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Dec 19, 2023, 4:31 am EST
Stock futures traded flat Tuesday, a day after the S&P 500 finished up 0.5% and moved closer to its all-time. The broad market index stands just 1.2% below its record of 4,796.56 reached in early January 2022.
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Oil futures fell on Friday, but finished off the session’s lows to eke out a gain for the week — the first for U.S. and global benchmark crude prices in eight weeks.
Attacks on ships traveling through the Red Sea, blamed on Yemen’s Houthi rebels, raised the potential for disruptions to the transport of oil and other goods, providing some support for prices.
Oil saw larger declines early Friday after a Federal Reserve official walked back dovish comments made earlier this week by the Fed Chair Jerome Powell, helping to strengthen the U.S. dollar.
CLF24,
declined by 15 cents, or 0.2%, to settle at $71.43 a barrel on the New York Mercantile Exchange, with prices ending 0.3% higher for the week, according to Dow Jones Market Data.
BRNG24,
the global benchmark, fell 6 cents, or nearly 0.1%, to $76.55 a barrel on ICE Futures Europe, settling 0.9% higher for the week.
Danish shipping company A.P. Moeller-Maersk
MAERSK.A,
said it will pause all of its container shipments through the Red Sea until further notice and detour them around Africa, Reuters and Bloomberg reported Friday, amid rising risks to its fleet posed by Houthi militants.
The Red Sea is “one of the hot pockets of seaborne crude flows,” accounting for approximately 10% of global volume, said Manish Raj, managing director at Velandera Energy Partners. “Although the attackers lack sophistication … shipping crews are even less sophisticated, making them easy targets.”
A potential blockage of the Red Sea route would be “chaotic indeed, but not nearly as detrimental as blockage of [the] Strait of Hormuz near Iran, for which there is no viable alternative,” Raj said.
Read from the AP: How are Houthi attacks on ships in the Red Sea affecting global trade?
For now, there is concern over higher insurance costs for these ships, said Phil Flynn, senior market analyst at the Price Futures Group.
“With ships in the Red Sea continuing to be at high risk, ‘it won’t take that much for the market’ to see oil prices spike if an oil tanker should be hit.”
Obviously, the risk to oil supply is large, although “so far, most of the attacks have been on cargo ships and not oil-related ships,” Flynn told MarketWatch.
However, as ships in the Red Sea continue to be at high risk, “it won’t take that much for the market” to see oil prices spike if an oil tanker is hit, Flynn said.
For the week, both U.S. and global benchmark crude prices posted gains.
“The combination of lower U.S. inventories, stronger economic data, and improved OPEC compliance [with production cuts] for the month of November were the highlights of the week,” said Peter McNally, global head of sector analysts at Third Bridge.
“However, there are ongoing seasonal challenges that forced OPEC to sustain production cuts through the first quarter of 2024, so it remains to be seen if they have done enough to prevent inventories from continuing their upward trend,” he said.
Read The Year Ahead: Why oil may not see a return $100 a barrel in 2024
Oil had been trading lower early Friday after New York Federal Reserve President John Williams told CNBC that it is “premature” to discuss whether it is time to cut interest rates. “We aren’t really talking about cutting interest rates right now,” Williams said.
That ran contrary to Powell’s comments Wednesday that Fed officials were starting to discuss when to cut rates.
After the euphoria in the U.S. stock market over the Powell “pivot party” on Wednesday, we got a “wake-up call” from Williams when he pushed back on market expectations for a March rate cut, Michael Hewson, chief market analyst at CMC Markets UK, said in market commentary.
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The New Year is almost here, and that means it’s time for four of the last dividend cutters of 2020— Boeing, American Airlines Group, Royal Caribbean Group, and Carnival—to bring back their payouts to shareholders.
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By Adria Calatayud
Airbus and Hong Kong’s Cathay Pacific Airways have signed a purchase agreement for six A350F freighter aircraft with a basic price of $2.71 billion before price concessions, the companies said Friday.
Cathay said Airbus granted it significant price concessions which might be used toward the payment of the aircraft. The basic price comprises prices for airframe, optional features and engine, Cathay said.
The aircraft, expected to be delivered by the end of 2029, will expand Cathay’s cargo fleet capacity and will mainly serve long-haul destinations in North America, South America and Europe, it said.
Airbus said the A350F can carry a payload of up to 111 metric tons and can fly up to 4,700 nautical miles, or 8,700 kilometers.
Write to Adria Calatayud at adria.calatayud@dowjones.com
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Shares of UiPath Inc. soared late Thursday after the automation-software company reported fiscal-third-quarter earnings and revenue that rose above expectations, amid strength in the licenses and subscription-services businesses.
The stock
PATH,
shot up 11% in after-hours trading, putting it on a path to trade at the highest closing levels seen since April 2022.
Net losses for the quarter to Oct. 31 narrowed to $31.5 million, or 6 cents a share, from $57.7 million, or 10 cents a share, in the same period a year ago. Excluding nonrecurring items, such as stock-based compensation expenses, adjusted earnings per share rose to 12 cents from 5 cents to beat the FactSet consensus of 7 cents.
Total revenue grew 24% to $325.9 million, above the FactSet consensus of $315.6 million.
Licenses revenue jumped 25.3% to $148.1 million, well above the FactSet consensus of $137.5 million, and subscription-services revenue climbed 28.7% to $167.5 million to top expectations of $166.9 million. Meanwhile, professional services and other revenue dropped 28.4% to $10.3 million, to miss forecasts of $11.2 million.
Annual recurring revenue increased 24% to $1.38 billion, above the FactSet consensus of $1.36 billion.
For the fourth quarter, the company expects revenue of $381 million to $386 million, which surrounds the FactSet consensus of $383 million.
The stock, which fell 0.6% during Thursday’s regular session after closing the previous session at a 15-month high, has run up 26.6% over the past three months, while the SPDR S&P Software & Services ETF
XSW,
has tacked on 1.3% and the S&P 500
SPX,
has edged up 1.2%.
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U.K. stocks rose Thursday, as the FTSE 100 Index FTSE 100 Index closed up 0.19% at 7,483.58.
Among FTSE 100 constituents, technical services company Intertek Group PLC Intertek Group PLC saw the largest increase Thursday, as shares climbed 3.42%.
Shares of air freight firm International Distribution Services PLC International Distribution…
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It’s filing season for a string of major hedge funds, and big tech names like Apple, Microsoft, and Nvidia were among the most-traded equities in the third quarter.
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Soros Fund Management, the investment firm founded by billionaire George Soros, took new positions or bulked up on IPOs and a number of tech names during the third quarter.
But it sold off small holdings of some of the largest — like Nvidia Corp. and Microsoft Corp. — as well as electric-vehicle maker Rivian Automotive.
According to a filing on Tuesday, the firm during the third quarter bought up 325,000 shares of chip designer Arm Holdings
ARM,
which went public in September, for $17.4 million. It also bought smaller stakes in recent IPOs such as Maplebear Inc.
CART,
better known as grocery-delivery platform Instacart, and digital-marketing firm Klaviyo Inc.
KVYO,
Those purchases were disclosed as investors remain cautious on new IPOs.
Elsewhere, the fund took a new position, of around 41,000 shares, in Apple Inc.
AAPL,
And it did so as well for Datadog Inc.
DDOG,
buying 62,000 shares during the quarter. It also bought up 574,962 shares of Splunk, and took fresh positions in Snowflake Inc.
SNOW,
and Taiwan Semiconductor
TSM,
Soros also packed on more to some of its other tech holdings. It added 125,000 shares to its stake in Uber Technologies Inc.
UBER,
boosting its position by 16.6% for a total of 878,955 shares. It also bought 42,000 more shares of another gig-economy player, DoorDash Inc.
DASH,
a 30.9% increase for 178,075 shares.
While Soros boosted its stake in General Motors
GM,
it sold off its 4.2 million shares in Rivian
RIVN,
The firm also sold off its positions — of roughly 10,000 shares apiece — in tech giants Microsoft
MSFT,
and Nvidia
NVDA,
Soros Fund Management also sold off its stake in Walt Disney Co.
DIS,
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Virgin Galactic said it would cut jobs and expenses to focus on producing its lower-cost Delta spaceships.
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Commercial space-flight operator Virgin Galactic Holdings Inc. on Tuesday said it would cut staff in an effort to focus on developing its new class of Delta spacecraft that are expected to cost less and bring more profit.
Management, in an email to employees, did not offer specific figures on the cuts, while citing a shaky investing environment as part of the reason for them. The message said the company would offer more details during its third-quarter earnings call on Wednesday.
Virgin Galactic
SPCE,
when reached on Tuesday, declined to offer additional information. Executives over the summer said they expected commercial service for Delta ships to begin in 2026, after testing in 2025.
Shares were little changed after hours on Tuesday. The stock has fallen 50.4% so far this year.
The cuts follow a handful of space flights this year from Virgin Galactic, which was founded by billionaire Richard Branson. But Chief Executive Michael Colglazier, in the email, said that following successes from the spaceship Unity and its carrier mothership, Eve, the company needed to “reduce our reliance on unpredictable capital markets.”
“To profitably scale our business, we must first invest upfront capital to create a fleet of ships based on a standardized production model — the Delta Class ships,” Colglazier said in the email.
He added that “uncertainty has grown in the capital markets,” with higher interest rates pressuring borrowing and “geopolitical unrest” making for a more cautious environment. He said the Delta spacecraft played a key role in expanding flight service and profitability, and that it was crucial to focus on bringing them into service.
“Interest rates remain high, which adds pressure to companies who are investing today for profits that will come in the future,” he said. “Geopolitical unrest continues to expand, and the combination of these factors makes near-term access to capital much less favorable.”
“The Delta ships are powerful economic engines,” he continued. “To bring them into service, we need to extend our strong financial position and reduce our reliance on unpredictable capital markets. We will accomplish this, but it requires us to redirect our resources toward the Delta ships while streamlining and reducing our work outside of the Delta program.”
He said employees would be notified of their job status between Tuesday and Thursday. Employees will be working from home for the rest of the week, Colglazier said, adding that on-site work locations would be unavailable through that time.
“Delta ships have been designed to have a relatively low unit-production cost and have a material improvement flight cadence relative to our initial ship, VSS Unity,” Colglazier said on Virgin Galactic’s earnings call in August.
“The Delta development process has yielded some excellent enhancements to the ship’s architecture, particularly with regard to manufacturability and maintainability,” he said. “And we are tracking well against our primary ship-performance criteria.”
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Last month, Netflix Inc.
NFLX,
stock jumped after it reported big subscriber gains and hiked prices. Last week, results from Paramount Global
PARA,
beat expectations, sending shares of the streaming and entertainment giant on its best percentage gain in nearly a year, and Roku Inc.
ROKU,
also offered an upbeat outlook.
This week — as Walt Disney Co., Warner Bros. Discovery Inc., Lions Gate Entertainment Corp. and AMC Entertainment Holdings Inc. all report results — we’ll get a deeper sense of whether the entertainment industry is starting to make investors happy again, even if they make viewers less happy in the process.
Those companies will report as the streaming industry, under pressure from investors to turn a better profit, consolidates and as platforms charge more to watch and cram more advertisements into shows and films.
Cable TV providers and movie theaters, too, are trying to figure out a way forward as streaming becomes more prevalent. Even as Hollywood’s writers come back to work following a strike that shut down production, its actors are still striking, with issues surrounding AI usage to portray actors, streaming payments and other issues in the balance.
Disney
DIS,
which reports results on Wednesday, faces questions about losses at Disney+, efforts to cut billions in costs and stamp out streaming-account sharing, its planned takeover of the streaming platform Hulu and speculation over which of its large media properties it might sell. BofA analysts recently estimated that ESPN, which Disney has leaned on for years, could be worth around $24 billion. Meanwhile, activist investor Nelson Peltz has been angling for seats on Disney’s board, and its fight with Florida Gov. Ron DeSantis continues.
Elsewhere, Warner Bros. Discovery
WBD,
— the parent company of the streaming service Max, Warner Bros. Pictures, Discovery Channel, CNN and other channels — reports on Wednesday, as it tries to turn its reserves of intellectual property into franchise films. Meme-stock theater chain AMC
AMC,
which also reports Wednesday, following upbeat results from rival Cinemark Holdings Inc.
CNK,
Sales at the theater chains have been lifted in recent months by “Barbie” and “Oppenheimer.” While both were original films, analysts have said the avalanche of sequels and remakes in theaters is unlikely to stop.
The pressure to boost profits will ultimately affect what TV shows and films get made, and what viewers actually consume. And a report from FactSet on Friday found that investors have been more unkind than usual to companies whose results come up short of Wall Street’s expectations.
That report found that through the third-quarter earnings season, companies whose earnings miss expectations have seen an average stock-price drop of 5.2% during the two days before the publication of the results through the two days after. If that figure holds, it would be the stock market’s biggest adverse reaction to an earnings miss since the second quarter of 2011.
Among S&P 500 companies, 55 including one from the Dow, will report quarterly results during the week ahead.
EV startup Rivian Automotive Inc.
RIVN,
reports amid concerns about EV demand. Following Ticketmaster parent Live Nation Entertainment Inc.’s
LYV,
blowout quarterly results last week, results from Madison Square Garden Entertainment Corp.
MSGE,
will shed more light on people’s appetites for live entertainment. Results from digital marketing platform Klaviyo Inc.
KVYO,
and fast-casual chain Cava Group Inc.
CAVA,
— both recent IPOS — will offer a deeper look at digital ad budgets and a competitive restaurant backdrop, respectively.
The New York Times Co.
NYT,
also reports during the week. So do Planet Fitness Inc.
PLNT,
Gilead Sciences
GILD,
eBay Inc.
EBAY,
and Take-Two Interactive Software
TTWO,
Cybersecurity drama: Cyberattacks are getting more severe, and customers are starting to feel their effects more acutely. Against that backdrop, casino and resort operator MGM Resorts International
MGM,
will report quarterly results on Wednesday, in the wake of a cyberattack that took down some of its systems. MGM has said that attack, which the company disclosed in September, would cost them roughly $100 million.
The company said the fallout of that attack — which disrupted hotel bookings and put hotels on manual operations, resulting in long lines — was largely contained to September. But the SEC last week accused software company SolarWinds Corp.
SWI,
of failing to disclose its purported cybersecurity vulnerabilities, potentially leaving other companies wondering whether they’re vulnerable to similar legal action.
The gig economy and delivery demand: Rival ride-hailing platforms Uber Technologies Inc. and Lyft Inc. report results on Tuesday and Wednesday, respectively. Maplebear Inc.
CART,
better known as the grocery-delivery platform Instacart, also reports on Wednesday.
Analysts have been kinder to Uber
UBER,
the larger of the two ride-hailing companies. But Lyft has tried to cut its prices and roll out new services, including one that tries to match women and non-binary riders and drivers. The financials from all three companies will land after strong results from food-delivery platform DoorDash Inc.
DASH,
which has expanded its services into retail an effort to compete with Instacart and other delivery providers. And they’ll fill in the picture of rider demand following the back-to-school season and a bigger push to get workers back into offices.
Beyond ride-sharing, results from Uber and Instacart will narrow the lens on delivery demand, as some analysts question whether higher prices for basics and the return of student-loan payments might make food delivery more dispensable. Analysts also seem likely to zero on in those companies’ high-margin digital-ad businesses, as more e-commerce platforms try to turn their apps and websites into online billboard space.
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What do Elon Musk, Warren Buffett, Shawn Fain and Lina Khan have in common? On the surface, it might not seem like much — one is an impetuous tech-bro genius, another is a buy-and-hold nonagenarian investor, and the other two are a tough union boss and a business-busting regulator.
But each of them are having a serious impact on your money. They all appear on this year’s MarketWatch 50 list of the most influential people in markets. The MarketWatch 50 is our tally of the investors, CEOs, policymakers, AI players and financial…
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JetBlue Airways Corp.’s stock fell 7% in premarket trades on Tuesday after the carrier warned it would post a wider-than-expected fourth-quarter loss, while it missed analyst estimates for its third-quarter loss and revenue.
“While we have been able to offset some of the costs associated with the challenging operational backdrop, the sheer magnitude of the air traffic control and weather-related delays has been staggering,” the carrier said.
JetBlue
JBLU,
said it lost $153 million, or 46 cents a share in the third quarter. In the year-ago quarter, JetBlue reported net income of $57 million, or 18 cents a share.
Adjusted loss in the latest quarter was 39 cents a share, wider than the FactSet consensus estimate for a loss of 25 cents a share.
JetBlue’s revenue fell 8% to $2.35 billion, below the analyst estimate of $2.38 billion.
For the fourth quarter, JetBlue expects to report an adjusted loss of 55 cents to 35 cents a share against an analyst estimate of a loss of 15 cents a share.
Also read: Airline stocks rocked as Israel-Hamas war fuels profit concerns
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Voiced by artificial intelligence.
KYIV — Sergeant Yegor Firsov, deputy commander of a Ukrainian army strike drone unit, sounds exhausted in a voice message he sent to POLITICO from Avdiivka, an industrial city at the center of intense fighting on the eastern front.
Russian troops have been storming Avdiivka relentlessly for more than two weeks in an all-out effort to encircle the Ukrainian forces there.
“The situation is very difficult. We are fighting for the heights around the city,” Firsov said. “If the enemy controls these heights, then all logistics and roads leading to the city will be under its control. This will make it much harder to resupply our forces.”
Facing an enemy with superior numbers of troops and armor, the Ukrainian defenders are holding on with the help of tiny drones flown by operators like Firsov that, for a few hundred dollars, can deliver an explosive charge capable of destroying a Russian tank worth more than $2 million.
The FPV — or “first-person view” — drones used in such strikes are equipped with an onboard camera that enables skilled operators like Firsov to direct them to their target with pinpoint accuracy. Before the war, a teenager might hope to get one for a New Year present. Now they are being used as agile weapons that can transform battlefield outcomes. Others are watching, and learning, from a technology that is giving early adopters an asymmetric advantage against established methods of warfare.
“It’s hard to handle the emotion when a drone pilot hits a tank. The whole group and the whole platoon are happy like babies. Infantry units are rejoicing nearby. Everyone is screaming, and hugging. Although they do not know the guy who gave them this happiness,” Firsov wrote in a Facebook post.
A typical FPV weighs up to one kilogram, has four small engines, a battery, a frame and a camera connected wirelessly to goggles worn by a pilot operating it remotely. It can carry up to 2.5 kilograms of explosives and strike a target at a speed of up to 150 kilometers per hour, explains Pavlo Tsybenko, acting director of the Dronarium military academy outside Kyiv.
“This drone costs up to $400 and can be made anywhere. We made ours using microchips imported from China and details we bought on AliExpress. We made the carbon frame ourselves. And, yeah, the batteries are from Tesla. One car has like 1,100 batteries that can be used to power these little guys,” Tsybenko told POLITICO on a recent visit, showing the custom-made FPV drones used by the academy to train future drone pilots.
“It is almost impossible to shoot it down,” he said. “Only a net can help. And I predict that soon we will have to put up such nets above our cities, or at least government buildings, all over Europe.”
Commercial drones were first weaponized in Azerbaijan’s — ultimately successful — campaign to retake the Nagorno-Karabakh breakaway region from Armenian separatists. Their use has expanded rapidly in the 20-month-old Russian war in Ukraine.
And, earlier this month, Hamas militants flew drones to knock out Israeli border defenses during a surprise attack in which they massacred more than 1,400 people and took around 200 hostages. For Ukrainians, the video clip of a Hamas drone destroying an Israeli main battle tank by dropping a grenade was a film they had seen before.
Ukrainian drone experts and intelligence officials are convinced that Russian specialists have trained Hamas in the art of drone warfare — although Moscow denies this.
“Only we and the Russians know how to do this — and we definitely did not teach them,” Andriy Cherniak, a representative of Ukraine’s Military Intelligence Directorate, told POLITICO.
Ruslan Belyaiev, head of the Dronarium military academy, shares that view. He warns that other militants will soon learn how to use FPV drones to sow terror.
“No one is immune from such attacks,” said Belyaiev. “In theory, a specialist with my level of expertise could plan and execute an operation to liquidate the first persons of any European state … Pandora’s box is open.”
While NATO militaries hesitate to use commercial drones that are mostly made in China, or made from Chinese components, some Western democracies have already shown interest in learning from Ukraine’s experience of drone warfare.
Several figures in Ukraine’s drone community, granted anonymity due to the sensitivity of the matter, told POLITICO that special forces and anti-terrorist units of two NATO countries bordering Russia have taken courses from Ukrainian drone operators over the past six months.
Their focus is on countering small kamikaze drones and commercial drones that can be successfully used for reconnaissance, correcting artillery fire and video signal transmission, one person with direct knowledge said.
Basic training for a drone pilot takes five days. Learning how to pilot a kamikaze drone takes more than 20 days, Tsybenko said.
Battlefield experience has led the Ukrainian government to shift its preference away from conventional military drones, which are miniature fixed-wing aircraft with a long enough range to strike targets inside Russian territory. The effectiveness of FPV drones at closer quarters has led Defense Minister Rustam Umerov to simplify approvals for new models to be deployed.
“FPV drones are effective tools for destroying the enemy and protecting our country. The Ministry of Defense is doing everything possible to increase number of drones,” Umerov said in a statement on Wednesday.
Every FPV drone pilot works in tandem with aerial reconnaissance units, who fly a DJI Mavic or other type of drone with video and audio transmitters to observe their mission. “An FPV loses its video signal close to the target. So, the other drone helps the pilot and supporting units to understand the target was indeed hit,” Tsybenko said.
Firsov confirmed that in a Facebook post from the front. What looks simple on video in fact requires close coordination between dozens of people.
“Everything seems so simple, put on glasses — and “Bam!” you destroyed a tank,” said Firsov. “In fact, aerial scouts spend hours looking for targets. A decryptor looks at video and finds targets that the enemy has carefully hidden. A navigator who is nearby helps the pilot to fly along the route. An engineer attaching explosives, a sapper, who twists standard ammunition for drones and many, many others.”
Most FPV drones are kamikaze, Tsybenko said. And their effectiveness has changed the stakes. The Russians, who at first lagged behind Ukraine in mastering drone warfare, have learned from their mistakes. And now they are scaling up Ukraine’s methods of drone warfare.
Russian forces now have “countless” FPV drones that they now use to target single soldiers.
Russia has also launched its own production lines and is devising new tactics to deploy drones in swarms. “One manager and all the others will repeat the movement. This controlled pack is a very big threat on the battlefield,” Tsybenko warned.
However, neither Ukraine nor Russia are able to produce drones for warfare by themselves. They still source crucial parts from China — the leading maker of commercial drones. Earlier this year the Chinese Ministry of Commerce imposed restrictions on drone exports to both Ukraine and Russia out of “fear it would be used for military purposes.”
