Markets Today: Stock Indexes Rise Despite a Weak Revenue Forecast from Intel

Morning Markets

The S&P 500 Index ($SPX) (SPY) today is up +0.32%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.37%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.55%.

U.S. stock indices are moderately higher despite Intel's -7.5% slide after reporting weaker-than-expected Q4 revenue and forecasting Q1 revenue that was well below expectations.  Helping stocks to move higher is this morning's PCE gauge, which showed inflation pressures continue to ease after the U.S. Dec PCE core deflator posted its smallest annual increase in 14 months.

KLA Corp is down more than -5% in pre-market trading after forecasting weaker-than-expected Q3 revenue.  Also, Chevron fell more than -1% after reporting weaker-than-expected Q4 adjusted EPS.  In addition,  Colgate-Palmolive slid more than -3% after forecasting full-year organic sales that were below expectations. 

American Express jumped more than +5% in pre-market trading after forecasting stronger-than-expected 2023 EPS.  Also,  L3 Harris Technologies climbed more than +3% after reporting Q4 revenue that was above expectations and forecasting stronger-than-expected full-year revenue. 

Bond yields are higher, with the 10-year T-note yield up +2.4 bp at 3.528%.  Also, the 10-year German bund yield climbed to a 2-week high of 2.287%, and the 10-year UK gilt yield is up +1.8 bp to 3.335%.

U.S. Dec personal spending fell -0.2% m/m, right on expectations and the biggest decline in a year.  Dec personal income rose +0.2% m/m, right on expectations.

U.S. Dec PCE core deflator rose +0.3% m/m and +4.4% y/y, right on expectations, with the +4.4% y/y gain the slowest annual pace of increase in 14 months.

Overseas markets are mixed.  The Euro Stoxx 50 index is down -0.22%.  Japan’s Nikkei Stock index closed up +0.07%, and Hong Kong’s Hang Seng Index closed up +0.54%.  China remained closed for the Lunar New Year holidays. 

The Euro Stoxx 50 index today is moderately lower on several weaker-than-expected corporate quarterly earnings results.  Hennes & Mauritz AG tumbled more than -7% after reporting a slump in earnings, and LVMH dropped -1% after reporting slower sales growth in Q4 profit.  Higher bond yields also weighed on stocks, with the 10-year German bund yield climbing to a 2-week high of 2.287%.  On the positive side, investors have been buying European stocks after Bank of America said EPFR Global data showed European stock funds had $3.4 billion of inflows in the week through Jan 25, the biggest increase in nearly a year.

Eurozone Dec M3 money supply rose +4.1% y/y, weaker than expectations of +4.6% y/y and the slowest pace of increase in nearly four years.

The France Jan consumer confidence indicator unexpectedly fell -1 to a 4-month low of 80, weaker than expectations of an increase to 83.

The Hang Seng Stock Index today climbed to a 10-3/4 month high and settled moderately higher. Strength in Asian semiconductor stocks led the overall market higher as Samsung Electronics rose more than +1% on optimism that it will report stronger-than-expected quarterly earnings results next Tuesday.  Hong Kong stocks were also underpinned by the hopes that economic growth would accelerate upon China’s reopening.

Japan’s Nikkei Stock Index today closed slightly higher.  fell back from a 1-1/4 month high, and closed slightly lower.  Japanese chemical firms rallied today, led by a more than +7% jump in Shin-Etsu Chemical after it posted Q3 results that were better than expected.  Also, Japanese utility companies rose after Hokkaido Electric applied to raise its regulated electricity prices.  The Nikkei Stock Index gave up most of its gains as exporters retreated when the yen strengthened after today’s report on Tokyo Jan CPI rose more than expected.

Japan Tokyo Jan CPI ex-fresh food rose +4.3% y/y, stronger than expectations of +4.2% y/y and the fastest pace of increase in 41 years.  Also, the Tokyo Jan CPI ex-fresh food and energy rose +3.0% y/y, stronger than expectations of +2.9% y/y and the fastest pace of increase in 31 years.

Pre-Market U.S. Stock Movers

Intel (INTC) slumped more than -9% in pre-market trading after reporting Q4 adjusted revenue of $14.04 billion, weaker than the consensus of $14.40 billion and forecasting Q1 adjusted revenue of $10.5 billion-$11.5 billion, well below the consensus of $13.96 billion.

Chevron (CVX) fell more than -1% in pre-market trading after reporting Q4 adjusted EPS of $4.09, weaker than the consensus of $4.27.

KLA Corp (KLAC) tumbled more than -5% in pre-market trading after forecasting Q3 revenue of $2.20 billion-$2.50 billion, the midpoint below the consensus of $2.49 billion.

Colgate-Palmolive (CL) slid more than -3% in pre-market trading after forecasting full-year organic sales of +3% to +5%, the midpoint below the consensus of +4.21%.

Hasbro (HAS) dropped more than -5% in pre-market trading after reporting preliminary Q4 adjusted EPS of $1.29-$1.31, well below the consensus of $1.49. 

Datadog (DDOG) fell more than -3% in pre-market trading after BTIG LLC downgraded the stock to neutral from buy.

Ralph Lauren (RL) slid more than -2% in pre-market trading after BMO Capital Markets downgraded the stock to underperform from market perform.

Eastman Chemical (EMN) fell more than -2% in pre-market trading after reporting Q4 sales revenue of $2.37 billion, weaker than the consensus of $2.43 billion.

American Express (AXP) jumped more than +5% in pre-market trading after forecasting 2023 EPS of $11.00-$11.40, stronger than the consensus of $10.43, and boosting its quarterly dividend by 15% to 60 cents a share.

Visa (V) gained more than +1% in pre-market trading after reporting Q1 adjusted EPS of $2.18, better than the consensus of $2.00.

L3 Harris Technologies (LHX) climbed more than +3% in pre-market trading after reporting Q4 revenue of $4.58 billion, above the consensus of $4.34 billion and forecasting full-year revenue of $17.4 billion-$17.8 billion, the midpoint above the consensus of $17.56 billion. 

CNH Industrial (CNHI) rose more than +1% in pre-market trading after Berenberg initiated coverage of the stock with a buy rating. 

Today’s U.S. Earnings Reports (1/27/2023)

American Express Co (AXP), Charter Communications Inc (CHTR), Chevron Corp (CVX), Colgate-Palmolive Co (CL), HCA Healthcare Inc (HCA), Roper Technologies Inc (ROP).

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