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Meta Platforms Inc. launched Threads, its rival to Twitter, a day early Wednesday.
“Let’s do this. Welcome to Threads,” Meta Chief Executive Mark Zuckerberg posted on the new app.
The text-based app, a spinoff of Meta’s META Instagram, had been set to launch Thursday morning, but instead went live for users in the U.S. and more than 100 other…
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Nike Inc. on Thursday reported fourth-quarter profit that came up short of Wall Street’s expectations, with price cuts weighing on results amid weaker demand for sneakers and clothing.
Nike
NKE,
reported fourth-quarter net income of $1.03 billion, or 66 cents a share, down from $1.44 billion, or 90 cents a share, in the same quarter last year. Revenue rose 5% to $12.83 billion, compared with $12.23 billion in the prior-year quarter.
Analysts polled by FactSet expected Nike to report adjusted earnings of 68 cents a share, on $12.58 billion in sales.
Nike said gross margins slipped 140 basis points to 43.6%, dragged by “higher product input costs and elevated freight and logistics costs, higher markdowns and continued unfavorable changes in net foreign currency exchange rates.”
Shares were up 0.3% after hours on Thursday.
Heading into the earnings, Wall Street had questions about Nike’s stockpiles of unsold shoes and clothing, and what it might take to clear them, as consumers still find themselves stretching their budgets to buy more essential goods like groceries.
Nike’s broader plans to sell more shoes and clothes directly — either through its own e-commerce platform or its own physical stores. But recent plans to start selling again in Macy’s Inc.
M,
and Designer Brands Inc.’s
DBI,
DSW shoe stores have raised questions over whether the athletic-gear maker is rethinking that strategy. Analysts were also focused on demand in China, whose re-opening from COVID-19 shutdowns remains in flux.
Shares of Nike have risen 9.6% over the past 12 months. By comparison, the S&P 500 Index
SPX,
has risen 15% over that period.
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Are stores getting more desperate to sell sneakers? Fourth-quarter results from Nike Inc. on Thursday will probably provide part of the answer.
Even as its some of its basketball shoes still put up double-digit sales gains — like those named after NBA icons LeBron James, Luka Doncic and Giannis Antetokounmpo — the athletic-gear maker, like its rivals, has faced weaker consumer demand overall. With customers forced to spend more money on necessities over the past year, they’ve had less to spend on new shoes.
In March, Nike
NKE,
executives said that the demand backdrop remained “promotional” — one in which anyone selling sneakers and clothing was cutting prices more aggressively to attract customers. But ahead of Thursday’s results, some analysts also wondered whether the stalling demand has forced bigger changes to the way management thinks about its broader turn away from retailers — a core piece of its sales strategy.
Nike over recent years has embarked on a plan to rely less on shoe retailers for sales and more on sales made directly to customers through its own stores and online. But recently, it decided to start selling clothing again at Macy’s
M,
and shoes again at DSW, the shoe-store chain run by Designer Brands Inc.
DBI,
— this after ending partnerships with both retailers over the past two years.
The return to traditional retail has raised questions about whether Nike is looking to more aggressively clear product it’s had trouble selling, and whether management is re-evaluating the company’s go-it-alone sales strategy overall.
“The big question on our minds heading into [Nike’s] quarter is what is going on with the [direct-to-consumer] pivot?” Quo Vadis analyst John Zolidis said in a note on Monday. “Reopening Macy’s and DSW seems odd in context of previous dismissive statements about undifferentiated retail.”
He continued: “Further, neither of these retailers has a customer that correlates strongly with [Nike’s] highest-value segments. The easiest explanation is that [Nike] overestimated the dollars it could recapture from closed wholesale accounts and now has too much inventory it needs to clear.”
Earnings: Analysts polled by FactSet expect Nike to earn 68 cents a share, down from 90 cents in the same quarter a year ago. Contributors to Estimize — a crowdsourcing platform that gathers estimates from Wall Street analysts as well as buy-side analysts, fund managers, company executives, academics and others — expect earnings per share of 75 cents.
Revenue: Analysts polled by FactSet expect $12.58 billion in sales for Nike. Forecasts from Estimize call for sales of $12.72 billion.
Stock price: Nike’s stock is only up 1.3% over the past 12 months. Shares got hit in September, after company executives warned of further price-cutting from rivals due to weaker demand. The stock rebounded later but gave up some gains in May. The stock was up 2% on Monday.
Nike in March said demand for product sold at full pricing remained solid. Still, sneaker chain Foot Locker Inc.
FL,
recently cut its outlook. Lots of Vans shoes are running at a discount, one analyst said last month, as the skater-centric brand competes with casual fare from the likes of Adidas
ADS,
and others.
Other analysts were also wondering about Nike’s return to Macy’s and DSW. But not everyone believed the move was a sign of deeper problems.
“Investors are worried that this is a reversal in Nike’s shift from wholesale to [direct-to-consumer], but we don’t think the strategy is broken,” BofA analyst Lorraine Hutchinson said in a research note on Wednesday. “We expect to hear an explanation of these moves on the [conference] call rather than an about-face on its focus on reducing undifferentiated wholesale.”
Still, the company faced concerns about sales abroad. Zolidis also said markets were increasingly worried about growth in China, whose recovery from pandemic lockdowns has stumbled.
“Our recent conversations with companies in China suggest that trends are mixed,” Zolidis said. “The consumer is more value oriented, and job uncertainty is higher.”
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That’s the practice by many S&P 500 food and consumer companies of raising prices to protect what a new report calls their “cushioned corporate profits,” and it has enabled them to boost margins through the current inflationary period.
Companies including Kimberly-Clark Corp.
KMB,
PepsiCo Inc.
PEP,
General Mills Inc.
GIS,
and Tyson Foods Inc.
