Daily Markets: Apple, Amazon Adjust Forward Guidance; Markets React

Today’s Big Picture

Asia-Pacific equity indexes ended today’s session up across the board with the exception of India’s Sensex which traded down 0.80%. Korea’s KOSPI, Taiwan’s TAIEX, and Australia’s ASX All Ordinaries gained 1.03%, 1.05%, and 1.08% respectively while Japan’s Nikkei advanced 1.75% and China’s Shanghai Composite rose 2.41%. Hong Kong’s Hang Seng led the way, up 4.01% on the day.

Hong Kong and Chinese tech stocks rallied on hopes that the PRC crackdown on internet platform companies will ease, as well as speculation that the ongoing battle over U.S. audit exchange listing rules audit requirements might be resolved soon. By mid-day trading, major European equity indices are up across the board, and U.S. futures point to a rough market open later this morning as Amazon (AMZN), Apple (AAPL), and others have begun to adjust forward guidance lower on what has universally been referred to as cost “pressures” associated with China lockdowns, lingering Covid related expenses and the impact of the Russia-Ukraine War.

Before equity markets in the U.S. begin trading, both the Employment Cost Index for the March quarter and Personal Income & Spending for the month of March will be reported. The data will likely shape how investors contemplate the Fed’s upcoming interest rate moves and what it is likely to say exiting its next monetary policy meeting that concludes on May 4. Ahead of these data points to be released at 8:30 AM ET today, early this morning we learned the Eurozone economy slowed further in the March quarter with GDP of 0.2% vs. 0.3% in the prior one, and April inflation ticked higher to a record 7.5% from 7.4% the prior month. Following yesterday eye-opening U.S. GDP print of -1.4% for the March quarter which was well below the expected 1.1% print, we would not be surprised to see renewed skepticism over central bankers’ ability to balance fighting inflation without torpedoing a fragile global economy creep back into the market mentality. 

Data Download

International Economy

Last night saw the release of March Industrial Production for South Korea rising 1.3% on a MoM basis which surprised against expectations but brought the YoY figure to 3.7%, missing expectations of a 4.0% gain over the one year period.

Today saw a slew of Q1 preliminary GDP out of Europe with Germany (0.20% QoQ), France (5.3% YoY), Italy (5.8% YoY), Spain (6.4% YoY), and the Eurozone itself (5.0% YoY). The overall trend points to modest increases over previously reported figures, the exception being France which shows a slight decline over the last quarter.

We also saw some preliminary April CPI figures out of the region as well with France (6.20%), Poland (12.3%), Portugal (7.2%), and the Eurozone itself (7.5%) all coming in hotter than previous prints with energy costs again leading the way.

Domestic Economy

8:30 AM ET will see the release of a number of metrics, primary of which will be the Personal Consumption Expenditure (PCE) Deflator and the Core PCE Deflator which both serve as a primary inflation gauge for the Fed. Expectations for March YoY changes are 6.7% as compared to the previously reported 6.4% for the PCE and 5.3% as compared to 5.4% for the Core PCE which excludes food and energy costs.

We will also see MoM March Personal Income and Personal Expenditures released with Income expected to contract slightly to 0.40% from the previous month’s 0.50% and expenditures to rise slightly to 0.30% from the previously reported 0.20%.

10:00 will the release of April’s reading of the Michigan Sentiment Index which is expected to be unchanged from preliminary readings of 65.7, up from March’s 59.4 release.

Markets

After a shaky start to the trading day yesterday, all of the major market indices shook off the surprising first print for March quarter GDP that came in at -1.4% vs. the expected 1.1%. Helping spur equities higher, aggregate March quarter earnings continue to come in better than expected leading the S&P to finish 2.5% higher yesterday while the Nasdaq Composite rose 3.1%, the Dow Jones Industrial Average added 1.9%, and the Russell 2000 climbed 1.8%. All 11 sectors in the S&P 500 closed higher with gains ranging from 1.1% for the utilities sector to 4.0% for information technology. Including yesterday’s moves, here’s how the major market indicators stack up year-to-date:

• Dow Jones Industrial Average: -6.7%
• S&P 500: -10.0%
• Nasdaq Composite: -17.7% 
• Russell 2000: -14.6%
• Bitcoin (BTC-USD): -17.9%
• Ether (ETH-USD): -23.4%

Stocks to Watch

Before trading kicks off for U.S.-listed equities, AbbVie (ABBV), Bristol-Myers (BMY), Cboe Global Markets (CBOE), Charter (CHTR), Chevron (CVX), Exxon Mobile (XOM), Honeywell (HON), and Weyerhaeuser (WY) are expected to report their quarterly results. 

Amazon reported March quarter results and guidance that led its shares to trade off in aftermarket trading last night. While Product sales dipped year over year, it was more than made up for by the company’s service sales, leading combined revenue to edge past the consensus forecast for the quarter. However, sales growth at Amazon Web Services slowed to 36.6% YoY vs. 39.5% in the December quarter. On a positive note, advertising revenue chugged higher, rising 25% on a constant currency basis to $7.88 billion. The real pressure came from the company’s outlook for the current quarter - revenue of $116-$121 billion vs. the $125.1 billion consensus and operating income between $(1.0)-$3.0 billion, well below consensus expectations due to the confluence of higher shipping rates, fuel costs, and wage pressures.

