%
    had so far been immune from the malaise. And even though Elon Musk remains preoccupied with Twitter — which now faces competition from Meta Platforms Inc.’s
    META,
    -1.45%
    Threads — Tesla’s second-quarter deliveries were far above expectations. Sales are expected to be big. And one analyst said that price cuts, which Tesla has used to capture more of the auto market in China, were likely “fairly minimal” during the second quarter. But some analysts wondered what the blowout delivery figures would mean for margins. And the industry, broadly, has increasingly tested the patience of profit-minded investors.

    “We’ve now seen a market where demand is constrained, capital has been tighter, and there is less tolerance for EV related losses,” Barclays analysts said in a note last week, adding that there was a “step back from EV euphoria.”

    Claudia Assis contributed reporting.

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  • Delta Air Lines stock surges to 2-year high after earnings beat, raised outlook

    Delta Air Lines stock surges to 2-year high after earnings beat, raised outlook

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    Shares of Delta Air Lines Inc. surged toward a more-than two-year high Thursday, after the air carrier reported second-quarter profit and revenue that rose above forecast, and boosted its full-year outlook citing continued “robust” travel demand.

    Delta
    DAL,
    -1.46%
    said net income more than doubled to $1.83 billion, or $2.84 a share, from $735 million, or $1.15 a share, in the year-ago period.

    Excluding nonrecurring items, adjusted earnings per share of $2.68 beat the FactSet consensus of $2.40.

    Revenue grew 12.7% to $15.78 billion, well above the FactSet consensus of $14.44 billion,

    For 2023, the company raised its EPS guidance range to $6 to $7 from $5 to $6, and increased its outlook for free cash flow to $3 billion from $2 billion.

    The stock jumped 3.5% in premarket trading, putting it on track to open at the highest price seen during regular-sessions hours since April 2021.

    “Consumer demand for air travel remains robust,” said Chief Executive Ed Bastian.

    Traffic increased 18.0% to 60.80 billion revenue passenger miles while capacity grew 17.1% to 68.99 billion available seat miles. Load factor improved one percentage point to 88%, to beat the FactSet consensus of 87.2%.

    The stock has run up 42.1% over the past three months through Wednesday, while the U.S. Global Jets exchange-traded fund
    JETS,
    -0.81%
    has climbed 22.1% and the S&P 500 index
    SPX,
    +0.74%
    has gained 9.3%.

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  • Meta, Bank of America, Affirm, AmEx, JetBlue, and More Stock Market Movers

    Meta, Bank of America, Affirm, AmEx, JetBlue, and More Stock Market Movers

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    This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.

    https://www.barrons.com/articles/stock-market-movers-3beb512f

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  • Boeing Stock Likes the Paris Air Show. There Is a Catch.

    Boeing Stock Likes the Paris Air Show. There Is a Catch.

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    Boeing Stock Usually Wins From the Paris Air Show. This Is the Catch.

    Investors who are buying into the post-Covid recovery of commercial aerospace will get an important update about the industry, including the hot issues of sustainability and supply-chain snags, when the Paris Air Show kicks off on Monday.

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  • Virgin Galactic shares rocket higher on plans for first commercial flight this month

    Virgin Galactic shares rocket higher on plans for first commercial flight this month

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    Shares of Virgin Galactic Holdings on Thursday made a scorching run higher after the space-travel company said it plans to begin offering commercial flights into space near the end of this month, a significant breakthrough for the nearly 20-year-old company founded by Richard Branson.

    Shares rocketed 44% after hours on the news.

    “We’re opening…

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  • Bud Light troubles prompts call to buy stocks of Boston Beer, Constellation Brands

    Bud Light troubles prompts call to buy stocks of Boston Beer, Constellation Brands

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    Bud Light’s recent troubles should worsen in the summer, to the benefit of its competition’s brands, enough to turn Roth MKM analyst Bill Kirk bullish on the stocks of Constellation Brands Inc. and Boston Beer Co. Inc.

    Kirk raised on Tuesday his rating on Modelo, Corona, Pacifico beer parent Constellation Brands to buy, after being at neutral since January 2021, while boosting his stock price target to $270 from $216.

    Kirk said a lot of the market share Anheuser-Busch InBev SA’s Bud Light lost, amid backlash from the beer brand’s partnership with trans influencer Dylan Mulvaney, went to other premium light products, but he expects that to shift to Constellation’s favor.

    “As the weather warms, we expect the share gains for Modelo Especial and Corona to accelerate,” Kirk wrote in a note to clients.

    Constellation Brands’ stock
    STZ,
    +1.79%
    rose 1.5% in afternoon trading Tuesday toward the highest close since Dec. 12, 2022, while Anheuser-Busch shares
    BUD,
    -4.71%
    slumped 4.5% toward the lowest close since Nov. 10.

    Also read: Bud Light anti-trans backlash has some weighing potential ‘chilling effect’ on corporate LGBTQ+ support

    He noted that weekly scanner data has shown that Constellation’s beer portfolio outperformed the broader beer market by seven percentage points in early 2023, and that outperformance improved to 10 percentage points at the beginning of Bud Light’s market-share losses in April.

    “With temperatures warming and substitutability with Bud Light increasing, recent weeks have seen 13 [percentage points] of outperformance,” Kirk wrote. “This trend should continue as Bud Light [declines/peak] over summer holidays.”

    For Samuel Adams, Truly, Twisted Tea parent Boston Beer, Kirk raised his rating to buy, after being at neutral for at least the past three years. He raised his stock price target to $386 from $274.

    Boston Beer’s stock
    SAM,
    +5.37%
    jumped 6.8% toward the highest close since Feb. 15.

    Earlier this year, Kirk was concerned that Truly hard seltzer’s weakness continued, offsetting Twisted Tea’s success, and that gross margins weren’t improving even after moving more production in-house.

    Read more: Bud Light crisis: It’s unclear how U.S. volume drop will end, analysts say

    “Now, we believe seltzer and Truly will benefit in the summer from Bud Light share losses (occasion overlap increases with warmer weather) and gross margin lift from production shift will be realized in 2Q (given inventory days timing),” Kirk wrote.

    He believes that will shift investor focus away from Truly’s weakness and toward Boston Beer’s brands that are growing.

    And while Wall Street expects the trends Boston Beer saw in the first quarter to continue throughout 2023, Kirk now believes the company will beat expectations for shipments and depletions, and sees opportunities for margins to also beat forecasts.

    “While we had written at 1Q that the ‘timing of upside surprises remains unclear,’ we now believe the timing is Summer 2023,” Kirk wrote.

