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Daily Market Report | April 21, 2022

US FINANCIAL MARKET

Tech Stocks Open Higher After Record Tesla Profit – Wall Street Journal, 4/21/2022

  • Stocks rose in early trading as Tesla shares jumped and investors awaited comments from Federal Reserve Chairman Jerome Powell on the world economy.
  • Tesla reported $3.3 billion in quarterly profits late Wednesday, its highest profit to date.
  • AT&T shares added 1.9% after its quarterly profit beat analysts’ forecasts.
  • American Airlines shares rose 8.3% after the carrier reported that revenue more than doubled in the first quarter.
  • United Airlines, which also benefited from a surge in post-lockdown travel, rose 8.9%.
  • Blackstone shares added 5.2% in premarket trading after the investment firm said assets under management rose to $915.5 billion, up from $880.9 billion in the prior quarter.
  • Netflix fell a further 1%, extending the 35% drop from Wednesday.
  • Equifax lost 4.9% after analysts at RBC Capital Markets cut their target price for stock.
  • On the economic front, data showed that new claims for unemployment benefits fell to 184,000 in the week through April 16, from 186,000 the previous week.
  • Yields on benchmark 10-year Treasury notes ticked up to 2.88%, from 2.836% Wednesday, when they approached 3% before pulling back.
  • The yield on two-year notes, which are particularly sensitive to expectations of where the Fed will set rates, ticked up to 2.645% from 2.577%.
  • Brent-crude futures, the international energy benchmark, gained 1.6% to $108.47 a barrel.

Tesla Stock Price Jumps After Record Earnings Report – Wall Street Journal, 4/21/2022

  • Tesla late Wednesday reported a record profit of $3.3 billion for the first three months of the year and signaled that vehicle production would keep growing despite shutdowns in China.
  • Elon Musk said the company likely would produce more than 1.5 million vehicles in 2022, up 60% over last year.
  • Tesla delivered around 310,000 vehicles globally in the first quarter, up from 184,877 a year earlier.
  • The stock charged higher when a collapse in interest rates pushed investors into more speculative corners of financial markets during the pandemic.
  • Mr. Musk has again used Twitter to unusual effect in recent days, sending cryptic tweets that hinted at the prospect of a tender offer to buy the social-media company.
  • Twitter is expected to rebuff his existing $43 billion bid, which came after Mr. Musk built a big stake in the company and criticized its moderation policies.

American Forecasts Second-Quarter Profit on Soaring Travel Demand, Stock Surges 11%– CNBC, 4/21/2022

  • American Airlines, the country’s largest airline, said March was the first month since the pandemic began that its revenue surpassed 2019 levels and said bookings have continued to rise.
  • The carrier forecast second-quarter sales as much as 8% higher than the same period three years ago even though it plans to fly between 6% and 8% less than its 2019 schedule.
  • That’s still more than competitors Delta Air Lines and United Airlines, which have been more conservative about restoring capacity throughout the pandemic.
  • American forecast business-travel revenue will be 90% recovered to 2019 levels in the second quarter, led by small- and midsize companies.
  • Adjusted loss per share of $2.32 versus an expected $2.40.
  • Total revenue of $8.9 billion versus expected $8.826 billion.
  • American posted a net loss of $1.6 billion in the first quarter on revenue of nearly $8.9 billion, more than double its $4 billion in sales a year ago and ahead of analyst estimates.
  • Sales were down 16% compared with the same quarter of 2019.
  • The Fort Worth, Texas-based airline said it paid $2.80 a gallon for fuel in the first quarter, up 65% from last year.

Alaska Air Group 1Q Loss Widens; Revenue Beats Views – MarketWatch, 4/21/2022

  • Alaska Air on Thursday reported that its net loss widened in the first quarter, though revenue rose, beating analyst expectations.
  • The SeaTac, Wash.-based airline holding company said net loss was $143 million, compared with a loss of $131 million a year earlier.
  • Its per-share net loss was $1.14, compared with a loss of $1.05 a share.
  • Its adjusted loss was $1.33 a share, beating analyst expectations of a loss of $1.59 a share, according to FactSet.
  • The company said revenue rose to $1.68 billion from $797 million, above analyst expectations of $1.66 billion.
  • “March results were particularly strong, marked by our highest cash sales month in history and revenues that exceeded 2019 levels for the first time since the pandemic began,” Chief Executive Ben Minicucci said.

