The stock market rally was mixed amid a huge week of earnings and economic news. The Dow Jones and S&P 500 rose solidly. The Nasdaq was little changed and the Russell 2000 retreated. That’s despite a Wednesday sell-off as Fed chief Jerome Powell said a March rate cut was unlikely, with a hot jobs report Friday hammering that point home. Meta Platforms (META), Amazon.com (AMZN) and Novo Nordisk (NVO) were earnings winners while Apple (AAPL) and Google parent Alphabet (GOOGL) were among the losers. Advanced Micro Devices (AMD) and Microsoft (MSFT) had modest weekly moves around record highs.
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Regional banks sold off as a surprise loss by New York Community Bancorp (NYCB) raised lending concerns.
Stocks Weather Big News Week
The Dow Jones led the major indexes higher amid big, mixed earnings, economic data, market-unfriendly Fed comments and renewed regional bank worries. The Nasdaq edged higher while the small-cap Russell 2000 retreated. Treasury yields sold off hard until slashing weekly losses Friday on a hot jobs report. Crude oil prices slumped.
Fed’s Powell, Jobs Data Hit Rate-Cut Odds
The Federal Reserve removed its tightening bias, while Fed chief Jerome Powell said he expects rate cuts in 2024. However, Powell said that he sees a March Fed rate cut as unlikely. A stronger-than-expected January jobs report reinforced that message, as the U.S. added 353,000 jobs and hourly wages spiked 0.6%, both double expectations. Seasonal adjustments raise some doubts about those gains. Meanwhile, strong productivity growth and still-contracting manufacturing activity pointed to a less-heated economy. Still, markets largely priced out a March rate cut and are no longer certain about an early May cut.
Meta Earnings Skyrocket
Meta Platforms (META) rocketed to record highs on strong fourth-quarter earnings, a $50 billion buyback and plans for its first dividend. The Facebook and Instagram parent reported a 203% EPS gain while sales grew 25% to $40.1 billion, both accelerating for a fourth straight quarter. Meta also gave bullish guidance and ramped up capital spending plans. CEO Mark Zuckerberg pledged to create “the most popular and most advanced AI products and services.”
Microsoft Gets Cloud, AI Sales Lift
Software titan Microsoft (MSFT) beat Wall Street’s targets for its fiscal second quarter thanks to strong cloud computing business. But its sales guidance for the current quarter was a shade below estimates. Microsoft EPS grew 33% with sales up 18% to $62.02 billion. Azure cloud infrastructure sales rose 30% year over year in fiscal Q2, with six percentage points of growth coming from artificial intelligence services. For the current quarter, Microsoft guided to sales of $60.5 billion, vs. the consensus of $61 billion.
Amazon Jumps On Strong Q4
The e-commerce and cloud-computing giant said it earned $1 per share vs. 3 cents a year earlier. Sales swelled 14% to $170 billion, the fourth straight quarter of slow acceleration. Importantly, Amazon Web Services cloud-computing business met expectations for a 13% revenue gain to $24.2 billion, edging up from Q3’s 12% rise. Amazon.com (AMZN) jumped to a record high.
Apple Guides Low For March Quarter
The consumer electronics giant topped expectations for the December quarter, with results fueled by iPhone 15 handset sales and services growth. Apple (AAPL) earnings rose 16%. Revenue climbed 2% to $119.6 billion, the first year-over-year gain in five quarters. But China sales fell nearly 13%, well below views. Worse, Apple’s guidance for the March quarter implied sales of about $90 billion, down 5% from the year-earlier quarter. Analysts had been modeling sales of $95.6 billion. Meanwhile, Apple began selling its Apple Vision Pro mixed-reality goggles on Friday after two weeks of preorders. It starts at $3,499.
Google Slumps On Ad Revenue
Google parent Alphabet (GOOGL) reported Q4 earnings and revenue that slightly topped consensus but advertising revenue slightly missed amid worries over the internet search business. GAAP earnings jumped 56% to $1.64 per share. Gross revenue rose 13% to $86.31 billion, the fourth straight quarter of slowly accelerating growth. But advertising revenue rose 11% to $65.52 billion, just below estimates. Google said Q4 cloud-computing revenue rose 25% to $9.19 billion, topping estimates of $8.94 billion. Meanwhile, YouTube ad revenue rose 15% to $9.2 billion, in line with estimates. Wall Street analysts now estimate Google’s 2024 capital spending at $40 billion, up 25% from last year.