TSN,
have on recent earnings calls touted their ability to raise prices, earning tidy profits and rewarding their shareholders as they go, according to the report from Accountable.US, a liberal-leaning consumer-advocacy group.
And they have signaled their intention to continue to take “price actions” even as the Federal Reserve has hiked interest rates an unprecedented 10 times in an effort to tame inflation.
“Higher interest rates haven’t stopped S&P companies, especially in the big food industry, from raising consumer prices despite reporting billions in extra net earnings and over a trillion dollars in new giveaways to wealthy investors,” said Liz Zelnick, director of economic security and corporate power at Accountable.US.
“Corporate greed is a stubborn thing and requires serious action from Congress. The Fed has not seen an adequate return on its investment in a policy that has already created fissures in the economy that could lead to recession. It’s just not worth it,” she said.
Now read: Skip, pause or hike? A guide to what is expected from the Fed on Wednesday.
Accountable.US is not alone in calling out price hikes on essentials including food. Walmart Inc.
WMT,
is also unhappy with packaged-food companies that have steadily raised prices in dry grocery and consumable goods, according to a recent report from research company CFRA.
“Given Walmart’s enormous bargaining power over its suppliers, we expect the retail giant to push back on further price increases from its packaged-food suppliers,” he said. That is expected to hurt margins, especially if volume growth does not recover.
May inflation data released Tuesday found that food prices were up 0.2% from April, after remaining flat for the previous two months. Food prices are up 6.7% over the last year. The food-at-home index is up 5.8% over the last year, while the index for cereals and bakery products is up 10.7%.
Food prices started to rise about two years ago, when supply-chain issues and higher fuel and commodity prices led companies to pass some of those costs on to customers.
But companies appear determined to raise prices even more, despite a decline in shipping and gas costs. Gasoline was down 5.6% in May from April and fuel oil fell 7.7%, according to consumer-price-index figures.
Also read: U.S. inflation slows again, CPI shows, and might keep Fed on sidelines
Kimberly-Clark executives told analysts on its recent earnings call that the company is able to “rapidly implement broad pricing actions” and acknowledged that “pricing has continued to be a big driver behind our top-line growth.”
The company’s first-quarter earnings topped expectations and it raised guidance for the full year. That’s after it raised prices by 10% for a second straight quarter, driving margins wider by 340 basis points.
Shareholders were rewarded to the tune of $425 million during the quarter, the Accountable.US report notes.
PepsiCo Chief Executive Ramon Laguarta told analysts on that company’s recent earnings call that most of its price increases are behind it.
However, he said, “obviously, there are some markets, highly inflationary markets around the world, where we might have to take additional pricing. If you think about Argentina, Turkey, Egypt — those kinds of markets where the currencies are suffering. But the majority of our pricing is already done,” he said, according to a FactSet transcript.
PepsiCo’s 2022 earnings rose 16.9% to nearly $9 billion, and it spent more than $7.6 billion on stock buybacks and dividends, with the former up 1,313% from 2021.
General Mills, meanwhile, bragged about “getting smart about how we look at pricing” on its recent call. The parent of brands including Cheerios, Nature Valley, Blue Buffalo pet products and Pillsbury raised its fiscal 2023 guidance in February.
And Tyson executives touted the “significant pricing power of our portfolio with a year-over-year increase of 7.6%.” Tyson’s latest quarter included a surprise loss, as it was hit by weak demand for meat, along with plant closures and job cuts.
For more, see: Tyson Foods stock slides after meat producer swings to surprise loss
But Tyson had net income of over $3.2 billion in 2022, up from $3 billion in 2021, and it rewarded shareholders with $1.35 billion in buybacks and dividends.
For Accountable.US, it’s more compelling evidence that the Fed’s rate-hike strategy “has failed to root out one of the main drivers of inflation and should give the [Federal Open Market Committee] pause before lifting rates again this week to the detriment of jobs and the economy.”
The Consumer Staples Select Sector SPDR exchange-traded fund
XLP,
has fallen 1.6% to date in 2023, while the SPDR S&P Retail ETF
XRT,
has gained 4.6%. The S&P 500
SPX,
has gained 13% in the same period.
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U.S. stock futures were inching higher Thursday as traders contemplated the latest Fed decision, more banking sector stress, and Apple’s impending results.
On Wednesday, the Dow Jones Industrial Average
DJIA,
fell 270 points, or 0.8%, to 33414, the S&P 500
SPX,
declined 29 points, or 0.7%, to 4091, and the Nasdaq Composite
COMP,
dropped 55 points, or 0.46%, to 12025.
Results from Apple
AAPL,
the market’s biggest company, which are due after the closing bell on Thursday, will move into sharper focus as the session progresses.
But before that investors must contend with disappointment over the Federal Reserve’s policy stance and renewed fretting about the U.S. regional banking sector that have delivered volatile trading over the past 24 hours and left stock-index futures struggling to rally.
The S&P 500 slid 0.7% on Wednesday after the Fed again raised interest rates and irked some traders by seeming equivocal on whether the implied pause in monetary tightening meant the cycle of rate hikes were at an end and cuts could come soon.
“As widely expected, the Federal Reserve raised interest rates by a further 0.25%, which of itself was not market moving. Of rather more interest was the implication that the rate hiking cycle had now ended, even though the Fed remains poised to act again if necessary,” said Richard Hunter, head of markets at Interactive Investor.
“At the same time, the Fed dampened expectations for any interest rate reductions in the immediate future, contrary to investor hopes that some kind of easing may follow before the end of the year, depending on the severity of any potential recession,” he added.
Traders will also be keeping an eye out for any surprises when the European Central Bank delivers its policy decision at 2:15 p.m. Central European time (8:15 a.m. Eastern).
Then, late on Wednesday, just hours after Fed Chair Jay Powell said that the banking sector was “sound and resilient” shares in PacWest Bancorp
PACW,
plunged 50% in after-hours trading after reports the struggling regional bank’s executives were weighing a possible sale.