AT&T posts 2.5% rise in quarterly core wireless revenue – CNBC, 4/21/2022

  • AT&T on Thursday posted a 2.5% rise in core wireless revenue for the first quarter, as the telecom giant benefited from the aggressive expansion of its fiber internet and 5G services.
  • The company’s core revenue, which includes contributions from its wireless business, rose to $29.7 billion in the first quarter from $29 billion a year earlier.
  • Overall revenue, however, was down more than 13%, reflecting the impact of its divested satellite TV business and weakness in its business wireline unit.
  • The Dallas, Texas-based firm – whose WarnerMedia unit completed its merger with Discovery earlier this month to form the new media firm Warner Bros. Discovery – added 691,000 monthly phone bill paying subscribers during the quarter.
  • The company reported that HBO and HBO Max, now part of Warner Bros. Discovery, have a total of 76.8 million subscribers worldwide, up 3 million last quarter.
  • In the U.S., HBO and HBO Max have 48.6 million customers.
  • Analysts expected domestic subscribers to be 48.8 million. The average U.S. HBO monthly bill was $11.24.
  • Net income attributable to common stock fell to $4.8 billion, or 65 cents per share, from $7.5 billion, or $1.02 per share a year earlier.

Blackstone Distributable Earnings Beat Target, Shares Rise – MarketWatch, 4/21/2022

  • Blackstone shares rose 6% in premarket trades Thursday after the investment firm said its first-quarter profit fell to $1.22 billion, or $1.66 a share, from $1.75 billion, or $2.46 a share, in the year-ago quarter.
  • Revenue fell to $5.13 billion from $5.3 billion.
  • First-quarter distributable earnings rose to $1.94 billion, or $1.55 a share, from $1.19 billion, or 96 cents a share in the year-ago quarter.
  • Distributable earnings revenue rose 71% to $3.5 billion from $2 billion.
  • Blackstone beat the Wall Street estimate for distributable earnings of $1.06 a share and distributable earnings revenue of $2.9 billion, according to a FactSet report.
  • Total assets under management increased by 41% to $915.5 billion, while fee-related assets under management also climbed 41% to $677.9 billion.

Danaher Posts Higher 1Q Sales, Profit – MarketWatch, 4/21/2022

  • Danaher logged greater sales and earnings in the first quarter, despite a slowdown in Covid-19-related testing sales.
  • The medical and diagnostics company posted a profit of $1.73 billion for the three months ended April 1, compared with $1.70 billion a year earlier.
  • Earnings were $2.31 a share, compared with $2.29 a share.
  • Stripping out one-time items, the company posted earnings of $2.76 a share.
  • Analysts were forecasting adjusted earnings of $2.67 a share, according to FactSet.
  • Danaher’s sales were $7.69 billion, up from $6.86 in the year-ago quarter. Analysts had anticipated revenue of $7.55 billion.
  • Covid-19-related testing sales held back sales growth for the quarter by 4%, the company said. Excluding that effect, base business core sales grew by 8% for the quarter.

Activision Blizzard Names Two Women to Its Board – Wall Street Journal, 4/21/2022

  • Activision Blizzard said it is moving to add two women to its board of directors, months after allegations of workplace discrimination and a toxic culture at the videogame company led to lawsuits and federal investigations.
  • The company said it has elected Lulu Cheng Meservey, a communications executive at newsletter platform Substack, to the board and plans to nominate Bacardi Ltd. executive Kerry Carr to the board at the company’s 2022 annual meeting.
  • Current board members Hendrik J. Hartong III and Casey Wasserman won’t stand for re-election, the company said.
  • “Lulu and Kerry will add important skills and experience as we continue to focus on building an exemplary workplace to make great games,” Activision Chief Executive Bobby Kotick said.

