Stocks close mostly lower as weak industrials sector offsets tech rally – MarketWatch

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Investors bid up Facebook Inc. shares after strong earnings.

U.S. stocks closed mostly lower Thursday as manufacturing-related sectors logged big losses, offsetting a rally in social-media shares. A double-digit decline in 3M Co.’s stock following disappointing earnings also weighed on the blue-chip Dow.

How did benchmarks fare?

The Dow Jones Industrial Average DJIA, -0.51% bounced off earlier lows but still fell 134.97 points, or 0.5%, to 26,462.08. The S&P 500 index SPX, -0.04% shed 1.08 points to 2,926.17, with industrials and materials sectors leading the decline while the tech-centric Nasdaq Composite COMP, +0.21% rose 16.67 points, or 0.2%, to 8,118.68.

See: Stock markets are ringing up records and bonds are rallying too

What drove the market?

Guidance from U.S. companies on the state of the economy and the business climate helped to underpin a mostly steady advance for equity markets so far this week, but mounting signs of economic weakness from Europe to Australia have cast a shadow over markets.

Major global exporter South Korea was one of the most recent indicators of a pullback in expansion as the Asian country’s first-quarter gross domestic product shrank by 0.3%, marking its worst performance in more than a decade. The data came a day after a reading of consumer prices in Australia remained flat in the first quarter, increasing expectations for a rate cut from the Reserve Bank of Australia.

The spate of weakness has prompted central banks, including the Reserve Bank of Australia, the Bank of Canada and the Bank of Japan, to adopt more dovish stances, which has, in turn, pushed the U.S. dollar to a roughly two-year high.

In the U.S., a parade of earnings rolled on, with 3M MMM, -12.95% , notably, driving early market action after the diversified industrial giant slashed its full-year 2019 guidance and said it would cut 2,000 jobs. 3M’s stock skidded 13%.

The number of Americans who applied for first-time jobless benefits surged to 230,000 in the week ended April 20, up from 193,000 during the previous week, and above the 201,000 expected by economists polled by MarketWatch.

Orders for durable goods rose by 2.7% in March, the largest one-month increase since last summer, the Commerce Department said.

A key measure of business investment, core durable orders, rose 1.3% in March, the third straight monthly increase.

National vacancy rates for rental homes remained steady at 7% in the first quarter of 2019, compared with the previous three months, while vacancy rates for homeowner housing fell 0.1%, according to the Commerce Department.

What were strategists saying?

“It’s been a solid week for earnings, but with expectations being so low, companies that beat earnings aren’t being rewarded as much as companies that miss forecasts are getting smacked,” said J.J. Kinahan, chief market strategist at TD Ameritrade.

The market is in an uptrend with its bullish patterns intact, said Frank Cappelleri, a strategist at Instinet LLC. “Over the last week not much has changed: The market continues to rally — little by little — taking a cue from positive market happenings and ignoring the negative headlines.”

Read: Why tech stocks can continue to lead the S&P 500 higher, in two charts

What stocks were in focus?

Facebook Inc. FB, +5.85% shares gained 5.9% after the social-media company reported revenue and profit that topped Wall Street estimates. However, Facebook did set aside some $3 billion for a potential regulatory fine related to its handling of client data.

Shares of Microsoft Corp. MSFT, +3.31%  rose 3.3% on solid fiscal third-quarter results, helping the company join the $1 trillion market-cap club.

Tesla Inc. TSLA, -4.26%  fell 4.3% after the electric-car maker produced a wider-than-expected quarterly loss.

Opinion: Elon Musk keeps moving Tesla’s finish line

Shares of Xilinix Inc. XLNX, -17.08% slumped 17% after the chip maker beat lowered expectations for fiscal fourth-quarter earnings and revenue. The stock has risen 64% year-to-date.

Southwest Airlines Co. LUV, +0.79%  rose 0.8% after the air carrier reported first-quarter earnings that beat expectations and the company raised its unit costs outlook.

Shares of Altria Group Inc. MO, -6.03%  retreated 6% after its first-quarter report.

Comcast Corp. CMCSA, +2.58% climbed 2.6% after the media company reported first-quarter earnings that topped estimates but fell short of revenue expectations.

Hershey Co.’s stock HSY, +4.59% rose 4.6% after the chocolate-and-snacks company reported first-quarter results that exceeded Wall Street estimates for profit and revenue.

United Parcel Service Inc. UPS, -8.13%  shares skidded 8.1% after the delivery company reported quarterly results that disappointed Wall Street on earnings and revenue.

How did other markets perform?

