US FINANCIAL MARKET

U.S. Stocks Slide After Amazon Posts Quarterly Loss – Wall Street Journal, 4/28/2022

• A tumble in shares of Amazon.com and other technology stocks helped push the S&P 500 lower Friday and toward its worst month since March 2020.
• The S&P 500 fell 1% shortly after the opening bell. The Dow Jones Industrial Average declined 142 points, or 0.4% and the technology-focused Nasdaq Composite dropped around 1%.
• Amazon shares fell 12% in morning trading, on track for the biggest one-day drop since at least 2014.
• Moves in large technology companies can have outsize impacts on major stock indexes due to their higher weighting relative to other stocks.
• Apple cautioned Thursday that the resurgence of Covid-19 in China threatens to hinder sales by as much as $8 billion in the current quarter. Shares were up around 0.2% in recent trading.
• Shares of Tesla added 4.2% after Chief Executive Elon Musk disclosed that he recently sold about $4 billion worth of shares in the electric-car maker to fund his takeover of Twitter but said that no further sales are planned.
• The Fed’s preferred measure of inflation, the personal-consumption-expenditures index measure of core inflation, which excludes volatile food and energy costs, rose 5.2% in March from one year earlier.
• U.S. consumer spending for March increased 1.1% from the prior month.
• In bond markets, the yield on the benchmark 10-year Treasury note rose to 2.908% Friday from 2.862% Thursday. Yields rise when prices fall.
• Brent crude, the international benchmark for oil, added 1.3% to $108.71 a barrel in recent trading.
• Moscow’s cutting off of gas supplies to some nations has worried traders of further disruptions as European countries try to move away from Russian energy.
• Overseas, the pan-continental Stoxx Europe 600 added 1%.
• In Asia, Alibaba and other Chinese technology stocks jumped by double-digit percentages on investor hopes that China’s government would do more to support the sector and the wider economy.
• The surge helped Chinese shares recoup some of their recent losses, while the yuan also clawed back some ground against the dollar after selling off sharply in recent sessions.
• Hong Kong’s Hang Seng Index gained 4%, while the Hang Seng Tech Index surged 10%, with shares in tech companies such as Alibaba, Tencent, JD.com and Meituan all rising more than 10%.
• In mainland China, the CSI 300 and Shanghai Composite indexes both rose about 2.4%.

Apple Says Covid-19 Lockdowns in China Loom Over Sales – Wall Street Journal, 4/28/2022

• Apple cautioned Thursday that the resurgence of Covid-19 in China threatens to hinder sales by as much as $8 billion in the current quarter—a setback after seeing supply-chain improvements during the first three months of the year.
• Apple’s revenue for the recent period rose 9% to $97.3 billion, far exceeding analyst expectations for $94 billion.
• Sales of the iPhone rose 5% to $50.6 billion in the past quarter compared with a year earlier. Analysts had expected 1% growth.
• Sales of the iPad dropped 2.1% to $7.6 billion.
• Mac computer sales rose 15% to $10.4 billion, far exceeding analysts expectations for flat results.
• The so-called services segment, which includes iTunes and the App Store, grew 17% to $19.8 billion in the three months through March. Analysts had expected 17% growth.
• Earnings per share rose to $1.52 from $1.40 a year earlier—beating estimates for $1.42 a share and setting a record for Apple’s fiscal second quarter.
• “Supply constraints caused by Covid-related disruptions and industrywide silicon shortages are impacting our ability to meet customer demand for our products,” Luca Maestri, Apple’s chief financial officer, said during a public conference call.
• Mr. Maestri said the constraints will hurt revenue by $4 billion to $8 billion in the three months through June.
• The lockdowns are also expected to damp demand in China.