US ECONOMY & POLITICS

Jobless Claims Slipped Lower Last Week Amid Tight Labor Market – Wall Street Journal, 4/21/2022

  • Initial jobless claims, a proxy for layoffs, decreased to 184,000 last week from 186,000 a week earlier, the Labor Department said Thursday.
  • Jobless claims have hovered around half-century lows since late 2021 as the labor market has continued to improve during the economic recovery.
  • The four-week average for claims, which smooths out volatility, nudged up to 177,250 from 172,750 a week earlier.
  • Continuing claims, a proxy for the total number of people receiving payments from state unemployment programs, declined to 1.42 million for the week ended April 9 from the previous week’s total of 1.48 million.
  • The unemployment rate fell to 3.6% last month, and is just above a half-century low touched before the pandemic.
  • Employers have added an average of nearly 600,000 jobs each month this year through March.
  • Average hourly earnings grew 5.6% in March from a year earlier. Still, that gain is less than the 8.5% increase in consumer prices over that time.

Biden Set to Unveil $1.3 Billion More in Arms and Economic Aid for Ukraine – Bloomberg, 4/21/2022

  • President Joe Biden said the U.S. is sending Ukraine another $1.3 billion in arms and economic aid, and that he’ll ask Congress to authorize further assistance as Russia steps up its attacks in the country’s east.
  • The money adds to $2.4 billion in U.S. aid already authorized for the fiscal year, much of it weaponry.
  • Of the new package, $800 million will go toward arms.
  • Biden also said no Russian-flagged ships would be allowed into U.S. ports, following a move by European countries.
  • Biden last week announced a package of aid that he said provided “new capabilities include artillery systems, artillery rounds, and armored personnel carriers,” as well as the transfer of additional helicopters.
  • Earlier Thursday, senior administration officials detailed plans to allow as many as 100,000 Ukrainians to come to the U.S. for two years, provided they have family or another sponsor in the country.

Mortgage Rates Continue to Rise – Wall Street Journal, 4/21/2022

  • The average rate for a 30-year fixed-rate mortgage rose to 5.11%, mortgage-finance giant Freddie Mac said Thursday.
  • The rate hit 5% last week for the first time since 2011, up from 3.22% at the beginning of 2022.
  • The Fed is expected to raise its benchmark rate again at its meeting early next month, and it has signaled that more increases are likely this year.
  • The combination of rising rates and record home prices has started to weigh on demand.
  • Sales of existing homes dropped 4.5% in March from a year earlier, according to the National Association of Realtors.
  • Purchase mortgage applications last week fell 3% from the prior week and 14% from a year earlier, according to the Mortgage Bankers Association.
  • The monthly payment on a $405,000 home with an interest rate of 5% is 38.1% higher than the payment on a similarly priced home would have been a year ago, according to Realtor.com data.

EUROPE & WORLD

Shoppers Shrug Off Higher Prices, Boosting Nestlé’s Sales – Wall Street Journal, 4/21/2022

  • Nestlé said consumers continued to snap up Nescafe coffee and Purina pet food, even as the packaged-food giant raised prices again to offset rampant cost inflation.
  • On Thursday, Nestlé reported first-quarter results showing shoppers so far haven’t been deterred by its efforts to offset those cost increases.
  • The Swiss company said sales on an organic basis, which strips out currency changes and the impact of mergers and acquisitions, climbed 7.6% in the first three months of the year.
  • Overall, reported sales rose 5.4% to 22.2 billion Swiss francs, equivalent to about $23.4 billion.
  • Nestlé—which doesn’t give profit figures in the first quarter—said overall prices rose 5.2%, while volumes climbed 2.4%.
  • Price growth was highest in North America, up 8.5%, where volumes rose 1.4%.
  • Nestlé said in North America, its professional business and its Starbucks out-of-home products—both of which supply places like offices and hotels—reported double-digit sales growth.
  • In Europe, Nestlé’s said growth in its coffee division, which includes Nescafe instant coffee and Nespresso pods, was roughly flat, following strong growth a year earlier as more people stayed at home.
  • Overall, sales in Europe rose 6.9%, as prices grew by 4.1%.
  • Nestlé’s Greater China region was a relative outlier, with prices declining 0.5% as its high-margin infant-nutrition business reported a drop in sales.