The Shanghai Composite SHCOMP, -2.43%  lost 2.2% and the CSI 300 Index 000300, -2.19%  gave up 2.2%, while the Stoxx Europe 600 index SXXP, -0.21% was down 0.2%.

Gold prices GCM9, -0.02% settled slightly higher while the ICE Dollar Index DXY, +0.12% was generally flat.

—Mark DeCambre contributed to this report

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AMZN – Amazon Boosts Fees for Free Delivery on Online Grocery Orders

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MCD – McDonald’s earnings haven’t been hit by higher prices, as ‘it just seems like Americans are more upset by the change in price at grocery stores’

Rising prices have kept diners away from many restaurants, but not McDonald’s Corp. As the ubiquitous burger chain prepares to report fourth-quarter results on Tuesday with its stock close to record highs, Wall Street could get pickier about signs of the company’s growth, though analysts were largely upbeat heading into the report. Some said McDonald’s
MCD,
-0.82%
size made it a “defensive” play within the fast-food universe, as the industry tries to pay workers more and handle higher ingredient costs, resulting in higher prices for its food.

Restaurant analyst Mark Kalinowski, chief executive of Kalinowski Equity Research, says consumer unrest with higher prices for food is focused elsewhere, though. “They’re not talking about the price of eggs at Denny’s
DENN,
+1.26%,
” Kalinowski said. “They’re talking about the price of eggs at their local grocery store. Even though Denny’s has taken price like a lot of chains have, it just seems like Americans are more upset by the change in price at grocery stores and supermarkets.” McDonald’s has consolidating its grip on the hamburger-focused fast-food industry, after the pandemic gutted many smaller restaurants and left those that survived struggling with higher costs. As independent restaurants and bigger chains raise their own prices — to either offset those costs or to gauge what people will pay — concerns have grown about the impact on demand. See also: Why McDonald’s, Google and other big businesses may face responsibility for many more workers But BofA data showed a widening gap between McDonald’s U.S. same-store sales and those of its rivals since the pandemic hit. When the company reported third-quarter results in October, management noted gains from “strategic price increases and positive guest counts” in the U.S. And it recently rolled out a plan to speed up restaurant openings, improve classic menu items and expand its digital-ordering capabilities. Kalinowski attributed McDonald’s traffic to its ability to stay relevant among younger consumers — along with its thousands of stores and digital and drive-through capacity. He noted the popularity of the chain’s celebrity meals — such as those based on the preferences of Travis Scott and J Balvin — Happy Meal collaborations and, in a throwback to the 1980s, Halloween buckets. He added that even as restaurants, more broadly, raise prices, they’ve been spared some of consumers’ anger over inflation. Kalinowski also noted that Chick-fil-A was becoming a larger object in McDonald’s rearview. “I think McDonald’s realizes, for the long term, that’s a competitor that they need to keep a close eye on,” he said. What to expect Earnings: Wall Street expects McDonald’s to earn $2.46 a share for the fourth quarter, according to FactSet, up 10% from the same quarter last year. Estimize, which crowdsources projections from hedge funds, academics and others, has a consensus of $2.51 a share.  Revenue: McDonald’s is expected to report sales of $5.72 billion, according to FactSet, down around 5% from a year ago. Estimize contributors on average expect $5.8 billion. Same-store sales are expected to rise 8.6%. Stock movement: McDonald’s stock has declined in the session following six of the past eight quarterly earnings reports, but four of those declines were by less than 1%. Shares have increased 8.4% in the past year, as the S&P 500 index
SPX,
+0.25%
has declined 8.2% and the Dow Jones Industrial Average
DJIA,
+0.08%
— which counts McDonald’s among its 30 components — has dropped 2.2%.What analysts are saying U.S. same-store sales will again be a focus for analysts, as will Europe, currently mired in a cost-of-living crisis, and China, which is trying to navigate a post-zero-COVID era. They have questions about competition from rapidly-growing Chick-fil-A, and whether McDonald’s can offer up a chicken sandwich that holds up in comparison. UBS analysts said McDonald’s stock was “well-positioned given defensive attributes in an increasingly difficult macro” environment. They also said they believed that “customer demand in Europe stayed largely resilient.” For more: SEC charges ex–McDonald’s CEO Easterbrook for making false statements relating to his 2019 ouster Elsewhere, Stephens analyst Joshua Long noted “successful price/value messaging across key platforms (breakfast, $1/$2/$3 value menu, and 2 for $6, as examples) with a focus on/around core menu items” in the U.S. Chief Executive Chris Kempczinski, during McDonald’s earnings call in October, said restaurants’ own higher costs — along with the politics of managing its ranks of independent franchise owners — would keep any discount war at bay. “Our expectation is that the industry is going to stay rational from a pricing standpoint,” he said. “And I think part of that is just going to be borne out of self-interest, which is everybody is experiencing the food and paper inflation. Everybody is experiencing the labor inflation.” “And some of our competitors, their franchisees are not in the same position as our franchisees,” he continued. “So I think even if there’s a desire to try to get more promotional in some areas to address maybe any traffic headwinds that somebody might face, I think you’re going to run into a lot of resistance from franchisees who are just not going to be in a position to engage in that.”

