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From Wall Street to Main Street

Highlights from the past week

Market / Macro Economic Summary

Markets ended the week on a negative note as earnings were mixed albeit stronger than expected and the Federal Reserve’s main measurement of inflation (PCE- personal consumption expenditures) was down to 3.7% for September.  This was lower than the 3.8% in August but still higher than the 2% desired target. I am going to take a detour for the moment and give you several points as to why I think the markets are doing just fine. For starters, as I’ve noted in prior newsletters, the markets tend to see two or three 10% drawdowns every year.  I ask for patience in investments today for these following reasons (which are all positive for stocks): inflation is unequivocally in decline, the Fed is 95% done with rate hikes, oil prices have come down, unemployment remains low, and perhaps most importantly, GDP (Gross Domestic Product) for the U.S. economy grew in the third quarter at a 4.9% pace. While some economists out there still point to a recession, which they have been expecting for over 15 months now, all these signs in my opinion point to a healthy economy.  I’ve never seen the markets decline when the economy is growing and healthy.  I might be in the minority camp with this view, but it is one that I believe will gain traction as we head into 2024 with no recession, a healthy economy and a Federal Reserve that is no longer working against the markets.

Company Specific / Micro Economic Summary

Amazon (AMZN)

Shares jumped 6.8% after the e-commerce giant reported stronger-than-expected third-quarter results.  Earnings per share of 94 cents were well above the 58 cents Wall Street was looking for.  Revenue jumped 13% to $143.1 billion versus the $141.4 billion estimates.  CEO Andy Jassy said cost cutting efforts helped but AWS growth is stabilizing, and ad revenue grew “robustly”.

Chevron (CVX)

Shares fell 6.7% after the oil company’s quarterly earnings were mixed.  Earnings per share of $3.05 were well short of analyst estimates of $3.75.  Revenue was $54.08 billion which was higher than the $50.24 billion Wall Street was looking for. In the quarter, non-recurring items jumped primarily due to a 50% increase in Capital expenditures in part to its acquisition of ACES Delta.    

Chipotle Mexican Grill (CMG)

Shares rose 4.5% after the restaurant chain’s quarterly results exceeded expectations.  Earnings per share of $11.36 versus estimates of $10.55.  Revenues of $2.472 billion were in line with expectations. Same store sales growth of 5% were better than the 4.5% Wall Street expected.

Intel (INTC)

Shares surged 9.3% after the chipmaker’s third-quarter numbers surpassed expectations and the company issued a strong outlook for the current quarter.  Earnings per share of 41 cents were above the expected 22 cents.  Revenue of $14.6 billion also exceed the calls for $13.53 billion.  

Ford Motor

Shares tumbled 12.3% after the company’s third-quarter results missed expectations. The automaker also dropped full-year earnings forecast due to the impact of the Autoworkers strike.

International Business Machines (IBM)

Shares jumped 4% as it reported earnings of $2.20 per share on revenue of $14.75 billion for the third quarter ended September 2023. The consensus earnings estimate was $2.12 per share on revenue of $14.79 billion, which was a growth of 4.57% on a year-over-year basis.

Meta Platforms (META)

Shares dropped 3.7% despite earnings of $4.39 per share on revenue of $34.15 billion for the third quarter ended September 2023. The consensus earnings estimate was $3.62 per share on revenue of $33.52 billion. The company beat expectations by 19.95% while revenue grew 23.21% on a year-over-year basis.

Boeing (BA)

Shares fell as it reported a loss of $3.26 per share on revenue of $18.10 billion for the third quarter ended September 2023. The consensus estimate was a loss of $3.21 per share on revenue of $18.27 billion. Deliveries of the 737 Max are expected to jump to 38 planes by end of year. 

Alphabet (GOOGL)

Shares dropped 6% as it reported earnings of $1.55 per share on revenue of $76.69 billion for the third quarter.  Estimates were $1.45 per share on revenue of $75.91 billion. The company beat expectations by 0.65% while revenue grew 11.00% on a year-over-year basis. Advertising revenue grew to $7.95 billion and were better than the estimates of $7.81 billion. 

Microsoft (MSFT)

Shares rose 5% as management reported earnings of $2.99 per share on revenue of $56.52 billion for the recent fiscal quarter. Wall Street was looking for earnings per share of $2.65 per share on revenue of $54.49 billion. The company beat expectations by 11.15% while revenue grew 12.76% on a year-over-year basis. AI was a key player for growth per CEO Satya Nadella.

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, MBA Wealth/Financial Advisor

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.