[ad_1]
Rivian Automotive Inc.’s stock fell more than 3% Monday after news that the electric-vehicle maker and Amazon.com Inc. are discussing possible changes to their deal for electric delivery vans.
Citing people familiar with the matter, the Wall Street Journal reported Monday that the companies are in talks to end the exclusivity part of their electric-van deal. The talks started after Amazon’s order for the year was at the low end of the previous range, the report said.
A…
[ad_2]
[ad_1]
Trading in shares of First Republic Bank and Western Alliance Bancorp ended sharply lower in a tough day of trading for regional banks as fears over bank solvency persisted following the failures of Silicon Valley Bank, Signature Bank and Silvergate Capital.
Stocks were periodically halted or paused for trading amid the bank stock bloodbath, which saw many suffering percentage declines well into the double digits. Typically, bank stocks are stable compared with sectors such as technology, with daily moves above 5% being relatively…
[ad_2]
[ad_1]
State authorities closed New York-based Signature Bank
SBNY,
on Sunday, after Silicon Valley Bank was shut down by regulators on Friday in the biggest bank failure since the 2008 financial crisis.
All depositors of Signature Bank will be made whole, according to a joint statement by the Department of the Treasury, Federal Reserve and FDIC.
Also see: Silicon Valley Bank depositors will get ‘all of their money,’ regulators say
Signature Bank has been popular among crypto companies, especially after crypto-friendly Silvergate Bank
SI,
said last Wednesday it would close its operations.
Signature Bank provides deposit services for its clients’ digital assets, but does not invest in, does not trade, does not hold on its own balance sheet nor provide custody of digital assets, and does not lend against or make loans collateralized by such assets, the company said.
The Federal Reserve on Sunday also announced a new emergency loan program to bolster the capacity of the banking system.
U.S. equity markets traded higher Sunday afternoon, with the Dow futures
YM00,
up 0.5%, and the S&P 500
ES00,
futures up 0.8%. Futures for the Nasdaq 100
NQ00,
rose 0.9%, according to FactSet data.
Major cryptocurrencies rallied Sunday. Bitcoin
BTCUSD,
surged 6.4% in the past 24 hours to around $21,842 and ether
ETHUSD,
gained 7% to $1,576, according to CoinDesk data.
[ad_2]
[ad_1]
Silicon Valley Bank has failed following a run on deposits, after its parent company’s share price crashed a record 60% on Thursday.
Trading of SVB Financial Group’s
SIVB,
stock was halted early Friday, after the shares plunged again in premarket trading. Treasury Secretary Janet Yellen said SVB was one of a few banks she was “monitoring very carefully.” Reaction poured in from several analysts who discussed the bank’s liquidity risk.
California regulators closed Silicon Valley Bank and handed the wreckage over to the Federal Deposit Insurance Administration later on Friday.
Below is the same list of 10 banks we highlighted on Thursday that showed similar red flags to those shown by SVB Financial through the fourth quarter. This time, we will show how much they reported in unrealized losses on securities — an item that played an important role in SVB’s crisis.
Below that is a screen of U.S. banks with at least $10 billion in total assets, showing those that appeared to have the greatest exposure to unrealized securities losses, as a percentage of total capital, as of Dec. 31.
Some media reports have referred to SVB of Santa Clara, Calif., as a small bank, but it had $212 billion in total assets as of Dec. 31, making it the 17th largest bank in the Russell 3000 Index
RUA,
as of Dec. 31. That makes it the largest U.S. bank failure since Washington Mutual in 2008.
One unique aspect of SVB was its decades-long focus on the venture capital industry. The bank’s loan growth had been slowing as interest rates rose. Meanwhile, when announcing its $21 billion dollars in securities sales on Thursday, SVB said it had taken the action not only to lower its interest-rate risk, but because “client cash burn has remained elevated and increased further in February, resulting in lower deposits than forecasted.”
SVB estimated it would book a $1.8 billion loss on the securities sale and said it would raise $2.25 billion in capital through two offerings of new shares and a convertible bond offering. That offering wasn’t completed.