IBKR – Interactive Brokers: Big Profits From Volatility

JuSunNo one can say for sure where the market will go in the near term, and no matter what, nearly everyone may agree that there will be plenty of volatility along the way. A good way to hedge against market volatility is to buy stocks that benefit from volatility itself. One such firm that stands to benefit from this is Interactive Brokers (NASDAQ:IBKR). With plenty of market ups and downs over the past few years, IBKR has continued to benefit. This is reflected by the 34% total return it’s provided since my last bullish take on the stock in late 2020, far surpassing the 10% return of the S&P 500 (SPY) over the same timeframe . In this article, I highlight why IBKR is currently a Buy for long-term growth investors. Why IBKR? Interactive Brokers Group is an online broker that’s widely used by professional traders and retail investors alike. It provides automated trade execution on securities, fixed income, commodities, and foreign exchange on a 24/7 basis to over 150 markets across 33 countries and 26 currencies with a single, integrated investment account, providing ease and simplicity to its clients. It has 2.0 million client accounts and $287 billion worth of client equity under custody. IBKR’s key competitive advantage is its aforementioned global reach and investments in technology to enable high speed execution. Its built-out platform and scale results in diminishing costs, and is reflected by its strong gross profit margin of 88%, which is well in excess of the 64% sector median. Meanwhile, IBKR continues to benefit from global volatility, as commission revenue increased by 3% YoY to $331 million during the fourth quarter. This was driven by higher customer futures trading volume and large average trade size in options, partially offset by lower customer stock trading volume. This makes sense as the fourth quarter was largely a down market for most stocks, with many investors utilizing options to bet where they believe the market is headed in this new year. Moreover, IBKR is largely benefitting from higher interest rates as net interest income rose by 92% YoY to $565 million. Importantly, IBKR is seeing strong new customer acquisition, as total accounts grew by 31% YoY to 2.0 million. Looking forward, IBKR is well-positioned as it continues to offer the lowest U.S. margin rates compared to its large brokerage peers, with rates ranging from 3.6% to 4.6% for IBKR Pro. IBKR also doesn’t spend a substantial amount of capital on marketing like its peers, as most of its account growth is by word of mouth. Management estimates that accounts grow at a 10% annualized rate during down markets, and 20% during up markets. Moreover, the first quarter of 2023 is lookup up from a market performance standpoint, which bodes well for IBKR’s common equity trading volume this quarter. Management is also upgrading its platform by adding new products and aims to maintain its lead in the options market, as noted during the recent conference call: We are at the cutting edge of this best execution through auction process. We were the largest market makers in options for over 30 years, so we are very well-versed in these processes, and we have been keeping them up to date over the years. With the potential for a new regulatory process, in addition to new exchanges and continuously evolving new rules, we have a team of programmers regularly engaged in this activity. We introduced more new products and expanded the capabilities of existing ones. Recognizing our global customer reach, we introduced GlobalTrader, a streamlined version of our platform for mobile devices, which allows our clients to trade in over 90 stock markets worldwide. We continue to enhance our options trading tools, from mobile options trading to our rollover options tool, Strategy Builder, and Probability Lab. Importantly, IBDKR carries a very strong balance sheet with $3.2 billion in cash and equivalents with no long-term debt, and over 99% of its balance sheet is comprised of liquid assets. Management is also highly aligned with shareholders, with a 76% ownership stake in the company, which is very high for a publicly-traded company. Lastly, I see value in the stock at the current price of $77.51 with a blended PE of 18.6, sitting well below IBKR’s normal PE of 26.7. Analysts have a consensus Strong Buy rating with an average price target of $102, translating to a potential one-year 32% total return. IBKR Valuation (FAST Graphs) Investor Takeaway Interactive Brokers is by far the most innovative broker in the industry, and continues to benefit from its strong global reach, platform upgrades, and efficient low cost structure. It’s seeing strong customer account growth due largely to word of mouth, and should continue to benefit from market volatility and high interest rates. It also carries a strong balance sheet and has high alignment of interest with shareholders. Lastly, I see value in the stock at the current price for potentially strong long-term returns.