Stock index futures dived further in response on fears of continued turmoil in the financial sector. But though they have managed to recover much of those secondary losses the febrile action signals a nervous market, analysts noted.
“It looks like more trouble is brewing for the U.S. banking sector, on the contrary to what Powell said yesterday,” said Ipek Ozkardeskaya, senior analyst at Swissquote.
Other company results due on Thursday include Moderna
MRNA,
Peloton
PTON,
Kellogg
K,
before the opening bell rings, followed by Lyft
LYFT,
and Shopify
SHOP,
after the close.
U.S. economic updates set for release on Thursday include weekly initial jobless claims; first quarter productivity and unit labor costs; and the March trade deficit. All are due at 8:30 a.m. Eastern.
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There is currently no dispute over who wears the crown of world’s wealthiest person. It isn’t Tesla Chief Executive Elon Musk.
The net worth of Bernard Arnault, the founder and chairman and chief executive officer of LVMH Moet-Hennessy Louis Vuitton SE
MC,
stood at $210 billion as of Thursday, according to the Bloomberg Billionaire Index. That makes him the world’s richest person by that marker, with an increasingly comfortable lead over Tesla’s
TSLA,
Musk, who also leads SpaceX and Twitter and whose wealth stands at $180 billion. At times the two have been in a neck-and-neck race for that top spot.
LVMH shares closed at a record €883 on Thursday, helping lift the French CAC-40
PX1,
to an all-time high. That followed forecast-beating first-quarter sales from the luxury giant, thanks to returning China shoppers as COVID-19 restrictions eased, and rebounding international travel that drove duty-free sales. Up 7% so far this week, LVMH shares rose another 0.5% on Friday to €888.70.
The stock surge padded Arnault’s fortune by $11.6 billion on Thursday, the second-biggest single-day gain ever for him and a fresh record fortune, according to Bloomberg. Musk didn’t do badly.
He increased his wealth by $3.83 billion on Thursday, before Tesla and U.S. equities
SPX,
generally retreated a bit on Friday.
Read: Who is Bernard Arnault, the world’s richest person after surpassing Elon Musk?
LVMH owns jewelers Bulgari and Tiffany, alongside fashion houses Louis Vuitton and Dior. Results released late Wednesday showed the luxury standard-bearer beating expectations across every division, led by fashion and leather goods, the latter of which is significant, Berenberg analysts observed.
“As the most profitable division, this also bodes well for margin development,” said Berenberg analyst Graham Renwick, in a note to clients on Friday.
“This performance sets the standard for [first quarter] luxury reporting and gives encouragement on China’s recovery from pandemic disruption. Overall, we think these results continue to demonstrate LVMH’s strong momentum and best-in-class execution — again reaffirming its high quality and strong track record, which we believe investors are favoring in this uncertain macro environment,” said Renwick, who reiterated a buy rating on LVMH’s stock and lifted his share-price target to €960.
The luxury sector got another confidence boost on Friday, as Hermès International SCA
RMS,
revealed sales momentum in the first quarter, driven by a bump in tourism and new stores. The maker of the legendary Birkin handbag saw a 23% annual increase in first-quarter sales and backed “ambitious” organic revenue-growth targets.
Luxury stocks have seen an impressive rebound in 2023, after a weak 2022 — LVMH shares fell 6% in 2022 as travel restrictions in China and overall economic worries weighed on shoppers.
LVMH shares are up 30% so far in 2023, with Hermès up 36% and Christian Dior SE
CDI,
and Gucci owner Kering SA
KER,
up 26% and 21%, respectively.
As for Musk, his wealth is divided among his businesses. While Tesla accounts for $76 billion, Bloomberg estimates his share of SpaceX is worth $49 billion, and his share of Tesla is worth nearly $10 billion. He paid $44 billion for Twitter last year, after an attempt to wriggle out of the deal, and its current valuation is a matter of much speculation. Musk has fired thousands of employees and claimed this week that a return to profitability is now just around the corner.
Tesla is slated to report quarterly results next week, and some analysts aren’t optimistic due to persistent price cuts of its models.
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Moderna Inc. said Tuesday it’s working to develop its first bacterial vaccine to protect against Lyme disease, the tick-borne illness that causes a range of painful symptoms, including fever, headaches, fatigue, joint pain and rash.
The biotech
MRNA,
whose first product to be approved by the U.S. Food and Drug Administration was its mRNA-based COVID vaccine, said it has two candidates in development to address Lyme disease, named mRNA-1982 and mRNA-1975.
It announced the news at its fourth Vaccine Day, where it offered a full update on its clinical pipeline, which includes vaccines to protect against flu and respiratory syncytial virus, or RSV, as well as HIV, Epstein-Barr virus and herpes simplex virus, among others.
There are about 120,000 cases of Lyme disease in the U.S. and Europe every year, creating a “significant quality of life burden,” the company said in a statement. Rising temperatures are helping the disease spread more easily, and it is difficult to diagnose, because the symptoms are similar to those of many other diseases. It most seriously affects children below the age of 15 and older adults.
“Older adults appear to have higher odds of unfavorable treatment response as compared with younger patients, and neurologic manifestations are more common at presentation for this older adult population,” said the statement.
The mRNA-1982 candidate is designed to create antibodies for Borrelia burgdorferi, the pathogen that causes almost all Lyme disease in the U.S., while mRNA-1975 is designed to elicit antibodies specific to the four major Borrelia species that cause the disease in the U.S. and Europe.
Other new candidates in Moderna’s pipeline include mRNA-1405 and mRNA-1403, which aim to address the enteric virus norovirus. Norovirus is highly contagious and is the leading cause of diarrheal disease globally, Moderna said. It’s associated with about 18% of all such illnesses worldwide and causes about 200,000 deaths every year.
