US FINANCIAL MARKET

U.S. Stocks Turn Higher Ahead of Fed Meeting – Wall Street Journal, 5/3/2022

• U.S. stock indexes rose Tuesday morning as investors geared up for the Federal Reserve’s policy decision this week and evaluated a batch of earnings.
• The S&P 500 climbed 0.8%, sustaining the momentum from a late rally that lifted stocks on Monday, May’s first business day.
• The technology-focused Nasdaq Composite gained 0.3% while the Dow Jones Industrial Average was up 0.4%.
• Ten of the S&P’s 11 industry subsectors were in the green.
• Earnings season continues apace. Airbnb, Starbucks, Lyft and AIG are on the block after markets close.
• Earlier on Tuesday, the yield on 10-year Treasury notes topped 3% for a second straight day before slipping back to 2.917%, compared with 2.995% Monday.
• They have also dragged up government borrowing costs globally. The yield on 10-year German government bonds, the benchmark in Europe, surpassed 1% Tuesday for the first time since 2015, before slipping back to 0.935%.
• Rate-setting officials will gather Tuesday for a two-day policy meeting.
• At its conclusion Wednesday, the Fed is expected to raise interest rates by a half percentage point, the first such increase in 22 years and following on from a quarter-point rise in March.
• Overseas stock markets wavered. The Stoxx Europe 600 gained about 0.3%, led by shares of banks and oil-and-gas companies on a busy day for earnings in the region.
• BP shares rose 4.1% after the oil producer reported underlying profit of $6.2 billion, when stripping out a pretax accounting charge related to its decision to exit its Russia holdings.
• BNP Paribas posted a jump in earnings, sending shares of the French lender 4.8% higher.
• Mainland Chinese markets were closed for a public holiday. Hong Kong’s Hang Seng edged up 0.1%.

Pfizer Sales Soar on Covid-19 Vaccine Sales – Wall Street Journal, 5/3/2022

• Pfizer’s first-quarter sales soared 77%, helped by higher revenue from its Covid-19 vaccine and antiviral medication.
• The New York-based drug company logged $25.7 billion in sales in the first-quarter, driven by sales of its vaccine, Comirnaty, and Paxlovid, a pill aimed at reducing severe outcomes from the virus.
• Direct sales of Comirnaty grew to $13.2 billion while Paxlovid brought in another $1.5 billion, having launched in the U.S. last December and internationally in late 2021 and earlier this year.
• Excluding those two products, revenue increased by 2%. Sales of its pneumococcal vaccine Prevnar swelled 59% in the U.S. thanks to strong retail stocking and government purchases of the pediatric version.
• The company’s net income rose to $7.86 billion for the quarter, up from $4.88 billion last year, while earnings rose 59% to $1.37 a share. Stripping out one-time items, adjusted earnings climbed 72% to $1.62. Analysts polled by FactSet had been expecting $1.49 a share.
• The company said it is on track to deliver between $98 billion and $102 billion in revenue for the year, with $32 billion coming from Comirnaty and $22 billion from Paxlovid.
• Despite the strong results, Pfizer trimmed its earnings forecast, reflecting an accounting-policy change that starts including all acquired in-process research and development expenses. It now expects per-share earnings between $6.25 and $6.45 a share, down 10 cents on each end of the range in its prior forecast.

Paramount+ Adds 6.8 Million Subscribers in First Quarter – Wall Street Journal, 5/3/2022

• Paramount Global said its main streaming platform, Paramount+, added 6.8 million subscribers during the first quarter, as the service benefited from original content including “Halo” and a “Star Trek” series, as well as National Football League games.
• Revenue slipped 1.1% to $7.33 billion.
• The company, home of CBS, Nickelodeon and the Paramount movie studio, said Paramount+ had nearly 40 million subscribers as of March 31, an increase of more than 20% from the 32.8 million total customers it had as of Dec. 31.
• The company said its net profit fell roughly 52% to $433 million from $911 million last year due to higher operating costs.
• On an adjusted basis, the company said adjusted earnings fell nearly 44% to $913 million, as it ramped up investment in its streaming platform.

