Stock futures rose on Thursday evening as Wall Street looked to finish the week higher, fueled by strong quarterly reports from key tech companies.
S&P 500 futures climbed 0.5%, while Nasdaq 100 futures added 1%. Futures tied to the Dow Jones Industrial Average were flat.
Futures were supported by gains in extended trading by two of the market’s biggest stocks. Shares of Amazon and Apple moved higher after showing strong sales growth in cloud computing and iPhones, respectively, in their most recent quarters.
The move in futures comes on the heels of a second-straight rally for stocks. The Dow is now up nearly 2% for the week, while the S&P 500 the Nasdaq Composite are up 2.8%.
“The market is taking on a hope that slowing economic growth is going to result in a more dovish Fed moving forward, even if it’s a little further out. So it would make sense to me that weaker rates expectations moving forward would result in a little buoyancy in the equity markets,” said Lauren Goodwin, economist and portfolio strategist of New York Life Investments.
However, Goodwin cautioned that the unusual economic environment and the long period before the next Fed meeting make it difficult to predict the central bank’s path from here.
Investors will get updated looks at a key inflation reading and second-quarter employment costs on Friday, which could be key data points for the Fed as it considers its next move.
Investors have also been navigating a mixed batch of earnings reports this week. Shares of Roku sank more than 20% in after hours trading after the company missed estimates and warned of a slowdown in advertising. Chipmaker Intel dropped 7% after its quarterly results fell short of expectations.
On Friday, key earnings include Chevron, Exxon Mobil and Procter & Gamble.
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— Mike Wilson, chief U.S. equity strategist and CIO, Morgan Stanley
Morgan Stanley’s Mike Wilson, who correctly called the stock market’s 2022 swoon, isn’t convinced the lows are in after major U.S. indexes scored a big gain following Wednesday’s Federal Reserve decision to raise rates by another 75 basis points, or three-quarters of a percentage point, to 2.25% to 2.5%.
The Nasdaq Composite COMP, +1.08% surged more than 4% Wednesday, while the Dow Jones Industrial Average DJIA, +1.03% jumped 436 points, or 1.4%, and the S&P 500 SPX, +1.21% advanced 2.6%.
Investors found reason to cheer after Fed chair Jerome Powell said that while another 75-basis-point move in September was possible, the decision would depend on forthcoming economic data. While Powell asserted the Fed would bring stubbornly high inflation down and that the economy would need to see below-trend growth, traders saw prospects for the Fed to slow the pace of rate increases and no reason to budge their expectations for the federal funds rate to ultimately top out somewhere south of 3.5%.
Stocks wobbled in early trade Thursday, but ended with another round of sharp gains as investors digested an estimate of second-quarter gross domestic product that showed the U.S. economy contracted an 0.9% annual pace. That follows a 1.6% contraction in the first three months of the year and highlights fears of a sharp slowdown in economic growth and the potential for recession, but also served to reinforce market expectations the Fed will soon slow the pace of tightening, analysts said.
Stocks have fallen sharply in 2022, with the S&P 500 and Nasdaq entering bear markets, as the Fed has moved to aggressively hike rates in its effort to rein in inflation. However, Wednesday’s jump was in line with the pattern seen on the three previous days when the Fed delivered rate hikes in 2022. Such jumps have often been followed by pullbacks.
Wilson, in a CNBC interview late Wednesday, said expectations that the pace of rate hikes is set to slow are premature. Wilson echoed a warning from a note published earlier this week, in which he argued that a past pattern that’s seen stocks rally in the time between a final Fed rate hike and the onset of a recession may not be in play in the current cycle. That’s because the Fed may find itself continuing to hike interest rates right into a recession as it attempts to get a grip on inflation.
Wilson has a 3,900 year-end target for the S&P 500, which is around 3% below Wednesday’s finish. He’s also warned the S&P 500 could take out the 2022 low near 3,636 set in mid-June and could drop as low as 3,000 if a recession does take hold.
The bear market may be getting “close to the end” but needs to have “that final move, and I don’t think the June low is the final move,” he told CNBC.
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A trader works on the floor of the New York Stock Exchange (NYSE) following a Fed rate announcement, in New York City, July 27, 2022.
Brendan McDermid | Reuters
Here are the most important news items that investors need to start their trading day:
1. Stock futures look soft
U.S. equities markets were set for a weak open Thursday following Wednesday’s broad rally. Investors are chewing on the latest round of earnings, which included Facebook parent Meta on Wednesday afternoon and NBCUniversal parent Comcast on Thursday morning. The Federal Reserve on Wednesday decided to hike rates by three-quarters of a point, in line with expectations, to battle a four-decade-high surge in inflation. Fed Chair Jerome Powell also indicated that the central bank could slow the pace of its rate hikes.
2. GDP and recession vibes
Federal Reserve Board Chairman Jerome Powell speaks during a news conference following a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, July 27, 2022.
Elizabeth Frantz | Reuters
3. JetBlue gets its way
LaGuardia International Airport Terminal A for JetBlue and Spirit Airlines in New York.
Leslie Josephs | CNBC
It didn’t take long for things to fall into place for JetBlue after Spirit scuttled its deal with fellow low-cost airline Frontier. On Thursday morning, Spirit and JetBlue said they reached a deal. If the acquisition is finalized, the combination of JetBlue and Spirit would create the fifth-largest carrier in the United States. But the agreement faces significant regulatory hurdles, as the Biden administration pushes a hard line on mergers and acquisitions. CNBC’s airlines reporter Leslie Josephs breaks it down here.
4. Reality bites Meta
Facebook parent Meta reported earnings after the bell Wednesday, and they weren’t pretty. Financial results missed expectations pretty much across the board. Its metaverse and virtual reality unit suffered a fat $2.8 billion loss in the second quarter, and it’s expected to post even lower revenue in the third. The bigger immediate concern, though, is advertising revenue. And just like social media rivals Snap and Twitter, Meta, which also owns Instagram, said a slowdown in the economy is weighing on the ad business. “It’s always hard to predict how deep or how long these cycles will be, but I’d say that the situation seems worse than it did a quarter ago,” CEO Mark Zuckerberg told analysts in a call.
