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

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

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

Microsoft Corp.

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

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

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

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

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

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

Tesla Inc.

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

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

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

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

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

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

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

Intel Corp.

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

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

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

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

This week in earnings

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

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

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

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

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

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

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

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

The call to put on your calendar

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

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

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

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

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

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

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

The numbers to watch

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

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

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

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January 22, 2023

More than 55,000 global tech workers laid off in the first few weeks of 2023, says layoff tracking site

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More than 55,000 global technology sector employees have been laid off in the first few weeks of 2023, according to data compiled by the Layoffs.fyi website.

The website’s tally of global tech layoffs has almost doubled from just over 25,000 on Tuesday.

The data suggest 2023 is on pace to surpass 2022 for global tech redundancies, with 154 tech companies laying off 55,324 employees in the first few weeks of the year. Last year, 1,024 tech companies laid off 154,336 employees, according to Layoffs.fyi.

Layoffs.fyi was set up by San Francisco-based startup founder Roger Lee to track layoffs during the COVID-19 pandemic. Lee is the co-founder of Human Interest, a digital 401(k) provider for small businesses and Comprehensive, an employee compensation platform.

Major U.S. tech companies are firmly in the layoffs spotlight. This week Google parent Alphabet Inc.
GOOGL,
+4.69%

GOOG,
+4.80%
confirmed plans to lay off about 12,000 workers globally and Intel Corp.
INTC,
+1.62%
said it is slashing hundreds of jobs in Silicon Valley.

Microsoft Corp.
MSFT,
+3.19%
confirmed plans to cut about 10,000 positions. The software maker’s layoffs did not come completely out of the blue. Earlier reports from Sky News and Bloomberg indicated that Microsoft was preparing to make cuts.

See Now: Google joins Intel, Microsoft Amazon, Salesforce and other major companies laying off thousands of people

In a blog post, Microsoft CEO Satya Nadella said that while the company is eliminating roles in some areas, the company will continue to hire in key strategic areas. The CEO did not specify which areas will see hiring but did describe advances in artificial intelligence as “the next major wave of computing.”

Earlier this month Coinbase Global Inc.
COIN,
+8.56%
announced 950 job cuts in an attempt to cut costs.

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January 20, 2023

Best stock picks for 2023: Here are Wall Street analysts’ most heavily favored choices

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Following a sharp and sustained rise in interest rates, U.S. stocks have taken a broad beating this year.

But 2023 may bring very different circumstances.

Below are lists of analysts’ favorite stocks among the benchmark S&P 500
SPX,
the S&P 400 Mid Cap Index
MID
and the S&P Small Cap 600 Index
SML
that are expected to rise the most over the next year. Those lists are followed by a summary of opinions of all 30 stocks in the Dow Jones Industrial Average
DJIA.

Stocks rallied on Dec. 13 when the November CPI report showed a much slower inflation pace than economists had expected. Investors were also anticipating the Federal Open Market Committee’s next monetary policy announcement on Dec. 14. The consensus among economists polled by FactSet is for the Federal Reserve to raise the federal funds rate by 0.50% to a target range of 4.50% to 4.75%.

Read: 5 things to watch when the Fed makes its interest-rate decision

A 0.50% increase would be a slowdown from the four previous increases of 0.75%. The rate began 2022 in a range of zero to 0.25%, where it had sat since March 2020.

A pivot for the Fed Reserve and the possibility that the federal funds rate will reach its “terminal” rate (the highest for this cycle) in the near term could set the stage for a broad rally for stocks in 2023.

Wall Street’s large-cap favorites

Among the S&P 500, 92 stocks are rated “buy” or the equivalent by at least 75% of analysts working for brokerage firms. That number itself is interesting — at the end of 2021, 93 of the S&P 500 had this distinction. Meanwhile, the S&P 500 has declined 16% in 2022, with all sectors down except for energy, which has risen 53%, and the utilities sector, which his risen 1% (both excluding dividends).

Here are the 20 stocks in the S&P 500 with at least 75% “buy” or equivalent ratings that analysts expect to rise the most over the next year, based on consensus price targets:

