The stock market rally suffered sharp losses on Thursday, pushing the major indexes to or below key levels following generally weak reactions to tech titans' earnings, including Microsoft. preelection concerns might also be playing a role, along with Treasury yields pushing up on key levels. But stocks bounced somewhat on Friday, buoyed by Amazon.com and a weak jobs report.
Eli Lilly dived on weak results, while restaurants were mixed, amid a slew of big earnings winners and losers.
Stocks Tumble, But Bounce Back
The stock market suffered weekly losses despite huge earnings, with a Nasdaq-led sell-off Thursday. But stocks bounced back somewhat Friday. The Nasdaq and S&P 500 rebounded from near the 50-day line but are below their 21-day lines. The Dow Jones and Russell 2000 regained their 50-day lines Friday after Thursday's losses. There were dozens of double-digit earnings winners and losers. The 10-year Treasury yield rose but kept hitting resistance around 4.3%.
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Economic Data Bolsters Fed Rate Cut Hopes
A huge batch of economic data over the past week, including a net loss of private-sector jobs in October amid storms and a strike, mostly strengthened the case for a string of further Fed rate cuts. Employers added just 12,000 workers to payrolls last month, which included a 40,000 lift from additional government jobs but still fell more than 100,000 below forecasts. Much, though not necessarily all of the weakness stemmed from the Boeing strike and hurricanes. However, the prior two months' job gains were revised down by a combined 112,000, suggesting a softer underlying trend. The Fed's primary inflation gauge, the core PCE price index, came in a hair above expectations for September, at 2.65%. The three-month annualized rate came in at 2.35%, meaning the Fed's job isn't quite done. GDP grew 2.8% in Q3, fueled by stronger-than-expected 3.7% growth in personal consumption expenditures. But there were plenty of data points suggesting the need for further easing. The Employment Cost Index showed wage growth decelerated more than expected in Q3. Job openings fell to the lowest level since January 2021. And the Institute for Supply Management's factory activity index hit its lowest level of the year.
Apple Slides In Stock Market On Soft Guidance
Apple beat estimates for its fiscal fourth quarter thanks to strong iPhone and services sales. But shares fell on its weaker-than-expected sales growth target for the current holiday quarter. In fiscal Q4, Apple's adjusted EPS earnings rose 12% while sales grew 6% to $94.93 billion.
Microsoft Outlook Spooks Investors
Microsoft topped fiscal Q1 estimates, with earnings per share up 10% and sales climbing 16% to $65.6 billion. Sales in its Azure cloud computing business rose 34%, beating views. But the Dow tech giant guided below views for sales in the current quarter, including on Azure, while also forecasting big capital spending for fiscal 2025. Microsoft stock fell sharply on the news.
Google Beats On Cloud, Ad Revenue
Google parent Alphabet reported Q3 earnings of $2.12 per share, up 37% from a year earlier, while gross revenue rose 15% to $88.3 billion, both beating. Operating margins rose to 32%, topping estimates for 30.6%. Google Cloud, internet search advertising revenue and YouTube revenue growth all topped views. Capital spending came in at $13.06 billion, ahead of estimates of $12.66 billion. Google stock rose.
OpenAI launched ChatGPT Search on Thursday, taking on Google and Microsoft's Bing, which uses ChatGPT tools. Microsoft is a big OpenAI investor.
Amazon Earnings Jump
Earnings per share grew 52%, easily beating Q3 views. Revenue rose 11% to $158.9 billion, slightly beating. Amazon Web Services growth was in line While Amazon's forecast for fourth quarter revenue growth of 9% was slightly below expectations, the tech giant gave strong guidance for operating profit, helped by improving retail margins. Amazon jumped near record highs.
Meta Guides Up On Sales, Spending
Facebook parent Meta Platforms cruised past earnings estimates, helped by a 19% jump in sales for the third quarter. EPS rose 37%, though growth slowed considerably for a third straight quarter as comparisons get tougher. But Meta also slightly increased its guidance for 2024 capital expenditures to $39 billion at the midpoint of its range and plans "significant capital expenditures growth in 2025." Chief Executive Mark Zuckerberg said AI infrastructure investment is already benefiting Meta's core business. Shares fell on earnings, but were little changed for the week.
