 The Market Sum | Insight after the bell
By Caleb Silver, Editor in Chief Wednesday's Headlines 1. Markets Flat as Industrials Falter 2. Microsoft Beats Expectations, Keeps on Winning 3. Tesla Beats Forecasts, Shares Rise 4. Facebook's Zuckerberg Defends Libra to Congress
Markets Closed
 Image: Getty Images
Markets Today
U.S. equity markets ended the day in slightly positive territory as investors digested earnings reports from companies including Caterpillar (CAT), Boeing (BA) and Eli Lilly (LLY), among others.
Caterpillar, a Dow component and a bellwether for the industrial sector, badly missed analysts' estimates for sales and profits, citing weakness in Asia (particularly China) and a decrease in dealer inventories in the U.S. The company also lowered its forecast for the fourth quarter citing, 'global economic uncertainty'.
I'm no doctor, but it sounds like CAT has a case of Trade War Fever. Its shares have outperformed the Dow Industrials for the past three years by about 10%, but it has under-performed the index year-to-date as the trade war has intensified. Since heavy equipment like Caterpillar's takes a long time to build, ship and deploy, and unit prices are in the millions of dollars, it is not a surprise that inventories have shrunk and its customers have held back on future orders.
chart courtesy YCHARTS  After the market close we got results from Microsoft (MSFT), Tesla (TSLA) and Ford (F), among others.
Microsoft, which has been one of the strongest stocks in the S&P 500, crushed expectations for both revenue and profit. Sales grew 14% from the same quarter a year ago, but for Microsoft, sales in its cloud business matter the most. That's where all the growth and margins are. Azure is Microsoft's cloud service, and it competes with Amazon Web Services and Google Cloud, among others, in this highly profitable arena. The company reported a 59% increase in sales in this segment, which is down from 64% last quarter.
Still, Microsoft remains the largest company in the world by market cap, and one of the best performers in broader market over the past year. Here's the stock against the S&P 500, Alphabet (GOOGL) and Amazon (AMZN) over the past year.  Tesla Beats, and Investors Respond
Very few companies have a bullseye on their backs like Tesla, but then again, very few companies have a CEO like Elon Musk.
After badly missing earnings estimates and deliveries last quarter, Tesla reversed the trend in the third quarter, sending shares up more than 10% after hours.
The company reported earnings of $1.86 per share (on a heavily adjusted basis), and revenue topped $6.33 billion. While that was 7% lower than the second quarter, Tesla was able to rein in costs through job cuts and other restructurings, which helps those adjusted earnings and margins look even better.
The company brought its Shanghai Gigafactory online, and says it is confident it will be able to reach and exceed its goal of 360,000 vehicle deliveries this year. That's always been a subject of doubt around Tesla, but Musk thrives on proving doubters wrong.
Here's Tesla's own chart of vehicle deliveries by quarter. Good trend.  Tesla is a very polarizing stock and company. It used to be one of the most shorted stocks in the S&P 500, in that investors made heavy bets against it. According to S3 Partners, which tracks such things, Tesla relinquished that crown to Apple recently. It's number two on the list (for now), but it still generates a lot of doubters and dollars against it. S3 reports that there is more than $8.3 billion bet against the company in what is called 'short interest'. If the stock breaks the $300 level again, those investors who bet Tesla short, will lose a lot of money.
Here's the top ten most shorted companies, per S3.  Facebook's Zuckerberg Defends Libra to Congress There aren't too many friendly faces on Capitol Hill for Facebook these days, and today was no exception. The social media giant is facing investigations or probes by the FTC and state attorneys general over antitrust concerns and its advertising practices, among other issues. Today, founder and CEO Mark Zuckerberg testified in front of the House Financial Services Committee to try to defend Libra, Facebook's cryptocurrency project that has been beset by criticism and the recent loss of key partners including Visa, PayPal and Mastercard.
Read more: What is Facebook's Globalcoin?
Zuckerberg defended Facebook's intention of offering financial services to more than a billion consumers around the world through Libra, the digital coin it is developing to allow users to make online and offline purchases as well as money transfers.
The project has been met with heavy skepticism from regulators including the U.S. Attorney General, the U.S. Treasury Dept., and the Federal Reserve. It's tough to launch anything, especially an alternative to fiat currency, without their consent. Today, congressional leaders like Rep. Maxine Waters of California, let Zuckerberg have it.
"As I have examined Facebook's various problems, I have come to the conclusion that it would be beneficial for all if Facebook concentrates on addressing its many existing deficiencies and failures before proceeding any further on the Libra project," Waters said. She was among the kindest of the politicians on the Committee.
For his part, Zuckerberg said that Facebook would not proceed with the Libra launch without the blessing of regulators.
(chart courtesy YCHARTS)  Medical device maker Align Technology rose 13.3% today. Financial management company Invesco rose 7.8% on an earnings beat. Alexion Pharmaceuticals also beat earnings estimates, rising 7.4% today.  Semiconductor manufacturer Texas Instruments fell 7.8% after it gave a lower-than-expected earnings forecast, and said that the trade war was hurting sales. Fellow semiconductor firms Analog Devices, Maxim Integrated Products, and Microchip Technology fell 4.8%, 3.7%, and 3.5% respectively. Chipotle Mexican Grill fell 5% today, despite beating earnings estimates and reporting the highest same-store sales growth in years. Word of the Day Adjusted earnings are the sum of earnings and increases in loss reserves, new business, deficiency reserves, deferred tax liabilities and capital gains for an insurance company from the previous time period to the current time period. Adjusted earnings provide a measurement of how current performance compares with performance in previous years.  Today in History October 23, 2006 Today in 2006, Jeffrey K. Skilling, the CEO of energy conglomerate Enron, was sentenced to over 24 years in prison for fraud. Enron went bankrupt in late 2001, after it was revealed that Skilling had hidden enormous losses through fraudulent accounting. Skilling was released after serving 12 years of this sentence in February 2019.
Source: https://www.nytimes.com/2006/10/24/business/24enron.html https://www.investopedia.com/updates/enron-scandal-summary/
How can we improve the Market Sum? Tell us at marketsum@investopedia.com
Enjoy the Market Sum? Share it with a friend. Or share the link below to invite friends to sign up.
CONNECT WITH INVESTOPEDIA
Email sent to: mondemand.forex@blogger.com To update your newsletter preferences or unsubscribe, click here.
114 West 41st St, floor 8 New York NY 10036 © 2019, Investopedia, LLC. All Rights Reserved | Privacy Policy |
Wednesday, October 23, 2019
Testify
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment