The stock market showed volatile action in a huge week for earnings, with the Nasdaq hitting its worst level since 2020. Facebook-parent Meta Platforms, Merck and Microsoft led a number of earnings winners, while Amazon.com, Google-parent Alphabet, AbbVie and Apple were losers. Tesla CEO Elon Musk agreed to buy Twitter for $44 billion and sold some TSLA shares to help finance the deal.
Market Correction Tries To Bottom
The major indexes declined for the week amid big daily gains and losses, with the Nasdaq hitting its lowest levels since 2020. But, a market rally attempt is underway. Facebook-parent Meta Platforms, Merck and Microsoft led a number of earnings winners, while Amazon.com and AbbVie slumped. Tesla CEO Elon Musk agreed to buy Twitter for $44 billion. TSLA stock fell as Musk sold 9.6 million shares. Crude oil prices rose solidly.
Apple Services Drive Quarterly Beat
Apple topped fiscal Q2 targets as services revenue jumped 17% to $19.82 billion. Overall revenue climbed 9% to $97.28 billion as EPS also rose 9%. Apple's iPhone sales rose 5% to $50.57 billion The company raised its quarterly dividend by 5% to 23 cents a share and increased its share buyback by $90 billion. Apple fell after warning that China's Covid resurgence could cut sales this quarter by as much as $8 billion.
Shares of Facebook-parent Meta Platforms soared, even though the social media giant turned in a mixed first-quarter earnings report and its outlook fell short. Facebook stock made a double-digit surge as Wall Street was encouraged by what the company had to say. Revenue fell short but earnings beat. One surprise in the earnings report was a $3 billion decrease in total expenses for the year, to a range of $87 billion to $92 billion.
Twitter Accepts Musk Buyout
Twitter agreed to be taken private by Tesla CEO Elon Musk for $54.20 a share cash, which values the company at $44 billion. Musk is getting a lot of financing for the deal, much of which is directly backed by Tesla shares. Later, Twitter reported Q1 revenue that fell short of views, while daily active users climbed 16%. Shares rose slightly for the week, but were still noticeably below the takeover price. Tesla stock sold off, with Musk disclosing late in the week that he sold 9.6 million shares on Tuesday through Thursday.
Microsoft Gets Cloud Business Boost
Microsoft beat fiscal Q3 forecasts on strong cloud computing business. EPS grew 14% while sales climbed 18% to $49.4 billion in the quarter ended March 31. Microsoft Cloud revenue rose 32% to $23.4 billion, driven by accelerating Azure sales growth. Microsoft sales guidance matched consensus estimates.
Google Misses On YouTube
Google-parent Alphabet reported Q1 earnings fell 6% to $24.62 per share, including a loss of $1.07 billion on equity investments that reduced EPS by 99 cents. Gross revenue rose 23% to $68.01 billion. Analysts had expected EPS of $25.74 on revenue of $68.05 billion. YouTube ad revenue rose 14% to $6.87 billion, missing estimates of $7.21 billion. Cloud-computing revenue rose 44% to $5.82 billion, slightly topping. Alphabet announced a $70 billion buyback, but GOOGL stock still fell.
Drugmakers Top EPS Views
On Thursday, Merck, Eli Lilly and Sanofi beat analysts' expectations. Merck's EPS jumped 84%, Lilly's 63% while Sanofi's edged higher. On Friday, AbbVie, Bristol Myers Squibb, AstraZeneca and Novo Nordisk beat EPS views. But AbbVie missed on sales and guided lower, while Bristol also cut guidance. Novo raised EPS guidance. Merck and Lilly flashed buy signals, while AbbVie broke below key support after a strong prior run.
Oil Giants' Earnings Mixed
Exxon Mobil and Chevron reported booming EPS growth that fell short of views while revenue topped estimates. Exxon earnings per share jumped 218%, excluding costs related to a planned exit from the Russia Sakhalin-1 project, as revenue rose 53% to $90.5 billion. Exxon increased its stock buyback program from $10 billion to as much as $30 billion through 2023. Meanwhile, Chevron earnings shot up 261% as revenue leapt 70% to $54.37 billion. CVX and XOM stock fell on Friday but gained for the week as crude oil prices advanced.
Defense Firms Top EPS Views
A slew of defense stocks topped earnings views with the Russia-Ukraine war poised to lift global military spending further in the short and long term. Northrop Grumman earnings fell 7% while revenue declined 4%. General Dynamics earnings rose 5% on a modest revenue gain. Raytheon Technologies earnings rose 28% while revenue advanced 3%. L3Harris Technologies reported a 2% EPS drop and 5% sales slide. General Dynamics topped on revenue while Northrop, Raytheon and L3Harris missed. Raytheon also cut its revenue outlook. Several defense stocks sit near buy points from short bases on top of longer consolidations.
Boeing, GE Dive
Boeing and General Electric sold off after reporting earnings for the first quarter. Boeing disclosed a widened loss of $2.75 a share while revenue fell 8% vs. expectations for a 5% gain. The embattled plane maker is delaying deliveries of its latest 777X passenger jet by a year to 2025 amid certification issues. GE beat on both the top and bottom lines but guided low. The jet-engine maker cited ongoing inflation and supply disruptions as well as new headwinds from the Russia-Ukraine war and China's Covid lockdowns.
Qualcomm Leads Chip Stocks
Wireless-chip leader Qualcomm surged higher after posting a beat-and-raise report for the March quarter. Other chipmakers getting a lift from positive earnings reports included MaxLinear, Silicon Labs and United Microelectronics. Meanwhile, Intel and Texas Instruments beat their quarterly targets but disappointed with their guidance for the current period.
Ford, GM Reaffirm 2022 Outlooks
General Motors and Ford both affirmed outlooks for earnings and vehicle volumes, citing improvements in chip supplies. GM posted a far less than feared 7% EPS decline for the first quarter. Revenue rose 11% but missed views. GM modestly hiked 2022 EPS guidance and expects to grow volumes 25%-30%. Ford posted a 46% EPS decline on a 5% revenue drop, in line with estimates. Ford affirmed 2022 guidance for a 15%-25% EBIT increase with volumes up 10%-15%. Both auto giants continue to ramp up electric vehicles. Ford launched the F-150 Lightning. GM's Cadillac Lyriq should arrive in May.
Fast Food Beats Inflation
Burger chain McDonald's and fast-casual chain Chipotle Mexican Grill reported first-quarter results that beat expectations, helped by menu-price hikes made amid rising supply costs and wages. Both companies said they saw little resistance to higher order prices. But McDonald's noted that its lower-income consumers were likely feeling more pressure. Domino's Pizza, meanwhile, missed expectations, as thin staffing, particularly among delivery drivers, weighed on service. McDonald's stock neared a buy point while Chipotle rose and Domino's fell.
Visa, Mastercard Beat
Visa, Mastercard and Capital One Financial reported quarterly results that beat expectations, while Discover Financial results were mixed. Visa has seen "no noticeable impact" on transaction volumes from inflation, Russia's Ukraine invasion or supply-chain snags. It noted a rebound in travel and restaurant spending and purchases from affluent customers. Mastercard also said it was "off to a strong start in 2022." Mastercard and Visa stock jumped, Discover rose while Capital One fell.
Caterpillar Profit Unexpectedly Rises
Caterpillar easily beat muted earnings expectations amid strong demand for its construction, mining, power and transportation equipment. But EPS rose less than 1% vs. a year earlier amid high commodity and labor costs. Caterpillar expects more of the same in Q2, before margins improve in the second half of the year. CAT stock fell Thursday, but cut losses to reclaim its 50-day line. Meanwhile, United Rentals rose after posting EPS growth of 66%. Supply-chain problems haunting the likes of Caterpillar partly explain why demand for URI gear is so strong.
Medical Device Makers Mixed
Edwards Lifesciences reported EPS rose 11%, beating the consensus but not the most-bullish forecasts. Sales grew 10% to $1.34 billion. Dexcom posted a tiny, unexpected EPS decline while sales topped views with a 25% gain. Stryker reported a clean beat with sales growing 8% and EPS up 2%. All three stocks fell for the week.
News In Brief
PayPal reported Q1 EPS fell 28%, in line with lowered expectations. Revenue rose 7% to $6.5 billion, topping estimates. PayPal forecast 2022 revenue growth in a range of 11% to 13% vs. earlier guidance of 15% to 17% growth.
Check Point Software reported Q1 EPS rose 2%, with revenue up 7% to $542.7 million, both narrowly topping. But billings climbed 4% to $502 million, well below estimates.
Juniper Networks said Q1 EPS rose 3% to 31 cents, missing estimates by a penny, while revenue climbed 9% to $1.17 billion, topping estimates of $1.16 billion. Shares fell sharply.
UPS topped first-quarter expectations. The parcel-delivery giant stuck with its full-year revenue target. Shares rose slightly.
KBR reported Q1 EPS rose 29%, just beating, but the third straight quarter of slowing growth. Sales slightly missed. The heavy construction firm raised full-year guidance, but shares fell.
Wyndham Hotels & Resorts reported Q1 EPS surged 162% with revenue up 27%. Wyndham stock rose toward a buy point.
Coca-Cola and PepsiCo topped first-quarter expectations, as price hikes offset higher costs. KO stock rose slightly for a seventh straight week. Pepsi moved back above a buy point.