AMD, Intel Offer Mixed Q3 Reports
Advanced Micro Devices matched Wall Street's earnings target on better-than-expected sales. But revenue guidance for Q4 was a bit light. Meanwhile, rival Intel posted a much larger-than-expected loss in Q3 due to restructuring charges but sales were ahead of views. Intel's sales and earnings guidance for Q4 topped expectations. Elsewhere among chip stocks, Monolithic Power Systems tanked after badly missing views with its data center sales.
Restaurants Get Mixed Reviews
Chili's-parent Brinker, Shake Shack, Cheesecake Factory all beat earnings estimates though Cheesecake only met on revenue. But all three gapped up to at least 52-week highs. Chipotle missed on sales while Wingstop fell short on earnings and Starbucks was weak across the board. All three stocks fell. McDonald's was little changed, with solid overall earnings marred by weak global same-store sales.
Chevron, Exxon Beat Stock Market Views
The U.S. supermajors reported better-than-expected third-quarter earnings, though they fell significantly vs. a year earlier. Oil prices rose modestly off their recent lows and natural gas futures were effectively flat vs. the start of the year. Exxon Mobil earnings per share fell 15% due to lower crude realizations and higher exploration expenses. Revenue dipped 1% to $90.02 billion, Chevron profit decreased 17% as revenue declined 6% to $50.67. Chevron said its Q3 earnings decline was due to lower margins on refined products and the absence of prior year favorable tax items. Exxon Mobil announced a 4% dividend hike. Both rose Friday on earnings.
Eli Lilly Leads Drug Losers
Pharmaceutical stocks largely took beatings with sales of their biggest brands coming up short in the third quarter. The most notable miss came from Eli Lilly, which sold off hard. While sales of Lilly's diabetes drug Mounjaro and obesity fighter Zepbound delivered huge growth, they were below views. GSK plunged after revenue from respiratory syncytial virus vaccine Arexvy and Shingrix, a shingles shot, declined and missed expectations. Likewise, Novartis fell after weak sales growth of its heart-failure drug, Entresto. Meanwhile, Pfizer held its ground as it beat forecasts and raised its outlook, thanks to better-than-expected sales of its Covid treatment, Paxlovid. AbbVie rose as it was crowned a new drug king as $3.21 billion in sales of immunology drug Skyrizi came out ahead of Humira, which missed views. Bristol Myers Squibb shot higher on a third-quarter beat-and-raise, helped by some of its newest products, including Reblozyl and Breyanzi. Merck cut its sales and profit outlook after revenue from diabetes drugs Januvia/Janumet and its HPV vaccine, Gardasil, lagged expectations.
Reddit, Snap Jump
The social media firms' earnings highlighted the strength of the digital advertising market. Reddit earned 16 cents a share adjusted, turning profitable a quarter ahead of schedule. The 2024 IPO's revenue jumped 68% to $348.4 million, slightly beating. Reddit stock soared 42% on Wednesday. Snap, meanwhile, reported a 300% earnings gain. Revenue climbed 15% to $1.37 billion, just beating as top-line growth slows. Shares gapped up but hit resistance at their 200-day.
Uber Slammed On Gross Bookings
Q3 gross bookings for the ride-hail and food-delivery giant grew 16% year over year to $41 billion vs. estimates of $41.3 billion, according to FactSet. Uber easily beat on earnings, helped by pretax benefit of unrealized equity investment gains. Revenue growth accelerated to 20%. But shares tumbled. Separately, Uber's food-delivery rival DoorDash posted its first quarterly profit as a public company, easily beating, while sales grew 25% to $2.71 billion. Shares hit a record high but erased those gains.
Biogen Beats, Incyte Flies
Biogen reported lower earnings and revenue that topped expectations, largely on the back of the Alzheimer's drug Leqembi. But other key products had lackluster results and Biogen stock fell. Incyte reported slightly lower EPS but sales rose nearly 24%, sending shares flying out of a base. Amgen, meanwhile, remains "laser-focused" on its obesity drug efforts. Q3 EPS grew 13%, beating, while a 23% sales gain was in line. Regeneron Pharmaceuticals beat top- and bottom-line projections but shares tumbled after revenue from high-dose Eylea, an eye disease treatment, lagged expectations.
Travel Plays Cruise Higher
Royal Caribbean earnings grew 35% while revenue advanced 17%, though the latter fell just shy of consensus. Norwegian Cruise Line enjoyed a 30% EPS gain with an 11% revenue rise. Travel site Booking beat on the top and bottom line with accelerating growth to 16% and 9%, respectively. All three stocks jumped to new highs.