5. Manchin and Schumer actually reach a deal
U.S. Senator Joe Manchin (D-WV) walks to the Senate floor at the U.S. Capitol in Washington, June 7, 2022.
Jonathan Ernst | Reuters
Washington is notoriously slow to get things done, especially when Congress is involved. But sometimes there are surprises, too, like the out-of-nowhere deal Wednesday evening between Senate Majority Leader Chuck Schumer, D-N.Y., and conservative West Virginia Democratic Sen. Joe Manchin. Just weeks ago, Manchin had balked at a reconciliation package due to his concerns over inflation. The new measure, which is designed to pass the Senate with a simple majority, includes provisions for health care and climate change, as well as deficit reduction (including a minimum corporate tax). CNBC’s Emma Newburger explains the climate provisions in the bill here.
– CNBC’s Samantha Subin, Carmen Reinicke, Patti Domm, Leslie Josephs, Emma Newburger, Jonathan Vanian, Kevin Breuninger and Jordan Novet contributed to this report.
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The Dow Jones Industrial Average jumped 436.05 points, or nearly 1.4%, to 32,197.59. The S&P 500 gained 2.62% to close at 4,023.61. The Nasdaq Composite climbed 4.06% to 12,032.42. Tech shares led gains a day after quarterly results from Alphabet and Microsoft.
Stocks hit their highs of the session in the afternoon as Fed Chairman Jerome Powell left the door open about the size of the central bank’s rate move at its next meeting in September and noted it would eventually slow the magnitude of rate hikes. Powell said in a press conference that the Fed could hike by 0.75 percentage point again in September, but that it would be dependent on the data.
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“As the stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation,” he said.
Investors were also encouraged after Powell noted that he doesn’t believe the economy is currently in a recession. The second-quarter GDP reading is due on Thursday.
Investors have continued to worry that the central bank’s ongoing efforts to lower inflation will push the economy into a recession, or that we may already be in one. Those fears eased Wednesday after Powell said he does not think the U.S. is currently in a recession, adding that “there are too many areas of the economy that are performing too well.”
“The reason this is providing some relief to the equity market is the Fed is acknowledging that there can be an impact on growth to the economy based on their policy,” said Gargi Chaudhuri, head of BlackRock’s iShares investment strategy for the Americas. “They’re recognizing there are two sides of this: there’s a growth tradeoff to fight inflation. That recognition is something we had today that we didn’t hear before.”
Many regard two consecutive quarters of negative GDP readings as a recession, but the National Bureau of Economic Research, the official arbiter of recessions, uses multiple other factors to determine one. The GDP reading Thursday is expected to show barely an expansion after first-quarter GDP declined by 1.6%.
Stocks started the day on a high note after getting a boost from tech earnings. Tech stocks added to those gains as the overall market rallied.
Alphabet shares rose about 7.7% after the tech giant’s quarterly report showed strong revenue from Google’s search business. Microsoft gained close to 6.7% after reporting a 40% jump in revenue growth for Azure and cloud services. The gains came even after both companies posted earnings and revenue that fell below analyst estimates.
Meta Platforms shares rose nearly 6.6%, ahead of its earnings scheduled for after the bell. Amazon advanced more than 5% after getting hit by the retail carnage Tuesday. Apple added 3.4%.
Retailers rallied too as inflation concerns softened Wednesday afternoon. Walmart, which led retail declines in the previous session, climbed about 3.8%. Kohl’s, Ross Stores and Costco added more than 2% each. The SPDR S&P Retail ETF advanced roughly 2.6%.
Enphase Energy also popped on the back of its latest results, ending the day about 17.9% higher. Chipotle added 14.7% following its mixed second-quarter earnings release.
U.S. stocks fell Tuesday after Walmart cut its earnings forecast, sending other retail shares lower and adding to concern that consumer spending might not be strong enough to keep the U.S. out of a recession.
The Dow Jones Industrial Average fell 228.50 points, or 0.71%, to 31,761.54. The S&P 500 retreated by 1.15% to 3,921.05. The Nasdaq Composite declined about 1.87% to 11,562.57. All of the major averages were still on pace for their best month of 2022.
Walmart cut its quarterly and full-year profit estimates because of rising food inflation. This alarmed investors who deliberated the implications for other retail stocks. The big-box retailer said higher prices are spurring consumers to pull back on general merchandise spending, particularly in apparel.
Walmart plunged 7.6% Tuesday and dragged other retailers with it. Kohl’s and Target dropped 9.1% and 3.6%, respectively. Among apparel companies, Macy’s was among the hardest hit, down 7.2%. Nordstrom and Ross each lost more than 5%, and TJX Companies shed about 4.2%. The SPDR S&P Retail ETF fell nearly 4.2%.
“The most important thing from the Walmart announcement is how inflation is changing what people buy,” said Robert Cantwell, portfolio manager at Upholdings. “Food now makes up a bigger share of individuals’ budgets, but overall spending still generally remains intact.”
The retail turmoil bled into e-commerce stocks. Shopify tumbled about 14.1% after the payments provider announced it’s laying off about 10% of its global workforce, citing a pullback in online spending and saying it misjudged how long the pandemic-fueled e-commerce boom would last. The company will report its earnings Wednesday.
Amazon fell 5.2%. Square parent Block and PayPal, both of which operate major merchant services businesses, dropped roughly 7.1% and 5.7%, respectively.
Inflation has also changed the cost of production for companies like General Motors. Its shares fell 3.4% after the company missed earnings estimates, blaming supply chain disruptions that forced factory shutdowns and led it to ship fewer vehicles than expected.
UPS shares also slid 3.4% after the shipping giant reported declines in its international and supply chain businesses.
On the flip side, Coca-Cola shares rose 1.6% after the beverage giant topped earnings and revenue expectations, citing a sales volume recovery from the pandemic and higher pricing.
Shares of McDonald’s added nearly 2.7% following mixed second-quarter results, in which net sales were hurt in part by the closure of locations in Russia and Ukraine, but international growth elsewhere fueled a rise same-store sales.
