From Wall Street to Main Street
Highlights from the past week
Market / Macro Economic Summary All market indexes turned lower this week (although marginally) despite earnings coming in strong from several of the Magnificent Seven stocks. The Dow Jones Industrial average leads the way in a gain of 4.1% while the S&P500 has increased 2.5% and the Nasdaq has managed a 1.1% gain. This week, total jobs added came in at 143,000, modestly below expectations of 175,000. However, the last two months of job gains were revised higher, bringing the three-month average to a healthy 241,000. The unemployment rate in the U.S. fell to 4.0%, below expectations of 4.1% and last month's reading, and remains well below the long-term U.S. average of 5.7%. In addition, the consumer continues to show signs of strength. As we know, consumption makes up about 68% of GDP in the U.S., and households thus far continue to spend on both goods and services. Consumption grew by 4.2% in the fourth quarter of 2024, well above long-term averages of about 3%, and at the highest growth rate of the year. Finally, the manufacturing economy in the U.S. is also starting to show signs of life. The U.S. manufacturing PMI, a gauge of business activity in the manufacturing sector, has flipped to indicate expansion for the first time since 2022. Company Specific / Micro Economic Summary Palantir (PLTR) Shares traded 21% higher following a strong top and bottom-line beat. Earnings per share of 14 cents were 23% better than the estimates of 11 cents. Revenues of $828 million were a 36% increase year-over-year and also beat the calls for $776 million. U.S. commercial revenue increased by 64% and management said they closed 129 deals of over $1 million in Q4. CEO Alex Karp also guided for growth of commercial revenue of at least 54% in the coming quarter. Amazon (AMZN) Shares fell 4% despite a strong quarter by the internet giant. Earnings per share of $1.86 were much better than the Wall Street estimates of $1.48. Revenue of $188 billion exceeded the calls for $187 billion. CEO Andy Jassy said Amazon Web Services (AWS) continued its strong growth, with sales increasing 19% year-over-year. Advertising revenue saw a significant jump, growing 18% year-over-year. Amazon's guidance for Q1 2025 revenue fell slightly below analysts' expectations, causing some concern among investors. This was attributed to unfavorable foreign exchange rates and the impact of the leap year in the previous year. Alphabet (GOOGL) Shares fell 7% despite a mixed quarter. Revenue of $96.5 billion came in slightly below the Wall Street estimates of $96.7 billion. Earnings per share of $2.15 did manage to beat expectations of $2.13. Google Services revenue, which includes Search, YouTube, and other products, grew by 10% in Q4, driven by strong performance in Search and YouTube ads. CEO Sundar Pichai emphasized the company's leadership in AI, highlighting the rapid pace of product and model development. He noted that AI advancements are driving increased user engagement in Search and strong customer demand for Google Cloud's AI-powered portfolio. Amgen (AMGN) Shares jumped nearly 5% as the company reported a top and bottom-line beat. Revenue of over $9 billion in revenue, surpassed estimates of $8.87 billion mainly driven by increased demand for their products, particularly in oncology and immunology. Earnings per share (EPS) also exceeded expectations, coming in at $5.31 compared to the projected $5.08. Several key products performed well, including Repatha (for high cholesterol), Evenity (for osteoporosis), and various oncology and immunology therapies. Uber Technologies (UBER) Shares rose 5% as the company reported a top and bottom-line beat. Diluted earnings per share (EPS) soared to $3.21, significantly surpassing the anticipated $0.50. This impressive figure reflects a growth of 386.4% compared to $0.66 a year ago. Revenue increased by 20.4% year-over-year, reaching $12.0 billion, above the estimated $11.76 billion. CEO Dara Khosrowshahi highlighted that the Uber One membership program saw significant growth, with a 60% increase year-over-year, reaching 30 million members. Eli Lilly and Co. (LLY) Shares rose 3.5% as the pharmaceutical firm delivered a top and bottom-line beat. Revenue of $13.5 billion came in $100 million above the estimates of $13.4 billion. Earnings per share of $5.32 exceeded the calls of $5.07. Revenue of $13.5 billion also beat the calls of $13.4 billion. Mounjaro sales jumped 60% to $3.5 billion while Zepbound, a newer weight-loss drug, generated $1.9 billion in revenue. CEO David Ricks said the company would continue investments in research and development, with eight new Phase 3 programs initiated in 2024. He also noted the board approval of a $15 billion share repurchase program and a 15% increase in the quarterly dividend. Parting Thoughts We welcome an opportunity to discuss the above detail and wish you much success in the rest of your week! Regards, Erick J. Palacios, MBA Wealth/Fiduciary Advisor