BYD Passes Tesla Revenue, Eyes BEV Crown
BYD earnings rose 16% in the third quarter, modestly topping. Revenue grew 29% to $28.7 billion, slightly missing, but surpassing Tesla revenue for the first time. Later, BYD reported October sales of 502,657 EVs for the month, up 66.5% vs. a year earlier and 19.8% from September's prior record of 419,166. That includes 18,614 fully battery electric vehicles (BEVs). Simply holding that pace would push BEV sales to nearly 587,000, which would easily beat Tesla. BYD stock fell modestly for the week, trading around a buy point. Tesla fell solidly, back below a buy point after the prior week's 22% surge on earnings.
In Brief
Atlassian reported an 18% EPS gain with revenue up 21% to $1.19 billion, with cloud revenue rising 31%. The collaboration software maker guided slightly higher. Shares skyrocketed Friday.
Carvana defied auto retail challenges and continued a massive turnaround. The online used-car seller raised 2024 guidance after smashing quarterly earnings estimates. Retail volumes jumped 34% in the third quarter, accelerating from a 33% gain in Q2. Margins and gross profit per unit, two closely watched metrics, both swelled in Q3 vs. a year ago. Carvana stock soared to fresh highs.
Ford earnings rose 26%, the first gain in four quarters, while revenue rose 5.5% to $46.2 billion, also beating. But full-year guidance implied a weak Q4. The emerging EV business lost $1.2 billion in the third quarter amid a price war despite improving costs. Meanwhile, Ford's inventory glut continues to raise fears about incentives. Shares tumbled.
Waste Management reported a 20% EPS gain while revenue advanced 8%, both beating views. Shares jumped, breaking out, but pulled back below the buy point later.
SoFi Technologies narrowly beat Q3 profit views while revenue rose 30% to $697.1 million, easily beating. The fintech lender also guided higher. Shares fell on earnings but rebounded, continuing a powerful run.
Brown & Brown narrowly topped Q3 views with a 12% EPS gain and 11% revenue rise. Fellow insurance broker Ryan Specialty posted 29% and 19% EPS and revenue gains, but the latter was only in line. Brown & Brown rose, flashing a buy signal. Ryan stock fell below a buy point, but slashed losses.
PayPal said Q3 adjusted earnings rose 22%, topping forecasts, but the 6% revenue gain to $7.85 billion just missed. Payment volume from merchant transactions rose 9% to $422.6 billion, in line with estimates. The payments giant gave lukewarm guidance for Q4. Shares fell modestly.
TransMedics plummeted nearly 30% on Tuesday after the organ transplant transportation company reported adjusted earnings far below views, while the 64% revenue gain to $108.8 million also lagged expectations. But the company reiterated its full-year sales outlook.
Twilio said Q3 earnings popped 76% to $1.02 on an adjusted basis while revenue rose 10% to $1.134 billion, both beating. The communications software maker hiked its full year 2024 organic revenue growth guidance to 7.5% to 8%, compared with 6% to 7% previously.
Visa and Mastercard modestly beat quarterly estimates. Visa, which also hiked its dividend, jumped, briefly hitting record highs. Mastercard hit a record high but then reversed lower, within a buy zone.
Super Micro Computer plunged after the data center specialist revealed that its accounting firm, Ernst & Young, had resigned over financial reporting concerns.
SharkNinja beat estimates for the third quarter, but guided below views for the holiday quarter. Shares of the kitchen and household device maker tumbled.
Zebra Technologies, a maker of enterprise systems for managing inventory and assets, beat third-quarter expectations and guided higher for Q4. Zebra stock surged, clearing a buy point.
Garmin, a maker of devices for outdoor recreation, fitness and navigation, easily beat Q3 estimates and raised its full-year outlook. Garmin stock rocketed out of a base.
Commvault surged after the data backup and recovery company posted strong Q3 results. Earnings rose 19% while revenue climbed 16% to $220.8 million, both slightly accelerating for a second straight quarter. Shares vaulted 24% the next day but pared gains somewhat.
Caterpillar missed on Q3 sales and earnings, which fell 6% and 4%, respectively, vs. a year earlier. The Dow Jones earthmoving giant also reined in full-year revenue estimates, but stood by its EPS outlook, thanks to above-target operating margins. Operating efficiency saved CAT stock from a clear sell signal.