So this appears to be an example of what can go wrong with a bank focused on a particular industry. The combination of a balance sheet heavy with securities and relatively light on loans, in a rising-rate environment in which bond prices have declined and in which depositors specific to that industry are themselves suffering from a decline in cash, led to a liquidity problem.
Banks leverage their capital by gathering deposits or borrowing money either to lend the money out or purchase securities. They earn the spread between their average yield on loans and investments and their average cost for funds.
The securities investments are held in two buckets:
In its regulatory Consolidated Financial Statements for Holding Companies—FR Y-9C, filed with the Federal Reserve, SVB Financial, reported a negative $1.911 billion in accumulated other comprehensive income as of Dec. 31. That is line 26.b on Schedule HC of the report, for those keeping score at home. You can look up regulatory reports for any U.S. bank holding company, savings and loan holding company or subsidiary institution at the Federal Financial Institution Examination Council’s National Information Center. Be sure to get the name of the company or institution right — or you may be looking at the wrong entity.
Here’s how accumulated other comprehensive income (AOCI) is defined in the report: “Includes, but is not limited to, net unrealized holding gains (losses) on available-for-sale securities, accumulated net gains (losses) on cash flow hedges, cumulative foreign currency translation adjustments, and accumulated defined benefit pension and other postretirement plan adjustments.”
In other words, it was mostly unrealized losses on SVB’s available-for-sale securities. The bank booked an estimated $1.8 billion loss when selling “substantially all” of these securities on March 8.
On the regulatory call reports, AOCI is added to regulatory capital. Since SVB’s AOCI was negative (because of its unrealized losses on AFS securities) as of Dec. 31, it lowered the company’s total equity capital. So a fair way to gauge the negative AOCI to the bank’s total equity capital would be to divide the negative AOCI by total equity capital less AOCI — effectively adding the unrealized losses back to total equity capital for the calculation.
Getting back to our list of 10 banks that raised similar red margin flags to those of SVB, here’s the same group, in the same order, showing negative AOCI as a percentage of total equity capital as of Dec. 31. We have added SVB to the bottom of the list. The data was provided by FactSet:
| Bank | Ticker | City | AOCI ($mil) | Total equity capital ($mil) | AOCI/ TEC – AOCI | Total assets ($mil) |
| Customers Bancorp Inc. |
CUBI, |
West Reading, Pa. | -$163 | $1,403 | -10.4% | $20,896 |
| First Republic Bank |
FRC, |
San Francisco | -$331 | $17,446 | -1.9% | $213,358 |
| Sandy Spring Bancorp Inc. |
SASR, |
Olney, Md. | -$132 | $1,484 | -8.2% | $13,833 |
| New York Community Bancorp Inc. |
NYCB, |
Hicksville, N.Y. | -$620 | $8,824 | -6.6% | $90,616 |
| First Foundation Inc. |
FFWM, |
Dallas | -$12 | $1,134 | -1.0% | $13,014 |
| Ally Financial Inc. |
ALLY, |
Detroit | -$4,059 | $12,859 | -24.0% | $191,826 |
| Dime Community Bancshares Inc. |
DCOM, |
Hauppauge, N.Y. | -$94 | $1,170 | -7.5% | $13,228 |
| Pacific Premier Bancorp Inc. |
PPBI, |
Irvine, Calif. | -$265 | $2,798 | -8.7% | $21,729 |
| Prosperity Bancshare Inc. |
PB, |
Houston | -$3 | $6,699 | -0.1% | $37,751 |
| Columbia Financial, Inc. |
CLBK, |
Fair Lawn, N.J. | -$179 | $1,054 | -14.5% | $10,408 |
| SVB Financial Group |
SIVB, |
Santa Clara, Calif. | -$1,911 | $16,295 | -10.5% | $211,793 |
| Source: FactSet | ||||||
Click on the tickers for more about each bank.
Read Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.
Ally Financial Inc.
ALLY,
— the third largest bank on the list by Dec. 31 total assets — stands out as having the largest percentage of negative accumulated comprehensive income relative to total equity capital as of Dec. 31.