Company	Ticker	Industry	Closing price – Dec. 12	Consensus price target	Implied 12-month upside potential	Share “buy” ratings	Price change – 2022 through Dec. 12
EQT Corp.	EQT	Oil and Gas Production	$36.91	$59.70	62%	78%	69%
Catalent Inc.	CTLT	Pharmaceuticals	$45.50	$72.42	59%	75%	-64%
Amazon.com Inc.	AMZN	Internet Retail	$90.55	$136.02	50%	91%	-46%
Global Payments Inc.	GPN	Misc. Commercial Services	$99.64	$147.43	48%	75%	-26%
Signature Bank	SBNY	Regional Banks	$122.73	$180.44	47%	78%	-62%
Salesforce Inc.	CRM	Software	$133.11	$195.59	47%	80%	-48%
Bio-Rad Laboratories Inc. Class A	BIO	Medical Specialties	$418.28	$591.00	41%	100%	-45%
Zoetis Inc. Class A	ZTS	Pharmaceuticals	$152.86	$212.80	39%	87%	-37%
Delta Air Lines Inc.	DAL	Airlines	$34.77	$48.31	39%	90%	-11%
Diamondback Energy Inc.	FANG	Oil and Gas Production	$134.21	$182.33	36%	84%	24%
Caesars Entertainment Inc	CZR	Casinos/ Gaming	$50.27	$67.79	35%	81%	-46%
Alphabet Inc. Class A	GOOGL	Internet Software/ Services	$93.31	$125.70	35%	92%	-36%
Halliburton Co.	HAL	Oilfield Services/ Equipment	$34.30	$45.95	34%	86%	50%
Alaska Air Group Inc.	ALK	Airlines	$45.75	$61.08	34%	93%	-12%
Targa Resources Corp.	TRGP	Gas Distributors	$70.42	$93.95	33%	95%	35%
Charles River Laboratories International Inc.	CRL	Misc. Commercial Services	$201.94	$269.25	33%	88%	-46%
ServiceNow Inc.	NOW	Information Technology Services	$401.64	$529.83	32%	92%	-38%
Take-Two Interactive Software Inc.	TTWO	Software	$102.61	$135.04	32%	79%	-42%
EOG Resources Inc.	EOG	Oil and Gas Production	$124.06	$158.24	28%	82%	40%
Southwest Airlines Co.	LUV	Airlines	$38.94	$49.56	27%	76%	-9%
Source: FactSet

Most of the companies on the S&P 500 list expected to soar in 2023 have seen large declines in 2022. But the company at the top of the list, EQT Corp.
EQT,
is an exception. The stock has risen 69% in 2022 and is expected to add another 62% over the next 12 months. Analysts expect the company’s earnings per share to double during 2023 (in part from its expected acquisition of THQ), after nearly a four-fold EPS increase in 2022.

Shares of Amazon.com Inc.
AMZN
are expected to soar 50% over the next year, following a decline of 46% so far in 2022. If the shares were to rise 50% from here to the price target of $136.02, they would still be 18% below their closing price of 166.72 at the end of 2021.

Read: Here’s why Amazon is Citi’s top internet stock idea

You can see the earnings estimates and more for any stock in this article by clicking on its ticker.

Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

Mid-cap stocks expected to rise the most

The lists of favored stocks are limited to those covered by at least five analysts polled by FactSet.

Among components of the S&P 400 Mid Cap Index, there are 84 stocks with at least 75% “buy” ratings. Here at the 20 expected to rise the most over the next year:

Company	Ticker	Industry	Closing price – Dec. 12	Consensus price target	Implied 12-month upside potential	Share “buy” ratings	Price change – 2022 through Dec. 12
Arrowhead Pharmaceuticals Inc.	ARWR	Biotechnology	$31.85	$69.69	119%	83%	-52%
Lantheus Holdings Inc.	LNTH	Medical Specialties	$54.92	$102.00	86%	100%	90%
Progyny Inc.	PGNY	Misc. Commercial Services	$31.21	$55.57	78%	100%	-38%
Coherent Corp.	COHR	Electronic Equipment/ Instruments	$35.41	$60.56	71%	84%	-48%
Exelixis Inc.	EXEL	Biotechnology	$16.08	$26.07	62%	81%	-12%
Darling Ingredients Inc.	DAR	Food: Specialty/ Candy	$61.17	$97.36	59%	93%	-12%
Perrigo Co. PLC	PRGO	Pharmaceuticals	$31.83	$49.25	55%	100%	-18%
Mattel Inc.	MAT	Recreational Products	$17.39	$26.58	53%	87%	-19%
ACI Worldwide Inc.	ACIW	Software	$20.75	$31.40	51%	83%	-40%
Topgolf Callaway Brands Corp.	MODG	Recreational Products	$21.99	$32.91	50%	83%	-20%
Dycom Industries Inc.	DY	Engineering and Construction	$86.03	$128.13	49%	100%	-8%
Travel + Leisure Co.	TNL	Hotels/ Resorts/ Cruiselines	$37.98	$56.00	47%	75%	-31%
Frontier Communications Parent Inc.	FYBR	Telecommunications	$25.21	$36.18	44%	82%	-15%
Manhattan Associates Inc.	MANH	Software	$120.06	$171.80	43%	88%	-23%
MP Materials Corp Class A	MP	Other Metals/ Minerals	$31.39	$44.79	43%	92%	-31%
Lumentum Holdings Inc.	LITE	Electrical Products	$54.45	$76.44	40%	76%	-49%
Tenet Healthcare Corp.	THC	Hospital/ Nursing Management	$44.22	$62.00	40%	80%	-46%
Repligen Corp.	RGEN	Pharmaceuticals	$166.88	$233.10	40%	82%	-37%
STAAR Surgical Co.	STAA	Medical Specialties	$59.57	$82.67	39%	82%	-35%
Carlisle Cos. Inc.	CSL	Building Products	$251.99	$348.33	38%	75%	2%
Source: FactSet