Overall, Moderna is expecting to launch six major vaccine products in the next few years, all of them with large addressable markets.
The company expects the annual global endemic market for COVID boosters alone to be worth about $15 billion.
It has dosed the first participant in a late-stage trial of its next-generation, refrigerator-stable COVID-19 vaccine candidate, mRNA-1283. The vaccine “has demonstrated encouraging results in multiple clinical studies,” the company said.
See now: Moderna CEO defends price increase for COVID vaccine to Congress
A separate trial of a flu vaccine called mRNA-1010 fared less well, however.
That trial “did not accrue sufficient cases at the interim efficacy analysis to declare early success in the Phase 3 Northern Hemisphere efficacy trial and the independent DSMB recommended continuation of efficacy follow-up,” the company said.
The company expects the market for respiratory-product sales to range from $8 billion to $15 billion by 2027 and for operating profit that year to range from $4 billion to $9 billion.
The stock was down 4% Tuesday and has fallen 15% in the year to date, while the S&P 500
SPX,
has gained 7%.
See also: Moderna’s stock slides as earnings fall short of estimates amid steep decline in COVID-vaccine sales
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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-88cae2de
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Data on the U.S. consumer and housing market, plus several notable earnings reports, will be this week’s highlights. Barring any surprises, federal financial regulators’ Congressional testimony will be the main event on the banking front.
On Wednesday, Fed Vice Chair for Supervision Michael Barr and Federal Deposit Insurance Corp. Chairman Martin Gruenberg are scheduled to testify before the House Financial Services Committee. They’ll discuss the collapses of Silicon Valley Bank and Signature Bank and efforts to maintain confidence in the U.S. banking system.
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Shares of Nike Inc. rallied after hours on Tuesday after the athletic-gear giant reported third-quarter results that topped expectations.
The maker of sneakers and sports apparel reported third-quarter net income of $1.24 billion, or 79 cents a share, compared with $1.4 billion, or 87 cents a share, in the same quarter a year ago. Revenue increased 14% to $12.39 billion, compared with $10.87 billion in the prior-year quarter.
Analysts polled by FactSet expected earnings per share of 56 cents, on sales of $11.48 billion.
Nike’s
NKE,
gross margin fell 330 basis points to 43.4%. Inventories stood at $8.9 billion, up 16%, amid “higher product input costs and elevated freight costs.”
For Nike’s fourth quarter, FactSet estimates called for earnings per share of 81 cents, on revenue of $12.55 billion. For the full year, those analysts expected earnings of $3.15 a share, on sales of $50.11 billion.
Shares rose 3.5% after hours. The stock also jumped after Nike’s last earnings report, in December, which also topped estimates.
Nike reported earnings after it cut prices in an effort to clear clothing and other items from its warehouses, following supply-chain hiccups that led to an excess of off-season goods and rising prices for basics. Those higher prices made customers less interested in dropping money on a new pair of sneakers.
However, Jefferies analyst Randal Konik, in a research note last week, suggested that rival Adidas AG’s struggles could become Nike’s gains, as Adidas
ADDYY,
finds itself stuck with a bunch of Kanye West-branded shoes. West’s antisemitic remarks last year led to the termination of a collaboration between the two.
“The athletic footwear space is highly fragmented, and we believe that NKE will likely continue to benefit as Adidas regroups,” he said in a note.
Konik said that Jefferies’ own data suggested that holiday-season interest in sneakers was still strong, despite inflation. And he said trends in China were getting better, as that nation’s economy reopens.
Foot Locker Inc.
FL,
on Monday said that it had “revitalized” its relationship with Nike — to focus on data-sharing and sneaker culture — after Nike began focusing on selling products online and through its own retail stores. And after weaker sales of Nike products in the past, Foot Locker Chief Executive Mary Dillon said the new arrangement with Nike would return both to growth in 2024.
Shares of Nike are down 4.4% over the past 12 months. By comparison, the S&P 500 Index
SPX,
is down 10.4% over that period.
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Shares of Under Armour Inc. sprinted higher Wednesday toward a nine-month high, after the athletic apparel and gear seller reported a big beat in fiscal third quarter profit and raised its full-year outlook.
Net income for the quarter to Dec. 31 rose to $121.6 million, or 27 cents a share, from $109.7 million, or 23 cents a share, in the year-ago period. Excluding nonrecurring items, adjusted earnings per share of 16 cents was well above the FactSet consensus of 9 cents.
Revenue grew 3.4% to $1.58 billion, above the FactSet consensus of $1.55 billion, as a 25% jump in footwear revenue offset 2% declines in apparel and accessories revenue. Meanwhile, a 2% decline in North America revenue was offset by a 14% increase in international revenue.
The Class C shares
UA,
shot up 6.8% in premarket trading, which puts them on track to open at the highest price seen during regular-sessions hours since May 5, 2022. The Class A shares
UAA,
jumped 6.9%.
Gross margin contracted by 6.5 percentage points, due primarily to higher promotions, sales mix impacts and the negative impact of currency fluctuations.
For fiscal 2023, the company raised its adjusted EPS guidance range to 52 cents to 56 cents from 44 cents to 48 cents, but kept its revenue growth guidance at a low single-digit percentage range. The FactSet consensus for EPS was 46 cents, and the FactSet revenue consensus of $5.86 billion implied 2.7% growth.
The Class C shares have soared 53.5% over the past three months through Tuesday, while the S&P 500
SPX,
has gained 8.8%.
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Tyson Foods Inc. stock slid 5.5% in premarket trade Monday, after the meat processor and parent to brands including Jimmy Dean and Hillshire Farm missed consensus estimates for its fiscal first quarter by a wide margin.
