Wednesday, July 26, 2023

Markets waver ahead of Fed decision

Dow edged up 19, advancers over decliners better than 3-2 & NAZ slid back 68.  The MLP index stayed below 241 & the REIT index was up 2+ to the 386s.  Junk bond funds were little changed & Treasuries had a little buying which lowered yields.  Oil was pennies higher in the 79s & gold gained 9 to 1973 .

AMJ (Alerian MLP Index tracking fund)


 

 




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Coca-Cola (KO), a Dow stock & Dividend Aristocrat, raised its full-year outlook after reporting earnings & revenue that topped estimates.  “On the positive side, many supply chain pressures eased, concern surrounding the bank sector diminished and energy prices continue to pull back from record highs,” CEO James Quincey said.  But he warned that some customers are switching to cheaper private label drinks & that some commodities, like sugar & corn syrup, are still putting pressure on profit margins.  Q2 EPS was 59¢, up from 44¢ a year earlier.  Excluding refranchising gains, restructuring costs & other items, EPS was 78¢.  Net sales rose 6% to $11.97B.  Organic revenue, which strips out the impact of acquisitions and& divestitures, increased 11% in the qtr, fueled by higher prices.  For 2023, KO expects comparable adjusted growth of 5-6%, up from its prior forecast of a 4-5% rise.  The company also hiked its outlook for organic revenue & predicts an increase of 8-9%, up from its previous range of 7-8%.  KO has been hiking prices on its products in response to higher commodity costs.  But it isn't expecting to hike prices much further in either region, he said.  Worldwide, unit case volume, which excludes the impact of pricing & currency changes, was flat for the qtr.  Its US volume fell just 1%, dragged down by falling demand for its namesake soda, Powerade & bottled water.  The stock rose 47¢.
If you would like to learn more about KO,
click on this link:
club.ino.com/trend/analysis/stock/KO_aid=CD3289&a_bid=6aeoso5b6f7

Coca-Cola raises full-year outlook as earnings beat estimates

Boeing (BA), a Dow stock, results topped expectations thanks to a pickup in commercial aircraft deliveries as the manufacturer increases production, but losses in its defense & space businesses drove the manufacturer into the red for the qtr.  The company generated $2.6B of free cash flow in Q2, ahead of forecasts & reiterated its full-year guidance of $3-5B of free cash flow.  BA has struggled to increase aircraft production in the wake of the Covid pandemic as some airlines face longer waits for new jets, just as travel demand rebounds.  The company delivered 136 planes in Q2, up from 121 aircraft last year.  BA is transitioning to higher production of its bestselling Max aircraft, at a pace of 38 jets a month, up from 31 a month, a plan it outlined earlier this year.  The company reiterated its 737 delivery forecast of 400-450 planes this year.  “With demand strong across our key markets, it is important that we stay focused on execution and on driving stability in our factories and supply chain to ensure we meet our customer commitments,” CEO Dave Calhoun said.  Revenue jumped 18% from a year ago to $19.7B, but the company still reported a net loss of $149M (25¢ per share).  That compares with a profit of $160M (32¢ per share) a year ago, with the most recent results weighed down by charges in its defense & space units.  On an adjusted basis, the company reported a loss of $390M, 82¢ per share.  The stock jumped 13.04 (6%).
If you would like to learn more about BA,
click on this link:
club.ino.com/trend/analysis/stock/BA_aid=CD3289&a_bid=6aeoso5b6f7

Boeing posts quarterly loss, but stock surges as aircraft deliveries drive up cash

Microsoft (MSFT), a Dow stock, issued worse-than-expected quarterly revenue guidance.  Many analysts remained optimistic about the its prospects, but a few fretted about how recent investments in artificial intelligence won't immediately come to fruition.  Growth in AI has the potential to propel its 2 largest businesses: the Azure public cloud & the more traditional, & market-leading, Office productivity software.  MSFT has been increasing its capital expenditures to get infrastructure in place to provide AI services to developers at other companies & roll out assistant capabilities to apps such as Word & Outlook.  The extra spending cuts into MSFT's cloud gross margin.  Last week, MSFT said  its Copilot assistant for these Microsoft 365 applications would cost $30 per person per month on top of regular subscription prices.  The company did not say when it would start charging.  CFO Amy Hood  said growth from AI services would be “gradual” as Azure AI tools gain in popularity & Copilots such as the one for Microsoft 365 become generally available.  She said that for the current 2024 fiscal year, which will end in Jun 2024, the impact would mainly come in H2.  Some investors will probably have to change their expectations on revenue as a result of Hood’s comments.  Members of the public became captivated by the ChatGPT chatbot from startup OpenAI, which relies on Azure, after its release in late 2022.  It's a prominent example of generative AI, which accepts human input such as text or an image & automatically creates content in response.  Companies selling productivity software have been hurrying to incorporate such generative features into their products, & delays in MSFT's release of its all-important Office suite could mean missing out on a clear growth opportunity.  The stock fell 14.12 (4%).
If you would like to learn more about MSFT,
click on this link:
club.ino.com/trend/analysis/stock/MSFT_aid=CD3289&a_bid=6aeoso5b6f7

Microsoft shares fall after earnings report as analysts process a delayed A.I. ramp

Earnings have been coming in mixed & unclear.  Meanwhile, traders are waiting to hear from Powell at the Fed.

Dow Jones Industrials

 






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