To be sure, these numbers don’t mean that a bank is in trouble, or that it will be forced to sell securities for big losses. But SVB had both a troubling pattern for its interest margins and what appeared to be a relatively high percentage of securities losses relative to capital as of Dec. 31.
There are 108 banks in the Russell 3000 Index
RUA,
that had total assets of at least $10.0 billion as of Dec. 31. FactSet provided AOCI and total equity capital data for 105 of them. Here are the 20 which had the highest ratios of negative AOCI to total equity capital less AOCI (as explained above) as of Dec. 31:
| Bank | Ticker | City | AOCI ($mil) | Total equity capital ($mil) | AOCI/ (TEC – AOCI) | Total assets ($mil) |
| Comerica Inc. |
CMA, |
Dallas | -$3,742 | $5,181 | -41.9% | $85,406 |
| Zions Bancorporation N.A. |
ZION, |
Salt Lake City | -$3,112 | $4,893 | -38.9% | $89,545 |
| Popular Inc. |
BPOP, |
San Juan, Puerto Rico | -$2,525 | $4,093 | -38.2% | $67,638 |
| KeyCorp |
KEY, |
Cleveland | -$6,295 | $13,454 | -31.9% | $189,813 |
| Community Bank System Inc. |
CBU, |
DeWitt, N.Y. | -$686 | $1,555 | -30.6% | $15,911 |
| Commerce Bancshares Inc. |
CBSH, |
Kansas City, Mo. | -$1,087 | $2,482 | -30.5% | $31,876 |
| Cullen/Frost Bankers Inc. |
CFR, |
San Antonio | -$1,348 | $3,137 | -30.1% | $52,892 |
| First Financial Bankshares Inc. |
FFIN, |
Abilene, Texas | -$535 | $1,266 | -29.7% | $12,974 |
| Eastern Bankshares Inc. |
EBC, |
Boston | -$923 | $2,472 | -27.2% | $22,686 |
| Heartland Financial USA Inc. |
HTLF, |
Denver | -$620 | $1,735 | -26.3% | $20,244 |
| First Bancorp |
FBNC, |
Southern Pines, N.C. | -$342 | $1,032 | -24.9% | $10,644 |
| Silvergate Capital Corp. Class A |
SI, |
La Jolla, Calif. | -$199 | $603 | -24.8% | $11,356 |
| Bank of Hawaii Corp |
BOH, |
Honolulu | -$435 | $1,317 | -24.8% | $23,607 |
| Synovus Financial Corp. |
SNV, |
Columbus, Ga. | -$1,442 | $4,476 | -24.4% | $59,911 |
| Ally Financial Inc |
ALLY, |
Detroit | -$4,059 | $12,859 | -24.0% | $191,826 |
| WSFS Financial Corp. |
WSFS, |
Wilmington, Del. | -$676 | $2,202 | -23.5% | $19,915 |
| Fifth Third Bancorp |
FITB, |
Cincinnati | -$5,110 | $17,327 | -22.8% | $207,452 |
| First Hawaiian Inc. |
FHB, |
Honolulu | -$639 | $2,269 | -22.0% | $24,666 |
| UMB Financial Corp. |
UMBF, |
Kansas City, Mo. | -$703 | $2,667 | -20.9% | $38,854 |
| Signature Bank |
SBNY, |
New York | -$1,997 | $8,013 | -20.0% | $110,635 |
Again, this is not to suggest that any particular bank on this list based on Dec. 31 data is facing the type of perfect storm that has hurt SVB Financial. A bank sitting on large paper losses on its AFS securities may not need to sell them. In fact Comerica Inc.
CMA,
which tops the list, also improved its interest margin the most over the past four quarters, as shown here.
But it is interesting to note that Silvergate Capital Corp.
SI,
which focused on serving clients in the virtual currency industry, made the list. It is shuttering its bank subsidiary voluntarily.
Another bank on the list facing concern among depositors is Signature Bank
SBNY,
of New York, which has a diverse business model, but has also faced a backlash related to the services it provides to the virtual currency industry. The bank’s shares fell 12% on Thursday and were down another 24% in afternoon trading on Friday.
