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Markets Stampede into the Green; CVS, GSK Beat, YUM Mixed

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Wednesday, February 9, 2022

Market indexes seem to have found their footing over the past week and a half — Monday’s sell-off notwithstanding — as pre-market futures are all in the green a half hour before Wednesday’s opening bell: the Dow is +245 points at this hour, the Nasdaq is +185 and the S&P 500 +40. Coming out of correction territory, the Nasdaq is now -9.3% from November highs, the S&P -5.1% and the Dow -2.4% from highs reached in early January.

A strong employment report late last week, along with announcements from states around the country lifting their Covid restrictions as the Omicron variant abates. While there’s always the possibility another variant may be lurking around the corner — we’ve been at this almost exactly two years now, after all — seeing our economy gaining in growth is a good reason for investors to become a little less risk-averse.

Atlanta Fed President Raphael Bostic also appeared on CNBC this morning, expressing optimism that supply-chain issues — in the U.S. and across the globe amid our trading partners — are abating, which would lead to some slack in goods availability, thus allowing for lower prices which would stem the tide of inflation. No doubt inflation is here to stay; the issue, according to Bostic, has to do with the trajectory of said inflation. To flatten at +2% would be optimum.

Q4 earnings for CVS Health (CVS - Free Report) show a beat on both top and bottom lines: earnings of $1.98 per share outpaced expectations by 4 cents, while revenues of $76.6 billion in the quarter topped the Zacks consensus by +0.79%. Covid vaccinations assisted foot traffic in CVS stores during the quarter. However, an in-line revenue guidance for full-year 2022 is seen as a disappointment, and shares are down -2.5% in today’s pre-market. For more on CVS’ earnings, click here.

GlaxoSmithKline (GSK - Free Report) also outperformed expectations on top and bottom lines this morning, with 70 cents per share on $13 billion (translated into U.S. dollars) beating the 63 cents per share and $12.62 billion expected, respectively. Pharma sales grew 25% while its Consumer Healthcare division, looking to be spun off after rejecting Unilever’s (UL - Free Report) offer to purchase it, was +10% in the quarter. For more on GSK’s earnings, click here.

Quick-service restaurant giant Yum Brands (YUM - Free Report) posted its first earnings miss in four quarters: $1.02 per share versus $1.08 expected, and down from the $1.15 per share in the year-ago period. Yet sales in the quarter surpassed expectations to $1.89 billion, for a +0.93% beat. Shares are trading higher on raising comps, filling in its -10% sell-off year to date. For more on YUM’s earnings, click here.

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