“We faced some challenges in the first quarter,” Chief Executive Donnie King said in a statement. “Market dynamics and some operational inefficiencies impacted our profitability. We expect to improve our performance through the back half of fiscal 2023 and into the future, as we strive to execute with excellence and work to become best in class in our industry.”
Springdale, Arkansas-based Tyson posted net income of $316 million, or 88 cents a share, for the quarter to Dec. 31, down from $1.121 billion, or $3.07 a share, in the year-earlier period. Adjusted per-share earnings came to 85 cents, well below the $1.31 FactSet consensus.
Sales rose to $13.260 billion from $12.933 billion, also below the $13.515 billion FactSet consensus.
The company, the biggest U.S. meat supplier measured by sales, said beef prices fell by an average of 8.5% in the quarter, while chicken prices rose 7.1% and pork prices were up 1.4%. The company’s prepared foods division’s sales rose 7.6% and international and other food sales were up 4.9%.
Beef sales rose 2.9% to $4.723 billion, while pork sales fell 7.4% to $1.529 billion. Sales of chicken rose 2.5% to $4.263 billion, while prepared foods sales rose 1.2% to $2.538 billion. International and other food sales were up 6.4% to $612 million.
The U.S. Department of Agriculture is expecting domestic protein production — beef, pork, chicken and turkey — to be flat in fiscal 2023 versus year-earlier levels, said Tyson.
Tyson said it is expecting fiscal 2023 sales of $55 billion to $57 billion, while FactSet expects $55.2 billion. Tyson expects capex of about $2.5 billion and net interest costs of about $330 million.
The stock has fallen 27% in the last 12 months, while the S&P 500
SPX,
has fallen 8%.
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Wall Street’s expectations for 2023 have been diving as forecasts for the new year come in light, and the news could get worse once they factor in disappointing results from Big Tech. But at least Bob Iger is coming back for a sequel.
Google, Facebook, Amazon and Apple all disappointed with holiday earnings this week. Their forecasts ranged from nonexistent to piecemeal to meh, and the fallout will only add to the biggest dive in Wall Street’s expectations through the beginning of a year since 2016.
Analysts’ average forecast for 2023 earnings from the S&P 500 index
SPX,
dropped by 2.5% in January, according to FactSet Senior Earnings Analyst John Butters, the worst in seven years. Those projections began heading lower last year, and the decline is only steepening — analysts are now projecting 3% earnings growth in 2023, and that is contingent on a big holiday rebound from the results being released this quarter.
The news was even worse for the first quarter, for which projections declined 3.3% in January as companies whiffed on their forecasts at a rapid pace: 86% of the 43 companies that have guided for first-quarter earnings have missed projections, Butters reported. Earnings are now expected to decline 4.2%, which would be the first year-over-year earnings decline since the third quarter of 2020, when the COVID-19 pandemic write-offs started to come in.
Big Tech only added to the downward trajectory in recent days. Amazon.com Inc.
AMZN,
missed on its holiday earnings as well as its forecast for the first quarter, and that company could determine if S&P 500 profits rise in 2023 all on its own. Amazon’s worst holiday earnings since 2014 could also contribute to the consumer discretionary sector’s first earnings decline since the beginning of the pandemic, with holiday sector earnings now expected to drop more than 5%.
Google parent Alphabet Inc.
GOOGL,
GOOG,
and Facebook parent Meta Platforms Inc.
META,
also missed their respective earnings targets amid problems with the digital-advertising industry, leading to the communications-services sector having the worst earnings season in the S&P 500. Profit has declined 25.2% in that sector so far, the worst among the 11 S&P 500 sectors, but would be down just 6.5% without the effects of Meta and Alphabet, Butters reported.
Apple Inc.
AAPL,
also didn’t do projections any favors, reporting its biggest sales decrease since 2016 and an earnings miss Thursday afternoon. In a piecemeal forecast, executives projected a similar sales decline in the calendar first quarter, though unofficially.
After the busiest week in earnings season wrapped up, don’t expect much of a breather — 95 S&P 500 companies are expected to report in the week ahead, the third consecutive week with at least 90 companies reporting. There will be plenty of intrigue among companies not in the S&P 500 too, including Robinhood Markets Inc.
HOOD,
and Affirm Holdings Inc.
AFRM,
reporting together on Wednesday afternoon.
Only one Dow Jones Industrial Average
DJIA,
stock will report, but that is the Wednesday call you will want to tune in for: Bob Iger’s return to the Walt Disney Co.
DIS,
earnings show.
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A Food and Drug Administration advisory panel voted unanimously Thursday for Americans to get a once-a-year booster against COVID-19, with the strain to be decided midyear for a fall campaign, the Associated Press reported.
“This is a consequential meeting to determine if we’ve reached the point in the pandemic that allows for simplifying the use of current COVID-19 vaccines,” said the FDA’s Dr. David Kaslow.
The panel agreed that people should get the same vaccine formula whether they’re receiving their initial vaccinations or a booster. Today, Americans get one formula based on the original coronavirus strain that emerged in 2020 for their first two or three doses, and their latest booster is a combination shot made by Pfizer
PFE,
or Moderna
MRNA,
that adds protection against omicron.
The FDA would have to decide how to phase in that change.
COVID-19 vaccines have saved millions of lives, and booster doses remain the best protection against severe disease and death. But Americans are tired of getting vaccinated. While more than 80% of the U.S. population has had at least one COVID-19 shot, only 16% of those eligible for the latest boosters — so-called bivalent doses updated to better match more recent virus strains — have gotten one.
Separately, the Centers for Disease Control and Prevention offered an update Friday on the strains that are dominant in the U.S., showing that XBB.1.5, the omicron sublineage that first emerged in small numbers in October, has extended its lead over other variants.
XBB.1.5 accounted for 61.3% of cases in the week through Jan. 28, the data shows, up from 49.1% a week ago. The prior dominant variants, BQ.1.1 and BQ.1, together accounted for 31.1% of new cases.