    Constellation Brands’ stock has gained 5.7% over the past three months and Boston Beer shares have advanced 4.8%, while Anheuser-Busch’s stock has dropped 10.1% and the S&P 500 index
    SPX,
    +0.00%
    has gained 5.9%.

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  • Gas will be much cheaper this Memorial Day Weekend. Now, for all the bad news.

    Gas will be much cheaper this Memorial Day Weekend. Now, for all the bad news.

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    Traveling this Memorial Day Weekend? Put some deep breaths on your checklist.

    Americans should brace for jammed highways and long airport lines with more people projected to drive and fly this holiday weekend compared to last year, experts say.

    Gas is $1 cheaper than it was at the same point last year and airline passengers aren’t flinching from pricey tickets, still powered by the pent-up demand to see family and friends as the pandemic recedes.

    “The roads are going to be pretty packed,” said AAA spokeswoman Aixa Diaz. “The bottom line is, the later you wait in the day, the worse it is — unless you drive at night.”

    “If there ever was a time you wanted to get to the airport early, it’s this one,” she added.

    “Whether driving or flying, pack your patience and prepare for heavy traffic on the road and at the airport,” said Erika Richter, spokeswoman for the American Society of Travel Advisors.

    “AAA is projecting that 37.1 million people will be driving at least 50 miles this upcoming weekend. That’s 2 million more people traveling by automobile compared to last year.”

    AAA is projecting that 37.1 million people will be driving at least 50 miles this upcoming weekend. That’s 2 million more people traveling by automobile compared to last year.

    They’ll be driving on cheaper gas. Nationally, a gallon of gas averaged $3.57 on Thursday, down from $4.59 one year ago, AAA said.

    Read also: Why this falling fuel price is stoking recession fears even as prime gas-demand season nears

    Meanwhile, nearly 3.4 million airline passengers are projected to fly this weekend, according to AAA. That would surpass pre-pandemic levels, when 3.2 million people flew over the Memorial Day Weekend in 2019.

    All together, 42.3 million people are expected to travel this weekend via cars, planes, buses, trains, according to AAA estimates. That’s higher than the 39.6 million who traveled last Memorial Day Weekend, and just under 2019 levels.

    Three major airlines, American Airlines
    AAL,
    +4.20%    ,
    United
    UAL,
    +1.76%
    and Delta Air Lines
    DAL,
    +2.35%    ,
    are expected to handle nearly 60% of the flights, according to a Thursday note from TD Cowen.

    Like others, analysts at TD Cowen, a division of TD Securities, say it’s going to be a brisk summer travel season.

    “We continue to see strong demand for air travel, with this summer’s focus on international [travel]. Remember, the U.S. government did not eliminate testing until mid-June last year, after most people planned their vacations,” they wrote.

    Related: Is it possible to book a cheap summer flight? Here are 5 tricks to save money.

    When to expect the worst?

    Friday is the day when roads and airports are going to be the busiest.

    On the roads, congestion is going to peak that day from 3:00 p.m. to 6:00 p.m., according to INRIX, a traffic-data analytics firm.

    Inside airports, approximately 2.6 million people will pass through Transportation Security Administration checkpoints that day, the agency said.

    During last year’s Memorial Day Weekend, 2.38 million people passed through TSA checkpoints, the agency’s data showed.

    Teens, aged 13-17, can now go with TSA PreCheck-enrolled parents and guardians, when they are on the same reservation and when the TSA PreCheck indicator shows on the child’s pass. Children ages 12 and under can still walk through checkpoints with their enrolled parents or guardians.

    Once getting on the plane, don’t count on having a nearby spare seat. Seating capacity is currently slated to be 17% higher than last Memorial Day Weekend, according to the travel app Hopper.com.

    This weekend, last-minute tickets are averaging $273, and that’s around $100 less than ticket-price averages at the same point last year and slightly cheaper than 2019 levels, Hopper.com’s data said. International travel is a different story. Fares to Europe, for example, are more than 50% higher than last year, according to Hopper.com.

    What happens after Friday?

    On the roads, there’s little extra traffic expected on Saturday and Sunday, according to projections from INRIX, a transportation analytics company. On Monday, the worst traveling time is 12 p.m. to 3 p.m. The window for less traffic that day is before 10 a.m., INRIX noted.

    As for flights, Richter said airlines and operators “are obligated to share the latest information if it impacts your travel.”

    Downloading smartphone apps for your airline, activating the notifications and opting for text and email alerts will also help keep you abreast of any last-minute changes, she said.

    Through March, less than 2% of scheduled domestic flights have been canceled, the U.S. Department of Transportation said Tuesday. That’s below last year’s 2.7% cancellation average and the 4.1% rate for the first three months of 2022, the department noted.

    A Transportation Department dashboard shows which airline carriers have committed to passenger-friendly accommodations when delays and cancellations occur. For example, some — but not all — airlines will rebook your flight with a partner airline at no additional cost.

    But Richter said the volume and potentials for travel snags this Memorial Day Weekend could be a preview for the months to come. “Travel delays will be inevitable this summer, so make sure you are planning ahead,” she said.

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  • Ryanair Swung to FY 2023 Net Profit as Revenue Beat Consensus on Higher Traffic, Ancillaries — Update

    Ryanair Swung to FY 2023 Net Profit as Revenue Beat Consensus on Higher Traffic, Ancillaries — Update

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    By Anthony O. Goriainoff

    Ryanair Holdings said Monday that it swung to a net profit for fiscal 2023 with revenue beating consensus due to a 74% rise in traffic and higher ancillary revenue, and that it was optimistic it would deliver a modest on-year profit increase in fiscal 2024.
    

    

    The low cost carrier said its guidance was nonetheless dependent on the avoidance of adverse events such as the war in Ukraine or further Boeing delivery delays.
    

    Ryanair said that although it expects traffic to grow to around 185 million in fiscal 2024, recent delivery delays from Boeing may push some of this into its lower-yielding second half, slightly reducing this target.
    

    For the year ended March 31 net profit was 1.31 billion euros ($1.42 billion) compared with a net loss of EUR240.8 million for fiscal 2022 and net profit consensus of EUR1.35 billion, taken from FactSet and based on 17 analysts’ forecasts.
    

    Revenue was EUR10.78 billion, compared with EUR4.80 billion the year before. Ancillary revenue rose to EUR3.84 billion from EUR2.15 billion the year before. Fares for the period were up 10% on prepandemic levels, the company said.
    

    Pre-exceptional profit after tax–its preferred metric–was EUR1.43 billion, compared with a loss of EUR355 million last year. .
    

    The company said its load factor–a measure of how full a plane is–stood at 93%, compared with 82% the year before, and that traffic reached 168.6 million passengers, a 13% increase on the levels seen in fiscal 2020.
    