Wall Street’s favorite small-cap names

Among companies in the S&P Small Cap 600 Index, 91 are rated “buy” or the equivalent by at least 75% of analysts. Here are the 20 with the highest 12-month upside potential indicated by consensus price targets:

Company	Ticker	Industry	Closing price – Dec. 12	Consensus price target	Implied 12-month upside potential	Share “buy” ratings	Price change – 2022 through Dec. 12
UniQure NV	QURE	Biotechnology	$22.99	$51.29	123%	95%	11%
Cara Therapeutics Inc.	CARA	Biotechnology	$11.34	$23.63	108%	88%	-7%
Vir Biotechnology Inc.	VIR	Biotechnology	$25.50	$53.00	108%	75%	-39%
Dynavax Technologies Corp.	DVAX	Biotechnology	$11.22	$23.20	107%	100%	-20%
Thryv Holdings Inc.	THRY	Advertising/ Marketing Services	$18.40	$36.75	100%	100%	-55%
Artivion Inc.	AORT	Medical Specialties	$12.93	$23.13	79%	83%	-36%
Cytokinetics Inc.	CYTK	Pharmaceuticals	$38.33	$67.43	76%	100%	-16%
Harsco Corp.	HSC	Environmental Services	$7.17	$12.30	72%	80%	-57%
Ligand Pharmaceuticals Inc.	LGND	Pharmaceuticals	$64.80	$110.83	71%	100%	-35%
Corcept Therapeutics Inc.	CORT	Pharmaceuticals	$20.84	$34.20	64%	80%	5%
Payoneer Global Inc.	PAYO	Misc. Commercial Services	$5.70	$9.33	64%	100%	-22%
Xencor Inc.	XNCR	Biotechnology	$28.69	$46.71	63%	93%	-28%
Pacira Biosciences Inc.	PCRX	Pharmaceuticals	$45.50	$72.90	60%	80%	-24%
BioLife Solutions Inc.	BLFS	Chemicals	$19.72	$31.38	59%	89%	-47%
Customers Bancorp Inc.	CUBI	Regional Banks	$30.00	$47.63	59%	75%	-54%
ModivCare Inc.	MODV	Other Transportation	$92.22	$145.83	58%	100%	-38%
Stride Inc.	LRN	Consumer Services	$32.56	$51.25	57%	100%	-2%
Ranger Oil Corp. Class A	ROCC	Oil and Gas Production	$36.98	$58.00	57%	100%	37%
Outfront Media Inc.	OUT	Real Estate Investment Trusts	$17.59	$27.00	53%	83%	-34%
Walker & Dunlop Inc.	WD	Finance/ Rental/ Leasing	$82.22	$125.20	52%	100%	-46%
Source: FactSet

The Dow

Here are all 30 components of the Dow Jones Industrial Average ranked by how much analysts expect their prices to rise over the next year:

Company	Ticker	Industry	Closing price – Dec. 12	Consensus price target	Implied 12-month upside potential	Share “buy” ratings	Price change – 2022 through Dec. 12
Salesforce Inc.	CRM	Software	$133.11	$195.59	47%	80%	-48%
Walt Disney Co.	DIS	Movies/ Entertainment	$94.66	$119.60	26%	82%	-39%
Apple Inc.	AAPL	Telecommunications Equipment	$144.49	$173.70	20%	74%	-19%
Verizon Communications Inc.	VZ	Telecommunications	$37.95	$44.60	18%	21%	-27%
Visa Inc. Class A	V	Misc.s Commercial Services	$214.59	$249.33	16%	86%	-1%
Microsoft Corp.	MSFT	Software	$252.51	$293.06	16%	91%	-25%
Chevron Corp.	CVX	Integrated Oil	$169.75	$191.20	13%	54%	45%
Cisco Systems Inc.	CSCO	Information Technology Services	$49.30	$53.76	9%	44%	-22%
UnitedHealth Group Inc.	UNH	Managed Health Care	$545.86	$593.30	9%	85%	9%
Goldman Sachs Group Inc.	GS	Investment Banks/ Brokers	$363.18	$392.63	8%	59%	-5%
Walmart Inc.	WMT	Specialty Stores	$148.02	$159.86	8%	72%	2%
JPMorgan Chase & Co.	JPM	Banks	$134.21	$143.84	7%	59%	-15%
Home Depot Inc.	HD	Home Improvement Chains	$327.98	$346.61	6%	61%	-21%
American Express Co.	AXP	Finance/ Rental/ Leasing	$157.31	$164.57	5%	43%	-4%
McDonald’s Corp.	MCD	Restaurants	$276.62	$288.67	4%	72%	3%
Johnson & Johnson	JNJ	Pharmaceuticals	$177.84	$185.35	4%	36%	4%
Coca-Cola Co.	KO	Beverages: Non-Alcoholic	$63.97	$66.62	4%	73%	8%
Boeing Co.	BA	Aerospace and Defense	$186.27	$192.69	3%	77%	-7%
Intel Corp.	INTC	Semiconductors	$28.69	$29.54	3%	13%	-44%
Walgreens Boots Alliance Inc.	WBA	Drugstore Chains	$41.06	$42.24	3%	17%	-21%
Merck & Co. Inc.	MRK	Pharmaceuticals	$108.97	$110.62	2%	65%	42%
Caterpillar Inc.	CAT	Trucks/ Construction/ Farm Machinery	$233.06	$236.23	1%	41%	13%
Honeywell International Inc.	HON	Aerospace and Defense	$214.50	$217.35	1%	54%	3%
Nike Inc. Class B	NKE	Apparel/ Footwear	$112.07	$112.58	0%	64%	-33%
3M Co.	MMM	Industrial Conglomerates	$126.85	$127.30	0%	5%	-29%
Procter & Gamble Co.	PG	Household/ Personal Care	$152.47	$150.22	-1%	59%	-7%
Travelers Companies Inc.	TRV	Multi-Line Insurance	$187.11	$184.24	-2%	18%	20%
Amgen Inc.	AMGN	Biotechnology	$276.78	$264.79	-4%	24%	23%
Dow Inc.	DOW	Chemicals	$51.11	$48.73	-5%	15%	-10%
International Business Machines Corp.	IBM	Information Technology Services	$149.21	$140.29	-6%	33%	12%
Source: FactSet