In the CDC’s Region 2, which includes New York, New Jersey, the U.S. Virgin Islands and Puerto Rico, XBB.1.5 accounted for 91.1% of new cases, up from 86.8% the previous week.
The World Health Organization said this week that it now has data on XBB.1.5 from 54 countries, showing it has a growth advantage over other circulating strains but still appears no more severe.
In its weekly epidemiological update, the agency said it has raised the confidence level of its risk assessment for XBB.1.5 to “moderate” from “low,” using these additional reports. The highest number of XBB.1.5 cases are showing up in the U.S., the U.K., Canada, Denmark, Germany, Ireland and Austria.
The news comes as the seven-day average of new cases stood at 46,300 on Thursday, according to a New York Times tracker. That’s down 24% from two weeks ago. The daily average for hospitalizations was down 24%, at 34,833. The average number of deaths was 549, down 3% from two weeks ago.
Cases are currently climbing in eight states — Illinois, Tennessee, Minnesota, Alaska, South Dakota, Vermont, Kentucky and Kansas — as well as in the U.S. Virgin Islands and Washington, D.C.
Coronavirus update: MarketWatch’s daily roundup has been curating and reporting all the latest developments every weekday since the coronavirus pandemic began
Other COVID-19 news you should know about:
• China’s claim that COVID cases and deaths have peaked and are falling fast is failing to take on board that testing is not keeping up with infections, the Guardian reported. China ended its zero-COVID policy in December and promptly saw a wave of cases spread across the nation. Its health authorities said this week that the worst is behind it, but experts are wary that it is underreporting numbers, as it has since the start of the pandemic. Now the pullback in testing is a factor, according to the Guardian. Daily tests had dropped to 280,000 by Monday, down from 150 million on Dec. 9, and 7.54 million on Jan. 1. Some provinces had enacted systems for collecting the results of residents or allowing residents to self-report, but the figures were “affected by the willingness of residents to test.”
• South Korea says it will continue to restrict the entry of short-term travelers from China through the end of February over concerns that the spread of COVID may worsen following the Lunar New Year holidays, the AP reported. South Korea in early January stopped issuing most short-term visas at its consulates in China, citing concerns about the virus surge in the country.
• Spain is set to end the mandatory use of face masks on public transport nearly three years after the start of the pandemic, the AP reported separately. Spanish Health Minister Carolina Darias said Thursday she would recommend that the government remove the health regulation when the cabinet meets on Feb. 7. Face masks will remain obligatory inside hospitals, health clinics, dentist offices and pharmacies.
Here’s what the numbers say:
The global tally of confirmed COVID-19 cases topped 669.9 million Wednesday, while the death toll rose above 6.82 million, according to data aggregated by Johns Hopkins University.
The U.S. leads the world with 102.3 million cases and 1,107,559 fatalities.
The CDC’s tracker shows that 229.6 million people living in the U.S., equal to 69.2% of the total population, are fully vaccinated, meaning they have had their primary shots.
So far, just 51.4 million Americans, equal to 15.5% of the overall population, have had the updated COVID booster that targets both the original virus and the omicron variants.
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China has accused “some Western media” of bias and political manipulation in covering China’s abrupt dropping of COVID restrictions, which has led to a wave of new cases of the virus, the Associated Press reported.
An editorial in the Communist Party publication the People’s Daily outlined what it called China’s “optimization and control measures” and blasted reports by media outlets they didn’t identify as “completely biased hype, smear and political manipulation with ulterior motives.”
The news comes as the country braces for the Lunar New Year holiday, which starts Jan. 21, and typically sees people traveling all over the country to visit family.
Experts are concerned that this year’s holiday will become a spreader event, although the editorial stressed that may localities have “passed the peak of the epidemic, and production and life are speeding up to return to normal.”
China has rejected all criticism, foreign and domestic, of its zero-COVID policy and pushed back against World Health Organization calls for more information about the state of its outbreak. Unconfirmed estimates now put the number of new cases at tens of thousands a day, with up to 85% of the population in some provinces having become infected.
In the U.S., the seven-day average of new U.S. COVID cases stood at 54,015 on Wednesday, according to a New York Times tracker. That’s down 14% from two weeks ago and well below the recent peak of 70,508 on Christmas Eve.
The daily average for hospitalizations was down 16% at 39,473. The average for deaths was 482, up 6% from two weeks ago. The death rate appears to be steadying after climbing as much as 73% as recently as Tuesday.
The Times trackers posited that the spike in deaths had more to do with data anomalies in recent reporting, which tends to become distorted around holiday periods when hospitals and healthcare centers are more thinly staffed.
Coronavirus Update: MarketWatch’s daily roundup has been curating and reporting all the latest developments every weekday since the coronavirus pandemic began
Other COVID-19 news you should know about:
• A hoped-for boom in Chinese tourism in Asia over next week’s Lunar New Year holidays looks set to be more of a blip as most travelers are opting to stay inside China if they go anywhere, the AP reported. From the beaches of Bali to Hokkaido’s powdery ski slopes, the hordes of Chinese often seen in pre-COVID days will still be missing, tour operators say. It’s a bitter disappointment for many businesses that had been hoping lean pandemic times were over, although operators are expecting a return by late February, or early March.
• Hong Kong will no longer require people infected with COVID to quarantine from Jan. 30, removing one of the last major coronavirus restrictions in place in the Asian financial hub, Reuters reported. The scrapping of the isolation requirements is part of a decision to downgrade COVID-19’s status to an endemic disease from a severe respiratory disease and follows a similar move by China on Jan.8.
• Moderna
MRNA,
chief executive Stephane Bancel said his company was in active discussions to supply COVID vaccines to China, Reuters reported separately. Speaking to Reuters on the sidelines of the World Economic Forum annual meeting in Davos, he said the talks with Beijing also covered the topic of factories and other products including cancer treatments. “What I really want to understand is how do we help the Chinese government as to what are the needs they have from a healthcare standpoint,” he said.
