Major market indicators continued to hit their all-time highs last week. The S&P 500 gained 2% over the week and again reached historic levels. On Friday, the index broadly tested the 4,700 mark and closed the trading session close to this value. The capitalization of the Nasdaq 100 increased by 3.2%. On Friday, the indicator tested the historically high level at 16,400 points. The stock market continues to be supported by the corporate reporting season. A two-day Fed meeting took place last week, which ended positively and removed a number of short-term risks. Investors were optimistic about Friday’s October unemployment report.
Tag: Weekly
S&P 500 renewed all-time highs
This week the American indicators showed positive dynamics. Thus, the S&P 500 rose 1.6% over the week and updated its historically high level at around 4,560 points. The market is supported by strong corporate reporting showing that higher commodity prices and labor shortages are not having a significant impact on companies’ bottom line. We believe the broad index maintains upside potential. We project the S&P 500 to reach 4,800 by the end of this year, which is in line with 5% upside potential from current levels.
Roche shareholders agree to buy back their own shares from Novartis
In early November, Novartis announced its agreement to sell 53.3 million shares of Roche to its current shareholders for $ 20.7 billion. At the end of November, Roche shareholders voted to acquire this stake from Novartis. The cancellation of the repurchased shares will take place in January-February 2022. We are currently seeing several positives for Roche in this deal. First, it is beneficial for Roche as the company will pay the market price for these assets, which is permitted by Swiss law. Secondly, the pharmaceutical sector is trading at lower multiples, so Roche has chosen the right moment to close the deal. Third, Roche’s profits should accelerate in the coming years, as economic activity around the world recovers after the pandemic. Fourth, Roche gets more strategic freedom. The company will have to raise borrowed funds to finance the deal. However, taking into account the annual operating cash flow of 15 billion Swiss francs, Roche will be able to fully repay the debt financing within 1-2 years. Thus, the increase in the debt burden will be insignificant and will be temporary in nature.
Dell Records Record Revenue and Operating Profit
With strong sales of personal computers, servers and storage systems in the third fiscal quarter, Dell posted record revenues and operating margins. Revenue for the quarter ended Oct. 29 increased 21% to $ 28.39 billion from $ 23.48 billion in the same period last fiscal year. Market consensus implied growth in the indicator to $ 27.37 billion. The company’s operating income increased by 19%, to $ 1.35 billion. Dell’s net profit in the last quarter rose to $ 3.84 billion, or $ 4.87 per share, up from $ 832 million, or $ 1.08 per share, a year earlier. Profit excluding one-off factors was $ 2.37 per share, beating the average analyst forecast of $ 2.3 per share.
Strong reporting despite falling sales in China
Nike posted better-than-expected earnings and revenues for the second quarter of fiscal 2022 ended November 30, despite a sharp decline in sales in China. Nike’s quarterly revenues increased 1% yoy to $ 11.36 billion, better than the market forecast of $ 11.25 billion. Excluding currency fluctuations, the figure was flat on an annualized basis. Online sales of the company for the reporting period increased by 12% year-on-year.
Micron triples its quarterly profit and improves its annual forecast
Micron Technology almost tripled its net profit in the first fiscal quarter of 2022, which ended on December 2, and revenue by 33.3% yoy, which was better than analysts’ forecasts. Micron’s quarterly revenue jumped to $ 7.69 billion from $ 5.77 billion, while the market forecast estimated the figure at $ 7.68 billion, and management predicted $ 7.65 billion. Nevertheless, revenue growth slowed slightly, which happened for the first time in a year. In the previous fiscal quarter, this figure increased by 36.6% over the previous year.
Strong results coupled with announcement of new $ 10 billion buyback program
Oracle, one of the world’s largest software companies, posted a net loss in the second quarter of fiscal 2022 ending November 30, but adjusted earnings and revenues rose above analysts’ expectations. Oracle’s revenue increased 6% year-on-year to $ 10.4 billion, up from $ 9.8 billion in the same period last year. The indicator grew the most since 2018, while the market expected revenue to grow to $ 10.2 billion.
Snowflake doubles its quarterly revenue
Snowflake has excellent Q3 earnings. Revenue soared 110% to $ 334.4 million, beating market forecasts of $ 305.6 million in sales. For the quarter, the company posted a loss of $ 0.51 per share, outperforming market consensus. estimated the expected loss at $ 0.60 per share. The figure was also significantly better than last year’s figure of $ 1.01 loss per share. Snowflake’s management improved its forecast for fourth-quarter revenue from $ 345mn to $ 350mn, beating market expectations of $ 316mn. We are impressed by the good financials and have revised our fair share price estimate upwards from $ 375 to $ 450.
Inflation data disappointed investors
Over the past week, the S&P 500 declined 0.3%, while the capitalization of the Nasdaq 100 declined 1%. Investors were disappointed with inflation figures released on Wednesday. The market is closely following US inflation data as they are key to the Fed’s decisions on the future direction of monetary policy. Consumer prices in the United States in October rose by 6.2% compared with the same month last year – the highest rate in almost 31 years (since November 1990). A month earlier, inflation in the US was 5.4%, and experts expected it to accelerate in October to 5.8%. The jump in energy prices in the United States last month amounted to 30% in annual terms, gasoline rose in price by 49.6%. The rate of growth in the cost of foodstuffs, which amounted to 5.3%, was the highest since January 2009. If inflation does not start to ease, the Fed may have to accelerate the pace of winding up its asset repurchase program and move on to hike rates, which will negatively affect the stock market.
Indices are storming new frontiers
American stock indices rose for the week and renewed their historical values again. The S&P 500 added 1.3% for the week, while the capitalization of the Nasdaq rose 3.2%. October was the best month since the beginning of the year. Thanks to strong corporate reporting, the S&P 500 yielded 7% over the past month, while the Nasdaq 100 gained 8%. The season for corporate reporting is in full swing. Caterpillar engineering group, whose reporting is perceived as an indicator of the situation in the real sector of the economy, delighted investors with good quarterly results. Ford has improved its profit forecast for 2021. It is also worth noting the excellent reporting of Microsoft and Google, which have shown strong growth in cloud revenues. Microsoft shares were in demand all week, and on Friday the company’s capitalization reached a record of $ 2,490 billion. Microsoft is now the most valuable company in the world, followed by Apple with a capitalization of $ 2,458 billion.