Industrial stocks were earnings winners, too. Shares of 3M rose 4.9% after the company beat earnings and revenue estimates and announced plans to spin its health care business into a separate publicly traded company. General Electric posted better-than-expected results, citing recovery in the aviation industry that boosted its jet engine business. Its shares gained 4.6%.
Traders are also bracing for an onslaught of megacap tech earnings and economic data this week, as well as the outcome of the Federal Reserve meeting, that will help Wall Street direct its expectations for the rest of the year.
“There is this moderating of earnings expectations,” said Stephanie Lang, chief investment officer of Homrich Berg. “The overall corporate sentiment seems to be declining, there is a lot of cautionary commentary around inflation, the dollar”
“As the Fed continues on its trajectory with its main goal to weaken demand for goods and services, that will translate into a weaker top line – if they are able to get inflation under control and temper that demand,” she added. “That’s something we would be concerned about for the second half of this year.”
Fed meeting and the market’s expectations
On Tuesday, the Federal Reserve commenced its two-day policy meeting. Traders are widely expecting a three-quarter percentage point hike and will be looking for clues on the future interest rate path and what it could mean for equity market pricing.
“The bottom line is the Fed, no matter how you cut it, is going to quickly move to that restrictive stance that will have a toll on the economy,” Lang said. “It’s going to get there quickly enough, whether it’s an extra 25 basis points next time versus a month later. Within the next six months we’re going to be in a financially restrictive environment.”
Stock splits occur when a company multiples its share count to reduce its stock price without changing its market cap (the total value of all shares outstanding). While this process doesn’t change a company’s valuation, it can make the stock more appealing to retail investors who are intimidated by higher-priced stocks and/or may not have access to fractional equities.
For those investors who don’t want to base their investment thesis solely on the fact that a stock-split stock’s price is now more reasonable, there are plenty of other reasons why two recently split stocks,Amazon(AMZN10.36%) andAlphabet(GOOG1.79%)(GOOGL1.84%), could make great buys right now. Let’s take a closer look.
Image source: Getty Images
1. Amazon.com
On June 6, Amazon completed a 20-to-1 stock split that dropped its stock price to around $122 per share. With a market cap of $1.25 trillion, it is still one of the biggest companies in the world. But a massive international push and a renewed focus on on-demand streaming could unlock even more long-term value for investors.
Amazon owes much of its success to its ability to pivot to new growth drivers. First, it was an online book store, then an e-commerce giant, and now a diversified tech conglomerate. But the company has a few more tricks up its sleeve.
According to Insider Magazine, Amazon is planning a big international push next year that will give its e-commerce platform a larger presence in Latin America and Africa. International e-commerce represented just 26% of Amazon’s first-quarter sales ($126 billion), and the company likely sees this as a long-term growth opportunity. But its expansion of Prime video may be even more exciting.
The Wall Street Journal reports Amazon is planning to roll out its video streaming service into 200 additional countries — a move that will better position it to compete with the market leader, Netflix, which currently operates in 190.
The global streaming push would follow Amazon’s $8.5 billion acquisition of MGM Studios, giving it a larger library of exclusive content and the talent to create more original productions. Are we witnessing Amazon’s video service transform from a loss leader into a stand-alone growth engine? It’s too early to tell. But the future looks bright considering Amazon’s track record of successfully expanding into new opportunities.
2. Alphabet
This FAANG stock also opted for a 20-for-1 split, which brought Google’s parent company, Alphabet, down to just $108 per share after the split was finalized on July 15. And like Amazon, it is still a massive company (with a market cap of $1.42 trillion). But despite its size, Alphabet still looks like a good deal because of its strong economic moat and relatively low valuation.
The term “economic moat” describes a company’s ability to maintain an advantage over rivals. And with the two most-visited websites on the internet (Google and YouTube), Alphabet has this in droves. The businesses maintain dominance through scale, which gives them brand recognition and more data to work with when developing algorithms to improve user experience and match ads to interested consumers.
First-quarter revenue jumped 23% to $68 billion, driven by strength in Google advertising, which represents 80% of Alphabet’s sales. Cloud computing provides a small but fast-growing diversification — jumping 44% to $5.8 billion in the period.
Like many tech companies, Alphabet is experiencing a post-pandemic slowdown, which sent profits down 8.4% to $16.4 billion. But with a forward price-to-earnings (P/E) multiple of just 19, Alphabet is cheaper than the tech-heavyNasdaq-100‘s average of roughly 26. This looks like a good value considering the company’s industry leadership, continued top-line growth, and potential to bounce back when macroeconomic conditions improve.
Betting on a tech rebound
The Nasdaq Composite index is down 24% year to date. And much of this decline is driven by big tech names like Alphabet and Amazon as the pandemic boost fades. But it can pay to be greedy when others are fearful. Both companies offer reasonable valuations and compelling drivers for long-term success. Now might be a good time for investors to bet on these stocks trading at a discount to their historic highs.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), and Amazon. The Motley Fool has a disclosure policy.
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Work is nearing completion on One Wall Street, a 564-foot-tall Art Deco skyscraper in the Financial District. Designed by SLCE Architects and developed by Macklowe Properties, the $1.5 billion venture is the largest office-to-residential conversion in New York City history and will yield 566 condominiums as well as a 44,000-square-foot Whole Foods Market and a four-floor, 75,000-square-foot Life Time fitness center on the lower levels. The project also involved the construction of a multi-story expansion above the mid-century annex to the 91-year-old structure. Compass Development Marketing Group is handling sales and marketing with a gallery located within the famous Red Room. JT Magen is the general contractor for the property, which is bound by Broadway to the west, Wall Street to the north, Exchange Place to the south, and New Street to the east.
Finishing touches have continued to progress on the lower stories of the complex since our last update in November, when scaffolding still surrounded the plot. This has all since been removed, revealing the finished look of the ground-level frontage.
Photo by Michael Young
Photo by Michael Young
A large banner is in place over the entrance to the Whole Foods Market. Adjacent to this is a stepped massing of floor-to-ceiling glass with a broad pleated pattern that mimics the undulating Art Deco façade of the original building and the stone-walled expansion. This architectural language extends around the southwestern corner and along Exchange Place. With the temporary scaffolding removed, sunlight brightens the street and the new ADA-accessible ramp and staircases beneath the fitness center’s entrance canopy.
