Last week marked the beginning of earnings season, and overall results and reactions were mixed. Broad indices remained largely unchanged with the S&P 500 and NASDAQ lower by 0.09% and 0.42% respectively. Small caps fared better, with the Russell 2000 ending higher by 0.59%.
Markets opened the week with Charles Schwab (SCHW) reporting mixed results, beating earnings estimates but announcing a pause to its share buyback program in light of regulatory uncertainty.1 Cash sorting (the movement of funds seeking higher interest rates) remains an issue, and revenue and earnings power are likely to be lower going forward. SCHW sold off on the announcement, but ended the day nearly 3% higher. M&T Bank (MTB) revenues and earnings rose 66% and 53% respectively, and its shares surged nearly 5%.2 Goldman Sachs (GS) reported weaker revenues and earnings, down 5% and 18% respectively.3 Overall, bank stocks absorbed the results well, with the SPDR S&P Regional Banking ETF (KRE) ending the week up 2.09%
Later in the week, wholesale electronics purveyor CDW Corporation (CDW) plummeted after it reported revenues and guidance much lower than expectations, sending a gloomy message on the future of enterprise spending.4 Tesla (TSLA) plunged nearly 10% on weaker-than-expected profit margins as the company announced its intention to give priority to market share over profits.5 The week ended with a strong report from Proctor and Gamble (PG), which gapped higher after beating both revenue and earnings estimates. While volumes fell 3% for the fourth consecutive quarter, PG was able to offset higher costs to customers by raising prices, which were higher by 10% year-over-year across its portfolio.6
Overall markets showed surprising resiliency last week, with volatility as measured by the VIX continues to drift to lower. That might change this week, as the bulk of the S&P 500 report earnings including many Big Tech stocks. Additionally, the Personal Consumption Expenditure (PCE) price index is due on Friday.
Sources:
- https://content.schwab.com/web/retail/public/about-schwab/schw_q1_2023_earnings_release.pdf
- https://ir.mtb.com/node/37281/pdf
- https://www.goldmansachs.com/media-relations/press-releases/2023/2023-04-18-q1-results.html
- https://investor.cdw.com/news/news-details/2023/CDW-Reports-Preliminary-First-Quarter-2023-Results-and-Updates-2023-US-IT-Industry-Outlook/default.aspx
- https://ir.tesla.com/press-release/tesla-vehicle-production-deliveries-and-date-financial-results-webcast-first-quarter-2023
- https://www.cnbc.com/2023/04/21/procter-gamble-pg-q3-2023-earnings.html#:~:text=P%26G%20reported%20fiscal%20third%2Dquarter,rose%204%25%20to%20%2420.07%20billion.