    Although the fuel bill for the year will increase by more than EUR1 billion on higher fuel prices, the company said it was optimistic that revenue for the year will grow sufficiently to cover this and deliver a modest on-year profit increase.
    

    “While we continue to enjoy a significant cost advantage over competitor airlines, we expect to record a modest increase in unit costs, excluding fuel, as annualized crew pay restoration, higher crew ratios this summer and increased, enroute charges will not be fully offset by Boeing 737 Gamechanger deliveries in the first half,” the company said.
    

    Write to Anthony O. Goriainoff at anthony.orunagoriainoff@dowjones.com
    

    

    

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  • 
		
		
    
			
    Biden proposes cash compensation from airlines for flight cancellations or major delays
    
			
    Biden proposes cash compensation from airlines for flight cancellations or major delays
    
			
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    President Joe Biden rolled out a plan on Monday that targets how airlines handle flight cancellations and significant delays that are within a carrier’s control.
    

    Biden said his administration will propose a new regulation later this year that would require airlines to provide cash compensation in addition to refunds and amenities for stranded passengers.
    

    “Airline…
    
    

    

    

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    Air Travel Is Booming. 2 Stocks to Buy That Aren’t Airlines.
    
			
    Air Travel Is Booming. 2 Stocks to Buy That Aren’t Airlines.
    
			
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    Air Travel Is Booming. 2 Stocks to Buy That Aren’t Airlines.
    

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    Tesla, Netflix earnings due: Cheaper cars, cheaper content, more workout videos, as ‘earnings recession’ seems likely
    
			
    Tesla, Netflix earnings due: Cheaper cars, cheaper content, more workout videos, as ‘earnings recession’ seems likely
    
			
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    For anyone watching Netflix, the streaming services’ recent moves to cut costs could mean fewer films, lower-budget shows and — depending on your subscription — more ads. For anyone buying a Tesla, its moves to cut prices will make it easier on customers, but harder on profit-seeking investors.
    

    With both companies reporting results this week, Wall Street will get a look at who still wants a Tesla, amid growing competition, and what kind of growth and viewership anyone can expect from Netflix, as it recalibrates its streaming ambitions and focuses more on profitability following years of rapid growth.
    

    

    Netflix Inc.
    
        NFLX,
    
        -2.18%    ,
    
       which reports first-quarter results on Tuesday, is trying to crack down on shared accounts, and analysts polled by FactSet see subscriptions coming in well below the average. However, BofA analyst Jessica Reif Ehrlich said that first-quarter results would likely “mark the low point” of the year, “reflecting the initial impact of password sharing efforts in select markets.”
    

    Netflix will report as shareholders’ growing influence over the streaming universe raises questions over what shows and films get streamed, and for how long, as Wall Street tries to wring more bottom-line gains from an industry that boomed before and during the pandemic but burned cash and got crowded in the process. Netflix, along with Walt Disney Co.
    
        DIS,
    
        -0.93%    ,
    
       have laid off employees, while Warner Brothers Discovery Inc.
    
        WBD,
    
        -1.85%
    
       fuses its streaming holdings together. 
    

    “We expect Netflix to continue reining in spending, particularly by seeking alternatives to its past practices,” Wedbush analysts Alicia Reese and Michael Pachter wrote in a research note on Thursday. “The company appears to us to be producing fewer feature length films, which we have always viewed as a poor investment, and appears focused on lower cost television content.” 
    

    “We are equally encouraged that Netflix is looking at low-cost content like workout videos, which we believe will present a lot of value to subscribers at very low cost,” they added later. 
    

    The analysts said that they felt Netflix was well positioned, as other streamers rethink their approach to expansion and financials. And they said Netflix “should be valued as an immensely profitable, slow-growth company.” They also said that Netflix’s decision to launch a cheaper ad-supported option was a “great decision” after growth stalled in the U.S. and Canada and the company’s business in Europe, the Middle East and Africa reaches the saturation point. 
    

    For Tesla Inc.
    
        TSLA,
    
        -0.48%    ,
    
       which reports results on Wednesday, the focus for investors will be on price-cutting and its impact on margins. Still, Potter, an analyst at Piper Sandler, has said Tesla is on a “warpath” and “maintaining its aggressive approach to pricing,” and said investors “should expect relentless price cuts to continue.”
    

    Base prices for Tesla’s Model S and Model X have fallen by around $5,000, MarketWatch has noted, as the electric-vehicle maker tries to stimulate demand. The company is also selling a more affordable Model Y SUV. 
    

    “Tesla concerns on pricing and a race to the bottom persisted as general sentiment on the stock is souring given recent price cuts after a brief period of stabilization,” TD Cowen analyst Jeffrey Osborne said in a note.
    

    Tesla will report as the Biden administration tries to take a harder stance on auto pollution. The EPA recently proposed new emissions restrictions intended to hasten electric-vehicle usage, by incrementally curtailing tailpipe emissions  each year for vehicle model years 2027 through 2032. However, some analysts said the measures would push prices higher for regular and electric vehicles.  
    

    This week in earnings
    

    The first-quarter earnings reporting season will pick up steam in the week ahead, with 60 S&P 500 companies, including six from the Dow Jones Industrial Average
    
        DJIA,
    
        -0.42%    ,
    
       reporting quarterly results, according to FactSet. Those companies will report as Wall Street analysts remain pessimistic about results for the quarter, and the prospect of another so-called “earnings recession” in which profits contract for at least two straight quarters. 
    

    “As of today, the S&P 500 is reporting a year-over-year decline in earnings of -6.5% for the first quarter, which would mark the largest earnings decline reported by the index since Q2 2020 (-31.6%) and the second straight quarter the index has reported a decline in earnings,” FactSet Senior Earnings Analyst John Butters said in a report on Friday. 
    

    After investors cheered JPMorgan Chase & Co.’s
    
        JPM,
    
        +7.55%
    
        quarterly results on Friday — despite Silicon Valley Bank’s collapse and broader recession anxieties — other banking giants, like Bank of America Corp.
    
        BAC,
    
        +3.36%    ,
    
       Goldman Sachs Group Inc.
    
        GS,
    
        +1.44%
    
       and Morgan Stanley
    
        MS,
    
        +1.19%
    
       report during the week ahead. So does Johnson & Johnson
    
        JNJ,
    
        -0.16%    ,
    
       after it agreed to pay as much as $8.9 billion to settle scores of lawsuits alleging that its talc baby powder was linked to cancer. Charles Schwab Corp.
    
        SCHW,
    
        -1.40%    ,
    
       United Airlines Holdings Inc.
    