Photo by Michael Young
Photo by Michael Young
Photo by Michael Young
Photo by Michael Young
Photo by Michael Young
Photo by Michael Young
Photo by Michael Young
The Life Time gym will stretch several floors below street level and feature amenities including a spa offering manicures, pedicures, multiple massage rooms, haircuts and blowouts; men’s and women’s lockers rooms; dressing rooms; a sauna; a eucalyptus steam room; showers; seven studios for yoga, pilates, barre, and cycling; a children’s academy with a half basketball court, a language and art studio, and an activity studio; a weightlifting space; and a chiropractic and rehabilitation recovery room.
The show room for Life Time is located along Broadway, adjacent to the Wall Street subway entrance, which services the 4 and 5 trains.
Photo by Michael Young
Life Time will reportedly begin operation in September, while the Whole Foods Market has yet to announce its official opening date. There will also be another retail tenant, although details have not yet been publicly announced.
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Things are on the up for cryptocurrencies, at least for the time being.
Bitcoin, the largest crypto, reached $24,000 on Friday — hitting a fresh new high in July as it continues to follow the rising stock market. Ethereum, the second-largest crypto, climbed above $1,700 and other cryptocurrencies were also trading higher on Friday.
The two largest cryptocurrencies are on track for their best month of the year. Bitcoin is up more than 20% in July and ethereum is up 50%, according to NextAdvisor’s crypto price data.
But after a dismal first half of the year, is the crypto market poised for a bull run in the second half? Experts say not quite, warning investors to remain cautious. The market could easily come crashing down again given the current macro environment, so it may not be wise take on risky bets right now.
“Many are warning we are not yet out of the woods from a macro perspective,” says Adrian Kenny, a senior sales trader at digital asset broker GlobalBlock. “A cautious thesis is a more logical stance to take in the current conditions.”
Bitcoin and Ethereum Prices: Is a Bull Run Starting?
A lot happened this week that led to a rally in the crypto and wider markets in general.
Many big retail and tech companies — including Google, Apple, and Meta — revealed their second-quarter earnings, a factor that influences stock prices. The Federal Reserve raised interest rates by 75 basis points, but signaled it may slow down the pace of such rises. And an economic report revealed that U.S. GDP fell for a second consecutive quarter in a row. Though that follows a commonly understood technical definition of a recession, President Joe Biden and Fed Chairman Jerome Powell both said this week that the U.S. is not in a recession.
Experts say all eyes have recently been looking to how the Fed would respond to the threat of soaring inflation and a potential recession. Experts say the upward movement in the markets suggest that investors were already expecting those outcomes this week, and will likely continue moving higher in the short-term because investors have already priced in the bad news.
“The reaction has been very positive this week and the cryptocurrency markets once again tipped over the $1 trillion market cap once again,” Kenny says.
While this week has for the first time in over a month seen some market recovery, there is still “an undoubtedly considerable mountain to climb in terms of ‘normality’ or the hopes of a return to the highs of 2021 anytime soon,” says Kenny.
What This Week’s Crypto Rally Means for Investors
If you’re investing crypto for the long-term, the recent developments this week shouldn’t drastically alter your investment strategy. It’s simply a reminder that crypto assets are highly volatility and risky, particularly during times of economic uncertainty.
While there has been positive momentum in the crypto market this week, bitcoin and ethereum are still down more than 50% from when they reached their all-time highs last November. Given crypto’s history of volatility, prices will continue to drastically swing up and down — and it’s extremely difficult to predict with certainty where they’ll go next.
One thing is certain: there’s a gloomy list of long-term potential worries for the U.S. economy, so experts recommend playing it safe. Allocate no more than 5% of crypto to your investment portfolio and only put in what you’re OK with losing. Before putting any extra cash into the crypto market, always make sure your financial bases are covered — from your retirement accounts to emergency savings.
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The S&P 500 has slumped over 14% this year as investors fret about a potential recession.
We asked experts for the essential reading that’s helped them to better understand bear markets.
Here are 19 books to help investors navigate a stock market downturn.
It’s been a tough year to make money in the stock market.
Equities have suffered a broad and deep sell-off in 2022, with investors panicking about a potential recession, rising interest rates, and Russia’s invasion of Ukraine.
Growth stocks have led the downturn, with the Nasdaq down 22% this year through Friday. Some retail and even professional investors are experiencing their first prolonged bear market after two years of record-breaking outperformance from major indices and the extended bull run in the decade after the 2008 financial crisis.
Insider asked a number of veteran Wall Street strategists which books have helped them better understand bear markets, recessions, and stock market crashes.
They shared 19 top picks, ranging from Michael Lewis’s “The Big Short,” which was adapted into a Hollywood blockbuster starring Christian Bale and Brad Pitt, to “Reminiscences of a Stock Operator,” a 1923 novel written by the journalist Edwin Lefèvre.
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Church & Dwight (NYSE:CHD – Get Rating) updated its third quarter 2022 earnings guidance on Friday. The company provided earnings per share guidance of $0.65-$0.65 for the period, compared to the consensus earnings per share estimate of $0.86. The company issued revenue guidance of $1.34 billion-$1.36 billion, compared to the consensus revenue estimate of $1.41 billion. Church & Dwight also updated its FY 2022 guidance to $3.02-$3.02 EPS.
Wall Street Analysts Forecast Growth
Several equities analysts recently weighed in on the stock. JPMorgan Chase & Co. increased their price target on shares of Church & Dwight from $84.00 to $86.00 in a report on Thursday, July 21st. Barclays dropped their price target on shares of Church & Dwight from $81.00 to $77.00 and set an underweight rating on the stock in a research note on Monday, May 23rd. StockNews.com started coverage on Church & Dwight in a report on Thursday, March 31st. They issued a hold rating on the stock. Wells Fargo & Company raised their price objective on Church & Dwight from $95.00 to $100.00 and gave the company an overweight rating in a report on Tuesday, June 28th. Finally, Morgan Stanley lifted their price target on Church & Dwight from $80.00 to $86.00 and gave the stock an underweight rating in a report on Tuesday, April 12th. Four analysts have rated the stock with a sell rating, five have given a hold rating and four have given a buy rating to the company. According to MarketBeat, the company has an average rating of Hold and a consensus price target of $98.50.