March quarter results at Apple once again bested expectations, however, the company also warned of greater than expected costs hitting in the current quarter. Helping buoy the shares, Apple also announced a 5% increase to its quarterly dividend to $0.23 per share and upped its share buyback program by $90 billion. Apple reported March quarter EPS of $1.52 per share vs. the $1.43 consensus as revenue rose 8.6% YoY to $97.28 billion the $93.99 billion consensus with YoY revenue gains at iPhone, iPad, Mac, and Services business while Wearables revenue contracted slightly vs. year ago levels. Apple did not provide exact revenue guidance but shared its June quarter revenue performance will be impacted by COVID-19 supply issues and semiconductor shortages. Supply chain issues will impact the company by an estimated $4-8 billion in the quarter, "substantially larger" than what it experienced during the March quarter.

While Intel (INTC) reported March quarter results that topped both revenue and EPS expectations, the chipmaker issued downside guidance for the current quarter calling for EPS of $0.70 vs. the $0.83 consensus forecast. Taking the sting out that shortfall, Intel lifted its full year 2022 EPS outlook to $3.60 from $3.50 and the $3.46 consensus. The company shared it continues to see limitations in areas like low-end consumer PC but demand continues to be robust in enterprise, cloud, AI, graphics, and networking verticals.

March quarter revenue at Roku (ROKU) rose 27.8% YoY to $733.7 million, topping the $718.6 million consensus, leading the company to report a smaller than expected bottom line loss for the quarter. For the quarter, Platform revenue rose 39% YoY to $646.9 million while Player revenue fell 19% YoY to $86.8 million. The number of Active Accounts reached 61.3 million, up 7.7 million YoY and up from 60.1 million accounts exiting the prior quarter. Despite that improvement, Roku issued revenue guidance for the current quarter of $805 million, below the consensus forecast of $823.1 million. Near-term the company anticipates inflationary pressures, geopolitical conflict, and supply chain disruptions “will continue to pressure our player gross margin and industry-wide TV unit sales, and have the potential to reduce or delay ad spend in certain verticals."

March quarter revenue at Robinhood (HOOD) fell 42.7% YoY to $299 million, widely missing the consensus forecast of $357.2 million. Transaction-based revenues decreased 48% to $218 million, compared with $420 million in the year ago quarter, Monthly Active Users (MAU) decreased 10% YoY to 15.9 million, and Average Revenues Per User (ARPU) decreased 62% YoY to $53. Earlier this week, the company announced a workforce reduction of ~9% and now sees its total operating expenses for 2022 rising 2%-5% YoY. 

IPOs

Readers looking to get the latest on upcoming IPO offerings should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

There are no companies slated to report their latest quarterly results. Investors should remain on watch for companies that pre-announce their March quarter results. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar. 

On the Horizon

Monday, May 2

• Germany: Retail Sales – March
• Eurozone: S&P Global PMI Manufacturing (Final) - April
• US: S&P Global PMI Manufacturing (Final) – April 
• US: Construction Spending – March 
• US: ISM Manufacturing Index – April 

Tuesday, May 3

• UK: CIPS Manufacturing PMI (Final) – April
• Eurozone: PPI – March
• Eurozone: Unemployment Rate - March
• US: Durable Factory Orders – March
• US: Factory Orders – March 
• US: JOLTS Job Openings – March

Wednesday, May 4

• Eurozone: S&P Global Service PMI (Final) – April
• Eurozone: Retail Sales - March
• US: Weekly MBA Mortgage Applications
• US: ADP Employment Report – April 
• US: S&P Global Services PMI (Final) – April
• US: ISM Non-Manufacturing Index – April 
• US: Weekly EIA Crude Oil Inventories 
• US: Federal Reserve FOMC Meeting Announcement 

Thursday, May 5

• China: Markit/Caixin Services PMI – April
• Germany: Manufacturing Orders & Turnover – March
• UK: CIPS Services PMI (Final) – April
• UK: Bank of England Interest Rate Announcement
• US: Weekly Initial & Continuing Jobless Claims 
• US: Unit Labor Costs & Productivity – 1Q 2022 
• US: Weekly EIA Natural Gas Inventories 

Friday, May 6

• Japan: CPI Tokyo - April
• US: Employment Report – April 
• US: Consumer Credit – March 

Thought for the Day

“Don’t have anything to do with closed-minded people. Being open-minded is much more important than being bright or smart.” - Ray Dalio

Disclosures

• Intel (INTC) is a constituent of the Tematica BITA Digital Infrastructure & Connectivity Index
• Apple (AAPL) is a constituent of the Tematica Research Thematic Dividend All-Stars Index

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

AAPL AMZN

Other Topics

Economy Stocks Earnings Central Banks