Amazon Posts First Quarterly Loss Since 2015 as Costs, Rivian Stake Weigh on Results – Wall Street Journal, 4/28/2022

• Amazon.com posted its first quarterly loss in seven years, a result that reflected broad economic trends related to a slump in online shopping, higher costs from inflation and supply-chain woes and market jitters over electric vehicle startups.
• Revenue for the tech giant rose by about 7% for the January-to-March period, the slowest pace in about two decades as consumers returned to pre-pandemic habits and spent more money in person at stores.
• One bright spot continued to be the company’s cloud business, Amazon Web Services, where sales rose about 37% in the first quarter to $18.4 billion.
• Advertising services revenue grew 25% in the latest quarter, excluding currency impact—still fast but well below the 33% clip in the fourth quarter of 2021 and 76% in the first three months of last year.
• It lost $3.8 billion in the quarter, compared with a profit of $8.1 billion a year ago, when a surge in online orders due to the pandemic lifted Amazon’s prospects.
• Results were also hit by its stake in electric vehicle maker Rivian Automotive, which has seen its stock plunge by more than 65% this year. Amazon has a roughly 18% stake in the company and had a pretax loss of $7.6 billion due to its holdings.
• Amazon signaled more uncertainty is on the way, it said it expects its operating income for the current quarter to be between a loss of $1 billion and profit of $3 billion.

Exxon earnings hurt by Russia exit, triples buybacks on high oil prices – Reuters, 4/29/2022

• Exxon Mobil doubled its first-quarter per-share profit, it said on Friday, but the results fell short of Wall Street estimates, even excluding a $3.4 billion write-down from its withdrawal from Russia.
• The company’s adjusted earnings per share came to $2.07, short of the Refinitiv consensus for $2.12 a share, while revenue came in at $90.5 billion, below the $92.7 billion consensus.
• Notably, the company’s refining division posted much weaker results from the previous quarter, with earnings of $332 million, compared with $1.5 billion in the fourth quarter.
• The company said the sharp rise in prices ended up costing $1.3 billion of “negative timing impacts,” including $760 million in mark-to-market effects on open derivatives positions.
• Exxon’s output of crude and other liquids including bitumen and synthetic oil was 2.3 million barrels per day, a 5% drop from the previous quarter. Natural gas production fell by 1.5%.
• Exxon reported net income of $5.48 billion, or $1.28 per share, in the three months ended March 31, compared with $2.73 billion, or 64 cents per share, last year.
• The results included a $3.4 billion after-tax hit on the oil major’s Russia Sakhalin-1 operation, which it said it would exit on March 1, shortly after Moscow’s invasion of Ukraine on Feb. 24.
• The top U.S. oil producer tripled the size of its buyback program, similar to other energy giants like TotalEnergies that are sending more cash back to shareholders.
• Exxon said it will repurchase up to $30 billion in shares by the end of next year, compared with its earlier estimates for $10 billion in repurchases.

Chevron’s profit nearly quadruples, Wall Street underwhelmed – Reuters, 4/29/2022

• Chevron’s first-quarter profit leapt from the same period a year ago to its highest in 10 years, benefiting from the surge in oil and gas prices in the aftermath of Russia’s invasion of Ukraine.
• Chevron’s revenue rose 70% to $54.4 billion in the first quarter, above the Refinitiv consensus of $47.9 billion.
• The company’s U.S. oil and gas production rose by 10% from the year-ago period.
• In the first quarter, Chevron pumped a record 692,000 barrels of oil and gas per day (boed) in the Permian, the top U.S. unconventional basin, and boosted full-year guidance to a range of 700,000 to 750,000 boed.
• The second-largest U.S. oil producer on Friday posted adjusted earnings of $6.5 billion or $3.36 per share, from $1.7 billion, or 90 cents per share, in the same quarter last year.
• Nevertheless, the result fell short of the $3.47 SmartEstimate figure from top-performing analysts on Wall Street according to Refinitiv, but was above the Refinitiv average estimate of $3.27 per share.
• The revenues from higher oil prices could be used to return cash to shareholders, expand Chevron’s low-carbon business and pay down debt, Chief Financial Officer Pierre Breber told Reuters.

Phillips 66 beats profit estimates, to resume share buybacks – Reuters, 4/29/2022

• U.S. refiner Phillips 66 on Friday promised to resume share buybacks in the current quarter, after posting a quarterly profit that surpassed Wall Street expectations as demand for fuel and refined products hovered near pre-pandemic levels.
• Phillips’ overall product supplied, a proxy for demand, rose to 21.1 million barrels per day in the third week of March and was near pre-pandemic levels.
• The Houston-based company said its first-quarter realized refining margins more than doubled to $10.55 per barrel, while total processed inputs worldwide rose 7.7% to 1.9 million barrels of oil per day.
• The company said net income was $582 million, or $1.29 per share, for the quarter ended March 31, compared with a loss of $654 million, or $1.49 per share, a year earlier.
• “We believe current market conditions will allow us to increase shareholder returns by restarting share repurchases and increasing the dividend,” Phillips Chief Executive Officer Greg Garland said.

