Stocks diverged to start August, pulling back from a July rally amid a flurry of mixed earnings.
For the day, the S&P 500 (^GSPC) dropped 0.3%, while the Dow Jones Industrial Average (^DJI) was up around 0.2%. The tech-heavy Nasdaq Composite (^IXIC) slumped 0.4%.
A plethora of earnings added mixed sentiments to what has been a bullish mood for most of 2023 so far. Of note Tuesday, Caterpillar (CAT) warned of a coming slowdown in its business, Pfizer (PFE) trimmed the upper end of its revenue forecast, and Uber (UBER) popped after posting a surprise profit.
Meanwhile, the job market continues to show signs of cooling, as job openings fell to their lowest level in more than two years on Tuesday.
These earnings and data points serve as the appetizer for the main event: second quarter results from Apple (AAPL) and Amazon (AMZN) that are due out Thursday. Both stocks are up more than 50% so far this year. Investors are also looking ahead to key pieces of data out this week, most notably the jobs report in the US on Friday.
On Monday, stocks capped a strong month of July for all the major indexes. The S&P 500 and Nasdaq both wrapped up their fifth straight month of gains.
Stocks were mixed on Tuesday as positive earnings from Caterpillar (CAT) contributed to gains in the Dow Jones Industrial Average and investors digested job openings data that showed some signs of cooling but an overall robust labor market.
The Dow Jones Industrial Average (^DJI) was the long average in the green, closing up 0.2%. The S&P 500 (^GSPC) fell about 0.3%. The tech-heavy Nasdaq Composite (^IXIC) dropped about 0.4%. The Dow has now closed in the positive three straight days and is at its highest level since February 2022.
Tesla shares were down about 2% on Tuesday as the National Highway Traffic Safety Administration opened an investigation into into certain Tesla (TSLA) vehicles regarding complaints about loss of steering control and power steering.
Yahoo Finance’s Pras Subramanian reports:
According to NHTSA’s preliminary investigation report, 12 separate owners have reported that their Tesla Model 3s and Model Y SUVs have experienced “loss of steering control” and warning messages that indicated that “power steering assist is reduced or disabled.” Of those 12 owners, five reported inability to steer the vehicle, and the seven others cited loss of power steering that resulted in increased effort to control the vehicle.
NHTSA says the investigation covers an estimated 280,000 Model 3 and Model Y sedans from model year 2023.
Tesla may not be able to fix a steering issue via a software update, which could lead to an expensive recall campaign with parts replacement.
Several motorist complaints detailed the seriousness of the issue.
A motorist from Washington state wrote in a complaint that “while driving my 2023 Model Y, the electronic power steering suddenly stopped working. Luckily there wasn’t a vehicle behind me, which avoided any accident. I had to use immense manual power on the steering to make the vehicle move to the side.”
Another owner from Hawaii said that a week into ownership, “the steering wheel would lock up randomly … This occurred 6 times on different dates before we were able to get it to the Tesla service department.” The owner said the car “currently remains at Tesla for the next 3 weeks while we await a new steering rack/motor.”
This is not the first time Tesla has had issues with steering. An investigation in March, which eventually led to a safety recall, addressed reports of the steering wheel in Model Y SUVs becoming completely detached from the steering column. The fix required the fastening of a nut to the steering wheel.
After strong guidance boosts for Delta and United Airlines to kick off second quarter earnings season, airliner shares aren’t flying so high this week.
Yahoo Finance’s Ines Ferre reports:
On Tuesday, JetBlue cut its annual earnings forecast and issued third-quarter guidance below Wall Street expectations. The stock fell as much as 8% during the trading session. Year-to-date shares are up about 9%.
“As we head into the third quarter, we continue to see many of the same trends, including strong demand during peak periods. However, during off-peak periods, we are now seeing demand trends normalize,” Joanna Geraghty, chief operating officer of JetBlue, said during the company’s second-quarter earnings call on Tuesday.
“We have seen fares normalizing back to 2019 levels,” she added.
Alasak Air (ALK) echoed similar commentary last week, noting domestic leisure airfares coming off their peaks along with traveler preference for longer flights to international destinations.
“As a primarily domestic leisure carrier, this summer presents a unique situation with the unprecedented surge in international demand, not dissimilar to the domestic surge last year,” Alaska Airlines CEO Ben Minicucci said during the company’s earnings call last week.
Uber (UBER) led the Yahoo Finance trending tickers page on Tuesday as shares extending losses in afternoon trading falling nearly 7% following the company’s second quarter earnings release. The company’s second quarter revenue of $9.23 billion came in below estimates for $9.34 billion. Uber CEO Dara Khosrowshahi also noted on the company’s earnings call that Lyft is now “competitive in pricing,” a shift from how he felt about Lyft “9 or 12” months ago.
Caterpillar (CAT) shares rose more than 7% as the company reported better than expected earnings for the second quarter. Caterpillar’s $5.67 earnings per share topped Street estimates for $4.54 cents while its $16.55 billion in revenue came in higher than estimates for $15.65 billion. Resilience in the US economy now has Caterpillar expecting the rest of 2023 to be “even better” than it initally planned for, according to management.