        UAL,
    
        -0.71%
    
       and AT&T Inc.
    
        T,
    
        -0.15%
    
       also report during the week. 
    

    The calls to put on your calendar
    

    Supply-chain update, anyone? Shipping rates have fallen. Labor tensions have risen. Railroad safety is under scrutiny. Elsewhere in that industry, hedge funders are applying pressure. Memories of 2021’s supply-chain meltdown are still fresh after it led to shipping delays and put the low-work labor that fuels much of that distribution network under a spotlight. 
    

    At any rate, trucking and logistics company J.B. Hunt Transportation Services Inc.
    
        JBHT,
    
        +1.23%
    
       reports on Monday, while railroad giant CSX Corp.
    
        CSX,
    
        +0.13%
    
       reports on Thursday. Both companies report after a drop-off in demand for goods last year, as inflation remolded consumers’ buying habits. They also report after rail workers threatened to strike over what they said were inadequate sick-time policies. More recently, a group representing the terminal operators at the ports of Los Angeles and Long Beach alleged that dockworkers were disrupting daily operations at the two massive import gateways, as the workers’ union and the terminal operators try to work out a contract. The quarterly financial reports and earnings calls will offer a look at what the year ahead has in store. 
    

    The number to watch
    

    Credit-card transactions, charge-offs: Credit-card providers Discover Financial Services
    
        DFS,
    
        +0.68%
    
       and American Express Co.
    
        AXP,
    
        +0.57%
    
       report Wednesday and Thursday, respectively. The companies will report after Discover took a hit in January after it forecast credit-card net charge-offs — a measure of debt a company doesn’t think it’ll get back — that were worse than what Wall Street expected. Similar to the  results from the big banks, the results from American Express and Discover will tells us how much consumers are still spending, and whether more are falling behind on their bills, as recession anxieties prevail.  
    

    

    

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    Delta stock surges after airline swings to profit, beats revenue forecasts and provides upbeat outlook
    
			
    Delta stock surges after airline swings to profit, beats revenue forecasts and provides upbeat outlook
    
			
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    Shares of Delta Air Lines Inc. surged Thursday, after the air carrier swung to a first-quarter profit as revenue rose above expectations, and said it was “confident” in its full-year projections given a “strong” outlook for the current quarter.
    

    The company reported a net loss that narrowed to $363 million, or 57 cents a share, from $940 million, or $1.48 a share, in the same period a year ago.
    

    But…
    
    

    

    

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    American Airlines stock dives after profit outlook raised, but disappoints Wall Street
    
			
    American Airlines stock dives after profit outlook raised, but disappoints Wall Street
    
			
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    Shares of American Airlines Group Inc. were rocked Wednesday, after the air carrier raised its profit outlook, but not by enough to match Wall Street expectations.
    

    The company said before the open that it expects first-quarter adjusted earnings per share of 1 cent to 5 cents, compared with a per-share loss of $2.32 a year ago. While that’s better than previous guidance for an “approximately breakeven” quarter, the average EPS estimate of analysts surveyed by FactSet was 5 cents.
    

    The…
    
    

    

    

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    The surprise OPEC+ oil production cuts will increase gas prices — here’s how much
    
			
    The surprise OPEC+ oil production cuts will increase gas prices — here’s how much
    
			
     [ad_1]
    

    

    Surprise crude oil production cuts from Saudi Arabia and other oil-rich countries shouldn’t produce worries of skyrocketing gas costs for U.S. drivers still smarting from last year’s pump price shocks, according to fuel industry experts.
    

    At a time when gas prices are already increasing because of rising seasonal demand, the slashed crude oil output that Saudi Arabia announced Sunday will translate into higher prices, they say. But compared to last year — when energy markets were absorbing the initial impact of Russia’s invasion of Ukraine — the altitude on those gas price increases may not feel so steep.
    

    

    On Monday, the national average for a gallon of gas was $3.50, according to AAA. That’s around 10 cents more than a month ago, but almost 70 cents less than the $4.19 average cost one year ago.
    

    The effects of decreased oil production could translate into initial price increases of up to 15 cents per gallon, according to two different energy sector watchers.
    

    There’s Patrick De Haan, head of petroleum analysis at GasBuddy.
    

    At OPIS, an outlet focused on energy sector news and analytics, Chief Oil Analyst Denton Cinquegrana said he was previously expecting summer gas prices to average around $3.60.
    

    “This move probably boosts that by about 10 – 15 cents to about $3.70-3.75/gal.” Cinquegrana told MarketWatch.
    

    OPIS is owned by Dow Jones, which also owns MarketWatch.
    

    It’s possible for gas price averages to hit around $3.60 in the next week or so, he said. The other 10 to 15 cents might filter into retail pump prices later this month or in early May, according to Cinquegrana.
    

    The surprise move came from Saudi Arabia and other members of OPEC+, the Organization of the Petroleum Exporting Countries and allies, including Russia. In Saudi Arabia, officials were reportedly “irritated” by recent remarks from U.S. Energy Secretary Jennifer Granholm.
    

    After the Biden administration tapped the country’s strategic petroleum reserve to combat last year’s high gas costs, Granholm said it will difficult to restock the reserve.
    

    By May, more than 1 million barrels of oil a day will be slashed from output in the global energy markets. That’s in addition to OPEC+ production cuts announced last fall.  
    

    In cost breakdowns for a gallon of gas, the price of crude oil is responsible for more than half the price tag, according to the U.S. Energy Information Administration.
    

    In Monday morning trading, the price of West Texas Intermediate crude for May delivery jumped 6% to just over $80 on the New York Mercantile Exchange.
    

    For context, when gas prices were breaking records last year, the costs of West Texas Intermediate crude were in the triple digits. While retail prices surged in early March 2022, West Texas Intermediate crude briefly traded for more than $130 during the trading day on March 7, 2022.
    

    The national average for a gallon of gas hit a record $5.01 in mid-June, according to AAA. In the current context, Cinquegrana doesn’t see a return to $5 gas averages, he said. Gas prices vary across the nation. California drivers are paying $4.80 on average while Mississippi drivers are paying $3.02 per gallon. 
    

    Even if price increases are not as sharp as last year, hot inflation is retreating slowly. So any extra costs are unwelcome to millions of American drivers who are living their lives and more frequently commuting to the office.
    

    Like last year, oil prices are poised to increase, said AAA spokesman Devin Gladden.
    

    But the economy’s background noise right now could dampen the impact as downturn worries keep sticking around, he added. Furthermore, there can be discrepancies in the announced production reductions and the amounts that are actually reduced, Gladden said.
    