Signature Bank said in a statement that it was in a “strong, well-diversified financial position.”
[ad_2]
[ad_1]
U.S. stocks ended sharply lower Friday as investors parsed mixed signals from the February jobs report amid ongoing concerns about contagion in the banking sector from the troubles at Silicon Valley Bank.
For the week, the Dow sank 4.4%, S&P 500 dropped 4.5% and the Nasdaq shed 4.7%, according to Dow Jones Market Data. The Dow booked its worst week since June, the S&P 500 saw its biggest weekly percentage decline since September, and the Nasdaq had its biggest percentage slide since November.
U.S. stocks slumped amid investor concerns about the banking sector after the closure of Silicon Valley Bank by the Federal Deposit Insurance Corp and in the wake of the monthly employment report released Friday.
In a sign of investor anxiety, the CBOE Volatility Index
VIX,
was up Friday afternoon at almost 25, after jumping Thursday, according to FactSet data, last check.
“Bears came out of hibernation this week after waking up to a warning shot from the banking space,” said Adam Turnquist, chief technical strategist for LPL Financial, in emailed comments Friday, pointing to the collapse of Silicon Valley Bank.
Silicon Valley Bank was closed Friday by the California Department of Financial Protection and Innovation. The Federal Deposit Insurance Corp. was appointed receiver, with the bank becoming the first FDIC-backed institution to fail this year.
Read: Bank ETFs fall amid concerns over SVB and ‘crack’ in financial system after rate hikes
The SPDR S&P Regional Banking ETF
KRE,
was down more than 4% Friday afternoon, FactSet data show, while shares of Bank of America Corp.
BAC,
closed 0.9% lower, Citigroup Inc.
C,
slid 0.5% and JPMorgan Chase & Co.
JPM,
rose 2.5%.
Worries over the banking sector are “probably overshadowing” the positive aspects of the employment report, said Karim El Nokali, investment strategist at Schroders, in a phone interview Friday.
The U.S. employment report for February showed the labor market continued to grow at a robust pace last month, with the U.S. economy adding 311,000 jobs, more than the 225,000 that economists polled by the Wall Street Journal had expected.
But “if you dig a little deeper” into the report, average hourly earnings came in “a little lighter than expected” while labor-force participation ticked up, which are positive developments from an inflation standpoint, said El Nokali.
Average hourly wages grew by 0.2%, a slower rate than the 0.3% rate economists had expected. It was also less than the 0.3% increase in January. The unemployment rate ticked higher to 3.6%, helped by an increase in the labor-force participation rate.
“On the margin,” said El Nokali, the employment report was “positive for the equity market.” He said it would “probably argue more” for the Federal Reserve to raise its benchmark rate by 25 basis points at its policy meeting later this month, as opposed to a 50-basis-point hike that investors had been fearing leading up to the employment data.
See: Jobs report shows strong 311,000 gain in February, puts pressure on Fed for bigger rate hike
Fed Chair Jerome Powell said earlier this week that the “totality” of jobs and inflation data would determine whether the central bank would go back to raising its policy interest rate by another 50 basis points at its meeting later in March.
After climbing earlier in the week, odds of a 50-basis-point rate hike by the Fed have moderated over the past 24 hours. Traders now see a 62% chance of the central bank raising its benchmark rate by 25 basis points, according to the CME FedWatch Tool.
Meanwhile, Treasury yields sank Friday.
The yield on the 2-year Treasury note
TMUBMUSD02Y,
dropped 31.4 basis points to 4.586%, while the 10-year Treasury yields fell 22.8 basis points to 3.694%, according to Dow Jones Market Data. The Treasury yield curve remains massively inverted, which has contributed to banks’ woes.
—Steve Goldstein contributed to this report.
[ad_2]
[ad_1]
U.S. stocks extended losses in the final hour of trade on Thursday, while awaiting Friday’s February employment data that could help decide how large an interest rate hike the Federal Reserve will impose at its next meeting in two weeks.