Norwegian Cruise Line Holdings (NCLH) shares fell more than 13% as the company reported weaker than expected guidance for the current quarter. Norwegian expects earnings per share of 70 cents in the current quarter, below estimates for 80 cents. Cruise stocks have largely rallied this year, with shares of Norwegian still up nearly 80% entering Tuesday’s report.
AMD (AMD) stock was trending ahead of the company’s expected earnings report after the closing bell on Tuesday. Analysts expect the company to report adjusted earnings per share of $0.57 and revenue of $5.3 billion for the quarter.
The stock market may have more room to run in 2023.
Oppenheimer Asset Management boosted its S&P 500 year-end price target to 4,900 from 4,400 in a new note on Tuesday citing recent strong data readings on the US economy. That would bring a new record end to the year for the S&P 500, which has never closed out a calendar year above 4,766.
“Our price target assumes that the resilience exhibited by the US economy will continue along with a high level of sensitivity by the Federal Reserve in raising its benchmark rates further to slow the inflation rate toward its 2% target,” Oppenheimer chief investment strategist John Stoltzfus wrote.
Economic data over the last month has painted a more positive picture of the US economy than many thought more than halfway through 2023. Inflation is cooling while Americans continue to gain jobs and consumers have remained resilient. Importantly, Stoltzfus argues this puts the Federal Reserve in range to achieve a “soft landing”, where inflation stabilizes without economic growth taking a significant downturn, and therefore no more interest rate hikes are needed.
Stocks fell on Tuesday as investors digested corporate results and job openings data that showed some signs of cooling but an overall robust labor market.
Around 12:30 p.m. ET, the Dow Jones Industrial Average (^DJI) fell just below the flatline, while the S&P 500 (^GSPC) fell about 0.4%. The tech-heavy Nasdaq Composite (^IXIC) dropped 0.6%.
During a second-quarter earnings call Tuesday morning a Wall Street analyst posed a question to Uber CEO Dara Khosrowshahi about the company’s AI strategy.
A quarter after tech CEOs couldn’t talk about generative AI enough, Khosrowshahi didn’t imply it will be a game changer for Uber.
“The large language models are more focused on text and pictures, et cetera, kind of guessing what the next appropriate answer is,” Khosrowshahi said. “So they’re not as extensible at this point into problems like pricing, matching, routing.”
Uber stock fell about 5% in morning trade after its earnings report revealed revenue of $9.23 billion, below the Street’s estimates for $9.34 billion.
Uber (UBER) led the Yahoo Finance trending tickers page on Tuesday morning as shares of the ride share app fell nearly following 5% following the company’s second quarter earnings release. The company’s second quarter revenue of $9.23 billion came in below estimates for $9.34 billion. Uber CEO Dara Khosrowshahi also noted on the company’s earnings call that Lyft is now “competitive in pricing,” a shift from how he felt about Lyft “9 or 12” months ago.
Caterpillar (CAT) shares rose more than 7% as the company reported better than expected earnings for the second quarter. Caterpillar’s $5.67 earnings per share topped Street estimates for $4.54 cents while its $16.55 billion in revenue came in higher than estimates for $15.65 billion.
Pfizer (PFE) stock was up less than 1% after the company announced revenue below Street expectations into while earnings per share of $0.67 topped estimates for $0.58. Covid vaccine sales of $1.49 billion in the quarter decreased 83% from the same period a year ago.
Norwegian Cruise Line Holdings (NCLH) shares tanked as the company reported weaker than expected guidance for the current quarter. Norwegian expects earnings per share of 70 cents in the current quarter, below estimates for 80 cents. Cruise stocks have largely rallied this year, with shares of Norwegian still up nearly 80% entering Tuesday’s report.
Job openings in June were mostly flat from the previous month, according to new economic data released Tuesday.
The latest Job Opening and Labor Turnover Survey, or JOLTs report, revealed 9.58 million job openings at the end of June, a slight tick down from the 9.62 million in job openings reported in May. Economists surveyed by Bloomberg had expected 9.60 million openings in June. The report also showed 5.91 million hires in June, down from 6.23 million in May.
The data reflects a strong but cooling labor market. Previously, a separate jobs report for June showed 209,000 nonfarm payroll additions in the month, a noted decrease from the month prior. While it was lower than economists had projected, many believed it was still a solid gain.
Stocks began the month of August searching for direction as investors digested corporate results amid a week that will be headlined by Apple (AAPL) and Amazon (AMZN) earnings on Thursday and the July jobs report on Friday.
At the market open, the Dow Jones Industrial Average (^DJI) rose just above the flatline, while the S&P 500 (^GSPC) fell about 0.3%. The tech-heavy Nasdaq Composite (^IXIC) dropped 0.6%.
Stocks diverged to start August, pulling back from a July rally amid a flurry of mixed earnings.