Intel CEO Sees Chip Shortage Lasting Into 2024 – Wall Street Journal, 4/28/2022

• Intel Chief Executive Pat Gelsinger said the chip shortage will last longer than expected as the semiconductor giant reported a decrease in quarterly sales amid a slowdown in PC purchasing.
• Intel on Thursday said first-quarter sales declined almost 7% to $18.35 billion, missing Wall Street expectations.
• Intel generated net income of $8.1 billion.
• The division that handles chips for PCs saw sales falling 13% to $9.3 billion. Mr. Gelsinger said the slowdown was caused mainly by sagging consumer demand for lower-end PCs, while corporate demand for computers remained strong.
• Intel provided the first detailed quarterly earnings report on its new contract chip-making venture.
• Sales for those activities came in at $283 million from what would have been $103 million in the year-ago period.
• The business lost $31 million at an operating level in the most recent quarter.
• Mr. Gelsinger said the global chip shortage he had previously forecast would stretch into 2023 is now likely to last even longer as chip-makers struggle to buy enough manufacturing equipment and increase production to meet demand.
• “We believe the shortage will last into 2024 now,” he said. “In part that’s a supply statement because we have seen that equipment shortages are really impinging the ability of the industry overall to ramp supply at the pace we earlier thought.”

Robinhood Reports 43% Revenue Decline – Wall Street Journal, 4/28/2022

• Robinhood Markets’ revenue fell to $299 million in the first quarter, a decline of 43% from the same period last year and the company’s fifth consecutive quarterly drop.
• Robinhood’s monthly active user count fell 10% to 15.9 million in March, from 17.7 million in the same month of 2021.
• When there are fewer customer orders, the brokerage makes less.
• Robinhood’s transaction-based revenues fell by almost half to $218 million from $420 million.
• In the second quarter of 2021, Robinhood said crypto trading totaled $233 million, more than half its transaction revenue.
• However, in the latest quarter that figure fell to $54 million.
• The company narrowed its loss to $392 million from a $1.4 billion loss in the same period last year. Its stock fell 10% in aftermarket trading Thursday.

U.S. Steel stock up 3% after Q1 earnings beat views – MarketWatch, 4/29/2022

• Shares of U.S. Steel, rose nearly 3% in the extended session Thursday after the steel maker reported adjusted earnings above expectations and revenue that met estimates, saying that customers are noticing the importance of having a domestic steel source.
• Revenue rose to $5.2 billion from $3.7 billion a year ago.
• U.S. Steel said it earned $882 million, or $3.02 a share, in the quarter, compared with $91 million, or $1.08 a share, in the year-ago quarter.
• Analysts polled by FactSet expected U.S. Steel to report earnings of $3.02 a share on sales of $5.2 billion.
• “Today’s geopolitical uncertainty and elevated raw material cost environment reinforces to customers the importance of steel that is mined, melted and made in the USA,” the company said. “Our iron ore mines are a unique competitive advantage that cannot be easily replicated by other competitors.”

AbbVie misses sales estimates on Humira weakness, shares fall – Reuters, 4/29/2022

• AbbVie missed Wall Street estimates for first-quarter sales, hurt by European competition for its blockbuster drug Humira and lower demand for its newer drug Rinvoq, sending shares of the company down 7% on Friday.
• Net revenues of $13.54 billion missed Refinitiv IBES estimates of $13.61 billion.
• Sales of the rheumatoid arthritis drug, Humira, fell 2.7% to $4.74 billion in the first quarter, below estimates of $4.91 billion, as it faces competition from cheaper biosimilar copies in Europe.
• Sales of Rinvoq, one of the drugs AbbVie has been betting on to drive growth post 2023, missed estimates in the quarter as the U.S. health regulator issued narrower guidelines in December.
• Rinvoq brought in sales of $465 million, below estimates of $500.6 million.
• However, plaque psoriasis drug Skyrizi brought in sales of $940 million, beating estimates by nearly $24 million.
• Botox sales in cosmetic applications rose 34.4% to $641 million, breezing past estimates of $569.88 million.
• AbbVie lowered its adjusted earnings per share forecast to between $13.92 and $14.12, from earlier estimates of $14.00 to $14.20, citing the impact of those expenses.