Financial sector stocks were particularly hard hit along with cryptocurrencies after Silvergate Capital Corp., collapsed overnight amid growing scrutiny in Washington. Other financial stocks fell, dragged down by SVB Financial Group, which fell by a record amount.
Both the S&P 500 and Nasdaq finished higher on Wednesday, with only the Dow finishing in the red, while all three indexes remained on track for weekly losses. A weekly drop for the S&P 500 would mark its fourth such pullback in five weeks.
U.S. stocks trimmed earlier gains and extended losses on Thursday afternoon after trading modestly higher after the open when the latest weekly jobless claims data showed an unexpectedly large uptick in the number of Americans filing for unemployment benefits.
The number of Americans who applied for unemployment benefits in early March jumped to a 10-week high of 211,000, the highest level since Christmas. That’s higher than the 195,000 new applicants that economists polled by the Wall Street Journal had anticipated.
Economists said the data suggest that the labor market might be starting to slow, which is seen as a necessary prerequisite for driving inflation back to the Fed’s 2% target.
“The labor market might just be on the cusp of an inflection point,” said Peter Boockvar, chief investment officer of Bleakley Financial Group, in emailed commentary.
Investors are now looking ahead to Friday’s closely watched February jobs report from the Department of Labor. Economists polled by the Wall Street Journal expect 225,000 jobs were created last month after 517,000 new jobs were created in January, a number that was much higher than economists had anticipated.
“If we do get the expected 200,000, or really anything between say 180,000 and 240,000, this would be a return to the prior trend and would signal that last month was indeed a one-off,” said Brad McMillan, chief investment officer of Commonwealth Financial Network, in emailed comments.
“That would be perceived as a positive by the Fed and markets, suggesting that inflation may start moderating again but is still high enough to allow for continued economic growth.”
The Russell 2000
RUT,
the small-cap index, is on pace to close below its 50-day moving average for the first time since January 9, 2023, according to Dow Jones Market Data.
Regional bank stocks underperformed on Thursday. Shares of Silicon Valley Bank parent company SVB Financial Group
SIVB,
plummeted more than 61% after the company disclosed large losses from securities sales and a stock offering meant to provide a boost to its balance sheet. SVB is on pace to book the biggest one-day selloff since the dotcom boom, while its trading was halted for volatility multiple times, according to Dow Jones Market Data.
Signature Bank
SBNY,
shares dropped 11.2%undefined
The KBW Bank Index
BKX,
of 24 leading banks slumped 7.1%, on pace for its worst day since June 26, 2020, according to Dow Jones Market Data. SPDR S&P Bank ETF
KBE,
was down 6.5%.
Treasury yields fell with the yield on the 2-year note BX:TMUBMUSD02Yslipped to 4.885% from 5.064% on Wednesday.
Stocks suffered earlier in the week after Powell said during testimony on Capitol Hill that rates would likely need to rise even further than market participants had expected. However, the main indexes saw some relief after the Fed chief clarified that policymakers hadn’t yet decided on the size of the next rate hike.
Investors have already digested several reports on the labor market this week, including a report on the number of job openings, which showed that the number of Americans quitting their jobs had fallen below 4 million in January for the first time in 19 months.
“The big picture is that the labor market is easing, but it’s still tighter than it was before the pandemic,” said Sonu Varghese, a global macro strategist at Carson Group.
— Jamie Chisholm contributed to this article
[ad_2]
[ad_1]
Silvergate Capital Corp.
SI,
shares plunged more than 30% in after-hours trading Wednesday after the company said it intended to wind down operations and voluntarily liquidate its subsidiary Silvergate Bank, a crypto-friendly lender.
The stock’s plunge would take it to a record low if losses hold through regular trading Thursday.
The La Jolla, Calif.-based lender made the announcement after it said last week in a regulatory filing that it was at risk of “being less than well-capitalized,” and discontinued its crypto-payments network.
As one of the few crypto-friendly banks, the liquidation of Silvergate Bank points to uncertainty in the future relationships between crypto companies and banks, who play an essential role in the conversion of fiat currencies into crypto.
Read: Crypto traders may lean toward stablecoins after Silvergate ceases crypto payments network
Silvergate Bank’s liquidation plan includes full repayment of all deposits, according to a statement Wednesday.