    “If recessionary concerns persist in the market, oil price increases may be limited due to the market believing lower oil demand will lead to lower prices this year,” he said.
    

    On Monday, energy sector stocks and related exchange traded funds were climbing after the production cut news.  In early afternoon trading, the Dow Jones Industrial Average
    
        DJIA,
    
        +0.81%
    
       was up more than 200 points, or 0.7%, while the S&P 500
    
        SPX,
    
        -0.03%
    
        is little changed and the Nasdaq Composite
    
        COMP,
    
        -0.98%
    
       dropped 100 points, or 0.8%. 
    

    

    

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    U.S. industrial output was flat in February
    
			
    U.S. industrial output was flat in February
    
			
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    The numbers: U.S. industrial production was flat in February, the Federal Reserve reported Friday. 
    

    The unchanged reading was in line with economists expectations, according to a survey by The Wall Street Journal.
    

    Output rose a revised 0.3% in January, revised up from the initial estimate of a flat reading, but there were deep declines in November and December.
    

    

    Key details: Manufacturing output downshifted to a slim 0.1% rise in February after a strong 1% gain in the prior month. 
    

    Motor vehicles and parts output fell 0.3% after a 0.6% jump in January. Excluding autos, total industrial output was unchanged.
    

    Utilities output rose 0.5% in February. Mining output, which includes oil and natural gas, fell 0.6% after a 2% gain in the prior month.
    

    Big picture: The softness in manufacturing is expected to continue as interest rates have moved higher. Credit conditions are expected to tighten in the wake of the worries surrounding regional banks.
    

    Market reaction: Stocks
    
        DJIA,
    
        -0.95%
    

            SPX,
    
        -0.63%
    
       were set to open lower on Friday. The yield on the 10-year Treasury note
    
        TMUBMUSD10Y,
    
        3.449%
    
       fell to 3.47%. 
    

    

    

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    These 20 stocks led the January rally
    
			
    These 20 stocks led the January rally
    
			
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      The initial version of this story had incorrect price changes for 2023. It is now updated with information as of the market close on Jan. 31. 
    

    Investors staged a January rally, with solid gains for the S&P 500 and an even better showing for technology stocks that led the dismal downward action in 2022.
    

    This…
    
    

    

    

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    Earnings Watch: Microsoft, Tesla and Intel are about to face the doubters
    
			
    Earnings Watch: Microsoft, Tesla and Intel are about to face the doubters
    
			
     [ad_1]
    

    After one of the worst years in Wall Street’s history, investors have some serious questions for companies. As holiday returns roll in — and with them, forecasts for the months or year ahead — many have the chance to answer those questions, or avoid them.
    

    In the busiest week of the holiday-earnings season so far, three big names will take the stage on back-to-back-to-back afternoons. Here is what to expect:  
    

    

    Microsoft Corp.
    

    Microsoft
    
        MSFT,
    
        +3.57%
    
       shed $737 billion in market value last year, the third-most of any S&P 500 company, then announced plans to lay off some 10,000 workers this month. Previously a Wall Street darling thanks to the phenomenal growth of its Azure cloud-computing offering, Microsoft now faces a cutback in enterprise spending on cloud and other products, as companies seek to cut their bills after spending wantonly during the early years of the COVID-19 pandemic.
    

    First Take: Big Tech layoffs are not as big as they appear at first glance
    

    When the company announced layoffs, Chief Executive Satya Nadella admitted customers were cutting, saying “as we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less.” Analysts believe Azure may be holding up better than rivals, however, and will expect to hear about it when Microsoft results hit Tuesday afternoon. 
    

    “Our Azure checks were mixed, but generally better than public cloud sentiment that has turned highly negative over the past few months,” Mizuho analysts wrote. “More specifically, we have heard of increasing levels of optimization, but it is being partially offset by many organizations prioritizing digital transformation.”
    

    From October: The cloud boom has hit its stormiest moment yet, and it is costing investors billions
    

    As cloud growth slows down, expect Microsoft to point to the next big buzzword in tech: Artificial intelligence, specifically ChatGPT, the chatbot product developed by OpenAI, which Microsoft has invested heavily in and expects to incorporate into its products. D.A. Davidson analyst Gil Luria this month wrote that Microsoft’s investments in OpenAI would help it build out more AI technology, including in its search engine Bing.  
    

    Tesla Inc.
    

    Tesla
    
        TSLA,
    
        +4.91%
    
       stock suffered a much larger percentage decline than Microsoft in 2022,as the electric-vehicle maker’s shares closed out their worst year on record with their worst quarter and month ever. After the year ended, Tesla began slashing prices in China and the U.S. in hopes of qualifying for more consumer tax incentives and reinvigorating demand, which could lead to questions about previously fat margins.
    

    In-depth: Tesla investors await clues on demand, board actions and weigh downside risks in 2023
    

    For Tesla, which reports fourth-quarter results Wednesday, the results will offer more context on production of the Cybertruck — currently set to start in the middle of the year — demand in China, competition and the impact of price cuts. Auto-information website Edmunds on Thursday said that Tesla’s decision to slash prices by as much as 20% in the U.S. and Europe led to a jump in interest in the vehicles. 
    

    While those cuts seem likely to hurt profit, Deutsche Bank analyst Emmanuel Rosner called it “a bold offensive move, which secures Tesla’s volume growth, puts its traditional and EV competitors in great difficulty, and showcases Tesla’s considerable pricing power and cost superiority.” And a survey from Wedbush analysts found that “76% of EV Chinese consumers are considering buying a Tesla in 2023.” But Toni Sacconaghi, an analyst at Bernstein, said Tesla needed more low-cost electric-vehicle offerings, which might not ship until 2025. 
    

    Tesla earnings preview: Price cuts in focus as stock hovers around 2-year low
    

    With Tesla’s stock in the gutter, some analysts have raised the possibility of a share buyback to spur investor interest, and Chief Executive Elon Musk said such a plan was being discussed in the previous earnings call. Musk is not in great favor with many investors right now, however, following some heavy selling of Tesla shares in the wake of his purchase last year of Twitter, which some on Wall Street have said has distracted him from the needs of the auto maker. Musk’s tweets have landed him in trouble elsewhere: Opening arguments began last week for a trial centered on allegations that Musk put investors at risk when he tweeted in 2018 that he was “considering” taking Tesla private and had secured the money to do so. 
    

    ‘He broke the stock’: Why a prominent Tesla investor wants Elon Musk to put him on the board
    

    Intel Corp.
    

    Intel’s
    
        INTC,
    
        +2.81%
    
       questions were not fresh in 2022, as the chip maker for years has seen rivals like Advanced Micro Devices Inc.
    
