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Market indices continue trying to find ways to dig out of the ditch. Unfortunately for investors this week, nothing seems to be working. Today we saw oil prices come down, jobless claims remain steady and low, and Philly Fed manufacturing jump surprisingly high. This led to all major indices launching into the green, only to mostly give everything back by the closing bell. The Dow gained +0.06%, the S&P 500 was -0.22%, the Nasdaq -0.52% and the small-cap Russell 2000 was -0.29%.
Existing Home Sales for the month of March came out this morning at 10am ET. Headline was slightly ahead of estimates to 4.19 million seasonally adjusted, annualized units, from 4.17 million projected. This represents a pullback from the February print of 4.38 million, which is easily the highest tally of the past 12 months, and as such appears to be something of an outlier. For perspective, the 12-month low came in October of 2023, at 3.85 million units. Pending Home Sales data for March is due next Thursday.
The Leading Economic Index (LEI) from The Conference Board, also for March, came out today, as well. It saw a deeper-than-expected miss to -0.3% from the -0.1% consensus, and the +0.2% reported for February. The LEI describes itself as “provid[ing] an early indication of significant turning points in the business cycle… to signal peaks and troughs… for major economies around the world...” This metric had decoupled in a big way from year-over-year changed in Real GDP going back to early 2022, but in recent months has begun to pull closer. September through March is down -2.2%, but an improvement from -3.6% over the previous six months.
After today’s close, we see strong Q1 earnings numbers from across industries. First up is streaming leader Netflix NFLX, which crushed estimates on both top and bottom lines. Earnings of $5.28 per share zipped past the $4.51 in the Zacks consensus, which was already a big jump from the $2.88 per share reported in Netflix’s year-ago quarter. Revenues of $9.37 billion swept beyond the $9.26 billion expected, up +15% from Q1 2023 and adding 9.3 million new subscribers in the quarter.
This amounts to +16% subscriber growth year over year, which is considerable considering Netflix is no longer the only major streaming service in town. Next-quarter earnings guidance is equally impressive: $4.68 per share, from $4.53 consensus. However, revenue guidance is down somewhat: $9.49 billion from the $9.55 billion in the Zacks consensus. That, plus the +30% earnings growth year to date has set up Netflix with a classic “sell the news” story, as shares are down -3.3% in late trading.
Taiwan Semiconductor TSM also outperformed estimates on both top and bottom lines this afternoon, posting earnings of US$1.38 per ADR versus expectations for $1.29, and swinging to a profit year over year. Revenues of $18.87 billion outpaced the $18.38 billion analysts were looking for, amounting to a +16.3% positive revenue surprise. Revenue guidance has been bumped up to a range of $19.6-20.4 billion, well ahead of previous estimates. But questions surrounding overall industry market growth are keeping a damper on shares in the late market.
Intuitive Surgical ISRG makes it an earnings-beat trifecta. The maker of the daVinci medical device, popular among minimally invasive surgeries like prostatectomies, reported earnings of $1.50 per share, surpassing the consensus estimate by a solid dime. Revenues in the quarter came in at $1.89 billion, +11% ahead of projections. It’s share are up +1% on the news, adding to its +12% gains year to date.
A week from tomorrow, Personal Consumption Expenditures (PCE) data comes out. This is the next major economic report to inform investors — as well as the Fed — about key changes in consumer appetites, among other things. Separate prints, such as the CPI and PPI, are plugged into monthly PCE data; as a result, there tend to be fewer and narrower revisions to previous reports, making it a steady barometer for the overall economy. Of course, we’ll also see Q1 earnings season pick up the pace next week.
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Focus on improving the siding business segment, strategic investments and cost-reduction across all businesses as well as enhancing its shareholders’ return bodes well.
Transition toward multi-cloud environments, rising demand for application security, acquisitions and partnerships are aiding F5’s growth. Ample liquidity and an aggressive shareholder return policy are other positives.
Core Labs’ technology-heavy portfolio of proprietary products and services gives it the opportunity to optimize production from new and existing fields.
Wells Fargo continues to benefit from deposit growth, strong capital position and a solid liquidity profile. Also, cost-efficiency initiatives might support bottom-line growth in the upcoming period.
Tractor Supply has been witnessing strength in its Life Out Here Strategy. The company’s e-commerce business and Neighbor's Club loyalty program are impressive.
Kroger is making investments to enhance product freshness and quality, and expand digital capabilities. Impressively, it has been introducing new items under its ‘Our Brands’ portfolio.
Rising demand for the SWP, solid total asset balance, SEI Investments’ partnership interest in LSV, strategic buyouts and global presence will continue supporting growth in the quarters ahead.
The rising cost of sales has been a cause of concern for Dolby over the past few quarters, primarily on account of increased product cost and higher licensing expenses.
Lindsay is witnessing supply-chain constraints, most notably in electronics, which will continue to impact results. The recent decline in corn prices is also concerning.
Alibaba's business structure involves certain risks due to the strict laws in China, which along with lower mobile monetization, increasing competition and integration risks are concerns.
The operational constraints may adversely impact results. Weaker methanol prices are also hurting margins. Lower deliveries are likely to affect margins.
Sun Life faces earnings pressure due to volatility in equity markets and interest rates, increased expenses weighing on margin expansion and regulatory uncertainties are concerns.
Hibbett’s performance might have been hurt by inflation, higher interest rates and weak consumer confidence. A tough retail landscape also remains an added deterrent.
Google has shown good execution to date. Its dominant search market share is a positive. Its expanding cloud footprint and strengthening presence in the smart home market remain noteworthy.
Netflix’s growing subscriber base, driven by content strength, focus on originals across various genres and languages, rapid international expansion and partnerships with telcos are key drivers.
Kroger is making investments to enhance product freshness and quality, and expand digital capabilities. Impressively, it has been introducing new items under its ‘Our Brands’ portfolio.