Don’t miss: 10 Dividend Aristocrat stocks expected by analysts to rise up to 54% in 2023

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December 13, 2022

Dow hits 2-month high as blue-chip gauge heads for longest winning streak since May

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The Dow Jones Industrial Average rose nearly 600 points on Friday to its highest level in two months as the blue-chip gauge remained on track for a sixth straight session in the green in what would be its longest winning streak since May 27, according to Dow Jones Market Data.

All three major indexes were trading higher as expectations that the Federal Reserve will shift toward smaller interest-rate hikes after its November meeting have offset weak earnings this week from some of the market’s biggest megacap technology names.

How are stocks trading?

The S&P 500
SPX,
+1.67%
gained 59 points, or 1.6%, to 3,866.
The Dow Jones Industrial Average
DJIA,
+1.98%
rose 589 points, or 1.8%, to 32,623.
The Nasdaq Composite
COMP,
+1.80%
advanced 181 points, or 1.7%, to 10,974.

Both the S&P 500 and Nasdaq were on track to cement their second weekly gain in a row on Friday, although the tech-heavy Nasdaq has substantially lagged after Thursday’s performance, where it was the only one of the major indexes to finish in the red following abysmal earnings from Meta Platforms Inc.

Barring an intraday turnaround, the Dow is on track to log its fourth straight weekly advance. It remains down just 10.2% so far this year.

The blue-chip gauge has risen 5% so far this week, while the S&P 500 is up 3.1% and the Nasdaq has risen 1.1%.

What’s driving markets?

All eyes were on the Dow Friday as the blue-chip gauge was the only major index to reach new notable highs late this week as its advance during the month of October has somewhat ameliorated its losses for the year so far.

The Dow has risen 13.5% since the start of the month, leaving it on track for its best October performance since it was created in the late 19th century.

Perhaps the biggest reason for the Dow’s rise this month is tied to its composition. The average is generally light on technology stocks, while including more of the energy and industrial stocks that have outperformed this year.

“The Dow just has more of the winners embedded in it and that has been the secret to its success,” said Art Hogan, chief market strategist at B.Reily Wealth.

Despite some volatility in the premarket session, all three major indexes turned higher after the open as investors remained fixated on expectations for the Fed to down shift to smaller interest rate hikes after next week’s policy meeting — an expectation that endured after the latest reports on inflation and wage growth released Friday.

See:Market expectations start to shift in direction of slower pace of rate hikes by Fed

Brad Conger, deputy chief investment officer at Hirtle, Callaghan & Co., said Friday’s data didn’t interfere with mounting expectations that the Fed might soon pause its campaign of aggressive rate hikes.

“Basically, the market is starting to price in a pause, not a pivot, but maybe a pause. The end is in sight,” Conger said.

The September core personal consumption expenditures price index — the Fed’s preferred gauge of inflation pressures — came in roughly in line with economists expectations, while a more modest 1.2% gain in private wages and salaries in the third quarter was interpreted as a sign that wage growth may have finally peaked, according to Andrew Hunter, senior U.S. economist at Capital Economics.

“The Federal Reserve has not yet broken the persistent trend in core inflation and so will likely stay aggressive at next week’s meeting. However, some areas of the economy show significant weakness and could build the case that the Fed downshifts to smaller rate hikes in 2023,” Jeffrey Roach, Chief Economist for LPL Financial in Charlotte, NC, said.

The final reading of the University of Michigan consumer sentiment index for October added 1.3 index points from 58.6 in September, and was up slightly from an initial reading of 59.8 earlier in the month.

See: GDP looked great for the U.S. economy, but it really wasn’t

Since the start of the week, investors have digested a batch of disappointing numbers from some of America’s largest tech companies, which helped to sully the overall quality of S&P 500 earnings this quarter.