LUV – ROSEN, NATIONAL TRIAL LAWYERS, Encourages Southwest Airlines Co. Investors to Secure Counsel Before Important Deadline in First Filed Securities Class Action Initiated by the Firm – LUV

New York, New York–(Newsfile Corp. – January 29, 2023) – WHY: Rosen Law Firm, a global investor rights law firm, reminds purchasers of the securities of Southwest Airlines Co. (NYSE: LUV) between June 13, 2020 and December 31, 2022, both dates inclusive (the “Class Period”), of the important March 13, 2023 lead plaintiff deadline in the securities class action commenced by the Firm. SO WHAT: If you purchased Southwest Airlines securities during the Class Period you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee arrangement.WHAT TO DO NEXT: To join the Southwest Airlines class action, go to https://rosenlegal.com/submit-form/?case_id=10716 or call Phillip Kim, Esq. toll-free at 866-767-3653 or email pkim@rosenlegal.com or cases@rosenlegal.com for information on the class action. A class action lawsuit has already been filed. If you wish to serve as lead plaintiff, you must move the Court no later than March 13, 2023. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation.WHY ROSEN LAW: We encourage investors to select qualified counsel with a track record of success in leadership roles. Often, firms issuing notices do not have comparable experience, resources, or any meaningful peer recognition. Many of these firms do not actually litigate securities class actions, but are merely middlemen that refer clients or partner with law firms that actually litigate the cases. Be wise in selecting counsel. The Rosen Law Firm represents investors throughout the globe, concentrating its practice in securities class actions and shareholder derivative litigation. Rosen Law Firm has achieved the largest ever securities class action settlement against a Chinese Company. Rosen Law Firm was Ranked No. 1 by ISS Securities Class Action Services for number of securities class action settlements in 2017. The firm has been ranked in the top 4 each year since 2013 and has recovered hundreds of millions of dollars for investors. In 2019 alone the firm secured over $438 million for investors. In 2020, founding partner Laurence Rosen was named by law360 as a Titan of Plaintiffs’ Bar. Many of the firm’s attorneys have been recognized by Lawdragon and Super Lawyers.DETAILS OF THE CASE: According to the lawsuit, throughout the Class Period, defendants made materially false and/or misleading statements and/or failed to disclose, among other things, that: (1) Southwest Airlines continuously downplayed or ignored the serious issues with the technology it used to schedule flights and crews, and how it stood to be affected worse than other airlines in the event of inclement weather; (2) Southwest Airlines did not discuss how it’s unique point-to-point service and aggressive flight schedule could leave it prone in the event of inclement weather; and (3) as a result, defendants’ statements about its business, operations, and prospects, were materially false and misleading and/or lacked a reasonable basis at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages.To join the Southwest Airlines class action, go to https://rosenlegal.com/submit-form/?case_id=10716 or call Phillip Kim, Esq. toll-free at 866-767-3653 or email pkim@rosenlegal.com or cases@rosenlegal.com for information on the class actionNo Class Has Been Certified. Until a class is certified, you are not represented by counsel unless you retain one. You may select counsel of your choice. You may also remain an absent class member and do nothing at this point. An investor’s ability to share in any potential future recovery is not dependent upon serving as lead plaintiff.Follow us for updates on LinkedIn: https://www.linkedin.com/company/the-rosen-law-firm or on Twitter: https://twitter.com/rosen_firm or on Facebook: https://www.facebook.com/rosenlawfirm. Rosen Law Firm represents investors throughout the globe, concentrating its practice in securities class actions and shareholder derivative litigation. Rosen Law Firm was Ranked No. 1 by ISS Securities Class Action Services for number of securities class action settlements in 2017. The firm has been ranked in the top 4 each year since 2013. Rosen Law Firm has achieved the largest ever securities class action settlement against a Chinese Company. Rosen Law Firm’s attorneys are ranked and recognized by numerous independent and respected sources. Rosen Law Firm has secured hundreds of millions of dollars for investors.Attorney Advertising. Prior results do not guarantee a similar outcome. ——————————-Contact Information: Laurence Rosen, Esq.Phillip Kim, Esq.The Rosen Law Firm, P.A.275 Madison Avenue, 40th FloorNew York, NY 10016Tel: (212) 686-1060Toll Free: (866) 767-3653Fax: (212) 202-3827lrosen@rosenlegal.compkim@rosenlegal.comcases@rosenlegal.com www.rosenlegal.comTo view the source version of this press release, please visit https://www.newsfilecorp.com/release/152815