AMD, Qualcomm Fall On Earnings News
Advanced Micro Devices (AMD) led earnings reports for semiconductor stocks. AMD delivered mixed fourth-quarter results and guided lower for the current period. On a year-over-year basis, AMD earnings climbed 12% while sales increased 10% in the December quarter. Investors expected a bigger boost from data center chips, including AI accelerators. Qualcomm (QCOM) handily beat estimates for its fiscal first quarter and guided slightly above views for the Q2. But QCOM fell over concerns about the strength of the smartphone market’s sales recovery. Other chipmakers followed a pattern of in-line or better December-quarter results with disappointing guidance for the March quarter. Those included Allegro Microsystems (ALGM), MaxLinear (MXL), Microchip Technology (MCHP) and Wolfspeed (WOLF). They blamed weakness in automotive, industrial and telecom infrastructure markets.
Regional Banks Sell Off
New York Community Bancorp (NYCB) plunged after reporting a surprise loss due to much-higher credit-loss provisions and slashing its dividend. It has to follow stricter capital requirements for larger banks following its December 2022 acquisition of Flagstar Bank and March 2023 rescue of Signature Bank. But NYCB also had some loan concerns. Regional banks slumped Wednesday, and again on Thursday. Even banking giants such as Wells Fargo (WFC) saw solid losses.
Novo Nordisk Jumps On Earnings
The Danish drugmaker’s earnings leapt 68%, just missing a fifth quarter of accelerating growth. Revenue rose 41% to $9.75 billion, the fifth quarter of faster growth. Sales of diabetes medicine Ozempic rocketed almost 79% to $4.37 billion. Revenue from weight-loss drug Wegovy, which uses the same active ingredient as Ozempic, almost quadrupled, but fell short at $1.4 billion. Novo Nordisk (NVO) now expects 2024 sales to grow between 18% and 26%, excluding currency shifts, amid growing competition in the diabetes and obesity treatment space. Shares rose strongly to a record high.
Drug Giants Mixed
Pfizer (PFE) and Merck (MRK) delivered surprise Q4 profits, though the former missed on sales while Merck beat. PFE stock fell toward long-term lows while Merck climbed in a buy zone. GSK (GSK) rose on solid results. But Novartis (NVS) fell on a big miss. Regeneron Pharmaceuticals (REGN) rose for the week after reporting a modest EPS decline as sales edged higher, both beating. Bristol Myers Squibb (BMY) topped consensus and guided higher on 2024 EPS, lifting shares modestly from 52-week lows. AbbVie (ABBV) reported a 23% EPS decline that just missed views while sales topped with a 5% decline to $14.3 billion. ABBV stock cleared a consolidation going back to late 2022.
Boeing Beats Views, Offers No Guidance
Boeing (BA) reported a smaller-than-expected Q4 loss. Revenue growth slowed, but grew 10% to $22.02 billion. The Dow Jones aerospace giant did not provide 2024 guidance in the wake of its 737 woes. CEO David Calhoun said Boeing is overhauling its quality control and production processes to restore confidence among regulators and customers. Meanwhile, a majority of the previously-grounded 737 Max-9 jets in the U.S. have returned to service after inspections. Executives also confirmed that aircraft deliveries to China are underway. BA stock advanced modestly on the week.
Trucking
Old Dominion Freight Line (ODFL) reported a 1% EPS gain, beating views, while flat revenue was in line. It hiked its dividend by 30%. Saia (SAIA) earnings jumped 26%, the first increase in five quarters, while a 14.5% revenue gain also topped. ODFL stock was little changed after big swings, while Saia surged to a record high. C.H. Robinson (CHRW) missed views significantly while Landstar System (LSTR) met EPS views and guided low on revenue. Both logistics firms fell.
Royal Caribbean Reverses Lower
Royal Caribbean (RCL) reported stronger-than-expected Q4 earnings while revenue grew 28% to $3.33 billion, just missing views. The cruise line operator guided higher on Q1 and 2024 earnings, citing strong demand and pricing. Earlier in the week, Carnival (CCL) announced that it is almost sold out for the first half of the year after seeing record booking volumes, but it’ll take a hit to earnings due to rerouting around the Red Sea conflict. RCL stock reversed solidly lower from just below record highs while Carnival rose modestly.