Here’s what the numbers say:
The global tally of confirmed cases of COVID-19 topped 668 million on Thursday, while the death toll rose above 6.73 million, according to data aggregated by Johns Hopkins University.
The U.S. leads the world with 101.9 million cases and 1,102,286 fatalities.
The Centers for Disease Control and Prevention’s tracker shows that 229.4 million people living in the U.S., equal to 69.1% of the total population, are fully vaccinated, meaning they have had their primary shots.
So far, just 49.6 million Americans, equal to 15.9% of the overall population, have had the updated COVID booster that targets both the original virus and the omicron variants.
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The World Health Organization has called on China to release more information about its current wave of COVID infections after China said nearly 60,000 people have succumbed to the virus since early December, the Associated Press reported.
The announcement of fatality numbers on Saturday came after weeks of complaints that China was not keeping experts abreast of what was happening.
The announcement “allows for a better understanding of the epidemiological situation,” said a WHO statement. Director-general, Tedros Adhanom Ghebreyesus talked by phone with Health Minister Ma Xiaowei, it said.
“WHO requested that this type of detailed information continued to be shared with us and the public,” the agency said.
The National Health Commission said only deaths in hospitals were counted, which means anyone who died at home is not part of the tally. It gave no indication of when or whether it might release updated numbers. China has seen a wave of cases ever since the government ended stringent restrictions on movement in December.
The WHO is now analyzing the data, which covers early December to Jan. 12. So far, the epidemiology is similar to what has been seen in other countries, “a rapid and intense wave of disease caused by known sub-variants of omicron with higher clinical impact on older people and those with underlying conditions,” said the statement.
The agency is hoping to get more information on the exact variants that are circulating. China has reported that two omicron sublineages, dubbed BA.5.2 and BF.7 are spreading but the WHO needs more sequences to be shared with open databases to get fully up to date.
See also: China reports first population drop in decades as birthrates plunge
In the U.S., the seven-day average of new U.S. COVID cases stood at 59,121 on Monday, according to a New York Times tracker. That’s flat from two weeks ago and below the recent peak of 70,508 on Christmas Eve.
The daily average for hospitalizations was down 8% at 45,052. The average for deaths stood at 562, up 78% from two weeks ago to continue the recent trend.
Coronavirus Update: MarketWatch’s daily roundup has been curating and reporting all the latest developments every weekday since the coronavirus pandemic began
Other COVID-19 news you should know about:
• The U.S. Centers for Disease Control and Prevention said its real-time surveillance system has met the statistical criteria to prompt additional investigation into whether there is a risk of ischemic stroke in people ages 65 and older who received the Pfizer/BioNTech
PFE,
BNTX,
bivalent COVID vaccine. “Rapid-response investigation of the signal in the VSD (vaccine safety datalink) raised a question of whether people 65 and older who have received the Pfizer-BioNTech COVID-19 Vaccine, Bivalent were more likely to have an ischemic stroke in the 21 days following vaccination compared with days 22-42 following vaccination,” the agency said in a statement. No such signal has been identified with the Moderna
MRNA,
bivalent vaccine, it added.
• Italian tennis player Camila Giorgi has denied allegations that she obtained a false COVID-19 vaccine certificate to allow her to travel, the AP reported. A doctor is under investigation in Italy for supplying false certificates and fake vaccines and Giorgi’s name was revealed in a long list of people implicated by an Italian newspaper. Giorgi is currently competing in the Australian Open.
• The New York State Department of Health is “exploring its options” after a state Supreme Court judge struck down a statewide mandate requiring healthcare workers to be vaccinated against COVID-19, the AP reported separately. Judge Gerard Neri wrote in a ruling released Friday that Democratic Gov. Kathy Hochul and the health department overstepped their authority by mandating a vaccine that’s not included in state public health law, the Syracuse Post-Standard reported. The mandate is “null, void, and of no effect,” the judge said. He sided with Medical Professionals for Informed Consent, a group of medical workers impacted by the vaccination mandate.
Here’s what the numbers say:
The global tally of confirmed cases of COVID-19 topped 667.3 million on Tuesday, while the death toll rose above 6.7 million, according to data aggregated by Johns Hopkins University.
The U.S. leads the world with 101.7 million cases and 1,099,885 fatalities.
The Centers for Disease Control and Prevention’s tracker shows that 229.4 million people living in the U.S., equal to 69.1% of the total population, are fully vaccinated, meaning they have had their primary shots.
So far, just 49.6 million Americans, equal to 15.9% of the overall population, have had the updated COVID booster that targets both the original virus and the omicron variants.
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The numbers: The New York Fed’s Empire State business conditions index, a gauge of manufacturing activity in the state, tumbled 21.7 points to negative 32.9 in January, the regional Fed bank said Tuesday.
This is the lowest level since the worst of the pandemic in May 2020 and among the lowest levels in the survey’s history, the regional Fed bank said.
Economists had expected a reading of negative 7, according to a survey by The Wall Street Journal.
Any reading below zero indicates contraction.
Key details: The new orders index fell 27.5 points to negative 31.1 in January. Shipments fell 27.7 points to negative 22.4.
The indexes for prices paid and prices received moved lower.
The employment gauges were also weak.
Firms expect little improvement in coming months, with the futures index at 8.
Big picture: The Federal Reserve’s steady increase in interest rates is having a slowing impact on capital spending as firms are scaling back investment, economists said. Demand for goods is also slowing after two strong years on the weak global economy. Added to the mix is the strong dollar which makes U.S. exports more expensive.
The market pays attention to the Empire State index because it is seen as a early read on the national ISM manufacturing index to be released early next month.