Still, it’s possible to obtain components and drones via third countries. “Yes, China can either stop or stall the export of parts if it sees ‘Ukraine’ in export data. But it can’t control what we buy in Europe. Russia has fewer problems and a common border with China, and that makes drone imports way easier.”
With Russia allied to China, the preference of Ukraine’s military for Chinese technology raises concerns among Kyiv’s Western partners. They fear that Beijing might pass sensitive military data to Moscow.
“Every lock has its key. Indeed, the commercial drones we buy in stores are synchronizing their data with a server. But we learned how to create user logins that are completely anonymized. Even the drone might think it is flying somewhere in Canada — and not in Donbas,” Tsybenko said.
“When we talked to Europeans, they were amazed at how easy it is to hack and anonymize Chinese drones. It is safe to use them, we tried to persuade our partners,” Tsybenko said, adding that Ukraine did not have the luxury of time to independently develop and certify its own drones.
“If we waited, the war would be over when they finally arrived.”
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Veronika Melkozerova
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United Airlines Holdings Inc. reported third-quarter earnings late Tuesday that were better than Wall Street expected, but the airline’s stock fell as the company called for lower profits later in the year.
United
UAL,
earned $1.1 billion, or $3.42 a share, in the quarter, compared with $942 million, or $2.86 a share, in the same quarter a year earlier. Adjusted for one-time items, the airline earned $3.65 a share.
Sales rose to $14.5 billion from $12.9 billion a year ago.
Analysts polled by FactSet expected United to report adjusted earnings of $3.38 a share on sales of $14.4 billion.
United said it expects fourth-quarter earnings of about $1.80 a share if flights to Tel Aviv are suspended through October, and of around $1.50 a share if the Tel Aviv flights are suspended through the end of the year. The Israel-Hamas war has raged for a little over a week.
Wall Street forecast fourth-quarter earnings of $2.09 a share. United’s stock dropped more than 4% in the extended session Tuesday after ending the regular trading day up 1.5%.
The airline also called for pricier jet fuel for the fourth quarter, seeing a gallon going for $3.28 on average by that time. That compares with a third-quarter fuel average price of $2.95 a gallon.
Fourth-quarter operating revenues are seen 10% higher year-on-year, and 9% higher if the Tel Aviv flights are still halted through the end of 2023. The FactSet analysts are calling for fourth-quarter revenue of $13.6 billion, from $12.4 billion in the fourth quarter of 2022.
United earlier this month said it placed orders for an additional 110 new jets from Boeing Co.
BA,
and Airbus SE
AIR,
as it expected air-travel demand to continue unabated.
The airline in 2021 launched its United Next plan, promising more savings by using newer, more fuel-efficient jets. These newer planes often offer premium seating, allowing the airline to sell more profitable, rarely discounted first-class and business seats.
United’s stock has gained 7% so far this year, compared with an advance of about 14% for the S&P 500 index
SPX.
United is slated to hold a conference call to discuss the third-quarter results and the update through the end of the year on Wednesday at 10:30 a.m. Eastern.
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Wall Street spent much of this year getting more tepid on third-quarter corporate profits, with expectations for subdued growth giving way to expectations for a slight decline.
But after results from a handful of companies soundly beat estimates in recent days, one analyst who tracks the ebbs and flows of earnings data says at least a slight profit gain for the quarter is more likely — with potentially double-digit percentage growth next year.
FactSet Senior Earnings Analyst John Butters, in a report out Friday, said that of the 32 companies in the S&P 500 Index
SPX
that reported third-quarter results through Friday, 84% have reported per-share profits that were above Wall Street’s expectations, and he said they were beating those expectations by a greater degree than usual.
The index collectively, so far, was putting up a third-quarter earnings growth rate of 0.4% — compared to estimates on Oct. 6 for a 0.3% decline. Most companies, he said, tend to turn in earnings results that beat estimates.
“Based on the average improvement in the earnings growth rate during the earnings season, the index will likely report year-over-year growth in earnings or more than 0.4% for Q3,” he said.
That assessment follows quarterly results from big companies like JPMorgan Chase & Co. and Delta Air Lines, Inc.. Both the bank and the airline reported better-than-expected profits. JPMorgan
JPM,
Chief Executive Jamie Dimon said U.S. consumers and businesses “generally remain healthy,” despite thinning pandemic-era savings, while Delta
DAL,
pointed to enduring “robust” travel demand.
More broadly, the quarter will be a look at how customers are faring amid still-high prices, an approaching holiday season and borrowing costs that could stay higher for longer. Recession pessimism has shown signs of easing. But Citigroup Inc.’s chief financial officer, Mark Mason, said on Friday that the bank expected a soft economic landing with a “mild recession” in the first half of 2024. However, he said such an outcome was “hard to call,” amid a strong job market.
Financial forecasts tend to fluctuate as analysts digest real-life financial data. For now, they expect S&P 500 index earnings growth of 7.6% for the fourth quarter, and 0.9% for 2023 overall, according to FactSet. Next year, at the moment, looks better, with expected earnings growth of 12.2%.
More names from the financial sector will report in the week ahead, following results from JPMorgan, Citigroup
C,
and Wells Fargo & Co.
WFC,
Reports from Morgan Stanley
MS,
and Goldman Sachs Group Inc.
GS,
will offer more context on deal-making and market sentiment, while earnings from credit-card giants Discover Financial Services
DFS,
and American Express
AXP,
will get more granular on customer spending.
More airlines, like United Airlines Holdings Inc.
UAL,
and American Airlines Group Inc.
AAL,
will also report, providing more detail on whether revenge travel still has any life left. Earnings are also due from Johnson & Johnson
JNJ,
and AT&T Inc.
T,
In total 55 S&P 500 companies total will report quarterly results this week, including five from the Dow, according to FactSet.