On Thursday night, Amazon.com
AMZN,
-9.29%
joined Microsoft Corp.
MSFT,
+2.75%,
Alphabet Inc.
GOOGL,
+2.76%
and Meta
META,
+0.34%
by publishing disappointing earnings for the quarter that ended Sept. 30.

But despite the disappointing results reported this week, in aggregate, S&P 500 firms are beating earnings expectations by 3.8%, according to Refinitiv data. That’s compared to a long-term average of 4.1% since 1994. However, if energy firms are excluded, the picture darkens substantially.

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

Shares of Amazon were off 10% after the e-commerce giant, which dominates the consumer-discretionary sector, predicted slower holiday sales and profit while also reporting slower-than-expected growth in its key cloud-computing business.

Peter Garnry, head of equity strategy at Saxo Bank, said investors were unnerved by Amazon’s guidance cut.

“The outlook for Q4 was what terrified investors with the retailer guidance operating income in the range $0-4 billion vs est. $4.7 billion and revenue of $140-148 billion vs est. $155.5 billion,” he said in a note.

One notable exception to the downbeat earnings news this week was Apple Inc.
AAPL,
+7.21%,
which proved a bright spot after the iPhone maker’s revenue and earnings topped forecasts, helped by record back-to-school sales of Macs. Shares were up nearly 0.9% in premarket trading.

Companies in focus

Oil giants Chevron Corp. CVX and Exxon Mobil Corp. XOM were climbing on Friday after reporting strong results. Chevron is a Dow component.
Pinterest Inc. PINS also saw strong sales and profit in the third quarter, beating Wall Street expectations. Its shares were up more than 14%.
Intel Corp. INTC shares advanced more than 8% after reporting an earnings beat. The chip maker said it would cut costs by $3 billion next year, and lay off employees, as it trimmed its outlook again.

See also: Live Markets coverage:

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October 28, 2022

Meta spending slams Facebook stock, but here are the chip stocks that are benefiting

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Data-center stocks buoyed an otherwise down chip sector Thursday as shares of Facebook parent Meta Platforms Inc. cratered on torn-in-half profits and a hike in capital spending to fuel Mark Zuckerberg’s metaverse ambitions, prompting one analyst to ask if server chips can only go up now.

As shares of Meta dropped as much as 25% Thursday, shares of Nvidia Corp.
NVDA,
+2.31%
surged as much as 7%, compared with less than 1% declines on the PHLX Semiconductor Index
SOX,
-1.51%
and S&P 500 index
SPX,
-0.69%.

Late Wednesday, Meta reported that quarterly profits fell by more than 50% and added that it expects 2022 capital expenditure of $32 billion to $33 billion, compared with a previous range of $30 billion to $34 billion. In 2023, the company said, it expects capital expenditure in the range of $34 billion to $39 billion, “driven by our investments in data centers, servers, and network infrastructure.”

Meta
META,
-24.64%
noted that an “increase in AI capacity is driving substantially all of our capital expenditure growth in 2023.”

Soon after Meta made that announcement, Jefferies analyst Mark Lipacis said in a note that “positive capex commentary from Alphabet
GOOGL,
-2.80%,
Microsoft
MSFT,
-2.03%
and Meta” was all a positive for data-center equipment providers Nvidia, Advanced Micro Devices Inc.
AMD,
-1.92%,
Broadcom Inc.
AVGO,
-1.26%
and Marvell Technology Inc.
MRVL,
+3.61%.
Lipacis has buy ratings on all four stocks.

Shares of AMD rallied as much as 5%, Broadcom shares rose as much as 2% and Marvell shares surged as much as 10% Thursday. Intel Corp.
INTC,
-3.69%
shares were up a little more than 1% at one point ahead of its earnings report, scheduled for after the close Thursday.

Opinion: Facebook and Google grew into tech titans by ignoring Wall Street. Now it could lead to their downfall

Jefferies noted that Meta’s capital expenditure for 2023 alone charts a 12% year-over-year hike at midpoint, compared with the Wall Street consensus of $29 billion, or a 5% year-over-year decline.

“We sense investor caution around Nvidia’s datacenter business this quarter, but we expect all four [equipment providers] to discuss positive datacenter trends this earnings season,” Lipacis said, noting he was a buyer of Nvidia stock “in front of its earnings call.”

From the perspective of the chip industry — which has gone from a two-year global chip shortage to a sudden glut in a matter of months as PC and consumer-electronics demand has dropped sharply, causing chip fabricators to pump the brakes on investments in new capacity — Lipacis questioned whether the glut will ever reach data-center sales, as many have feared.

“The most common comment we hear from investors on Nvidia is ‘the Datacenter Shoe has to Drop,’” Lipacis said, noting that his data shows that the shoe has already dropped and an uptick is on the horizon.

Lipacis explained that data-center sales from Nvidia, AMD and Intel combined declined to $10.5 billion in the second quarter from $12 billion in the fourth quarter of 2021 and that he is modeling another $10.5 billion quarter in the third.