Church & Dwight Stock Performance
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NYSE CHD opened at $96.21 on Friday. Church & Dwight has a 1-year low of $80.34 and a 1-year high of $105.28. The company has a market cap of $23.36 billion, a P/E ratio of 29.51, a P/E/G ratio of 3.73 and a beta of 0.39. The company has a debt-to-equity ratio of 0.47, a current ratio of 0.65 and a quick ratio of 0.33. The stock has a 50-day moving average of $90.66 and a two-hundred day moving average of $96.43.
Church & Dwight (NYSE:CHD – Get Rating) last announced its quarterly earnings data on Friday, July 29th. The company reported $0.76 EPS for the quarter, topping analysts’ consensus estimates of $0.72 by $0.04. Church & Dwight had a return on equity of 22.29% and a net margin of 15.46%. The business had revenue of $1.33 billion during the quarter, compared to the consensus estimate of $1.34 billion. During the same period in the previous year, the company posted $0.76 earnings per share. The business’s revenue for the quarter was up 4.2% on a year-over-year basis. As a group, analysts anticipate that Church & Dwight will post 3.16 EPS for the current year.
Church & Dwight Dividend Announcement
The business also recently disclosed a quarterly dividend, which will be paid on Thursday, September 1st. Stockholders of record on Monday, August 15th will be given a dividend of $0.2625 per share. This represents a $1.05 dividend on an annualized basis and a dividend yield of 1.09%. The ex-dividend date is Friday, August 12th. Church & Dwight’s dividend payout ratio is presently 32.21%.
Insider Transactions at Church & Dwight
In related news, Director Bradley C. Irwin sold 7,000 shares of the business’s stock in a transaction that occurred on Wednesday, May 11th. The stock was sold at an average price of $97.86, for a total transaction of $685,020.00. Following the completion of the sale, the director now owns 41,636 shares in the company, valued at $4,074,498.96. The transaction was disclosed in a document filed with the SEC, which is available through the SEC website. Corporate insiders own 1.70% of the company’s stock.
Institutional Investors Weigh In On Church & Dwight
Several institutional investors have recently added to or reduced their stakes in CHD. Covestor Ltd lifted its stake in Church & Dwight by 62.7% during the first quarter. Covestor Ltd now owns 932 shares of the company’s stock worth $93,000 after purchasing an additional 359 shares during the last quarter. Brown Brothers Harriman & Co. lifted its stake in Church & Dwight by 54.6% in the first quarter. Brown Brothers Harriman & Co. now owns 1,702 shares of the company’s stock valued at $169,000 after buying an additional 601 shares during the last quarter. Fund Management at Engine No. 1 LLC purchased a new stake in Church & Dwight in the first quarter valued at approximately $203,000. Eudaimonia Partners LLC purchased a new stake in Church & Dwight in the first quarter valued at approximately $205,000. Finally, Wellington Management Group LLP purchased a new stake in Church & Dwight in the first quarter valued at approximately $208,000. Hedge funds and other institutional investors own 84.81% of the company’s stock.
Church & Dwight Co, Inc develops, manufactures, and markets household, personal care, and specialty products. It operates through three segments: Consumer Domestic, Consumer International, and Specialty Products Division. The company offers cat litters, carpet deodorizers, laundry detergents, and baking soda, as well as other baking soda based products under the ARM & HAMMER brand; condoms, lubricants, and vibrators under the TROJAN brand; stain removers, cleaning solutions, laundry detergents, and bleach alternatives under the OXICLEAN brand; battery-operated and manual toothbrushes under the SPINBRUSH brand; home pregnancy and ovulation test kits under the FIRST RESPONSE brand; depilatories under the NAIR brand; oral analgesics under the ORAJEL brand; laundry detergents under the XTRA brand; gummy dietary supplements under the L’IL CRITTERS and VITAFUSION brands; dry shampoos under the BATISTE brand; water flossers and replacement showerheads under the WATERPIK brand; FLAWLESS products; cold shortening and relief products under the ZICAM brand; and oral care products under the THERABREATH brand.
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The Dow Jones Industrial Average jumped 436.05 points, or nearly 1.4%, to 32,197.59. The S&P 500 gained 2.62% to close at 4,023.61. The Nasdaq Composite climbed 4.06% to 12,032.42. Tech shares led gains a day after quarterly results from Alphabet and Microsoft.
Stocks hit their highs of the session in the afternoon as Fed Chairman Jerome Powell left the door open about the size of the central bank’s rate move at its next meeting in September and noted it would eventually slow the magnitude of rate hikes. Powell said in a press conference that the Fed could hike by 0.75 percentage point again in September, but that it would be dependent on the data.
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“As the stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation,” he said.
Investors were also encouraged after Powell noted that he doesn’t believe the economy is currently in a recession. The second-quarter GDP reading is due on Thursday.
Investors have continued to worry that the central bank’s ongoing efforts to lower inflation will push the economy into a recession, or that we may already be in one. Those fears eased Wednesday after Powell said he does not think the U.S. is currently in a recession, adding that “there are too many areas of the economy that are performing too well.”
“The reason this is providing some relief to the equity market is the Fed is acknowledging that there can be an impact on growth to the economy based on their policy,” said Gargi Chaudhuri, head of BlackRock’s iShares investment strategy for the Americas. “They’re recognizing there are two sides of this: there’s a growth tradeoff to fight inflation. That recognition is something we had today that we didn’t hear before.”
Many regard two consecutive quarters of negative GDP readings as a recession, but the National Bureau of Economic Research, the official arbiter of recessions, uses multiple other factors to determine one. The GDP reading Thursday is expected to show barely an expansion after first-quarter GDP declined by 1.6%.
