Stocks Climb as Chip Stocks Jump on Strong Earnings from Qualcomm

Morning Markets

June S&P 500 futures this morning are up by +1.16%.   Strength in technology stocks in pre-market trading is lifting the overall market after Qualcomm and Meta Platforms reported stronger-than-expected quarterly earnings.  Q1 earnings season has gotten off to a strong start and is bullish for stocks as 77% of the 140 S&P 500 companies that have reported have beaten earnings estimates, and 65% of those reported have raised guidance for the full year.  U.S. stock index futures fell back from their best levels after this morning’s data showed that U.S. Q1 GDP unexpectedly contracted.

U.S. weekly initial unemployment claims fell -5,000 to 180,000, right on expectations.

U.S. Q1 GDP unexpectedly contracted -1.4% (q.q annualized), weaker than expectations of +1.0%, The Q1 core PCE deflator rose +5.2% q/q a slower pace of increase than expectations of +5.5% q/q .

The Euro Stoxx 50 index today is up by +1.23%.  A rally in semiconductor stocks today is leading European stocks higher after Qualcomm gave a robust outlook.  ASML Holding NV, Infineon, and STMicroelectronics NV are all up more than +3%.  Also, Nordic Semiconductors jumped +10%, and Soitech climbed +6% after reporting better-than-expected quarterly earnings. European stocks fell back from their best levels after German consumer prices climbed at a record pace. 

ECB Vice President Guindos said new pandemic measures in Asia are worsening bottlenecks and that "these latest developments point to slower growth in the period ahead."

German Apr CPI (EU harmonized) rose a record +7.8% y/y (data from 1997), stronger than expectations of +7.6% y/y,

Asian markets today closed higher.  China’s Shanghai Stock Index closed up by +0.58%, and Japan’s Nikkei Stock Index closed up by +1.75%.  Chinese stocks today moved higher on government efforts to bolster the economy after China’s State Council pledged to promote the growth of internet platform firms and to give cash handouts to poor people who have lost their jobs.  Also, an easing of Covid outbreaks in Beijing and Shanghai may prompt the government to loosen pandemic restrictions, which boosted market sentiment.

Japanese stocks rallied today, and the Japanese yen sank to a 20-year low against the dollar on signs the BOJ will continue its stimulus measures.  Stocks rallied, the yen sank, and the yield on the 10-year Japan JGB bond fell to a 3-week low of 0.216% today after the BOJ said it would buy an unlimited amount of bonds at a fixed rate every business day to protect the ceiling of its 0.25% yield target as part of its stimulus measures.

Japanese economic data today was mixed after Japan Mar industrial production rose +0.3% m/m, weaker than expectations of +0.5% m/m.  Conversely, Japan Mar retail sales rose +2.0% m/m, stronger than expectations of +1.0% m/m and the largest increase in 1-3/4 years.

Pre-Market U.S. Stock Movers

Meta Platforms (FB) surged +19% in pre-market trading after it reporting Q1 EPS of $2.72, above the consensus of $2.56 billion. 

Qualcomm (QCOM) jumped nearly +8% in pre-market trading after it reported Q2 adjusted revenue of $11.61 billion, stronger than the consensus of $10.60 billion, and forecast Q3 revenue of $10.5 billion to $11.3 billion, better than the consensus of $9.07 billion.  Other chip stocks rallied in pre-market trading as well, with Nvidia (NVDA) and Advanced Micro Devices (AMD) up more than +3% and Intel (INTC) up more than +1%.

Eli Lilly (LLY) climbed +4% in pre-market trading after reporting Q1 revenue of $7.81 billion, well above the consensus of $7.48 billion, and raised its full-year revenue forecast to $28.8 billion-$29.3 billion, above the consensus of $28.43 billion.

PayPal Holdings (PYPL) climbed more than +3% in pre-market trading after reporting Q1 net revenue of $6.48 billion, stronger than the consensus of $6.40 billion, and Q1 active customer accounts of 429 million, above the consensus of 427.3 million. 

Pinterest (PINS) jumped +9% in pre-market trading after reporting Q1 revenue of $574.9 million, better than the consensus of $572.7 million.

Ford Motor (F) rose nearly +3% in pre-market trading after reporting Q1 EPS of 38 cents, above the consensus of 36 cents.

ServiceNow (NOW) surged +10% in pre-market trading after reporting Q1 subscription revenue of $1.63 billion, stronger than the consensus of $1.61 billion.

Amgen (AMGN) fell nearly -6% in pre-market trading after it said it faced a $7.1 billion fine from the IRS related to how the company reported profits from the years of 2013 to 2015.

Teladoc Health (TDOC) plunged -40% in pre-market trading after reporting an unexpected Q1 adjusted Ebitda loss of -$54.5 million, weaker than the consensus of a profit of $53 million, and cut its full-year Ebitda forecast to $240 million-$265 million from an earlier forecast of $330 million-$355 million. 

Align Technology (ALGN) tumbled -20% in pre-market trading after reporting Q1 net revenue of $973.2 million, below the consensus of $999.5 million.

Today’s U.S. Earnings Reports (4/28/2022)

A. O. Smith Corp (AOS), ABIOMED Inc (ABMD), Alliant Energy Corp (LNT), Altria Group Inc (MO), Amazon.com Inc (AMZN), American Electric Power Co Inc (AEP), Apple Inc (AAPL), Arthur J Gallagher & Co (AJG), Baxter International Inc (BAX), Bio-Rad Laboratories Inc (BIO), Camden Property Trust (CPT), Carrier Global Corp (CARR), Caterpillar Inc (CAT), Celanese Corp (CE), Church & Dwight Co Inc (CHD), Cincinnati Financial Corp (CINF), Comcast Corp (CMCSA), Dexcom Inc (DXCM), Digital Realty Trust Inc (DLR), Domino's Pizza Inc (DPZ), DTE Energy Co (DTE), Eastman Chemical Co (EMN), Eli Lilly & Co (LLY), Fortive Corp (FTV), Fortune Brands Home & Security (FBHS), Gilead Sciences Inc (GILD), Hartford Financial Services Gr (HIG), Hershey Co/The (HSY), Intel Corp (INTC), International Paper Co (IP), Interpublic Group of Cos Inc/T (IPG), Iron Mountain Inc (IRM), Kimco Realty Corp (KIM), KLA Corp (KLAC), L3Harris Technologies Inc (LHX), Laboratory Corp of America Hol (LH), Linde PLC (LIN), LKQ Corp (LKQ), Mastercard Inc (MA), McDonald's Corp (MCD), Merck & Co Inc (MRK), Mohawk Industries Inc (MHK), Nielsen Holdings PLC (NLSN), Northrop Grumman Corp (NOC), Principal Financial Group Inc (PFG), PulteGroup Inc (PHM), ResMed Inc (RMD), Southern Co/The (SO), Southwest Airlines Co (LUV), Stanley Black & Decker Inc (SWK), Stryker Corp (SYK), T Rowe Price Group Inc (TROW), Teleflex Inc (TFX), Textron Inc (TXT), Thermo Fisher Scientific Inc (TMO), Twitter Inc (TWTR), VeriSign Inc (VRSN), West Pharmaceutical Services (WST), Western Digital Corp (WDC), Willis Towers Watson PLC (WTW), WW Grainger Inc (GWW), Xcel Energy Inc (XEL).