        AMD,
    
        +3.49%
    
       and Nvidia Corp.
    
        NVDA,
    
        +6.41%
    
       challenge it in ways that would have been unthinkable in previous generations. Shares still dove more than 43% last year, as declining sales led to plans for $3 billion in cost cuts. 
    

    There’s little hope for a big rebound when Intel reports Thursday afternoon. Personal-computer sales have experienced their biggest year-over-year declines ever recorded, and Intel’s long-delayed new data-center offering that is meant to answer AMD’s challenge only began selling this year.  
    

    Opinion: The PC boom and bust is already ‘one for the record books,’ and it isn’t over
    

    Intel CEO Pat Gelsinger, though, has a chance to lay out his vision for a long-term Intel rebound, as he attempts to make Intel a chip-manufacturing powerhouse again after years of struggles. He was forced to trim his annual outlook multiple times last year, so it will be important for him to provide attainable numbers this time, but without reducing hopes in the path forward.
    

    This week in earnings
    

    Expectations remain low for fourth-quarter earnings season overall, with consumers squeezed by higher prices and interest rates, and hopes fading for any relief from the holiday shopping season. But even with a low bar, the fourth-quarter results from companies so far have been worse than the historical norm, with FactSet senior earnings analyst John Butters writing Friday that “the fourth-quarter earnings season for the S&P 500 is not off to a strong start.”
    

    So far, 11% of S&P 500 companies have reported fourth-quarter results, with roughly one-third reporting earnings better than estimates, Butters reported. That’s lower than the 10-year average of 73%.
    

    Still, Wall Street generally expects strong profit margins for companies in the S&P 500, as earlier price increases — which help businesses offset their own costs and test the limits of consumer demand — mix with more recent cost cuts.
    

    For the week ahead, 93 companies in the S&P 500 index
    
        SPX,
    
        +1.89%    ,
    
       and 12 of the 30 Dow Jones Industrial Average
    
        DJIA,
    
        +1.00%
    
       components, are set to report quarterly results. 
    

    Mark your calendars! Here is MarketWatch’s full earnings calendar for the week
    

    Among the highlights: General Electric Co.
    
        GE,
    
        +1.07%
    
       reports Tuesday for the first time since splitting off its GE HealthCare Technologies
    
        GEHC,
    
        +4.43%
    
       business. 3M Co.
    
        MMM,
    
        +1.87%
    
       — which makes Post-it Notes, duct tape, air filters, adhesives and coatings — also reports Tuesday, after the company in October said the costs of raw materials, a big driver of inflation, were showing signs of easing. 
    

    And as demand for goods eases amid worries about a downturn, a number of railroad operators that ship those goods report during the week. Union Pacific Corp.
    
        UNP,
    
        +1.54%    ,
    
       whose lines ship across the Western half of the U.S., reports on Tuesday, while CSX Corp.
    
        CSX,
    
        +1.46%    ,
    
       which covers much of the East, reports Wednesday. Norfolk Southern Corp.
    
        NSC,
    
        +1.51%
    
       also reports Wednesday.
    

    Telecom giants Verizon Communications Inc.
    
        VZ,
    
        -0.15%    ,
    
       AT&T Inc.
    
        T,
    
        +1.53%
    
       and Comcast Corp.
    
        CMCSA,
    
        +3.22%
    
       report Tuesday, Wednesday and Thursday, respectively. Results there will offer a clearer sense of the state of demand for Apple Inc.’s
    
        AAPL,
    
        +1.92%
    
       iPhones, as premium models suffer from production snags, and for broadband, which saw heightened demand when more people were staying home due to the pandemic. 
    

    The call to put on your calendar
    

    Southwest, post-meltdown: Southwest Airlines Co.
    
        LUV,
    
        +1.67%    ,
    
       which reports on Thursday, will offer executives with plenty to answer for, after bad weather and an overloaded, aging scheduling system caused thousands of flight cancellations over the holidays. 
    

    For more: Southwest Airlines turns to repairing its reputation after holiday meltdown
    

    The implosion has raised questions about the air carrier’s investments in its own technology — after restarting dividend payments shortly before the disruptions — and airlines’ ability to handle the post-lockdown travel rebound. The breakdown has underscored the airline industry’s bigger issues with understaffing, after 2020’s wave of departures, as carriers try to reload flight schedules to meet pent-up travel demand.  
    

    Scott Kirby, chief executive at United Airlines Holdings Inc.
    
        UAL,
    
        +2.25%    ,
    
       said during his company’s earnings call last week that he felt the industry’s goals to expand their flight coverage this year and beyond were “simply unachievable.” And he said that airlines that tried to follow prepandemic patterns were destined to face trouble. He said manufacturers were suffering from delays in building jets, engines and other parts, and that airlines had outgrown their technology infrastructure. 
    

    For more: United Airlines swings to profit despite ‘worst’ winter storm’
    

    “All of us, airlines and the FAA, lost experienced employees and most didn’t invest in the future,” he said. “That means the system simply can’t handle the volume today, much less the anticipated growth.”
    

    American Airlines Group Inc.
    
        AAL,
    
        +0.37%    ,
    
       Alaska Air Group Inc.
    
        ALK,
    
        +0.85%
    
      and JetBlue Airways Corp.
    
        JBLU,
    
        +0.94%
    
      are also expected to report results Thursday morning, along with Southwest. 
    

    The numbers to watch
    

    Visa, Mastercard and consumer spending: The return of travel and entertainment, along with rising prices, have helped prop up consumer spending. But as Visa Inc.
    
        V,
    
        +1.77%    ,
    
       Mastercard Inc.
    
        MA,
    
        +2.27%    ,
    
       American Express Co.
    
        AXP,
    
        +3.23%
    
       and Capital One Financial Corp.
    
        COF,
    
        +6.40%
    
       prepare to report, their finance-industry counterparts are getting nervous — and taking more steps to pad themselves against the fallout from consumers struggling to pay their bills. 
    

    Credit-card issuer Capital One reports results on Tuesday, while card payments-network providers Visa and Mastercard report on Thursday, with Amex on Friday morning. They’ll report after shares of Discover Financial Services
    
        DFS,
    
        +4.16%
    
       got hit last week after the company, which also offers credit cards and loans, set aside more money to cover souring credit, and reported a bump in its net charge-off rate — a measure of debt a company thinks is unlikely to be recovered. 
    

    Larger banks, like JPMorgan Chase & Co.
    
        JPM,
    
        +0.24%    ,
    
       have also set aside more money to guard against credit losses.  
    

    

    

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    Earnings Watch: Microsoft, Tesla and Intel are about to face the doubters
    
			
    Earnings Watch: Microsoft, Tesla and Intel are about to face the doubters
    
			
     [ad_1]
    

    After one of the worst years in Wall Street’s history, investors have some serious questions for companies. As holiday returns roll in — and with them, forecasts for the months or year ahead — many have the chance to answer those questions, or avoid them.
    

    In the busiest week of the holiday-earnings season so far, three big names will take the stage on back-to-back-to-back afternoons. Here is what to expect:  
    

    

    Microsoft Corp.
    

    Microsoft
    
        MSFT,
    
        +3.57%
    
       shed $737 billion in market value last year, the third-most of any S&P 500 company, then announced plans to lay off some 10,000 workers this month. Previously a Wall Street darling thanks to the phenomenal growth of its Azure cloud-computing offering, Microsoft now faces a cutback in enterprise spending on cloud and other products, as companies seek to cut their bills after spending wantonly during the early years of the COVID-19 pandemic.
    

    First Take: Big Tech layoffs are not as big as they appear at first glance
    

    When the company announced layoffs, Chief Executive Satya Nadella admitted customers were cutting, saying “as we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less.” Analysts believe Azure may be holding up better than rivals, however, and will expect to hear about it when Microsoft results hit Tuesday afternoon. 
    

    “Our Azure checks were mixed, but generally better than public cloud sentiment that has turned highly negative over the past few months,” Mizuho analysts wrote. “More specifically, we have heard of increasing levels of optimization, but it is being partially offset by many organizations prioritizing digital transformation.”
    

    From October: The cloud boom has hit its stormiest moment yet, and it is costing investors billions
    

    As cloud growth slows down, expect Microsoft to point to the next big buzzword in tech: Artificial intelligence, specifically ChatGPT, the chatbot product developed by OpenAI, which Microsoft has invested heavily in and expects to incorporate into its products. D.A. Davidson analyst Gil Luria this month wrote that Microsoft’s investments in OpenAI would help it build out more AI technology, including in its search engine Bing.  
    

    Tesla Inc.
    

    Tesla
    
        TSLA,
    
        +4.91%
    
       stock suffered a much larger percentage decline than Microsoft in 2022,as the electric-vehicle maker’s shares closed out their worst year on record with their worst quarter and month ever. After the year ended, Tesla began slashing prices in China and the U.S. in hopes of qualifying for more consumer tax incentives and reinvigorating demand, which could lead to questions about previously fat margins.
    

    In-depth: Tesla investors await clues on demand, board actions and weigh downside risks in 2023
    

    For Tesla, which reports fourth-quarter results Wednesday, the results will offer more context on production of the Cybertruck — currently set to start in the middle of the year — demand in China, competition and the impact of price cuts. Auto-information website Edmunds on Thursday said that Tesla’s decision to slash prices by as much as 20% in the U.S. and Europe led to a jump in interest in the vehicles. 
    

    While those cuts seem likely to hurt profit, Deutsche Bank analyst Emmanuel Rosner called it “a bold offensive move, which secures Tesla’s volume growth, puts its traditional and EV competitors in great difficulty, and showcases Tesla’s considerable pricing power and cost superiority.” And a survey from Wedbush analysts found that “76% of EV Chinese consumers are considering buying a Tesla in 2023.” But Toni Sacconaghi, an analyst at Bernstein, said Tesla needed more low-cost electric-vehicle offerings, which might not ship until 2025. 
    

    Tesla earnings preview: Price cuts in focus as stock hovers around 2-year low
    

    With Tesla’s stock in the gutter, some analysts have raised the possibility of a share buyback to spur investor interest, and Chief Executive Elon Musk said such a plan was being discussed in the previous earnings call. Musk is not in great favor with many investors right now, however, following some heavy selling of Tesla shares in the wake of his purchase last year of Twitter, which some on Wall Street have said has distracted him from the needs of the auto maker. Musk’s tweets have landed him in trouble elsewhere: Opening arguments began last week for a trial centered on allegations that Musk put investors at risk when he tweeted in 2018 that he was “considering” taking Tesla private and had secured the money to do so. 
    

    ‘He broke the stock’: Why a prominent Tesla investor wants Elon Musk to put him on the board
    

    Intel Corp.
    

    Intel’s
    
        INTC,
    
        +2.81%
    
       questions were not fresh in 2022, as the chip maker for years has seen rivals like Advanced Micro Devices Inc.
    
        AMD,
    
        +3.49%
    
       and Nvidia Corp.
    
        NVDA,
    
        +6.41%
    
       challenge it in ways that would have been unthinkable in previous generations. Shares still dove more than 43% last year, as declining sales led to plans for $3 billion in cost cuts. 
    

    There’s little hope for a big rebound when Intel reports Thursday afternoon. Personal-computer sales have experienced their biggest year-over-year declines ever recorded, and Intel’s long-delayed new data-center offering that is meant to answer AMD’s challenge only began selling this year.  
    

    Opinion: The PC boom and bust is already ‘one for the record books,’ and it isn’t over
    

    Intel CEO Pat Gelsinger, though, has a chance to lay out his vision for a long-term Intel rebound, as he attempts to make Intel a chip-manufacturing powerhouse again after years of struggles. He was forced to trim his annual outlook multiple times last year, so it will be important for him to provide attainable numbers this time, but without reducing hopes in the path forward.
    

    This week in earnings
    

    Expectations remain low for fourth-quarter earnings season overall, with consumers squeezed by higher prices and interest rates, and hopes fading for any relief from the holiday shopping season. But even with a low bar, the fourth-quarter results from companies so far have been worse than the historical norm, with FactSet senior earnings analyst John Butters writing Friday that “the fourth-quarter earnings season for the S&P 500 is not off to a strong start.”
    

    So far, 11% of S&P 500 companies have reported fourth-quarter results, with roughly one-third reporting earnings better than estimates, Butters reported. That’s lower than the 10-year average of 73%.
    

    Still, Wall Street generally expects strong profit margins for companies in the S&P 500, as earlier price increases — which help businesses offset their own costs and test the limits of consumer demand — mix with more recent cost cuts.
    

    For the week ahead, 93 companies in the S&P 500 index
    
        SPX,
    
        +1.89%    ,
    
       and 12 of the 30 Dow Jones Industrial Average
    
        DJIA,
    
        +1.00%
    
       components, are set to report quarterly results. 
    

    Mark your calendars! Here is MarketWatch’s full earnings calendar for the week
    

    Among the highlights: General Electric Co.
    
        GE,
    
        +1.07%
    
       reports Tuesday for the first time since splitting off its GE HealthCare Technologies
    
        GEHC,
    
        +4.43%
    
       business. 3M Co.
    