“This looks consistent with the pattern since 2017 of 4-to-5 qtrs above trendline, followed by 2-to-3 qtrs of below trendline ‘digestion,’ i.e., it looks like the datacenter shoe has already dropped,” Lipacis said.

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October 27, 2022

Mobileye prices IPO above targeted range to raise nearly $1 billion, and most of it will go to Intel

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Mobileye Global Inc. priced its initial public offering higher than its targeted range late Tuesday to raise nearly $1 billion, most of which will go to Intel Corp.

Mobileye priced its initial public offering at $21 late Tuesday, the company announced in a news release, after previously stating a targeted range of $18 to $20; shares are expected to begin trading on the Nasdaq under the ticker symbol “MBLY” on Wednesday. Intel
INTC,
+0.85%
will sell at least 41 million shares of Mobileye, which would raise $861 million, and also agreed to a $100 million concurrent sale of stock to General Atlantic, which would make the total raised at least $961 million.

Intel paid $15.3 billion to acquire Mobileye in 2017, and was reportedly aiming for a valuation as high as $50 billion when originally planning this IPO, but instead will settle for a basic valuation of roughly $16.7 billion. After a record year with more than 1,000 offerings in 2021, the IPO market has largely dried up in 2022.

Read: Mobileye IPO: 5 things to know about the Intel autonomous-driving spinoff

Underwriting banks — Intel listed two dozen underwriters, led by Goldman Sachs Group Inc.
GS,
+1.13%
and Morgan Stanley
MS,
+1.36%
— have access to an additional 6.15 million shares for overallotments, which could push the total raised higher than $1 billion and make Mobileye the second-largest offering of the year. Only two offerings thus far this year have raised at least $1 billion — private-equity firm TPG Inc.
TPG,
+4.21%
raised exactly $1 billion in January, and American International Group Inc.
AIG,
-0.11%
spinoff Corebridge Financial Inc.
CRBG,
+1.36%
raised at least $1.68 billion in September.

Intel will receive the bulk of the proceeds of the offering — after promising to make sure that Mobileye has $1 billion in cash and equivalents, the chip maker will take the rest of the proceeds for its own coffers. Wells Fargo analysts calculated that Mobileye will need about $225 million to hit that level, leaving at least $736 million for Intel before fees and other costs.

Intel will also maintain control of the company after spinning it off, keeping class B shares that will convey 10 votes for each share while selling class A shares that convey one vote per share. Intel will retain more than 99% of the voting power and nearly 94% of the economic ownership of the company, and the Mobileye board is expected to include four members with ties to Intel, including Chief Executive Pat Gelsinger serving as chairman of the board.

Mobileye will continue to be led by founder Amnon Shashua, who served as chief executive before Intel acquired the company and stayed at the helm while it was part of the Silicon Valley chip maker. Shashua founded Mobileye in 1999 and turned it into a pioneer in the field of automated-driving technology and one of Israel’s most prominent tech companies.

Mobileye filed for the initial public offering at the end of September, when executives were still reportedly hoping for a $30 billion valuation.

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October 25, 2022

U.S. stocks edge up despite higher-than-expected inflation data

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U.S. stock indexes edged higher on Wednesday, while hotter-than-expected producer price inflation data deepened concerns that the Federal Reserve may continue its aggressive interest rate hikes.

How are stock-index futures trading

The Dow Jones Industrial Average
DJIA,
+0.50%
was up 120 points, or 0.4% to around 29,355
The S&P 500
SPX,
+0.35%
gained 5.3 points, or 0.2% to about 3,594
The Nasdaq Composite
COMP,
-6.31%
traded 5.1 points, or 0.1% higher to 10,430

On Tuesday, the Dow Jones Industrial Average rose 36 points, or 0.12%, to 29239, the S&P 500 declined 24 points, or 0.65%, to 3589, and the Nasdaq Composite dropped 116 points, or 1.1%, to 10426. The S&P 500 closed down 1,177 points, or 24.7% for the year to date.

What’s driving markets

The 12-month rate of producer price inflation slowed to to 8.5% from 8.7% while the annual core rate, excluding food and energy, was unchanged at 5.6%, but the monthly rate rose 0.4% in September, above forecast, and the monthly core PPI was also up 0.4% in September.

Such data has worsened fears that to curb inflation, the Fed will continue its aggressive rate hikes, which may steer the U.S. economy into a recession.

“We believe the odds of a recession in 2023 are now better than 50%,” Greg Bassuk, chief executive at AXS Investments, wrote in a Wednesday note. “Last week’s market turbulence saw volatility at levels we have not seen since July, and we believe investors should brace for ongoing market volatility and uncertainty throughout Q4, in concert with another likely Fed interest rate hike to the tune of 0.75% in November,” according to Bassuk.

The 10-year Treasury yield BX:TMUBMUSD10Y, which started the year around 1.65% was trading at 3.931% on Wednesday, off 1.3 basis points, after the producer price inflation data.

Traders are also awaiting U.S. September consumer prices data on Thursday due at 8:30 am Eastern Time.