Stocks started the day on a high note after getting a boost from tech earnings. Tech stocks added to those gains as the overall market rallied.
Alphabet shares rose about 7.7% after the tech giant’s quarterly report showed strong revenue from Google’s search business. Microsoft gained close to 6.7% after reporting a 40% jump in revenue growth for Azure and cloud services. The gains came even after both companies posted earnings and revenue that fell below analyst estimates.
Meta Platforms shares rose nearly 6.6%, ahead of its earnings scheduled for after the bell. Amazon advanced more than 5% after getting hit by the retail carnage Tuesday. Apple added 3.4%.
Retailers rallied too as inflation concerns softened Wednesday afternoon. Walmart, which led retail declines in the previous session, climbed about 3.8%. Kohl’s, Ross Stores and Costco added more than 2% each. The SPDR S&P Retail ETF advanced roughly 2.6%.
Enphase Energy also popped on the back of its latest results, ending the day about 17.9% higher. Chipotle added 14.7% following its mixed second-quarter earnings release.
Microsoft announced its fourth-quarter results Tuesday, missing Wall Street’s expectations. The company reported it had $51.9 billion in sales for the quarter that ended June 30, an increase of 12% year over year. Analysts were expecting around $52.5 billion. Net income inched up 2% to $16.74 billion. This is considered the slowest revenue growth for Microsoft since 2020.
Microsoft reduced its Q4 prediction in June to between $51.9 billion and $52.7 billion, anticipating that foreign currency exchanges would interfere with its quarterly revenue. And for the most part, the company wasn’t wrong.
Microsoft cited that foreign exchange rate movement negatively impacted revenue by $595 million and reduced earnings per share by 4 cents.
The software company continues to experience other challenges stemming from a deteriorating PC market — its largest decline in years — as well as extended production shutdowns in China and scaled-down operations in Russia.
PC shipments experienced a huge drop, and Gartner predicts worldwide PC sales could decline nearly 10% this year.
Here are other key numbers from the report:
Xbox content and services revenue saw a slight dip at 6%. Hardware revenue fell 11%.
Windows OEM (original equipment manufacturer) revenue decreased 2%.
On the bright side, Microsoft’s Intelligent Cloud segment generated $20.91 billion in revenue, up 20%. Revenue from Azure and other cloud services grew by 40%, compared with 46% last quarter.
The company also said LinkedIn continues to grow as revenue was up 26%. However, this is down from the 34% growth last quarter.
Office Commercial products and cloud services revenue increased 9% driven by Office 365 Commercial revenue growth of 15%.
Office Consumer is also up 9% year over year.
Microsoft 365 Consumer reached 59.7 million subscribers.
Microsoft’s earnings follow the announcement that it will be the ad tech partner for Netflix’s upcoming ad-supported tier.
The news also comes as the overall tech market faces a beating and companies slow down hiring and announce layoffs. In the beginning of this month, Microsoft laid off less than 1% of its 180,000-person workforce, per Bloomberg. The company also said it was slowing hiring moving forward.
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Stocks on Wall Street are solidly higher in afternoon trading Wednesday after the Federal Reserve raised its key interest rate by a widely expected three-quarters of a point as the central bank ratchets up its campaign to quell surging inflation.
The Fed’s move, its second three-quarters of a point hike in row, raises its benchmark short-term rate to the highest level since 2018.
The S&P 500 was up 1.5%, little changed from where it was right before the 2 p.m. Eastern release of the Fed policy statement. The benchmark index’s latest gains more than make up for its losses from a day earlier. The Dow Jones Industrial Average was up 0.4% and the technology-heavy Nasdaq Composite was up 2.6%.
Smaller company stocks also gained ground, lifting the Russell 2000 by a percent.
Bond yields were mixed. The two-year Treasury yield, which tends to move with expectations for the Fed, rose to 3.08% from 3.06% late Tuesday. The 10-year yield, which influences mortgage rates, fell to 2.77% from 2.79%.
A screen teases the Federal Reserve rate decision on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)
Photo: ASSOCIATED PRESS/Seth Wenig
Traders work on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)
Photo: ASSOCIATED PRESS/Seth Wenig
Traders work on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)
Photo: ASSOCIATED PRESS/Seth Wenig
Traders work on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)
Photo: ASSOCIATED PRESS/Seth Wenig
Traders work on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)
Photo: ASSOCIATED PRESS/Seth Wenig
Traders work on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)
Photo: ASSOCIATED PRESS/Seth Wenig
Traders work on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)
Photo: ASSOCIATED PRESS/Seth Wenig
Traders work on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)
Photo: ASSOCIATED PRESS/Seth Wenig
Traders work on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)
Photo: ASSOCIATED PRESS/Seth Wenig
Traders work on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)
Photo: ASSOCIATED PRESS/Seth Wenig
Traders work on the floor at the New York Stock Exchange in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)
Photo: ASSOCIATED PRESS/Seth Wenig
A sign for New York Stock Exchange is displayed on the floor at the NYSE in New York, Wednesday, July 27, 2022. (AP Photo/Seth Wenig)
Wall Street had correctly predicted the size of the hike, which is triple the usual size and the Fed’s fourth rate hike this year.
Such increases make borrowing more expensive, slowing the economy. The hope is that the Fed and other central banks can deftly find the middle ground where the economy slows enough to whip inflation but not enough to cause a recession.
The central bank’s decision comes as inflation has accelerated to 9.1%, the fastest annual pace in 41 years.
The move could mean less pressure on stocks, particularly tech stocks and others seen as relatively expensive.
Technology and communication services stocks accounted for a big share of the S&P 500′s gains. Nvidia rose 5.4% and Netflix added 4%.
Stocks have been choppy this week following solid gains last week that were mainly fueled by better-than-expected reports on corporate profits.
Inflation remains at the forefront of investors’ minds, however. Markets were spooked Monday after retail giant Walmart warned that its profits are being hurt by rising prices for food and gas, which are forcing shoppers to cut back on more profitable discretionary items such as clothing.
The retailer’s profit warning in the middle of the quarter was rare and raised worries about how the highest inflation in 40 years is affecting the entire retail sector.