Expedia Results Are in Line as Omicron Weighs on Pent-Up Demand – Bloomberg, 5/3/2022

• Expedia Group reported revenue in the first quarter that jumped 80%, in line with analysts’ estimates, and signaled a strong summer travel season after two years of pent-up demand.
• Revenue was $2.25 billion in the first three months of the year, according to a statement from the Seattle-based company.
• Expedia, which hosts reservations for traditional lodging like hotels and short-term rentals on its Vrbo platform, and provides access to pricing for airlines, hotels and car rental companies, reported gross bookings of $24.4 billion, compared with analysts’ projections for $24.5 billion.
• Expedia reported a loss of 47 cents a share, excluding some costs, while analysts were predicting a loss of 43 cents.
• Expedia doesn’t break out Vrbo’s performance, but Chief Executive Officer Peter Kern said demand remains above 2019 levels. Supply in top locations is already selling out, he added.

Marathon Petroleum posts profit on robust refining margins – Reuters, 5/3/2022

• U.S. refiner Marathon Petroleum posted a first-quarter profit on Tuesday, compared with a loss last year, buoyed by strong refining margins as demand for fuel and refined products recovered to near pre-pandemic levels amid tight supplies.
• Crude capacity utilization was 91%, resulting in total throughput of 2.8 million bpd, compared with an 83% utilization and total throughput of 2.6 million bpd a year earlier.
• The company said its refining and marketing margins rose nearly 51% to $15.31 per barrel in the first quarter ended March 31.
• Refining and marketing segment’s profit from operations stood at $768 million, compared with a loss of $598 million last year.
• The Findlay, Ohio-based refiner said net profit was $845 million, or $1.49 per share, for the quarter, compared with a loss of $242 million, or 37 cents per share, a year earlier.
• For the current quarter, the refiner expects throughput of 2.9 million bpd.

DuPont shares down 4.5% premarket after earnings beat is offset by Q2 guidance that lags consensus – Marketwatch, 5/3/2022

• DuPont de Nemours shares slid 4.5% in premarket trade Tuesday, after the company beat earnings estimates for the first quarter but offered second-quarter guidance that lagged consensus.
• Sales rose 9% to $3.274 billion from $3.017 billion, also ahead of the $3.208 billion FactSet consensus.
• The specialty materials company posted net income of $488 million, or 42 cents a share, for the quarter, down from $5.394 billion, or 64 cents a share, in the year-earlier period.
• Adjusted per-share earnings came to 82 cents, ahead of the 67 cent FactSet consensus.
• DuPont is now expecting second-quarter adjusted EPS of 70 cents to 80 cents and sales of $3.200 billion to $3.300 billion. The FactSet consensus is for EPS of 84 cents and sales of $3.334 billion.
• It expects full-year adjusted EPS of $3.20 to $3.50 and sales of $13.300 billion to $13.700 billion, compared with a FactSet consensus of 3.40 and sales of $13.476 billion.

Estee Lauder cuts profit forecast on China COVID curbs, Ukraine crisis – Reuters, 5/3/2022

• Estee Lauder cut full-year profit forecast on Tuesday as fresh COVID-19 curbs in China and the suspension of operations in Russia following the invasion of Ukraine dent sales, sending the luxury cosmetics maker’s shares down 8%.
• Estee’s sales rose 10% to $4.25 billion in the third quarter, but fell short of expectations of $4.31 billion, according to Refinitiv data.
• Full-year net sales are projected to rise 7% to 9%, down from its prior forecast of an increase of 13% to 16%.
• Estee estimates adjusted annual profit of between $7.05 and $7.15 per share, compared with its prior outlook of between $7.43 and $7.58.

Burger King, Tim Hortons sales power earnings beat for parent Restaurant Brands – Reuters, 5/3/2022

• Restaurant Brands International beat estimates for quarterly results on Tuesday, boosted by higher prices and strong demand at its Burger King and Tim Hortons chains.
• The company’s total revenue rose to $1.45 billion in the first quarter ended March 31, from $1.26 billion a year earlier, topping analysts’ average estimate of $1.39 billion, according to Refinitiv IBES data.
• Comparable sales at Tim Hortons in Canada rose 10.1%, while Burger King global same-store sales jumped 10.3%, both beating analyst estimates.
• Net income attributable to common shareholders rose 2.2% to $183 million.
• Restaurant Brands, which usually caters to lower-income consumers, is also set to hike prices again this year after it stripped Burger King’s popular Whopper sandwich from discount menus earlier this year.
• The price hikes have helped Toronto, Ontario-based Restaurant Brands cushion a hit from a 3% decline in comparable sales at its Popeyes chain, popular for its fried chicken sandwich.