“Inflation has proven to be difficult to forecast and given the negative ‘shock’ from the August CPI, it would be difficult for any investor to have conviction going into this report,” according to Tom Lee, head of research at Fundstrat.

“For us, analyzing the month over month numbers is much more important than looking at the headline,” Zachary Hill, head of portfolio management at Horizon Investments, said in an interview.

“The way we’ve been thinking about it, the last three months annualized [inflation] gives you a kind of a decent idea of where the shorter term trends are around inflation,” Hill said. “We think that’s what the Fed is going to be looking at to see progress towards their 2% goal. And unfortunately, based on various measures, we’re nowhere near that today.”

Adding to the market anxiety, and keeping any Wednesday rally in check, is the continuing volatility in U.K. government bonds after the Bank of England reiterated it would stop supporting the market after Friday.

Investors have become increasingly concerned of late that severe stresses in the financial system may emerge as central banks switch from the era of zero or negative interest rates to sharply higher borrowing costs as they try to tackle inflation at multi-decade highs.

“[G]lobal financial conditions have tightened as central banks continue to raise interest rates. Our latest Global Financial Stability Report shows that financial stability risks have increased since our last report, with the balance of risks tilted to the downside,” said the International Monetary Fund in a report released on Tuesday.

“The mood of global investors was gloomy enough and hardly needed yesterday’s reminder from the IMF that the risks to financial stability have increased,” Ian Williams, strategist at Peel Hunt, noted. “Its report highlighted specifically (if obviously) the threats from persistent inflation, China’s slowdown and the war in Ukraine. The highlighted ‘disorderly repricing of risk’ is arguably already underway.”

The Fed may offer its view on the topic as a number of officials are due to give comments on Wednesday. Minneapolis Fed President Neel Kashkari said the Fed is “dead serious” about getting inflation down. Fed vice chair Michael Barr will speak at 1:45 p.m. The minutes of the Fed’s previous monetary policy setting meeting will be released at 2 p.m. ET and Fed governor Michelle Bowman will deliver comments at 6.30 pm.

Companies in focus

Shares of Philips
PHIA,
-12.27%

PHG,
-11.33%
plunged 12% after the Dutch tech company issued its second profit warning this year, forewarning that supply chain problems will impact sales and third-quarter profits.
Intel Corp.
INTC,
+1.50%
may fire thousands of workers by the end of the month, around the same time the chip manufacturer reports quarterly results amid a tough year for semiconductor makers, Bloomberg reported late Tuesday. The company’s shares rose 1% Wednesday.
Shares of PepsiCo Inc. climbed 4.6% Wednesday, after the beverage and snack giant reported third-quarter profit and revenue that rose above expectations and raised its full-year outlook, as higher prices helped offset some volume weakness.

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October 12, 2022

Dow books 630-point drop after strong jobs data rattles investors, but stocks cement weekly gains

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U.S. stocks finished sharply lower Friday, but still booked their best weekly gains in a month, after September jobs data showed an unexpected fall in the unemployment rate that’s anticipated to reinforce the Federal Reserve’s resolve to keep tightening monetary policy.

Investors also weighed a profit warning at a leading microchip maker ahead of next week’s increase in quarterly earnings results.

What happened

The Dow Jones Industrial Average
DJIA,
-2.11%
fell 630.15 points, or 2.1%, ending at 29,296.79, but off the session low of 29,142.66.
The S&P 500
SPX,
-2.80%
dropped 104.86 points, or 2.8%, closing at 3,639.66.
The Nasdaq Composite
COMP,
-3.80%
shed 420.91 points, or 3.8%, to finish at 10,652.40.

Stocks posted back-to-back losses, trimming weekly gains, but recorded their best weekly gains since Sept. 9, according to Dow Jones Market Data.

Read: Will the stock market be open on Columbus Day?

What drove markets

Stocks recorded sharp losses Friday after the Labor Department said the U.S. economy added 263,000 jobs in September, while the unemployment rate declined to 3.5% from an August reading of 3.7%. Average hourly earnings rose 0.3%.

Still, a powerful rally earlier in the week boosted all three major stock indexes to weekly gains, a departure from three straight weekly losses, according to Dow Jones Market Data.

“It’s manic. We are all on edge,” said Kent Engelke, chief economic strategist at Capitol Securities Management, of the sharp market swings.

“Any piece of good news is a cause for an explosive rally,” Engelke said by phone. On the flip side, he pegged technology-based trading “in an illiquid and emotional market” as exacerbating Friday’s selloff.

“It’s a reflection that people have re-entered the mind-set that the Fed is going to be raising rates at a rapid clip, probably for longer than what they might have suspected at the start of the week,” said Robert Pavlik, a senior portfolio manager at Dakota Wealth Management, by phone.

Pavlik expects the Fed to keep tightening financial conditions to try to head off inflation. “But once we turn the corner, and the economy slows down, the Fed probably will be more aggressive in cutting rates on the way down.”