Has Netflix become a utility? Hollywood’s writers will start returning to work, while talks with actors and studios have stalled. But the TV-and-film production limbo hasn’t been the only headache for streaming platform Netflix Inc., which reports quarterly results on Wednesday. The company will report amid greater pressure to boost profits, as the entertainment industry tries to find its footing in the streaming era. Ahead of the results, Wolfe Research analyst Peter Supino recently expressed concern that Netflix’s
NFLX,
ad-supported plan was slow to catch on with viewers. Bernstein analysts likened the company to a mature, durable “utility.” But they also compared the stock to a long-running TV show that, while still good, might be starting to bore its audience. Executives will be hoping for better a better reception from investors.
Tesla margins: When EV maker Tesla Inc. reports results on Wednesday, it will be “all about margins,” Deepwater Asset Management’s Gene Munster said in note recently. Those results, and the focus on margins, will follow price cuts, and questions over profit growth and enthusiasm for Tesla’s
TSLA,
new Cybertruck. And Morgan Stanley analyst Adam Jonas, in a research note, said the year ahead could be “volatile.”
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U.S. stocks are poised to rise on Monday ahead of a week of earnings and economic data releases, including quarterly reports from Tesla, Netflix, and .
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It now pays to be an amateur.
The NCAA started allowing college athletes to make money from their name, image and likeness in 2021, after decades of student-athletes saying it wasn’t fair that they didn’t receive any money while the games they played in generated millions of dollars — especially football and basketball contests. And today, many of these athletes are not just making some extra cash on the side — they’re making millions.
These NIL deals are negotiated by college athletes and their representation, and typically involve leveraging an athlete’s brand and influence through promotional means. For example, a car dealership near a university campus may ask the college’s high-profile quarterback to do a commercial for them in exchange for a monetary payment or a car. Similarly, an athlete can make money from social media, depending on how big their following is.
Football players are among the college athletes who make the most money from NIL deals, followed by men’s basketball, women’s volleyball and women’s basketball. That’s because college football and basketball have multibillion-dollar TV contracts to broadcast games, while most other sports generally have lower visibility.
With that in mind, here are the college athletes who make the most money from NIL deals according to On3’s proprietary NIL algorithm, which is based on NIL-deal data, performance, influence and exposure
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As the junior quarterback for the Michigan Wolverines football team, McCarthy is one of the six college football QBs in the top 10 of NIL earners.
McCarthy sports 276,000 followers across his social-media platforms, and has deals with Alo, Bose and Bowman.
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The senior QB for the Oregon Ducks has led his team to a perfect 5-0 start this season.
Nix has 219,000 followers on social media and NIL deals with 7-Eleven, Bojangles and Celsius. Nix is considered one of the top players in the nation and has the third-best betting odds to win college football’s Heisman Trophy on DraftKings
DKNG,
sportsbook.
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The South Carolina Gamecocks senior QB has one of the more robust NIL profiles in the nation. He has deals with Mercedes-Benz
MBG,
Leaf trading cards and Raising Canes.
Rattler also has 578,000 followers across TikTok, Instagram
META,
and X, the platform formerly known as Twitter.
Getty Images
Reese was one of the breakout stars of the women’s March Madness basketball tournament this year. The Louisiana State University hooper led her team to the 2023 title and famously flashed a “you can’t see me” gesture in the title game.
Reese has brand deals with Airbnb, PlayStation and Intuit TurboTax
INTU,
and has appeared in ads for Amazon
AMZN,
and Pepsi Co.’s
PEP,
Starry. She also has 5.2 million followers across her social-media platforms.
During LSU’s magical title run last season, Reese set an NCAA single-season record with her 34th double-double against the Iowa Hawkeyes and was named the most outstanding player of the Final Four.
Reese is one of just two female athletes inside the top 10 in On3’s NIL valuation tracker, and the top college basketball player on the list.
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Hunter was one of the college football players who transferred to the University of Colorado from Jackson State last season to follow coach Deion Sanders.
Hunter, a five-star sophomore prospect, plays on both offense and defense — as a wide receiver and a cornerback — a rarity in a high-level college program. He has 1.9 million followers on social media, a successful YouTube
GOOG,
channel, and endorsements with Celsius Energy Drink and 7-Eleven.
Hunter entered the 2023 college season as the most highly touted NFL prospect at Colorado, and Deion Sanders contends rival schools have attempted to poach him via lucrative NIL deals.
“People offered Travis Hunter a bag — about $1.5 million to try to lure him and buy him out of the transfer portal,” coach Sanders told 247Sports over the summer. “But Travis is not the kind of guy that can be bought. He isn’t built like that. Travis is a relational young man that is built on relationships and stability. And that’s what he wanted and desired. That is why he decided to ride and stay with us.”
If and when Hunter decides to declare for the NFL draft, he will likely have a multimillion-dollar contract as a rookie that could dwarf his collegiate NIL earnings.
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The University of Southern California QB is seen as a generational NFL prospect and the presumptive No. 1 overall pick in the 2024 NFL draft, but he isn’t the top NIL earner.
Williams has 347,000 followers on social media, and brand deals with United Airlines
UAL,
Alo and Beats by Dre.
Once the USC junior QB declares for the draft, his rookie contract will likely be set above $37 million, per Spotrac’s estimates.
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The Texas Longhorns freshman QB is one of several top NIL earners whose family plays a role in their fame. Arch Manning is the nephew of Super Bowl champion QBs Peyton and Eli Manning, and the grandson of former NFL QB Archie Manning.
Despite being a backup quarterback with no recorded statistics, the younger Manning has 277,000 followers on social media and has a brand deal with Panini. That deal involved him autographing an extremely rare one-of-one Prizm Black card that was auctioned off for $102,500, which was later donated to charity.
Manning was a standout high school recruit, ranked No. 5 in the nation in the 2023 class, and could have an NFL future.
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Dunne is the only college athlete in the top 10 of NIL earners who doesn’t play basketball or football. The junior LSU gymnast is the top female NIL earner in the nation and has brand deals with Vuori clothing, Body Armor
KO,
and American Eagle Outfitters.