The company is considering the best way to resolve claims and preserve the residual value of its assets, Silvergate Capital said. All of the company’s other deposit-related services remain operational, it said.
Silvergate also said it hired Centerview Partners as financial adviser and Cravath, Swaine & Moore LLP as legal adviser.
Several crypto companies, such as Coinbase Global Inc.
COIN,
Galaxy Digital, Paxos and Circle, said last week that they would cease some or all payment transactions with Silvergate Bank.
Representatives at Silvergate didn’t immediately respond to a request seeking comment.
Signature Bank
SBNY,
another crypto-friendly lender, saw its shares slide 3.7% in after-hours trading Wednesday.
Major cryptocurrencies were steady Wednesday. Bitcoin
BTCUSD,
lost 0.3% to around $21,981, while ether
ETHUSD,
gained 0.2% to about $1,550, according to CoindDesk data.
Read: Here’s the real challenge facing Silvergate and other ‘crypto banks,’ says this short seller
[ad_2]
[ad_1]
Silicon Valley could use a reboot. The biggest players aren’t growing, and more than a few are seeing sharp revenue declines. Regulators seem opposed to every proposed merger, while legislators push for new rules to crack down on the internet giants. The Justice Department just can’t stop filing antitrust suits against Google. The initial public offering market is closed. Venture-capital investments are plunging, along with valuations of prepublic companies. Maybe they should try turning the whole thing on and off.
The only strategy that seems to be working is to lay people off. Tech CEOs suddenly are channeling Marie Kondo, tidying up and keeping only the people and projects that “spark joy,” or at least support decent operating margins. Layoffs.fyi reports that tech companies have laid off more than 122,000 people already this year.
[ad_2]
[ad_1]
Analysts are increasingly upbeat about
Alibaba
stock in the wake of the group’s quarterly earnings, which supported the narrative that the Chinese tech company’s recovery is on track. But a familiar challenge may be returning.
Shares in Alibaba Group Holding (ticker: BABA) lost almost half their market value in 2021 as Beijing cracked down on the Chinese technology sector. Things were equally difficult in 2022. Regulatory pressure continued, while economic growth slowed on the mainland, battering Alibaba’s bottom line, as a result of broad lockdowns intended to stamp out Covid-19.
[ad_2]
[ad_1]
Alibaba
reported better-than-expected earnings in the final three months of 2022, giving Wall Street exactly what it wanted as analysts remain positive on the Chinese tech giant.
But there are signs that the destructive Covid-19 lockdowns that hurt the world’s second-largest economy last year continue to linger.
[ad_2]
[ad_1]
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-5b0c54ae
[ad_2]
[ad_1]
China has announced new rules on overseas IPOs, potentially sparking the resumption of Chinese companies listing in New York.
Under the new rules, the China Securities Regulatory Commission (CSRC) will vet any overseas listing applications, effective from March 31. The regulator has the power to block such IPOs, and the rules make clear listings must not endanger national security.
[ad_2]
[ad_1]
Nvidia
should be insulated from any slowdown in the broader economy by increased spending on artificial intelligence, say analysts at Oppenheimer, who lifted their price target for the semiconductor company.
The heightened interest around artificial-intelligence should set investors’ minds at ease ahead of
Nvidia
‘s earnings next week, say the analysts, with the semiconductor maker’s commentary on data-center spending in focus.
[ad_2]
[ad_1]
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.
[ad_2]
[ad_1]
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-apple-amazon-google-ford-51675354870
[ad_2]
[ad_1]
Apple Inc. posted its largest revenue decline in more than six years amid underwhelming sales of iPhones, Macs and wearables, but its shares pared back most of their initial losses in after-hours trading Thursday after the company blamed its smartphone declines on supply issues.
Apple’s
AAPL,
iPhone revenue fell to $65.8 billion in the fiscal first quarter from $71.6 billion a year before, whereas analysts tracked by FactSet were looking for $67.8 billion. The performance comes after Apple warned in November that its iPhone 14 Pro and Pro Max shipments would be impacted by pandemic-fueled production constraints at a major Foxconn
2354,
facility in China.