Investors kept an eye on the latest batch of corporate earnings reports Wednesday, including strong earnings from Google’s owner Alphabet and Microsoft.
Shares in Microsoft and Google parent Alphabet rose 5.1% and 6.8%, respectively, after their latest quarterly reports. Boeing shares slipped 0.8% despite the aerospace company reporting it delivered more planes in the first quarter than it has since the start of the pandemic.
Retailers, restaurant chains and other companies that rely on direct consumer spending also helped lift the market. Chipotle Mexican Grill jumped 12.7% after the restaurant chain reported second-quarter earnings that beat analysts’ forecasts.
Spotify Technology vaulted 11.5% after the music streaming service reported monthly active user and premium subscriber numbers that exceeded the Street’s expectations.
Investors will get quarterly results from Ford Motor Co. as well as Facebook’s parent company Meta Platforms after the closing bell.
Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
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The Dow Jones Industrial Average jumped 436.05 points, or nearly 1.4%, to 32,197.59. The S&P 500 gained 2.62% to close at 4,023.61. The Nasdaq Composite climbed 4.06% to 12,032.42. Tech shares led gains a day after quarterly results from Alphabet and Microsoft.
Stocks hit their highs of the session in the afternoon as Fed Chairman Jerome Powell left the door open about the size of the central bank’s rate move at its next meeting in September and noted it would eventually slow the magnitude of rate hikes. Powell said in a press conference that the Fed could hike by 0.75 percentage point again in September, but that it would be dependent on the data.
Loading chart…
“As the stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation,” he said.
Investors were also encouraged after Powell noted that he doesn’t believe the economy is currently in a recession. The second-quarter GDP reading is due on Thursday.
Investors have continued to worry that the central bank’s ongoing efforts to lower inflation will push the economy into a recession, or that we may already be in one. Those fears eased Wednesday after Powell said he does not think the U.S. is currently in a recession, adding that “there are too many areas of the economy that are performing too well.”
“The reason this is providing some relief to the equity market is the Fed is acknowledging that there can be an impact on growth to the economy based on their policy,” said Gargi Chaudhuri, head of BlackRock’s iShares investment strategy for the Americas. “They’re recognizing there are two sides of this: there’s a growth tradeoff to fight inflation. That recognition is something we had today that we didn’t hear before.”
Many regard two consecutive quarters of negative GDP readings as a recession, but the National Bureau of Economic Research, the official arbiter of recessions, uses multiple other factors to determine one. The GDP reading Thursday is expected to show barely an expansion after first-quarter GDP declined by 1.6%.
Stocks started the day on a high note after getting a boost from tech earnings. Tech stocks added to those gains as the overall market rallied.
Alphabet shares rose about 7.7% after the tech giant’s quarterly report showed strong revenue from Google’s search business. Microsoft gained close to 6.7% after reporting a 40% jump in revenue growth for Azure and cloud services. The gains came even after both companies posted earnings and revenue that fell below analyst estimates.
Meta Platforms shares rose nearly 6.6%, ahead of its earnings scheduled for after the bell. Amazon advanced more than 5% after getting hit by the retail carnage Tuesday. Apple added 3.4%.
Retailers rallied too as inflation concerns softened Wednesday afternoon. Walmart, which led retail declines in the previous session, climbed about 3.8%. Kohl’s, Ross Stores and Costco added more than 2% each. The SPDR S&P Retail ETF advanced roughly 2.6%.
Enphase Energy also popped on the back of its latest results, ending the day about 17.9% higher. Chipotle added 14.7% following its mixed second-quarter earnings release.
Medical Properties Trust (NYSE:MPW) is a healthcare REIT that has been around for close to two decades. During that time, it has managed to gain access to 46,000 licensed hospital beds across 17 states, making it the second largest owner in the US. Besides the US, it also has operations in Europe, Australia, and South America. In addition to its core expertise of acquiring, developing, and leasing healthcare facilities under long-term contracts, it also provides mortgage loans and other types of loans (via its subsidiaries) to healthcare operators. MPW also looks to secure equity ownership with some of its tenants.
What’s To Like?
MPW has quite a few interesting qualities that could enable it to serve as a fine portfolio stock over time.
Firstly, it primarily operates in a very lucrative market- the US; 60% of its business comes from this market which is proving to be a very opportunistic terrain for those who are involved. The country tops the world for total healthcare expenditure ($4.1 trillion); this equates to $12,530 per person and is poised to grow at over 5% CAGR and reach $6.2 trillion in six years. As a percentage of GDP, the US already spends more than anyone else at 19%. Within the US, MPW is also not dependent on only certain pockets as no single state accounts for more than a 10% share.
MPW Website
Then there’s a lot of brouhaha about inflationary pressures across the economy, but MPW is one of those entities that look well-positioned to cope with these conditions. Firstly, do note that Medicare reimbursements that hospitals receive are typically higher than inflation. Besides 99% of MPW’s lease agreements have, either annual rent escalation costs linked to the CPI or fixed minimum annual rent escalations. All in all, incremental cash rental revenue looks well poised to expand for the foreseeable future.
Then unlike quite a few of its peers, MPW does not suffer from any major concentration effect, which reduces the overall impact of potential bankruptcy risks tied to some of its operators (even when faced with bankruptcy challenges, MPW typically sets up master lease structures which enable it to reclaim all properties on default). Just to clarify, note that no single property accounts for more than 3% of its gross assets. MPW also does a very good job of extracting value from its assets. The average ROA of healthcare REITs only works out to 2.5%; MPW on the other hand generates ROAs that is more than 2x better than this figure at 5.7%!
Then of course there’s the income angle to consider, something which appears to be very reliable and sound. MPW has been paying out quarterly dividends since 2005, and the dividends as a function of the company’s AFFO have typically come in at rather elevated levels of 80% (I will cover other aspects of the dividend towards the end of this article).
Company presentation- April 2022
Will Medical Properties Stock Go Up Again?
Technically, at current levels, the risk-reward on offer looks quite attractive, and it could attract some bargain-hunting ammunition that could serve as a useful fillip for the stock’s progress.
