(386) 271-2127

From Wall Street to Main Street

Highlights from the past week

Market / Macro Economic Summary

I am loving what I am seeing in the markets and in the economic data right now.  As I’ve tried to say in prior newsletters, I believe that the Fed will be able to navigate a “soft landing.”  This week continues to bear towards that narrative as several economic data points came in better than expected. Purchasing Managers Index (PMI) came in higher than expected, with the manufacturing PMI hitting 50.3 in January, well above expectations of 47.6 and higher than last month’s 47.9 reading.  Services PMI also continued to strengthen, pointing to ongoing strength in the U.S. services economy. The services PMI came in at 52.9 for January, also in expansionary territory, above expectations of 51.5.  Fourth-quarter GDP growth in the U.S. came in at 3.3% annualized, well above expectations of 2.0% growth. This strength was driven by ongoing resilience in consumption, which grew at 2.8%.  Lastly, the Personal Consumption Expenditures (PCE) came in rising .2% and the Core PCE 2.9% in December versus 3.2% in November.  This is the main measure for the Federal Reserve for inflation.  In summary, all of these metrics tell the story of a weakening inflation picture, but an underlyingly strong U.S. economy.  On the week, the Dow Jones Industrial Average was up .6%, the S&P500 was up 1.1% and Nasdaq was up .09%.

Company Specific / Micro Economic Summary

American Express (AXP)

Shares rose 7.1% mainly on the heels of a stronger guide for 2024 despite weaker quarterly results. 

Earnings per share of $2.62 per share were just shy of the calls for $2.65.  Revenue of $15.80 billion

were also shy of the estimates of $16.03 billion.  Management expects 2024 earnings of $12.65 to $13.15 per share on revenue of $65.96 billion to $67.17 billion. The current consensus earnings estimate is $12.46 per share on revenue of $66.47 billion.  Not only do credit metrics remain strong but net write-off and delinquency rates for total card member loans and receivables have gone back down to below pre-pandemic levels.

Tesla (TSLA)

Shares declined 8% as the company reported a quarter that fell short of expectations.  Earnings per share came in at $0.71 cents on revenue of $25.17 billion for the fourth quarter ended December 2023. Wall Street was looking for earnings of $0.74 per share on revenue of $23.17 billion. Moreover, Elon and team failed to issue a “total vehicles” expected to be delivered in 2024, which has been the main metric by which investors have kept the faith in the stock.

Visa (V)

Shares fell almost 2% despite the company beating on the top and bottom-lines.  Earnings per share of $2.41 came in stronger than the Wall Street estimates of $2.33.  Revenue of $8.63 billion was also ahead of the analyst calls for $7.78 billion.  The main problem on the quarter came from management’s upward revisions to the firm’s operating expenses for 2024.

Intel (INTC)

Shares tumbled 9% as the company reported strong numbers yet announced plans that were rather uncommon.  Earnings per share of $0.54 cents were better than the $0.48 cents Wall Street was looking for.  Revenue of $15.41 billion was higher than the calls for $13.81 billion.  The main issue was management trying to reduce their share class types from A (public investors),B (U.S. banks) and C (foreign banks)  and release the transfer restrictions to class B shares.  Effectively allowing domestic banks to sell their shares.  

Dow Chemical (DOW)

Shares slipped 1% as it reported a loss of $105 million or 15 cents per share in fourth-quarter 2023 from a profit of $613 million or 85 cents per share a year ago. Barring one-time items, adjusted earnings were 43 cents per share for the reported quarter, down from 46 cents a year ago. 

International Business Machines (IBM)

The computer giant added more than 5% in extended trading. IBM surpassed analysts’ expectations in the fourth quarter, posting adjusted earnings of $3.87 per share on revenue of $17.38 billion. Analysts polled by LSEG anticipated earnings of $3.78 per share and revenue of $17.30 billion.

AT&T (T)

The stock slumped about 4% after AT&T posted a fourth-quarter earnings miss. The company also forecasted lower-than-expected adjusted earnings for 2024, falling short of analysts’ expectations according to FactSet. AT&T did, however, slightly beat revenue expectations for the fourth quarter and said it expects to deliver adjusted EPS growth in 2025.

Netflix (NFLX)

Netflix’s stock price jumped 9.2% after topping analyst’s revenue and subscriber growth expectations during the fourth quarter. The streaming giant added 13.1 million subscribers during the quarterly period, reaching a record 260.8 million in paid subscribers.

3M (MMM)

Shares fell 10.4% as the company reported a top and bottom-line beat. 3M raised its 2023 adjusted earnings per share (EPS) guidance for the second time in the third quarter and hoped to earn up to $9.15 per share. The main problem for management this year will be raising funds to settle pending lawsuits related to products, including masks and respirators, defective earplugs, and PFAS chemicals contaminating drinking water. Last year, 3M reached agreements with PWS and combat arms that are now subject to the court’s approval. 

Parting Thoughts

We welcome an opportunity to discuss the above detail and wish you much success in the rest of your week!

Regards,

E.Palacios

Erick J.  Palacios

Plan to Prosper Wealth Management’s clients & employees will from time-to-time hold securities mentioned above. Commentary is not endorsements or recommendations of any securities.