Dunne is the second most-followed college athlete on social media with 12.1 million followers on Instagram, TikTok and X combined.
For many years Dunne was seen as the poster child for NIL deals, and she said earlier this year that she could make as much as $500,000 from a single post.
“What I love with certain brands is getting long-term brand deals,” Dunne said on the Full Send podcast in June. “Those are probably the best because you build a relationship with the brand and they want you year after year.”
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University of Colorado’s Shedeur Sanders has become a phenomenon in the sports world. The 21-year-old junior made headlines after throwing for 510 yards and four touchdowns in Colorado’s season-opening shocker against No. 17–ranked Texas Christian.
Colorado has become the center of the football world since Shedeur’s father Deion took over as coach. Coach Prime’s team is currently 4-2 — the team was 1-11 last season, good for last place in its conference.
The quarterback has more than 2.3 million followers on social media, and has already inked several deals with big brands, including with yogurt producer Oikos
0KFX,
Gatorade and Mercedes-Benz. He has shown fans some of his new Mercedes cars on social media, too.
Overall, Shedeur Sanders’s NIL value currently sits at $4.8 million, according to On3, up from $1.5 million at the beginning of the year — that’s the highest value in all of college football. For context, that’s nearly twice the average NFL player’s salary.
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James has perhaps the most famous family member of any person on this list. He is the son of NBA legend LeBron James, and is currently set to begin his freshman basketball season at USC.
The younger James has yet to play a game at his new school, but will immediately be one of the most well-known players in college athletics. James has 13.5 million social media followers, the most of any college athlete, and has brand deals with Nike
NKE,
and Beats by Dre
AAPL,
two brands his dad is also repped by.
Bronny James suffered cardiac arrest in July during a basketball practice and had to be taken to the hospital. But he’s on the road to recovery, and hopes to play basketball this season.
“Bronny is doing extremely well,” the older James said last week. “He has begun his rehab process to get back on the floor this season with his teammates at USC. (With) the successful surgery that he had, he’s on the up-and-up. It’s definitely a whirlwind, a lot of emotions for our family this summer. But the best thing we have is each other.”
See also: Michael Jordan is now worth $3 billion. Here’s what billionaire athletes have in common.
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The stock market always overreacts, and this year it seems as if investors believe dividend stocks have become toxic. But a look at yields on quality dividend stocks relative to the market underlines what may be an excellent opportunity for long-term investors to pursue growth with an income stream that builds up over the years.
The current environment, in which you can get a yield of more than 5% yield on your cash at a bank or lock in a yield of 4.57% on a10-year U.S. Treasury note
BX:TMUBMUSD10Y
or close to 5% on a 20-year Treasury bond
BX:TMUBMUSD20Y
seems to have made some investors forget two things: A stock’s dividend payout can rise over the long term, and so can it is price.
It is never fun to see your portfolio underperform during a broad market swing. And people have a tendency to prefer jumping on a trend hoping to keep riding it, rather than taking advantage of opportunities brought about by price declines. We may be at such a moment for quality dividend stocks, based on their yields relative to that of the benchmark S&P 500
SPX.
Drew Justman of Madison Funds explained during an interview with MarketWatch how he and John Brown, who co-manage the Madison Dividend Income Fund, BHBFX MDMIX and the new Madison Dividend Value ETF
DIVL,
use relative dividend yields as part of their screening process for stocks. He said he has never seen such yields, when compared with that of the broad market, during 20 years of work as a securities analyst and portfolio manager.
Before diving in, we can illustrate the market’s current loathing of dividend stocks by comparing the performance of the Schwab U.S. Equity ETF
SCHD,
which tracks the Dow Jones U.S. Dividend 100 Index, with that of the SPDR S&P 500 ETF Trust
SPY.
Let’s look at a total return chart (with dividends reinvested) starting at the end of 2021, since the Federal Reserve started its cycle of interest rate increases in March 2022:
The Dow Jones U.S. Dividend 100 Index is made up of “high-dividend-yielding stocks in the U.S. with a record of consistently paying dividends, selected for fundamental strength relative to their peers, based on financial ratios,” according to S&P Dow Jones Indices.
The end results for the two ETFs from the end of 2021 through Tuesday are similar. But you can see how the performance pattern has been different, with the dividend stocks holding up well during the stock market’s reaction to the Fed’s move last year, but trailing the market’s recovery as yields on CDs and bonds have become so much more attractive this year. Let’s break down the performance since the end of 2021, this time bringing in the Madison Dividend Income Fund’s Class Y and Class I shares:
| Fund | 2023 return | 2022 return | Return since the end of 2021 |
| SPDR S&P 500 ETF Trust | 14.9% | -18.2% | -6.0% |
| Schwab U.S. Dividend Equity ETF | -3.8% | -3.2% | -6.9% |
| Madison Dividend Income Fund – Class Y | -4.7% | -5.4% | -9.9% |
| Madison Dividend Income Fund – Class I | -4.7% | -5.3% | -9.7% |
| Source: FactSet | |||
Dividend stocks held up well during 2022, as the S&P 500 fell more than 18%. But they have been left behind during this year’s rally.
The Madison Dividend Income Fund was established in 1986. The Class Y shares have annual expenses of 0.91% of assets under management and are rated three stars (out of five) within Morningstar’s “Large Value” fund category. The Class I shares have only been available since 2020. They have a lower expense ratio of 0.81% and are distributed through investment advisers or through platforms such as Schwab, which charges a $50 fee to buy Class I shares.
The Madison Dividend Income Fund holds 40 stocks. Justman explained that when he and Brown select stocks for the fund their investible universe begins with the components of the Russell 1000 Index
RUT,
which is made up of the largest 1,000 companies by market capitalization listed on U.S. exchanges. Their first cut narrows the list to about 225 stocks with dividend yields of at least 1.1 times that of the index.
