Before the bell: big winners, but also big losers

On Wall Street, indices are rising, but some companies are seeing their share prices fall sharply after earnings releases.

Wall Street saw gains yesterday. The S&P 500 rose by 0.2%, while the Nasdaq climbed 0.8% to a new record. The indices, however, mask significant price swings in individual stocks. Want to know if quarterly results met or missed expectations? Just look at the stock reaction. McDonald’s (-0.6%), Pfizer (-1.4%), PayPal (-4%), and BP (-5%) were unable to please their shareholders. For companies reporting results after Wall Street’s close, we can already see the after-hours impact. Alphabet was up 1.8% yesterday and added another 5.8% after-hours. Chipmaker AMD showed a different story: it rose 4% during regular hours but fell 7.6% after hours. Chipotle ended the day nearly unchanged but lost 5.3% after hours. Visa (-0.8%) gained 1.8% after hours. Mondelez remained relatively stable both during and after trading. There’s a saying that “the market is always right,” but a sharp sell-off can sometimes present an opportunity. For example, Philips dropped by 17% on Monday but rebounded by 2.4% yesterday. In Europe, the average loss was 0.4%. On the Brussels exchange, UCB (+1%) performed well, while Cofinimmo (-2.3%) and Elia (-3.7%) lost ground. The Bel20 index fell by 0.4%. Outside the index, Colruyt (+7.3%) was in good shape.

In Japan, stocks are up an average of 1% today, while Hong Kong’s market is down by 1.7%. Today, we’ll see economic growth figures for the eurozone and the U.S., while Belgium will release its inflation data. Aedifica and Melexis have already published their quarterly results this morning, and Galapagos will report after the close. We’ll also get results from Amundi, BASF, UBS, and Volkswagen, while AbbVie, Caterpillar, Eli Lilly, and GSK will report pre-market in the U.S., with Amgen, Meta, Microsoft, and Starbucks reporting after-hours.

Profit warning

Is it still possible to issue a warning when the market is already pessimistic about your company? Yes, it is. Melexis did just that this morning. The Belgian chipmaker posted quarterly revenue of €247.9 million, slightly below the €248.6 million from the third quarter last year. Operating income (EBITDA) fell by 8% to €76 million, while net profit dropped by 10% to €51.2 million. The management’s previous full-year revenue target of €1 billion has been reduced to “€935–945 million.” The operating profit margin forecast has also been adjusted to 24% (down from “above 25%”). These figures aren’t encouraging, and shareholders haven’t had much to smile about lately. In late March last year, Melexis shares traded at €106 each, but yesterday, they were just under €70—a 34% drop. Today, that price is likely to fall further.

Financial sector sees profit increase

We already knew that most banks had a strong quarter, and UBS confirmed this again this morning. The Swiss financial institution reported a net profit of $1.4 billion. Is that a lot? Analysts certainly think so, as they had expected “only” $740 million. This impressive figure results from a combination of revenue growth (from $11.5 billion to $12.3 billion) and cost savings. UBS is also in the midst of integrating Credit Suisse. The merger wasn’t without risk but appears to be succeeding.

Fund managers are also experiencing golden times. Amundi, for example, controlled by Crédit Agricole but also publicly traded, reported a 16.1% increase in quarterly profit to €337 million, slightly above analysts’ expectations of €333 million. Amundi, though smaller than U.S. giants BlackRock and Vanguard, is Europe’s largest asset manager, with €2.19 trillion under management.

Did you know…

that as a Saxo client, you can trade on earnings releases via ‘Pre- and after-hours trading’? This feature can be easily activated through ‘Profile’ > ‘Platform Settings’ > ‘Pre- and after-hours trading’.

This article was translated from Dutch and was originally published on Spaarvarkens.be.