        MMM,
    
        +1.87%
    
       — which makes Post-it Notes, duct tape, air filters, adhesives and coatings — also reports Tuesday, after the company in October said the costs of raw materials, a big driver of inflation, were showing signs of easing. 
    

    And as demand for goods eases amid worries about a downturn, a number of railroad operators that ship those goods report during the week. Union Pacific Corp.
    
        UNP,
    
        +1.54%    ,
    
       whose lines ship across the Western half of the U.S., reports on Tuesday, while CSX Corp.
    
        CSX,
    
        +1.46%    ,
    
       which covers much of the East, reports Wednesday. Norfolk Southern Corp.
    
        NSC,
    
        +1.51%
    
       also reports Wednesday.
    

    Telecom giants Verizon Communications Inc.
    
        VZ,
    
        -0.15%    ,
    
       AT&T Inc.
    
        T,
    
        +1.53%
    
       and Comcast Corp.
    
        CMCSA,
    
        +3.22%
    
       report Tuesday, Wednesday and Thursday, respectively. Results there will offer a clearer sense of the state of demand for Apple Inc.’s
    
        AAPL,
    
        +1.92%
    
       iPhones, as premium models suffer from production snags, and for broadband, which saw heightened demand when more people were staying home due to the pandemic. 
    

    The call to put on your calendar
    

    Southwest, post-meltdown: Southwest Airlines Co.
    
        LUV,
    
        +1.67%    ,
    
       which reports on Thursday, will offer executives with plenty to answer for, after bad weather and an overloaded, aging scheduling system caused thousands of flight cancellations over the holidays. 
    

    For more: Southwest Airlines turns to repairing its reputation after holiday meltdown
    

    The implosion has raised questions about the air carrier’s investments in its own technology — after restarting dividend payments shortly before the disruptions — and airlines’ ability to handle the post-lockdown travel rebound. The breakdown has underscored the airline industry’s bigger issues with understaffing, after 2020’s wave of departures, as carriers try to reload flight schedules to meet pent-up travel demand.  
    

    Scott Kirby, chief executive at United Airlines Holdings Inc.
    
        UAL,
    
        +2.25%    ,
    
       said during his company’s earnings call last week that he felt the industry’s goals to expand their flight coverage this year and beyond were “simply unachievable.” And he said that airlines that tried to follow prepandemic patterns were destined to face trouble. He said manufacturers were suffering from delays in building jets, engines and other parts, and that airlines had outgrown their technology infrastructure. 
    

    For more: United Airlines swings to profit despite ‘worst’ winter storm’
    

    “All of us, airlines and the FAA, lost experienced employees and most didn’t invest in the future,” he said. “That means the system simply can’t handle the volume today, much less the anticipated growth.”
    

    American Airlines Group Inc.
    
        AAL,
    
        +0.37%    ,
    
       Alaska Air Group Inc.
    
        ALK,
    
        +0.85%
    
      and JetBlue Airways Corp.
    
        JBLU,
    
        +0.94%
    
      are also expected to report results Thursday morning, along with Southwest. 
    

    The numbers to watch
    

    Visa, Mastercard and consumer spending: The return of travel and entertainment, along with rising prices, have helped prop up consumer spending. But as Visa Inc.
    
        V,
    
        +1.77%    ,
    
       Mastercard Inc.
    
        MA,
    
        +2.27%    ,
    
       American Express Co.
    
        AXP,
    
        +3.23%
    
       and Capital One Financial Corp.
    
        COF,
    
        +6.40%
    
       prepare to report, their finance-industry counterparts are getting nervous — and taking more steps to pad themselves against the fallout from consumers struggling to pay their bills. 
    

    Credit-card issuer Capital One reports results on Tuesday, while card payments-network providers Visa and Mastercard report on Thursday, with Amex on Friday morning. They’ll report after shares of Discover Financial Services
    
        DFS,
    
        +4.16%
    
       got hit last week after the company, which also offers credit cards and loans, set aside more money to cover souring credit, and reported a bump in its net charge-off rate — a measure of debt a company thinks is unlikely to be recovered. 
    

    Larger banks, like JPMorgan Chase & Co.
    
        JPM,
    
        +0.24%    ,
    
       have also set aside more money to guard against credit losses.  
    

    

    

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    United Airlines swings to profit despite ‘worst’ winter storm, issues blue-sky guidance
    
			
    United Airlines swings to profit despite ‘worst’ winter storm, issues blue-sky guidance
    
			
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    United Airlines Holdings Inc. late Tuesday reported fourth-quarter earnings that were well above Wall Street expectations, saying it managed well the severe winter-weather disruptions in late December, and offered an optimistic view of the current quarter and guidance for full-year 2023.
    

    United
    
        UAL,
    
        -0.87%
    
       managed through “one of the worst weather events in my career to get deliver for so many of our customers and get them home for the holidays,” United Airlines Chief Executive Scott Kirby said. 
    

    

    U.S. airlines canceled or delayed thousands of flights in late December due to Winter Storm Elliott, with Southwest Airlines Co.
    
        LUV,
    
        +0.14%
    
       the worst affected. Southwest told Wall Street to expect a fourth-quarter loss, adding that the cancelations are likely to cost about $825 million. 
    

    United’s Kirby pinned the different outcome for his airline on “critical” investments in personnel and technology. “That’s why we’ve got a big head start, and we’re now poised to accelerate in 2023,” the CEO said. 
    

    United earned $843 million, or $2.55 a share, in the fourth quarter, swinging from a loss of $646 million, or $1.99 a share, in the year-ago quarter. Adjusted for one-time items, United earned $2.46 a share. 
    

    Revenue rose to $12.40 billion from $8.2 billion a year ago. 
    

    Analysts polled by FactSet expected United to report adjusted earnings of $2.11 a share on revenue of $12.23 billion. 
    

    The stock rallied more than 3% in extended trading after ending the regular trading day down 0.9%. The airline has scheduled a conference call with analysts Wednesday at 10:30 a.m. Eastern
    

    See also: Here’s what Delta Air earnings say about the rest of the industry
    

    United guided for first-quarter adjusted EPS between 50 cents and $1, well above current FactSet consensus of 31 cents a share, and said it expects revenue to grow around 50% in the quarter. 
    

    For the full year, the airline called for adjusted EPS between $10 and $12, also significantly higher than FactSet consensus of $6.84 a share.  
    

    United stock has gained 9% in the past 12 months. That contrasts with losses of around 14% for the S&P 500 index
    
        SPX,
    
        -0.20%
    
       and of nearly 10% for the U.S. Global Jets ETF
    
        JETS,
    
        +0.40%    .
      
    

    

    

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