Bristol Myers first-quarter sales up on Eliquis, Opdivo – Reuters, 4/29/2022

• Drugmaker Bristol Myers Squibb posted slightly better-than-expected first-quarter earnings on Friday on growth of sales of its blood thinner Eliquis and cancer drug Opdivo, but said it no longer expects sales growth in 2022 due to stiff generic competition overseas for blood cancer drug Revlimid.
• Revenue in the quarter rose 5% from last year, to $11.65 billion. Analysts had forecast $11.4 billion in revenue, according to Refinitiv IBES data.
• The first-quarter dropoff in sales of Revlimid, which lost some patent protection this year, was not as sharp as expected. Sales of the drug were around $2.8 billion, compared with analyst forecasts of $2.53 billion.
• Sales of Eliquis rose 11% to $3.21 billion and sales of Opdivo rose 12% to $1.92 billion in the quarter.
• Earnings in the quarter were $1.28 billion, or 59 cents a share, down from $2.02 billion, or 89 cents a share, last year. Excluding one-time items, the company said it earned $1.96 a share, topping analyst forecasts of $1.91 a share.
• Still, Bristol Myers cut its full-year sales forecast for Revlimid by $500 million, to $9 billion to $9.5 billion. Sales of the drug were around $12.8 billion in 2021.
• Bristol said it lowered its full-year forecast by 21 cents, to between $7.44 and $7.74 a share, to reflect those expenses.

Roku Shares Open Higher After 28% Jump in 1Q Sales – MarketWatch, 4/29/2022

• Shares of Roku were up 5.6% in early trading Friday after the streaming company posted first-quarter revenue that beat analyst expectations and increased 28% from last year.
• Total revenue for the latest quarter was $733.7 million, up from $574.2 million in the same period a year ago and clearing the $718 million forecast from analysts polled by FactSet.
• Revenue from advertisers and content publishers rose 39% to $646.9 million.
• The San Jose, Calif.-based company said active accounts for the quarter that ended March 31 reached 61.3 million, half a million accounts shy of analyst forecasts, according to FactSet.
• The company also posted a net loss of $26.3 million, or 19 cents a share, which aligned with analyst expectations.

Honeywell Stock Jumps on Solid Earnings. The Company Raised Guidance, Too. – Barron’s, 4/29/2022

• Industrial conglomerate Honeywell International reported first-quarter numbers that beat Wall Street estimates. Full-year earnings guidance also was raised and the stock moved higher.
• Honeywell reported adjusted earnings per share of $1.91 from $8.4 billion in sales. Analysts were looking for EPS of $1.86 from $8.3 billion in sales.
• Aerospace and building technology sales were up 5% and 8%, respectively, year over year on a comparable basis.
• Sales in the company’s safety and productivity solutions business fell 15% partly because of less sales of personal protective equipment such as masks.
• Earnings guidance for 2022 was increased by 10 cents a share. Coming into the quarter, Honeywell expected to earn between $8.40 and $8.70 a share from about $35.9 billion in sales this year.
• Now Honeywell expects EPS to land between $8.50 and $8.80 a share.
• Sales guidance was unchanged.
• For the second quarter, Honeywell expects to earn about $2.03 a share.
• Analysts are currently projecting $2.04.

The Permian Basin Oil Field Is Running Out of Workers, Materials—and Cash – Wall Street Journal, 4/28/2022

• In the Permian Basin, the sprawling oil-rich region in West Texas and southeastern New Mexico, drillers are facing long delays and steep competition for everything from roughnecks to steel to fracking pumps.
• Unlike the last time oil fetched about $100 a barrel, the vast service industry of steel suppliers, drilling-rig operators and fracking companies that develop shale producers’ wells is coming into the current price cycle malnourished.
• Service companies mothballed large fleets of equipment during the pandemic and investors remain wary of the industry, leaving companies short of capital and reluctant to invest in new fracking fleets and drilling rigs.
• The bottlenecks have forced some shale producers to pause operations for days, weeks or even months while they wait for steel casing, for which there is currently far less inventory than usual in the Permian, or to replace workers, many of whom haven’t returned to the industry since the pandemic.
• In some cases, entire crews have left projects before completion in search of bigger paychecks, executives said.

