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Economic Prints Demonstrate Resiliency; Plus INTC, V Report

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This week, the running theme is the resiliency of the U.S. economy, and the stock market as a result. Not just in Q4 earnings, which have really heated up this week, but in economic prints such as the healthy Jobless Claims and Q4 GDP that we saw this morning are helping bolster positive sentiment. The Dow gained 204 points, +0.61% for the session, while the Nasdaq grew +199 points, +1.76%. The S&P 500 and Russell 2000 split the difference: +1.10% and +0.67%, respectively.

Q4 earnings beats were supposed to be weaker than over the past several quarters, and they are. The markets appear to be looking past this, however, seeing glimpses of a non-recessionary economy on the horizon, without major aggregate job losses and with China coming full back online. Of course, this type of exuberance was punished half a dozen times in 2022; is it really different this year?

Ultimately, it’s too early to say. Clearly, market participants are trying to get a head start on a pop in the market next week when the Fed announces a 25 bps rate hike. This would keep 5% on Fed funds at bay a little longer. And because we’d been pricing in 5%+ as far back as mid-December, the market has found some room to maneuver here. But where will markets go from there?

Intel (INTC - Free Report) brought a Zacks Rank #4 (Sell) with a Zacks Style Score of D into its Q4 earnings release this afternoon, where it posted earnings per share only half of what analysts were projecting: 10 cents per share reported, versus 20 cents in the Zacks consensus. Revenues of $14.04 billion in the quarter was also light the $14.46 billion anticipated.

The tech giant also slashed guidance for Q1 from positive earnings of 26 cents per share expected to a loss of -15 cents actual. Revenue projections of between $10.5-11.5 billion is well off the Zacks consensus $14.05 billion. Gross margins are projected to sink to 39% from 46% in the previous quarter. Shares have been down as much as -8% on the news, for only the second negative earnings surprise in the past five years — although 2 or the past 3 quarters posted misses.

Visa (V - Free Report) ), which literally never misses on bottom-line estimates, came in at $2.18 per share on $7.94 billion in sales for the quarter — also higher than the $1.18 per share in the year-ago quarter. Revenues of $7.94 billion outpaced the $7.68 billion expected, more than +10% higher year over year. Payment volumes rose +7% in the quarter. Shares have gained +1.4% so far this late-trading period.

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