Hilton resumes capital return earlier than expected after profit beat – Reuters, 5/3/2022

• Hotel operator Hilton Worldwide Holdings said on Tuesday it had resumed returning capital to shareholders earlier than expected, after reporting a better-than-expected quarterly profit as travel demand rebounded.
• The Virginia-based company reported revenue of $1.72 billion for the first quarter, compared with average analysts’ expectations of $1.73 billion, according to Refinitiv data.
• Hilton, which own brands including the Waldorf Astoria Hotels & Resorts, said U.S. occupancy rate rose to 61.8% in the quarter ended March 31, up 14.1 percentage points from a year earlier.
• Hilton’s comparable RevPAR, or revenue per available room, rose 80.5% for the quarter as people spent more on travel, dining out at restaurants as well as hotel stays despite rising inflation.
• On an adjusted basis, the company earned 71 cents per share, better than average analysts’ expectations of 65 cents per share.
• The company said it expects 2022 adjusted profit per share between $3.77 and $4.02, lower than analysts’ estimate of $4.10 per share.

Fertilizer company Mosaic sees high ag-commodity prices continuing due to Russia-Ukraine conflict – Marketwatch, 5/3/2022

• Fertilizer and feed producer Mosaic late Monday said Russia’s invasion of Ukraine continues to push prices of some agricultural commodities higher, with the conflict also impacting fertilizer supplies amid low stocks globally.
• Revenue rose 71% to $3.9 billion as “stronger pricing more than offset lower volumes,” Mosaic said.
• The Tampa, Fla., company said it earned $1.18 billion, or $3.19 a share, in the first quarter, compared with $157 million, or 41 cents a share, in the year-ago period.
• Adjusted for one-time items, Mosaic earned $2.41 a share.
• Analysts polled by FactSet had expected the company to report adjusted earnings of $2.40 on revenue of $4.1 billion.
• Russia and Ukraine together supply more than a quarter of the world’s wheat and barley, 16% of corn, and more than three quarters of global sunflower oil, Mosaic said.
• That “supply uncertainty” continued to drive grain and oilseed prices higher, and prices were already higher before the February invasion amid a 20-year low in global stocks-to-use ratios, the company said.

Nutrien bolsters profit forecast on surging fertilizer prices – Reuters, 5/3/2022

• Nutrien on Monday raised its full-year earnings forecast well above estimates after posting a more than 10-fold jump in first-quarter profit, as the world’s largest fertilizer company benefits strongly from soaring prices of crop nutrients.
• Net earnings rose to $1.39 billion, or $2.49 per share, in the quarter ended March 31 from $133 million, or 22 cents per share, a year earlier.
• “Global agriculture and crop input markets are being impacted by a number of unprecedented supply disruptions that have contributed to higher commodity prices and escalated concerns for global food security,” interim Chief Executive Officer Ken Seitz said in a statement.
• The company forecast a cut in global potash shipments for the year, citing supply uncertainties from Russia and Belarus.
• Nutrien expects 2022 adjusted earnings of $16.20 to $18.70 per share, compared with its previous forecast of $10.20 to $11.80 per share. Analysts were expecting $15.20 per share, as per Refinitiv data.

CNH tops Q1 profit forecast despite Ukraine, supply headwinds – Reuters, 5/3/2022

• Agricultural and construction machine maker CNH Industrial said on Tuesday its operating profit rose 9% in the first quarter as demand remained healthy despite headwinds including war in Ukraine and higher energy costs.
• The company said its adjusted earnings before interest and tax (EBIT) for industrial activities stood at $429 million in the January-March period, in its first set of results after spinning off Iveco Group.
• That topped a $391 million forecast in an analyst poll compiled by Reuters.
• CNH added, however, it took a $71 million hit in the quarter due to the suspension of its Russian operations, including for asset writedowns.
• It also saw negative cash flow generation from industrial activities of $1.059 billion, as “critical supply chain disruptions” constrained its ability to ship finished goods.
• “Order books remain exceptionally strong, up almost 40% in agriculture and 80% in construction,” Chief Executive Scott Wine said in a statement, confirming full-year forecasts the group had previously released.