The first chart highlights the relative strength of the Medical Properties stock as against its peers in the Real Estate space, represented by the Vanguard Real Estate ETF (VNQ). We can see that over the years, MNQ has continued to gain more stature relative to VNQ in the shape of an ascending channel, and currently, that ratio is trading closer to the lower boundary of the channel, implying good risk-reward.
Stockcharts
Similarly, on the standalone monthly chart of MPW, we can see that the stock has been trending up in the shape of an ascending wedge, and after the correction witnessed since the start of the year, the stock recently bounced off the lower boundary of this wedge.
Investing
What could perhaps also abet potential upside momentum is the growing prospect of a short squeeze. Just to contextualize the situation, the number of shares that have been sold short but are yet to be covered has never quite been this high at nearly 45m shares. Put another way, that works out to almost 11% of the float that is currently short (typically, over the last 5 years, MPW’s float, that has been short, has averaged less than 6%) which could be closed out in the weeks and months ahead if an appropriate catalyst comes through.
YCharts
The most immediate catalyst on the anvil will be the Q2 results due to be announced on July 27. Consensus FFO estimates for Q2 (0.45) imply that it will be the weakest quarter before things pick up in Q3 and Q4. Do consider that as things stand, FY22 consensus is already at the upper end of the management’s previous FFO guidance of $1.78-$1.82 so any negative surprises in Q2 won’t be taken too well. Investors should be watching out for any updates with hospital labor costs as this appears to be putting a spanner in the works of hospital-related finances; in the Q1 call, the MPW management was keen to play down the impact of this, but recent data from Kaufman and Hall, show that even though hospital volumes remain resilient, labor market remains hyper-competitive resulting in negative operating margins.
Having said all that, if one wants to see really strong momentum in this counter, I suspect one would need to see investors with deep pockets, aka the institutional investor community, come back on board; unfortunately, according to the latest available data, they have continued to reduce their ownership stake in MPW every month since the turn of the year (with June’s reduction being particularly pronounced).
YCharts
Closing Thoughts- Is MPW Stock A Buy, Sell, or Hold?
One of the principal reasons why some investors may have been reluctant to hold MPW is on account of a potentially slower pace of acquisitions, an important facet of the MPW story so far. Just for some context, last year, they spent around $3.9m on acquisitions, but this year, the acquisition forecast is expected to be much lower, within a range of $1-$3bn.
I can understand the reduced pace of acquisitions being a concern if the stock was still trading at pricey valuations, but that no longer appears to be the case. As you can see from the image below, on a forward price/AFFO basis (11.6x), MPW is one of the cheapest healthcare REITs around, trading at a 25% discount to the peer set average.
Seeking Alpha
Besides that, I would also point to the highly lucrative yield facet of MPW which could well be the raison d’être for most investors. At 6.9%, this is one of the highest yielders you could own from the health-care REIT space (the average yield on offer in this sector is considerably lower at only 5.34%). What also makes a potential ‘Buy’ timing right is the fact that at the current price point, MPW offers the most superior yield differential relative to its long-term average (of +130bps); no other healthcare REIT even comes close, with quite a few of them even offering yields lower than their long-term averages.
Seeking Alpha
All things considered, I would rate the MPW stock a BUY at this juncture.
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BEIJING – Asian stock markets followed Wall Street lower Wednesday as traders prepared for a possible sharp interest rate hike by the Federal Reserve to cool inflation.
Shanghai, Hong Kong and South Korea declined. Tokyo and Sydney advanced. Oil prices were little changed, staying below $100 per barrel.
Wall Street tumbled Tuesday after Walmart warned that inflation that has spiked to a four-decade high of 9.1% is hurting American consumer spending.
Investors worry aggressive action against inflation by the Fed and central banks in Europe and Asia might derail global economic growth.
The Fed is expected to announce a rate hike Wednesday of up to three-quarters of a percentage point, triple its usual margin. That would match a similar increase last month, the U.S. central bank’s biggest in 28 years.
“The main risk at this stage is in fact an inflation ‘overkill’ with monetary tightening too abrupt, unnecessarily pushing up the unemployment rate,” Thomas Costerg of Pictet Wealth Management said in a report. Costerg said most economic indicators and lower commodity prices already point to slower inflation ahead.
The Shanghai Composite Index lost 0.1% to 3,274.37 while Tokyo’s Nikkei 225 advanced 0.3% to 27,728.93. The Hang Seng in Hong Kong sank 1.5% to 20,590.46.
The Kospi in Seoul retreated 0.4% to 2,401.78 and Sydney’s S&P-ASX 200 gained 0.1% to 6,814.00.
India’s Sensex opened up 0.3% at 55,418.55. New Zealand, Bangkok and Jakarta advanced while Singapore declined.
On Wall Street, the benchmark S&P 500 index fell 1.2% to 3,921.05. The Dow Jones Industrial Average dropped 0.7% to 31,761.54. The Nasdaq composite closed 1.9% lower at 11,562.57.
Walmart slumped 7.6% after the retail giant cut its profit outlook for the second quarter and the full year late Tuesday. It said rising prices for food and gasoline are forcing shoppers to cut back on more profitable discretionary items, particularly clothing.
The retailer’s profit warning in the middle of the quarter is rare and raised worries about how the highest inflation in 40 years is affecting the entire retail sector.
Other major chains also fell. Target dropped 3.6%, Macy’s slid 7.2% and Kohl’s fell 9.1%.
Tech stocks retreated. Microsoft fell 2.7%, Amazon slid 5.2% and Facebook owner Meta Platforms dropped 4.5%.
General Motors fell 3.4% after its second-quarter profit fell 40% from a year ago. U.S. sales fell 15% after shortages of processor chips and other components left the company unable to deliver 95,000 vehicles during the quarter.
In energy markets, benchmark U.S. crude rose 32 cents to $95.30 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.72 on Tuesday to $94.98. Brent crude, the price basis for international oils, added 6 cents to $99.52 per barrel in London.
The dollar rose to 137.01 yen from Tuesday’s 136.00 yen. The euro gained to $1.0151 from $1.0120.
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Church & Dwight (