Elon Musk Sells $8.5 Billion of Tesla Shares After Deal to Buy Twitter – Wall Street Journal, 4/29/2022

• Elon Musk sold roughly $8.5 billion worth of Tesla stock in the three days after agreeing to buy Twitter for $44 billion, according to regulatory filings.
• The Tesla chief executive reported selling a total of more than 9.6 million shares Tuesday through Thursday, at prices between around $820 and $1,000 a share, the filings show.
• That left him with around 163 million shares in the electric-vehicle maker, regulatory filings show, or nearly 16% of the company.
• Mr. Musk is Tesla’s largest shareholder and owned around 17% of the company before this week’s sales, according to FactSet.

Aluminum Orders Stall as U.S. Buyers Fear Looming Recession – Bloomberg, 4/29/2022

• Aluminum buyers in the U.S. are holding off inking new orders over fears that rising inflation and crumbling supply chains may spark a recession.
• Spot deals have taken a breather in recent weeks as Russia’s invasion of Ukraine added increased uncertainty in a market already facing long wait times and weakening demand, according to several people who trade the lightweight industrial metal.
• Buyers continue taking delivery of their contracted metal, but recent economic gauges have people worried enough to hold off purchasing extra for their shipments.
• A major driver of the slowdown is ongoing semiconductor shortages in the automotive industry, which is preventing carmakers from hitting full capacity.
• The auto industry accounts for 31% of U.S. aluminum needs, according to data from the Aluminum Association industry group.
• The cost to ship aluminum to the U.S. Midwest dropped in the last two weeks, indicating quoting activity has slowed.

Ford to halt production next week at Flat Rock plant on chips shortage – Reuters, 4/29/2022

• Ford Motor confirmed late on Thursday it will halt production next week at its Flat Rock plant where it assembles the Mustang because of a shortage of semiconductor chips.
• The No. 2 U.S. automaker had previously said it had planned to idle the plant for two days this week. Automotive News reported the production cuts earlier.
• Ford said on Wednesday it had built about 53,000 vehicles but not shipped them as they awaited final parts held up by the chips shortage.

Tesla recalls 48,000 U.S. vehicles over speed display – Reuters, 4/29/2022

• Tesla is recalling about 48,000 Model 3 Performance vehicles in the United States because they may not display the speedometer while in “Track Mode,” documents released Friday show.
• The recall covers vehicles from the 2018 through 2022 model years. Tesla will perform an over-the-air software update to address the issue. Tesla said a firmware update released in December unintentionally removed the speed unit from the user interface.
• The National Highway Traffic Safety Administration said the vehicles do not comply with a federal motor vehicle safety standard and if drivers do not know how fast they are traveling it could increase the risk of a crash.

Tesla recalls another batch of Model 3 cars in China, the second in April – Reuters, 4/29/2022

• Tesla is recalling 14,684 imported and locally made Model 3 cars in China on problems with software that could lead to collisions, the country’s market regulator said, the second batch of recalls for the U.S. car maker in April.
• Tesla will recall the Model 3 Performance cars manufactured between January 2019 to March 2022, including 1,850 cars that were imported and 12,834 made in China, according to a statement on Friday from the State Administration for Market Regulation.
• The regulator said earlier in April that the electric vehicle maker would recall 127,785 units of Model 3 cars for potential faults in semiconductor components that might lead to collisions.

U.S. solar industry warns of slowdown due to supply chain disruptions, tariff uncertainty – Reuters, 4/29/2022

• The U.S. solar industry is warning of a big slowdown in project installations this year as global supply chain disruptions and the threat of new U.S. tariffs on panel imports from Southeast Asia hit home.
• U.S. power company Southern on Thursday said nearly a gigawatt of its planned solar energy projects would be delayed by a year, the latest in a string of warnings from companies and industry representatives citing the two issues.
• The delay to November 2024 applies to five planned solar facilities in Georgia that add up to 970 megawatts of capacity, according to a regulatory document. That’s enough capacity to power 184,000 homes.