It has been a positive week for Wall Street with the US Federal Reserve’s decision to hold rates given the thumbs-up by the market and solid third quarter updates continuing to tumble in.
This helped the S&P 500 and Nasdaq Composite to close the week 4.2% and 4.7% higher respectively.
Investors had feared that recent strong economic data and above target inflation could push Fed chairman Jerome Powell into adopting a hawkish stance, but US rates were left untouched for the second time in a row.
Should Powell make it a hat-trick in December, markets could take this as confirmation the Fed is done raising rates altogether in this cycle.
Investors were left waiting for the latest US non-farm payrolls data, which analysts expected to show 180,000 jobs added to the world’s biggest economy in October, a slowdown from the 336,000 increase seen in September.
Stocks on the rise this week included payments company PayPal (PYPL:NASDAQ), which powered 6.6% higher to $55.1 after posting forecast-beating third quarter earnings, raising guidance and pledging to become ‘leaner’, as well as Kraft Heinz (KHC:NASDAQ), which fattened up 5.5% to $33.5 after the food giant raised profit expectations off the back of price increases.
Also in demand was Starbucks (SBUX:NASDAQ), which frothed up 8% to $100 after the coffeehouse colossus put up better-than-expected fourth quarter earnings as strong North America demand offset a muted recovery in China.
APPLE
Apple (AAPL:NASDAQ) is about to hit a hardware wall, judging by comments looking to the Christmas run-in quarter. The Cupertino colossus may have topped forecasts in the three months to 30 September but that did little to offset growing worries that iPhone 15 simply isn’t going to provide the growth bump investors were hoping for.
The stock tumbled as much as 5% in after-hours trading, although those losses were eventually tempered to a nudge below 3%, putting the share price at $172.60 when Wall Street reopens later today.
The tech giant said current quarter sales would grow at a similar rate to last year, implying revenue growth of around 5%, a tally that fell shy of Wall Street forecasts and compounding a fourth quarter straight of headline revenue declines as China demand weakens.
Apple’s profitable service business continues to shine, making 16% more revenue in the September quarter than the same time last year, thanks to hardy App Store spending, revamped iCloud plans, and a steady flow of AppleTV+ subscriptions, which helped pull up profit margins.
But there’s no escaping that fact that competition’s tough in China, with local competitors like Huawei doing their best to win budget-conscious shoppers’ hard-earned cash.
MCDONALD’S
The world’s largest fast food chain McDonald’s (MCD:NYSE) served-up a tasty set of third quarter results with sales and earnings beating Wall Street estimates.
It marks the seventh quarter out of the last eight where results have come in ahead of consensus forecasts.
The firm said strong demand for its relatively cheap burgers and fries hit the spot for diners struggling with high food prices. And although footfall dipped in the US, price hikes drove sales higher.
New product launches including the Cheesy Jalapeno Bacon quarter-pounder and the popular Spicy Chicken McNuggets which returned to menus in September also gave sales a boost.
Global comparable sales increased 8.8% compared with the 7.4% growth expected by analysts, according to LSEG data. Group revenue jumped 14% to $6.7 billion, slightly ahead of Street estimates of $6.6 billion despite headwinds from a strong US dollar.
The company reported diluted EPS (earnings per share) up 19% to $3.19 in the quarter to 30 September, around 7% higher than consensus estimates. McDonald’s shares are up 1% year to date compared with a near-13% gain for the S&P 500.
ESTEE LAUDER
Investors in Estee Lauder (EL:NYSE) were left blushing after the cosmetics group posted a 10% drop in first-quarter sales and cut its full year organic growth forecasts.
‘We are lowering our fiscal 2024 outlook given incremental external headwinds, namely from the slower growth in overall prestige beauty in Asia travel retail and in mainland China, which is currently confirmed in the pre-sale phase of the 11.11 Shopping Festival, and the risks of business disruption in Israel and other parts of the Middle East’, said president and chief executive officer Fabrizio Freda.
Estee Lauder shares plunged 19% on the news, their biggest one-day loss on record, to a five-year low of $104.50.
In contrast, shares in Gen Z-focused cosmetics maker e.l.f. Beauty (ELF:NYSE) were indicated 12% higher at $106 in pre-market trading on Thursday, taking their year-to-date gain to more than 50%, after the California-based firm posted blow-out first half results and raised its sales and earnings outlook.
Chairman and chief executive Tarang Amin said the brand’s innovation pipeline had never been stronger. ‘We continue to have these holy grails that consumers can’t seem to get enough of,’ added Amin.
