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Sunday February 5, 2023



United Airlines Releases Earnings Report

United Airlines Holdings, Inc. (UAL) posted its fourth-quarter and full-year earnings report on Wednesday, January 19. The airline company's stock fell 2.3% following the release of the report.

The company reported total operating revenue of $8.2 billion for the quarter, up from $3.4 billion during the same quarter last year. For the full year, United reported revenue of $24.6 billion, up from $15.4 billion in 2020.

"The United team has been fighting through unprecedented obstacles to, once again, overcome the new and daunting challenges that COVID-19 is bringing to aviation, and I am grateful to each one of them for their commitment to taking care of our customers," said United Airlines CEO, Scott Kirby. "While Omicron is impacting near term demand, we remain optimistic about the spring and excited about the summer and beyond."

United posted a net income of $646 million during the quarter, down from net income of $1.9 billion during the same quarter last year. For the full year, the company reported a net income of $1.9 billion, down from $7.1 billion in net income for 2020.

United Airlines announced that due to the Omicron variant, the company expects 2022 capacity to decline compared to 2019. The Omicron variant continued to affect travel during the quarter as airline traffic fell 28.1%. United Airlines measures its capacity in available seat miles, which equals the number of available seats multiplied by miles flown. For the fourth quarter, United's available seat miles decreased 22.8% compared to the fourth quarter of 2019.

United Airlines Holdings, Inc. (UAL) shares ended the week at $41.65, down 9.3% for the week.

Bank of America Reports Earnings

Bank of America Corporation (BAC) released its latest quarterly and full-year earnings on Wednesday, January 19. The banking institution increased revenue and net income for the quarter.

Revenue came in at $22.1 billion during the fourth quarter, up 10% from $20.1 billion at this time last year. For the full year, the company reported revenue of $89.1 billion.

"Our fourth-quarter results were driven by strong organic growth, record levels of digital engagement, and an improving economy," said Bank of America CEO, Brian Moynihan. "We also continued to support our communities, helping them address some of society's biggest challenges, including the environment, the pandemic, racial equality and economic opportunity. I want to thank our talented teammates across the globe for all their work over the past year."

The company reported net income of $7.0 billion for the quarter, up from $5.5 billion last year at this time. For the full year, Bank of America posted $32.0 billion in net income.

Bank of America's Consumer Banking segment brought in net income of $3.1 billion during the quarter. The segment also noted a 16% increase in deposit balances for the quarter, up to more than $1.0 trillion. The increase in deposits come as the company added 901,000 new consumer checking accounts and 525,000 new consumer investment accounts during the quarter.

Bank of America Corporation (BAC) shares ended the week at $44.92, down 6.1% for the week.

Procter & Gamble Posts Quarterly Earnings

The Procter & Gamble Company (PG) reported its second quarter earnings on Wednesday, January 19. The company's stock rose 3.4% after the release of the earnings report.

Net sales for the quarter were $21.0 billion. This was a 6% increase from $19.7 billion during the same quarter last year.

"We delivered very strong top-line growth and made sequential progress on earnings in the face of significant cost headwinds," said Procter & Gamble CEO, David Taylor. "These results keep us on track to deliver our earnings outlook and to raise estimates for sales growth, cash productivity and cash return to shareowners. Our focus remains on the strategies of superiority, productivity, constructive disruption and continually improving P&G's organization structure and culture."

The company reported net earnings of $4.2 billion for the quarter. This was up from $3.9 billion in net earnings last year at this time.

The Cincinnati, Ohio-based company, offers a variety of popular brands, including Crest, Dawn, Febreze, Gillette, Tide, Pampers and others. The company's Fabric & Home Care segment posted $6.9 billion in net sales, up 7% from the same quarter last year. The Baby, Feminine & Family Care segment and Beauty segment each posted $5.1 billion in net sales, up 5% from one year ago.

The Procter & Gamble Company (PG) shares ended the week at $162.62, up 2.7% for the week.

The Dow started the week at 35,662 and closed a 34,265 on 1/21. The S&P 500 started the week at 4,632 and closed at 4,398. The NASDAQ started the week at 14,682 and closed at 13,769.

Treasury Yields Fluctuate

U.S. Treasury yields rose throughout the week as inflation levels rise and the Omicron variant continues to spread. Yields fell on Friday despite unemployment levels coming in higher than expected.

Last week, the U.S. Department of Labor released the Consumer Price Index (CPI) for December. The CPI measures costs across dozens of items. The CPI climbed 7% and is rising 0.5% on a monthly basis. Adding to inflation levels is the ongoing spread of the Omicron variant and resulting supply chain issues.

"The headline rate of inflation accelerated on an annual basis, hitting 7%, but did decelerate on a monthly basis for the second month in a row, owing to a decline in energy and slower increases in food prices," said chief financial analyst at Bankrate, Greg McBride. "But core consumer prices are still rising at an outsized pace and have not shown signs of deceleration."

The benchmark 10-year Treasury note yield opened the week of 01/17 at 1.792% and traded as high as 1.900% on Wednesday. The 30-year Treasury bond yield opened the week at 2.125% and traded as high as 2.217% on Wednesday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment insurance totaled 286,000. This was higher than analysts' estimate of 225,000 and an increase from the previous week's 231,000.

"Omicron has put a wrench in where we stand on the labor market front, but with hiring challenges, employers are likely trying to hold onto their workforce," said managing director of investment strategy at E-TRADE, Mike Loewengart. "So this could be a short-term surge in jobless claims."

The 10-year Treasury note yield closed at 1.76% on 01/21, while the 30-year Treasury bond yield was 2.12%.

Mortgage Rates Continue to Rise

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, January 20. Mortgage rates increased this week in response to a continued rise in inflation levels.

This week, the 30-year fixed rate mortgage averaged 3.56%, up from last week's average of 3.45%. Last year at this time, the 30-year fixed rate mortgage averaged 2.77%.

The 15-year fixed rate mortgage averaged 2.79% this week, up from 2.62% last week. During the same week last year, the 15-year fixed rate mortgage averaged 2.21%.

"Mortgage rates moved up again as the 10-year U.S. Treasury yield rose and financial markets adjusted to anticipated changes in monetary policy that will combat inflation," said Freddie Mac's Chief Economist, Sam Khater. "As a result of higher mortgage rates, purchase demand has modestly waned in advance of the spring homebuying season. However, supply remains near historically tight levels and home prices remain high, keeping the market competitive."

Based on published national averages, the savings rate was 0.06% as of 01/18. The one-year CD averaged 0.13%.

Published January 21, 2022
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