Starbucks shares rise after earnings release
Starbucks shares are up nearly 2% in premarket trading after the coffee chain reported quarterly earnings on Tuesday after its IPO. The company beat earnings and sales expectations, which were fueled by US demand for cold beverages even in the face of high inflation.
“We actually had record subscribers and record average weekly sales,” Rachel Ruggeri, Starbucks chief financial officer, told CNBC’s “Squawk Box” last quarter.
– Carmen Reinicke
Moderna surges after beating earnings expectations
Shares of Moderna rose nearly 4% in premarket trading after the Covid-19 vaccine maker released quarterly results that beat Wall Street expectations for both earnings and sales. In addition, the company announced $3 billion in share buybacks and maintained its full-year outlook.
– Carmen Reinicke
Potential earnings revisions are a risk for the second half, says RBC’s Calvasina
This earnings season, results have generally come in above Wall Street expectations, showing companies are managing the current economic conditions better than analysts had hoped, wrote Lori Calvasina, RBC’s head of US equity strategy, in a statement dated Wednesday.
“The good news for the US stock market is that corporate earnings continue to show evidence of resilience,” Calvasina said. “The bad news for the US stock market is that the possibility of further earnings revisions to the downside remains a risk as we move deeper into the second half.”
So far, estimates for earnings and sales have come down for the second half of 2022 and for the full year 2023.
Still, the strength of corporate earnings this quarter could suggest that any upcoming economic downturn will be short and superficial, according to Calvasina. That’s good for stocks now, but could set them up for further volatility.
“This has been supportive for stock prices in recent weeks, but going forward it also tells us that the stock rally is fragile given the possibility of further downgrades to earnings as 2023 comes into view,” she said.
– Carmen Reinicke
CVS wins by winning shot
CVS Health shares are up more than 3% in premarket trading after the company reported better-than-expected quarterly earnings ahead of the opening bell. The company also raised its earnings outlook for the year, saying healthcare services are helping boost sales.
– Carmen Reinicke
Pelosi leaves Taiwan
House Speaker Nancy Pelosi left Taiwan on Wednesday after a visit that heightened tensions with China and shook financial markets a bit.
Pelosi met with Taiwanese President Tsai Ing-wen on Wednesday. China, which considers the disputed island part of its territory, stepped up military exercises in the Taiwan Strait during his visit. The S&P 500 is down about 1% this week as traders worried about the impact of Pelosi’s trip on relations with China. But the market was set for a small recovery rally on Wednesday following her departure.
– John Meloy
AMD shares fall on weak revenue forecast
AMD’s shares traded 5% lower premarket after the chipmaker released third-quarter revenue guidance that fell short of analysts’ expectations.
AMD expects revenue of $6.7 billion for the third quarter, down from a Refinitiv guidance of $6.82 billion.
The disappointing guidance overshadowed better-than-expected earnings and sales for the second quarter.
—Fred Imbert
European markets mixed as cautious sentiment persists; Avast up 42%
European stocks were mixed on Wednesday, continuing the cautious regional trend this week.
The pan-European Stoxx 600 was down 0.2% in early trade, with autos falling 1.5% while tech stocks rose 1.2%.
It’s a busy day for earnings in Europe, with Commerzbank, SocGen, BMW, Banco BPM, Siemens Healthineers, Veolia and Wolters Kluwer among the companies reporting before the bell.
Shares in Czech cybersecurity firm Avast rose 42% after the UK competition regulator gave tentative approval to its $8.6 billion sale to US rival NortonLifeLock.
Focus on data, not what Fed spokesmen say, says Art Hogan
Despite the “parade of Fed spokesmen,” investors shouldn’t focus on it, according to Art Hogan, chief markets strategist at B. Riley Financial.
“I think investors need to pay more attention to what the data is telling us than what any individual Fed spokesman, voter or not, has to say about what our expectations should be,” Hogan told the Squawk Box” by CNBC Asia.”
Still, he said Fed officials have been able to change expectations about the direction of Fed policy.
St. Louis Federal Reserve Chairman James Bullard said Tuesday the central bank will need to maintain rate hikes and that the Fed’s interest rate will likely need to rise to 3.75% to 4% by the end of 2022. San Francisco Fed Chair Mary Daly said “our work is far from over” in fighting inflation, while Chicago Fed Chair Charles Evans said another big rate hike is possible, although he hopes it will be avoided can be.
After last week’s meeting, some expected the Fed to continue higher and hit 3.25% to 3.5% before pivoting in 2023, Hogan said.
“I think the parade of Fed speakers this week did a pretty good job of pushing that back and dampening those expectations,” he said.
— Abigail of
These stocks are poised for a comeback when inflation peaks, says Jefferies
A slowdown may be on the horizon and further earnings downgrades have been forecast. If inflation also peaks, as some analysts expect, that mix of factors will favor a stock class, says Jefferies.
Jefferies compiled a selection of such stocks for investors to buy based on a list of metrics, including strong profitability, reasonable valuations, and good cash flows. Pro subscribers can read the story here.
— Wheat Tan
PayPal rises on profit, share buyback announcement
PayPal shares are up more than 11% after the close of business. The payments company beat analysts’ earnings and revenue estimates for the second quarter and issued an upbeat full-year guidance. PayPal also announced a $15 billion share buyback program.
Stock buybacks offer companies a way to increase earnings per share and increase the value of their shares, especially as the market across the board has suffered sharp falls this year. The company launched a $10 billion program four years ago.
Elliott Management said it had a $2 billion stake in the payments giant. PayPal announced that it has entered into an agreement to share information about value creation with the activist investor.
– Tanaya Macheel
Despite Fedspeak on fighting inflation, a “easing cycle” is emerging, says Leuthold’s Jim Paulsen
Jim Paulsen, Leuthold Group’s chief investment strategist, said that despite the Federal Reserve’s “continued lip service to fighting inflation” by tightening monetary policy, there are several factors that suggest the market is entering an “emerging easing cycle.” could.
Bond yields have achieved a sizeable rate cut, the dollar is finally rolling and junk spreads have narrowed, he said in a note to investors late Tuesday.
“The primary focus of the media, politicians and investors is the fight against inflation and how aggressively the Fed needs to continue raising rates,” Paulsen said. “With real economic growth already slowing to a crawl and mounting evidence that inflation is slowing, the case for further Fed tightening at its September meeting is quickly falling apart.”
“Investors should give due weight to economic policy leadership,” he added. “Tightening today means lower real and nominal growth tomorrow.”
– Tanaya Macheel
MatchGroup shares fall after hours
Shares in dating app operator Match Group plummeted as much as 23% after the company reported second-quarter revenue of $795 million, compared to FactSet’s estimate of $803.9 million. Match also issued weak guidance for its adjusted operating income and revenue for the current quarter.
– Tanaya Macheel
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