The Madison team calculates a stock’s relative dividend yield by dividing its yield by that of the S&P 500. Let’s do that for the Schwab U.S. Equity ETF
SCHD
(because it tracks the Dow Jones U.S. Dividend 100 Index) to illustrate the opportunity that Justman highlighted:
| Index or ETF | Dividend yield | 5-year Avg. yield | 10-year Avg. yield | 15-year Avg. yield | Relative yield | 5-year Avg. relative yield | 10-year Avg. relative yield | 15-year Avg. relative yield |
| Schwab U.S. Dividend Equity ETF | 3.99% | 3.41% | 3.20% | 3.16% | 2.6 | 2.1 | 1.8 | 1.6 |
| S&P 500 | 1.55% | 1.62% | 1.79% | 1.92% | ||||
| Source: FactSet | ||||||||
The Schwab U.S. Equity ETF’s relative yield is 2.6 — that is, its dividend yield is 2.6 times that of the S&P 500, which is much higher than the long-term averages going back 15 years. If we went back 20 years, the average relative yield would be 1.7.
After narrowing down the Russell 1000 to about 225 stocks with relative dividend yields of at least 1.1, Justman and Brown cut further to about 80 companies with a long history of raising dividends and with strong balance sheets, before moving further through a deeper analysis to arrive at a portfolio of about 40 stocks.
When asked about oil companies and others that pay fixed quarterly dividends plus variable dividends, he said, “We try to reach out to the company and get an estimate of special dividends and try to factor that in.” Two examples of companies held by the fund that pay variable dividends are ConocoPhillips
COP,
and EOG Resources Inc.
EOG,
Since the balance-sheet requirement is subjective “almost all fund holdings are investment-grade rated,” Justman said. That refers to credit ratings by Standard & Poor’s, Moody’s Investors Service or Fitch Ratings. He went further, saying about 80% of the fund’s holdings were rated “A-minus or better.” BBB- is the lowest investment-grade rating from S&P. Fidelity breaks down the credit agencies’ ratings hierarchy.
Justman named nine stocks held by the fund as good examples of quality companies with high relative yields to the S&P 500:
| Company | Ticker | Dividend yield | Relative yield | 2023 return | 2022 return | Return since the end of 2021 |
| CME Group Inc. Class A |
CME, |
2.04% | 1.3 | 31% | -23% | 1% |
| Home Depot, Inc. |
HD, |
2.79% | 1.8 | -3% | -22% | -25% |
| Lowe’s Cos., Inc. |
LOW, |
2.17% | 1.4 | 3% | -21% | -19% |
| Morgan Stanley |
MS, |
4.24% | 2.7 | -3% | -10% | -13% |
| U.S. Bancorp |
USB, |
5.89% | 3.8 | -22% | -19% | -37% |
| Medtronic PLC |
MDT, |
3.62% | 2.3 | 1% | -23% | -22% |
| Texas Instruments Inc. |
TXN, |
3.30% | 2.1 | -3% | -10% | -12% |
| United Parcel Service Inc. Class B |
UPS, |
4.17% | 2.7 | -8% | -16% | -23% |
| Union Pacific Corp. |
UNP, |
2.52% | 1.6 | 2% | -16% | -15% |
| Source: FactSet | ||||||
Click on the tickers for more about each company, fund or index.
Now let’s see how these companies have grown their dividend payouts over the past five years. Leaving the companies in the same order, here are compound annual growth rates (CAGR) for dividends.
Before showing this next set of data, let’s work through one example among the nine stocks:
Home Depot hasn’t been the best dividend grower among the nine stocks named by Justman, but it is a good example of how an investor can build income over the long term, while also enjoying capital appreciation.
Here’s the dividend CAGR comparison for the nine stocks:
| Company | Ticker | Five-year dividend CAGR | Dividend yield on shares purchased five years ago | Dividend yield five years ago | Current dividend yield | Five-year price change | Five-year total return |
| CME Group Inc. Class A |
CME, |
9.46% | 2.44% | 1.55% | 2.04% | 20% | 42% |
| Home Depot Inc. |
HD, |
15.20% | 4.32% | 2.13% | 2.79% | 54% | 75% |
| Lowe’s Cos, Inc. |
LOW, |
18.04% | 4.14% | 1.81% | 2.17% | 91% | 109% |
| Morgan Stanley |
MS, |
23.16% | 7.62% | 2.69% | 4.24% | 80% | 108% |
| U.S. Bancorp |
USB, |
5.34% | 3.60% | 2.78% | 5.89% | -39% | -26% |
| Medtronic PLC |
MDT, |
6.65% | 2.90% | 2.10% | 3.62% | -20% | -9% |
| Texas Instruments Inc. |
TXN, |
11.04% | 5.24% | 3.10% | 3.30% | 59% | 82% |
| United Parcel Service Inc. Class B |
UPS, |
12.23% | 5.56% | 3.12% | 4.17% | 33% | 56% |
| Union Pacific Corp. |
UNP, |
10.20% | 3.37% | 2.07% | 2.52% | 34% | 49% |
| Source: FactSet | |||||||
This isn’t to say that Justman and Brown have held all of these stocks over the past five years. In fact, Lowe’s Cos.
LOW,
was added to the portfolio this year, as was United Parcel Service Inc.
UPS,
But for most of these companies, dividends have compounded at relatively high rates.
When asked to name an example of a stock the fund had sold, Justman said he and Brown decided to part ways with Verizon Communications Inc.
VZ,
last year, “as we became concerned about its fundamental competitive position in its industry.”
Summing up the scene for dividend stocks, Justman said, “It seems this year the market is treating dividend stocks as fixed-income instruments. We think that is a short-term issue and that this is a great opportunity.”
Don’t miss: How to tell if it is worth avoiding taxes with a municipal-bond ETF
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If anyone wanted evidence that the market feels skittish just look at stocks related to electric vehicles. They are getting hammered on capital raising activity that, frankly, should surprise no one.