The ISM factory index contracted in December for the second straight month, falling to 48.4% from 49% in the prior month.
Looking ahead: “Manufacturing conditions in the U.S. are deteriorating and the worst is likely ahead,” said Gurleen Chadha, economist at Oxford Economics.
Market reaction: U.S. stocks
DJIA,
SPX,
opened lower on Tuesday. The yield on the 10-year Treasury note
TMUBMUSD10Y,
retreated to 3.51% after reaching 3.57% in early morning trading.
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Nearly two years after biotechnology stocks began to tumble, executives at small and midsize companies in the space are finally accepting that share prices aren’t bouncing back anytime soon.
With reality setting in, it’s a buyer’s market for companies looking for acquisitions and partnerships, according to many of the pharmaceutical and medical technology executives who gathered at this year’s
J.P. Morgan
healthcare investor conference, which wrapped up in San Francisco on Thursday.
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The XBB.1.5 omicron subvariant that has been dominant in the Northeast for several weeks is now officially dominant across the U.S., according to an update from the Centers for Disease Control and Prevention early Friday.
XBB.1.5 accounted for 43% of all COVID cases in the week through Jan. 14, pulling ahead of BQ.1.1, which accounted for 28.8% of new cases, and BQ.1, which accounted for 15.9%, the data showed.
Last week, BQ.1.1 was still dominant nationwide, accounting for 33.5% of new cases versus XBB.1.5’s 30.4%.
In the New York region, which includes New Jersey, the U.S. Virgin Islands and Puerto Rico, XBB.1.5 now accounts for 82.7% of new cases, up from 72.7% a week ago.
On Thursday, the World Health Organization acknowledged that XBB.1.5, which was first detected in tiny numbers in the U.S. in October, has become the most transmissible variant yet thanks to a growth advantage, and said that it appears to have a greater ability to evade immunity than earlier variants.
However, the immune-escape data is based on preliminary lab-based studies and not on research in humans. And with the only data to review coming from the U.S., the agency said there’s no information yet on clinical severity.
XBB.1.5 is similar to its immediate predecessor XBB.1 but has an additional mutation to its spike protein that may be behind its growth advantage. For now, it does not appear to have any mutation that might lead to more severe disease or death, WHO officials have said. The agency is monitoring it along with five other omicron variants.
On Friday, the WHO updated guidelines on face masks, treatments and patient care in the age of COVID, a reminder that the pandemic is not yet over, even if people are mostly behaving as if it is. Given current global trends, the agency is recommending that people wear face masks when in public settings that are enclosed or poorly ventilated. People who have been exposed to the virus should also wear masks.
“Similar to previous recommendations, WHO advises that there are other instances when a mask may be suggested, based on a risk assessment,” the agency said in a statement. “Factors to consider include the local epidemiological trends or rising hospitalization levels, levels of vaccination coverage and immunity in the community, and the setting people find themselves in.”
The WHO reduced its recommended isolation period for COVID patients and said they can end isolation early if they test negative on a rapid test. Patients with symptoms should isolate for 10 days from the start of symptom onset, but the agency has dropped its advice for an additional three days.
For asymptomatic patients who test positive, the WHO now recommends five days of isolation, compared with 10 days previously.
The WHO extended a strong recommendation for the use of Pfizer’s
PFE,
antiviral Paxlovid for patients with mild to moderate symptoms who are at risk of hospitalization.
The data comes as the seven-day average of new U.S. cases stood at 60,610 on Thursday, according to a New York Times tracker. That’s up 4% from two weeks ago and below the recent peak of 70,508 on Christmas Eve. The daily average for hospitalizations was up 10% to 45,842. The average for deaths was 564, up 61% from two weeks ago.
Coronavirus Update: MarketWatch’s daily roundup has been curating and reporting all the latest developments every weekday since the coronavirus pandemic began
Other COVID-19 news you should know about:
• The peak of China’s COVID-19 wave is expected to last two to three months and to soon extend over the country’s vast rural areas, where medical resources are relatively scarce, Reuters reported Friday, citing a Chinese epidemiologist. Infections are expected to surge in those areas as hundreds of millions of people travel to their hometowns for the Lunar New Year holiday, which starts Jan. 21. “Our priority focus has been on the large cities. It is time to focus on rural areas,” said Zeng Guang, the former chief epidemiologist at the Chinese Centers for Disease Control and Prevention, according to a report published in local media outlet Caixin on Thursday.
• Private services offering Chinese travelers access to mRNA vaccines are attracting droves of mainlanders to Hong Kong and Macau, the Guardian reported on Friday, as people seek a booster shot that their government has refused to approve. The government only allowed its citizens to get homegrown vaccines developed by Sinopac and Sinopharm
8156,
throughout the pandemic, but many people are now seeking the greater protection offered by the mRNA vaccines developed by Moderna
MRNA,
and by Pfizer and German partner BioNTech
BNTX,
• Kansas Gov. Laura Kelly plans to return to work at the Statehouse Friday after learning that a COVID-19 test earlier in the week gave her a false positive result, her office said, the Associated Press reported. Kelly has been working in self-isolation at the governor’s residence since the false positive Tuesday. Her office announced that she had tested positive for COVID-19, and she postponed the annual State of the State address from Wednesday to Jan. 24.
Here’s what the numbers say:
The global tally of confirmed cases of COVID-19 topped 666.3 million on Friday, while the death toll rose above 6.7 million, according to data aggregated by Johns Hopkins University.
The U.S. leads the world with 101.6 million cases and 1,099,629 fatalities.
The Centers for Disease Control and Prevention’s tracker shows that 229.4 million people living in the U.S., equal to 69.1% of the total population, are fully vaccinated, meaning they have had their primary shots.
So far, just 49.6 million Americans, equal to 15.9% of the overall population, have had the updated COVID booster that targets both the original virus and the omicron variants.
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