Toshiba Puts Itself Up for Auction, Bowing to Shareholder Pressure – Wall Street Journal, 4/21/2022

  • Toshiba on Thursday put itself up for auction after pressure from foreign shareholders and said it would solicit bids from investors including those who want to take the company private.
  • The decision came a month after Toshiba’s shareholders rejected a plan to split the company into two.
  • In late March, U.S. private-equity firm Bain Capital said it was examining a possible bid for Toshiba. It declined to comment on Toshiba’s announcement Thursday.
  • Toshiba has struggled for the last seven years after an accounting scandal that emerged in 2015 and the 2017 bankruptcy of its U.S. nuclear-energy arm.
  • Toshiba outlined its timeline for the sale of the company, saying it would seek nonbinding proposals from bidders and finish an initial evaluation before its annual shareholder meeting in June.
  • Shareholders based outside Japan now control roughly half the company after injecting capital in 2017 to repair Toshiba’s finances.

Russia Says It Controls Mariupol, but Ukrainian Troops Hold Out in Steel Plant – Wall Street Journal, 4/21/2022

  • Russia said Thursday it had taken control of Mariupol, presenting it as one of its first victories in the conflict after weeks of setbacks, though Ukrainian forces were still blockaded inside a vast steel plant in the city and said they were continuing to launch attacks on Russian positions.
  • Russia has tightened its grip on Mariupol since the first weeks of the invasion, pushing out pockets of resistance in residential areas.
  • There were conflicting reports around how many Ukrainian troops remained at the plant, with Russia saying some 2,000 were there.
  • While Russian troops won’t be storming the plant, an operation that could take three to four days, they will still likely be engaging with Ukrainian troops who continue to fire on Russian positions.
  • Mr. Putin appealed to Ukrainian soldiers at the plant to lay down their weapons and said they would be dealt with according to international law.
  • Elsewhere in Ukraine, the Russian Defense Ministry said it had hit more than 1,000 military objects across the country overnight, including 58 command posts and 162 artillery positions.

India Plans to Penalize Companies, Mandate Recalls After EV Fires – minister – Reuters, 4/21/2022

  • India plans to impose heavy penalties and mandate recalls if electric vehicle (EV) companies are found to be negligent, as part of new “quality-centric” rules, the country’s transport minister said, after a spate of fires involving e-scooters.
  • In the meantime, companies may take advance action to recall all defective batches of vehicles immediately, Nitin Gadkari said on Twitter on Thursday, adding that the safety of every commuter is a priority for the government.
  • In recent weeks, there have been close to a dozen cases of e-scooters catching fire or being involved in them, including one made by SoftBank Group-backed Ola Electric, sparking safety concerns among some buyers.
  • Scooters involving Indian start-ups Okinawa and PureEV have also been involved in fire incidents, in what some say could be an early setback for a nascent sector that is key to Prime Minister Narendra Modi’s carbon reduction and climate goals.

Factmonster – TODAY in HISTORY

  • Texan army under Sam Houston defeated Mexicans in the Battle of San Jacinto. (1836)
  • Samuel Clemens (Mark Twain), author of the novel Huckleberry Finn, died at the age of 74. (1910)
  • Baron Manfred von Richthofen, the notorious World War I German flying ace known as the “Red Baron,” was killed in action today. (1918)
  • Brazil inaugurated its new capital, Brasilia. (1960)
  • Timothy McVeigh was arrested in connection with the Oklahoma City bombing. (1995)
  • The ashes of Timothy Leary, Gene Roddenberry, and 22 others blasted into space for the first space funerals. (1997)

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. Historical performance is no guarantee of future results. All indices are unmanaged and may not be invested into directly. All investing involves risk including loss of principal. No strategy assures success or protects against loss. Any economic forecasts set forth may not develop as predicted. All company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. Material presented is excerpts derived from third party content and you may need a subscription to access the full the content. The views and opinions expressed are those of the authors and do not necessarily reflect the views of Pence Wealth Management or LPL Financial. Prior to making any investment decision please consult your financial advisor regarding your specific situation.

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