KKR’s first-quarter earnings jump 47% on strong asset sales, fees – Reuters, 5/3/2022

• Private equity firm KKR & Co said on Tuesday that its first-quarter distributable earnings rose 47% year-on-year, thanks to a surge in asset sales and a rise in revenue from fees it charges investors to manage their money.
• During the quarter, KKR generated $609.2 million in income from performance fees, up from $171.3 million a year ago, as it booked more profits from asset divestments.
• Its fee-related earnings, which reflect revenue from management and capital market transaction fees, rose to $624.9 million from $439.7 million a year earlier.
• The New York-based firm said its after-tax distributable earnings, which represent the cash used to pay dividends to shareholders, rose to $968.5 million, compared with $660.2 million a year earlier.
• That translated to after-tax distributable earnings per share of $1.10, exceeding the mean Wall Street analyst estimate of $0.98 per share, according to financial data provider Refinitiv.
• KKR’s assets under management rose to $479 billion at the end of the first quarter, up from $471 billion at the end of the fourth quarter, while unspent capital totaled $115 billion.

Cummins stock turns higher after profit declines, while revenue rises above forecasts – Marketwatch, 5/3/2022

• Shares of Cummins rose 1.1% in premarket trading Tuesday, reversing an earlier loss, after the diesel and natural gas engines and new power company reported first-quarter profit that fell, weighed by costs associated with the suspension of its Russia operations, but revenue that rose above forecasts and raised its full-year outlook.
• Sales grew 4.8% to $6.39 billion, beating the FactSet consensus of $6.02 billion.
• Among Cummins’ business segments, engine, distribution, components and power systems beat expectations while new power missed.
• Gross margin slipped to 24.0% from 24.4%.
• Net income declined to $418 million, or $2.92 a share, from $603 million, or $4.07 a share, in the year-ago period.
• The FactSet consensus for earnings per share was $3.55.
• The results include costs of $1.03 a share related to the suspension of Russia operations and 9 cents a share related to the separation of the filtration business.
• For 2022, the company raised its revenue growth guidance to 8% from 6%, while the FactSet sales consensus of $25.52 billion implies 6.2% growth.

Clorox Falls After Cutting Annual Profit View on Inflation – Bloomberg, 5/3/2022

• Clorox shares fell after the company lowered its outlook for full-year earnings amid stubbornly rising costs while reporting profit in its latest quarter that exceeded market expectations.
• Net revenue of $1.8 billion was slightly higher than Wall Street expectations.
• On Monday, the company said organic sales for the quarter rose 2%, surpassing analyst estimates of a 0.1% decline.
• Gross margins of were 35.9%, ahead of the 34.4% expectation.
• Adjusted earnings per share for the company’s fiscal third quarter, which ended March 31, were $1.31, compared to the 93-cent average analyst estimate in a Bloomberg survey.
• Higher costs will result in a steeper-than-expected hit to gross margins this fiscal year, the owner of natural skincare line Burt’s Bees and salad-dressing brand Hidden Valley said in a statement.
• The measure is now seen decreasing as much as 800 basis points, compared to a prior call for a drop of 750 basis points.
• The maker of Pine-Sol and Glad trash bags now sees earnings per share of $4.05 and $4.30, excluding some items, for its fiscal year ending in June. That compares to the prior expectation of $4.25 to $4.50.
• Organic sales, which exclude the impact of currency fluctuations and acquisitions, are still seen falling by 1% to 4%, unchanged from the previous forecast.
• The new outlook for $530 million of extra expenses, up from a previous prediction of $500 million, is due to the recent jump in oil prices — which also affects the cost of resins and transportation.

Biogen CEO Michel Vounatsos to Step Aside After Alzheimer’s Drug Struggles – Wall Street Journal, 5/3/2022

• Biogen Chief Executive Michel Vounatsos will resign from the company as it slims down its workforce, cuts spending by $1 billion annually and attempts to chart a new course after Medicare’s devastating refusal to cover its new Alzheimer’s drug Aduhelm.
• Sales fell 6% to $2.5 billion, down from $2.7 billion in the year-earlier quarter.
• Biogen said Aduhelm sales were $2.8 million in the first quarter, representing 0.1% of the company’s product sales.
• The company’s net income was $303.8 million, down 26% from a year earlier, in part due to a write-off of $275 million for Aduhelm inventory.
• Biogen said Tuesday that Mr. Vounatsos would continue to lead the company and remain on its board until a search for a new CEO is completed.
• Biogen also said it would substantially eliminate the sales infrastructure it built up to support Aduhelm’s launch, which will contribute to other cost-cutting measures intended to provide savings of $500 million annually.

