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- PDFFILLER | January 29th, 2024
PDFFILLER | January 29th, 2024
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[ good morning ]
Here’s everything you need to know today
We’re in another moment of equilibrium as the market gears up for the main event of earnings season playing out across the next 48 hours.
Sure, earnings season has been pretty strong so far—but with 5 of the world’s 10 biggest companies reporting earnings across the next 48 hours, we’ve come to the moment that actually matters.
At the same time, markets are pulling back a little ahead of tomorrow’s pivotal FOMC meeting where Jerome Powell will hopefully shed more light on when exactly we can expect rate cuts this year.
Expect a lot more noise than signal in the build-up to these next few days. However, there are still important headlines with long-term implications we can dig into. Let’s break down the meaningful stories while the market braces for impact.
Markets at a Glance
*Market data based on standard trading hours and calculated close to close
[ automotive ]
GM Defies Odds and Keeps Profits Alive
The stock is surging thanks to solid damage control after the UAW strike
BREAKING NEWS
GM stock is surging after the company pulled off an incredible profit and revenue recovery after the UAW strike. Let’s break down the managerial masterclass here:
WHAT HAPPENED
GM generated an adjusted $1.24 EPS from $42.98 in revenue—crushing The Street’s expectations.
Of course, that EPS figure is a sharp decline from the same time last year while revenue stayed fairly flat. But investors had priced in a pretty steep fall given how long the UAW strike lasted and the mountain of expenses that will come from GM’s Cruise division halting operations. Instead—GM maintained tight cost controls and kept sales alive enough to have revenue stay flat on the year. And thanks to a very strong first half of 2023—GM’s full-year income grew 10% compared to 2022. Sometimes that’s all you need.
CRUISE CONTROL
GM is also hurting thanks to a massive sales decline in China. GM’s equity income over there got cut in half in another sign that China’s economy is struggling to recover.
However, this market only really cares about efficiency. GM announced they would be spending roughly $1 billion less on their Cruise subsidiary while various state investigations play out. With other cost-savings outlined in their earnings report, all the market needed to see was relatively decent revenue guidance for 2024 before they jumped back into the stock in droves.
WHY IT MATTERS
After years of Tesla staying on top of legacy automakers thanks to their incredibly fast path to scale and ultra-high margins, this result is a reminder of why big business is such a powerful force in this economy.
GM managed to tighten things up perfectly in response to a historic strike and the fallout from a bad tech bet. Now, the company is poised to gain a lot more upside as they push into 2024. GM stock popped over 7% in early trading.
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Sectors at a Glance
| Sector | Day | Month | Year |
|---|---|---|---|
| Communications | 0.84% | 8.33% | 43.09% |
| Consumer Disc. | 1.46% | -2.28% | 18.67% |
| Consumer Stap. | 0.58% | 1.78% | 0.47% |
| Energy | -0.14% | -0.36% | -7.11% |
| Financials | 0.26% | 3.33% | 7.46% |
| Health Care | 0.70% | 3.09% | 5.76% |
| Industrials | 0.65% | 0.83% | 13.59% |
| Materials | 0.50% | -2.36% | 0.04% |
| Real Estate | 0.73% | -3.00% | -3.15% |
| Technology | 0.92% | 7.24% | 50.67% |
| Utilities | 0.64% | -2.32% | -10.26% |
*Market data based on standard trading hours and calculated close to close
[ logistics ]
UPS Falls as Profits Dry Up
The stock is caught between higher labor costs and slower spending
BREAKING NEWS
UPS is getting crushed in early trading thanks to weak profits and weaker revenue. The logistics leader is really caught between a rock in a hard place in a more competitive market.
WHAT HAPPENED
UPS missed on both sides of the balance sheet—only netting a $2.5 billion operating profit from $24.9 billion in revenue for Q4. Both of these were below The Street’s already diminished expectations and a pretty sharp fall from last year.
Essentially, UPS got slammed by higher labor costs to end the year, higher overall costs thanks to inflation and a reduction in demand as companies slowed their shipping times to offset their own costs.
PAINFUL RECOVERY
And the market is fleeing the stock even more because UPS projects they won’t be able to recover that same level of profitability in 2024. Their 2024 guidance projects even lower profits this year and even more revenue declines. Sure, things aren’t falling apart—but UPS doesn’t seem to be able to control costs nearly fast enough. This is despite UPS announcing 12,000 layoffs to keep costs under control.
WHY IT MATTERS
As rivals like Amazon gather strength—old-school logistics plays like UPS are getting smoked in the industry they essentially built. UPS can pull off a recovery here, but investors were clearly betting on a faster move toward efficiency than UPS thinks is possible. The stock fell over 4% in early trading.
[ tech ]
Super Micro Surges on AI Hope
The AI hype train is at full speed again
BREAKING NEWS
Tech manufacturer Super Micro Computer is a top performer in early trading this morning thanks to a brilliant earnings report that’s reigniting AI hype for the whole industry. Let’s break down the details:
WHAT HAPPENED
Super Micro smashed expectations by making a staggering $5.59 EPS from $3.66 billion in revenue. Basically, Super Micro is experiencing unprecedented demand for their server products. A lot of Super Micro’s inventory is powered by Nvidia chips and can be used for AI computing, so this surge in demand at least makes sense.
2024 BLOWOUT
Super Micro’s stock is flying high mostly thanks to a massive guidance boost. Management now projects that revenue will be 40% higher than their earlier predictions. Demand isn’t even close to slowing down as more and more companies try to build out AI infrastructure.
WHY IT MATTERS
Other names like Intel recently pumped the brakes on all this bullish AI sentiment with a weaker demand outlook. Super Micro’s results help prove that demand may indeed be strong enough to keep lifting this whole industry. We may start seeing specific winners and losers emerge as some companies keep up with AI infrastructure demand while others fall behind. For now, Super Micro is a massive winner—surging over 11% in early trading,
Extra Moby Snacks
After all the fallout from their botched Spirit merger, JetBlue fell hard this morning as their earnings report came up short. The company is now generating a loss and projecting lower capacity for 2024. The stock fell over 6% in early trading.
Pfizer finally managed to reverse their decline by posting a slim adjusted profit for Q4 this morning. In the middle of a massive COVID surge—Pfizer’s COVID business managed to perform better than expected. The stock is flat to start trading, but still down over 20% in the last 6 months.
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