In addition, the Fed has been “draining liquidity from the system at a remarkable pace,” wrote Rick Rieder, BlackRock’s chief investment officer of global fixed income, in a Friday client note, while pointing to an astounding $1.3 trillion decline in the central bank’s balance sheet since the December 2021 peak.

Pavlik at Dakota Wealth said he anticipates the Fed will start slowing interest rate hikes by mid-next year, which likely means continued pressure for the stock market, particularly with a backdrop of big oil-price
CL00,
+5.37%
gains this week after global crude producers voted to cut monthly production and with the U.S. dollar’s
DXY,
+0.44%
surge this year against a basket of rival currencies.

U.S. crude oil prices climbed for a fifth day in a row on Friday to settle at $92.64 a barrel, while booking at 16.5% weekly gain.

New York Fed President John Williams said Friday that benchmark interest rates likely need to hit 4.5% over time. The Fed’s policy rate now sits in a 3%-3.25% range, up from a zero-0.25% range a year ago.

The benchmark 10-year Treasury rate
TMUBMUSD10Y,
3.889%
climbed to 3.883% Friday, as the key metric used to gauge the affordability of credit for businesses, household and the economy posted 10 straight weeks of gains, according to Dow Jones Market Data.

Read: Bond markets facing historic losses grow anxious of Fed that ‘isn’t blinking yet’

Investors continued to hope for relief on the inflation front and will be monitoring next week’s release of the September consumer-price index, as well as corporate earnings season as it picks up.

Companies in focus

Twitter Inc.
TWTR,
-0.43%
shares fell 0.4% Friday after a judge delayed a looming trial between the company and Elon Musk to allow the Tesla Inc.
TSLA,
-6.32%
CEO more time to close his $44 billion acquisition of the social media platform.
Besides the jobs report, investors weighed a profit warning from microchip maker Advanced Micro Devices Inc. AMD, which said the PC market weakened significantly during the quarter. AMD shares fell 13.9%, and rivals including Nvidia Corp. NVDA and Intel Corp. INTC also closed lower.
U.S. cannabis stocks were choppy Friday, with the AdvisorShares Pure US Cannabis ETF
MSOS,
-2.80%
ending lower, following steep gains earlier in the week after President Joe Biden said the U.S. would consider de-scheduling cannabis from its current position as a Schedule 1 narcotic under federal law.

—Steven Goldstein contributed reporting to this article

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October 7, 2022

Intel files for Mobileye IPO, creating a share structure that will keep the chipmaker in control

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After nearly a year’s wait, Mobileye is on the highway to Wall Street.

Intel Corp.
INTC,
-2.31%
-owned Mobileye Global Inc. launched its drive to an initial public offering in a Securities and Exchange Commission filing late Friday, leaving the size of the offering blank for now on what is expected to be one of the largest IPOs of the year.

Intel executives were targeting mid-2022 as of late last year, and filed confidentially with the SEC in March for the IPO of its self-driving-car unit, but the IPO market has been dry amid a decline for stocks, especially those that went public in a 2021 rush.

Mobileye plans to trade Class A shares of common stock on the Nasdaq exchange under the symbol “MBLY,” the same symbol the company had before Intel acquired Mobileye in 2017 for $15.3 billion in cash. While selling shares in Mobileye, Intel will retain official control of the company, keeping class B shares that carry 10 votes apiece while selling class A shares that have only one vote.

Mobileye also plans to have four Intel-affiliated members on its board, including Chief Executive Pat Gelsinger serving as chairman of Mobileye’s board.

Intel will also get paid from the offering: Mobileye issued Intel a dividend note for $3.5 billion, and expects to pay that off with proceeds from the sale, according to the filing; there was an initial payment of $336 million, leaving more than $3 billion still owed to Intel. Earlier reporting suggested Intel would seek a $30 billion valuation for Mobileye in the IPO, though the initial filing Friday did not include targeted prices for the shares.

The filing did include financial information, though: Mobileye reported revenue of $1.39 billion in 2021, well ahead of Nvidia Corp.
NVDA,
-0.66%,
which reported fiscal-year revenue of $566 million in auto chip sales in January. Mobileye reported a loss of $70 million last year, compared with a $196 million loss in 2020 and $328 million in 2019. Revenue in the first half of this year hit $854 million, growing 41% in the second quarter from the year before.

The filing lists a whopping 24 underwriters for the deal including Goldman Sachs, Morgan Stanley, Evercore ISI, Barclays, Citigroup, and B of A Securities.

Shares of Intel were up 0.5% after hours Friday, following a 2.3% decline in the regular session to close at $25.77.

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September 30, 2022

Tag: Wooden Furniture

Microsoft Corp.

Tesla Inc.

Intel Corp.

This week in earnings

The call to put on your calendar

The numbers to watch

Wall Street’s large-cap favorites

Mid-cap stocks expected to rise the most

Wall Street’s favorite small-cap names

The Dow

How are stocks trading?

What’s driving markets?

Companies in focus

How are stock-index futures trading

What’s driving markets

Companies in focus

What happened

What drove markets

Companies in focus