Chief Executive Tim Cook said on Apple’s earnings call that he believes the company would have shown iPhone sales growth in the quarter had it not been for the supply constraints.
At the same time, he noted that it’s “very hard” to estimate the company’s ability to recapture lost sales, “because you have to know exactly what would’ve happened.”
Apple shares ended the extended session Thursday down 3.2%, after having been down as much as 5.6% in after-hours trading.
After reporting a quarterly revenue record for Macs in the September quarter, Apple fell way short of those heights in the December quarter with its Thursday afternoon report, and the company missed expectations by a wide margin. Mac sales declined to $7.7 billion from $10.9 billion a year earlier, while analysts had been looking for $9.4 billion.
Those big misses helped drive total revenue lower on the year and fueled a miss on the top line, despite a sizable beat in the iPad category. Overall revenue declined to $117.2 billion from $123.9 billion a year ago, while analysts were looking for $121.4 billion.
Dating back to its report for the December 2017 quarter, Apple has only missed revenue expectations twice, according to FactSet, including one time when the company issued a formal warning ahead of its official results.
The smartphone giant’s sales decline of 5.48% was its steepest year-over-year fall since the September quarter of 2016, when sales slipped 8.12%, according to Dow Jones Market Data.
Apple executives once again declined to provide a traditional financial forecast, though Chief Financial Officer Luca Maestri shared on the call that he expects Apple’s year-over-year revenue performance in the March quarter to be similar to what was seen in the December quarter. That would actually mark an acceleration of sorts, he said, since the December quarter benefited from an extra week.
Within iPhones specifically, Maestri also anticipates that year-over-year revenue growth will accelerate.
Apple’s profits fell as well in the latest period, as the company generated net income of $30.0 billion, or $1.88 a share, compared with $34.6 billion, or $2.10 a share, a year earlier. Analysts were modeling $1.94 in earnings per share.
Maestri called out “significant foreign-exchange headwinds, supply constraints on iPhone 14 Pro and iPhone 14 Pro Max and a challenging macroeconomic environment” in discussing the company’s smartphone performance. Mac growth was negatively impacted by economic conditions, currency pressures and tough comparisons to a year before.
Within its iPad segment, Apple showed sharp growth. Revenue increased to $9.4 billion from $7.3 billion a year earlier. The FactSet consensus was for $7.8 billion.
Maestri noted that the iPad business benefited from the launch of new iPads during the quarter as well as comparisons to a year-earlier period in which Apple faced supply constraints.
Revenue for wearables, home and accessories came in at $13.5 billion, down from $14.7 billion a year before and far below the $15.3 billion that analysts were modeling. Services revenue rose to $20.8 billion from $19.5 billion and beat the FactSet consensus, which was for $20.4 billion.
Shares of Apple have fallen 14.2% over the past 12 months, though they’re up 16.1% to start 2023. The Dow Jones Industrial Average
DJIA,
is off 4.4% over a 12-month span but ahead 2.7% so far this year.
[ad_2]
[ad_1]
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-tesla-alibaba-gm-lucid-51674835133
[ad_2]
[ad_1]
Microsoft
posted better-than-expected results for the December quarter, driven by strength in cloud computing. But the strong results were tempered by disappointing guidance for the March quarter.
While the company saw weakness in its PC software business, Microsoft (ticker: MSFT) posted solid results in cloud computing and enterprise applications. In particular, the Azure public cloud business beat Wall Street growth estimates, which is a relief to investors nervous about the outlook for corporate IT spending.
[ad_2]
[ad_1]
Microsoft Corp.’s profit declined more than 12% in the holiday season, and executives said Tuesday that a revenue deceleration at the end of 2022 is expected to continue into the new year as the company lays off workers.
Microsoft MSFT Chief Financial Officer Amy Hood said in a conference call Tuesday that “we are seeing customers exercise caution,” which resulted in “moderating consumption growth in Azure and lower-than-expected growth in new business” in December. Hood then said that “we expect business trends that we saw…
[ad_2]