Amazon Workers Reject Union in New York After Labor Victory at Separate Facility – Wall Street Journal, 5/3/2022

• Amazon.com workers voted against unionizing at a facility on Staten Island, N.Y., a win for the company after a loss at another warehouse in the borough last month.
• The National Labor Relations Board said 62% of workers who cast valid ballots from a location site named LDJ5 voted not to form a union. The count was 618 to 380 against unionization, the NLRB said.
• The results Monday dealt a blow to organizers who hoped to build on their success from an April election, where workers at a warehouse named JFK8, Amazon’s largest on Staten Island, voted to establish the first U.S. union inside the e-commerce giant.

Global Chip Shortage’s Latest Worry: Too Few Chips for Chip-Making – Wall Street Journal, 5/3/2022

• The drought in chip availability that has hit auto production, raised electronics prices and stoked supply-chain worries in capitals around the globe has a new pain point: a lack of chips needed for the machines that make chips, industry executives say.
• The wait time it takes to get machinery for chip-making—one of the world’s most complex and delicate kinds of manufacturing—has extended over recent months.
• Early in the pandemic it took months from placing an order to receiving the equipment. That time frame has stretched to two or three years in some cases, according to chip-making and equipment executives.
• Deliveries of previously placed orders are also coming in late, executives say.
• As a result, hopes of quickly overcoming the global chip shortage are dimming as it stretches into its third year.
• What began as a pandemic-era aberration of supercharged demand for laptops and other chip-hungry gadgets has spiraled into a structural problem for the industry. Now many chip executives say the problem will persist into 2023 and 2024, or even longer.

Natural Gas Hits 13-Year High in U.S. on Growing Supply Jitters as Demand Soars – Bloomberg, 5/3/2022

• Natural gas prices in the U.S. climbed above $8 per million British thermal units, hitting a fresh 13-year high, on growing concern that stockpiles of the power-plant fuel will fall short of demand this summer.
• The current rally is unusual in that past U.S. price spikes tended to be triggered by bone-chilling weather that boosted demand, or by Gulf of Mexico hurricanes that slashed supplies.
• Normally at this time of the year, North American weather is so benign that utilities, manufacturers and brokers have no trouble stowing ample volumes of gas in storage caverns for use later in the year.

NFT Sales Are Flatlining – Wall Street Journal, 5/3/2022

• The sale of nonfungible tokens, or NFTs, fell to a daily average of about 19,000 this week, a 92% decline from a peak of about 225,000 in September, according to the data website NonFungible.
• The number of active wallets in the NFT market fell 88% to about 14,000 last week from a high of 119,000 in November.
• NFTs are bitcoin-like digital tokens that act like a certificate of ownership that live on a blockchain.
• An NFT of the first tweet from Twitter co-founder Jack Dorsey sold in March 2021 for $2.9 million to Sina Estavi, the chief executive of Malaysia-based blockchain company Bridge Oracle.
• Earlier this year, Mr. Estavi put the NFT up for auction. He didn’t receive any bids above $14,000, which he didn’t accept.

Snarled-up ports point to worsening global supply chain woes – report – Reuters, 5/3/2022

• Global supply chain problems look to set to worsen, a new report published on Tuesday said, as China’s COVID-19 lockdowns, Russia’s invasion of Ukraine and other strains cause even longer delays at ports and drive up costs.
• The study by analysts at Royal Bank of Canada (RBC) found that one-fifth of the global container ship fleet was currently stuck in congestion at various major ports.
• In China, ships awaiting berth at the Port of Shanghai now tally 344, a 34% increase over the past month, while shipping something from a warehouse in China to one in the United States currently takes 74 days longer than usual.
• In Europe too, ships from China are showing up an average of four days late, causing a number of knock-on effects, including a shortage of empty containers to take European-made goods to the U.S. east coast.
• Though vessel delays have improved fractionally over the last couple of months, the average global delay of a ship’s arrival was still 7.26 days in March, a figure that rarely tops 4.5 days in normal times, RBC noted.
• A queue of 19 vessels in Los Angeles and port level inefficiencies have seen Time of Turnaround (ToT) jump to 6.9 days from 5 days a month ago, although it is still down from the peak of 8.7 days during last year’s pre-Christmas rush.