General Motors Soars On Earnings, Guidance
General Motors (GM) reported a 41.5% EPS decline in Q4, while sales edged down to $42.98 billion, the first sales drop in seven quarters. But those both beat views. GM took a $1.6 billion charge for unsold EVs, while the recent UAW strike also took a toll. But GM guided 2024 well above consensus. CEO Mary Barra predicted U.S. EVs will be profitable in the second half of the year, despite noting that “the pace of EV growth has slowed.” Barra said the company will watch demand conditions and prepare to adopt production accordingly. GM guided 2024 adjusted earnings between $8.50 to $9.50 per share, compared to FactSet estimates of $7.75 per share. Analysts lifted their forecast to $8.45 per share after results. GM stock surged into a buy zone.
Deckers Steps Up, Skechers Trips Up
Deckers Outdoor (DECK) earnings jumped 44%, though that ended a string of accelerating growth. Revenue rose 16% to $1.45 billion. Sales of Hoka running shoes jumped 22% to $429.3 million, but Ugg boots remained the top seller at $1.07 billion, up 15%. Deckers guided up for 2024. Shares bolted to a record high. Meanwhile, Skechers (SKX) reported a 17% EPS gain, topping views, but revenue slightly missed with a 4.4% gain to $1.96 billion. The company also guided lower on Q1 and 2024 EPS. SKX stock dived.
Exxon, Chevron Results Mixed
U.S. supermajors Exxon Mobil (XOM) and Chevron (CVX) topped on EPS while revenue fell short. Exxon earnings fell 27% while Chevron’s slumped 18%, as weaker prices took a toll. Looking to 2024, Chevron announced it expects production to increase 4%-7% vs. 2023 vs. analysts consensus forecast for 14%. Exxon plans to up output by less than 2%. Earlier in this week, Saudi Arabia’s state oil giant, Saudi Aramco, abandoned a plan to expand oil production capacity. That news slammed oil machinery, drilling and services firms. Oil prices tumbled for the week amid demand concerns and hopes for an Israel-Hamas cease-fire.
MedTech Device Makers Jump
Boston Scientific (BSX) and Stryker (SYK) jumped after beating fourth-quarter projections and offering promising guidance. Boston Scientific reported 15% sales growth to $3.73 billion, while adjusted earnings grew 22%. The company guided to 7%-9% organic sales growth in Q1. One analyst called it “impressive” considering the tough comparison with Q1 2023. Meanwhile, Stryker’s earnings gained 15%, to $3.46 a share and sales rose nearly 12% to $5.82 billion.
In Brief
Powell Industries (POWL) skyrocketed 45% Wednesday as fiscal Q1 profit came in at $1.98 a share vs. 10 cents a year earlier and more than double estimates. Revenue jumped 53% to $194 million, also beating.
Nextracker (NXT) earnings shot up 231%, crushing fiscal Q3 views. The solar array tracking device company reported a 38% revenue gain, the third straight quarter of accelerating growth. Shares of the 2023 IPO surged to a record high.
A Delaware judge voided a $56 billion compensation deal for Elon Musk, saying the Tesla (TSLA) board in 2018 didn’t provide sufficient disclosures or show sufficient independence from the CEO.
Vertex Pharmaceuticals (VRTX) unveiled mixed late-stage test results for its painkiller alternative to opioids. Vertex’s pain drug beat out a placebo. It held its own vs. an opioid in patients following a tummy tuck, but was inferior for patients following bunion removal. VRTX jumped Tuesday, but pared weekly gains.
Super Micro Computer (SMCI) easily beat expectations for its fiscal second quarter ended Dec. 31, thanks to red-hot demand for AI computer systems. Earnings surged 71% while sales rocketed 103%. Super Micro also raised its sales guidance for the full year. SMCI stock skyrocketed for the week, now up more than 100% in 2024.
SoFi Technologies (SOFI) reported its first profit using generally accepted accounting principles, or GAAP, accounting. In Q4, SoFi earned 2 cents with revenue up 34% to $594.2 million. For 2024, the provider of college student loans as well as home and personal loans forecast EPS of 7-8 cents, up from a 36-cent loss in 2023. Analysts had expected 5 cents. SOFI stock initially jumped, but then tumbled.
Manhattan Associates (MANH) said Q4 EPS rose 27% to $1.03. Revenue jumped 20% to $238.3 million. The supply-chain management software company, which recently forged a partnership with e-commerce firm Shopify (SHOP), blasted out of a base.
Mastercard (MA) reported a 20% increase in adjusted EPS while revenue grew 13% for a second straight quarter, to $6.55 billion. Both beat views. MA stock jumped to a record high.
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