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Monday November 28, 2022



American Express Reports Earnings

American Express Company (AXP) released its latest quarterly and full-year earnings on Tuesday, January 25. Revenue reflected stronger-than-expected growth causing shares to rise 8% after the report's release.

The company reported revenue of $12.2 billion, up 30% from $9.4 billion reported at this time last year. Full year income was $42.4 billion, up from $36.1 billion in 2020.

"We delivered strong fourth-quarter and full-year results that exceeded our expectations thanks to the efforts of our dedicated and talented colleagues," said American Express CEO, Stephen Squeri. "Our investment strategy enabled us to reach record levels of Card Member spending, maintain customer retention and satisfaction above pre-pandemic levels, increase new Card acquisitions, grow our loan balances, and deepen our digital engagement with customers."

American Express reported net income of $1.7 billion for the quarter or $2.18 per share. This is up from last year's fourth quarter earnings of 1.4 billion or $1.76 per share.

The financial services company delivered stronger-than-expected growth in card fee revenue. During the full year, American Express customers spent $368.1 billion on AmEx credit cards in the fourth quarter. The new card growth and higher usage of travel-related benefits provided strong card member spending.

American Express Company (AXP) shares ended the week at $177.06, up 13.9% for the week.

Johnson & Johnson Posts Strong Earnings

Johnson & Johnson (JNJ) reported its fourth-quarter results on Tuesday, January 25. The pharmaceutical company beat earnings estimates but fell short of revenue expectations.

The company posted revenue of $24.8 billion during the quarter. This was up from $22.5 billion during the same quarter last year. This missed analysts' expected revenue of $25.3 billion.

"Our 2021 performance reflects continued strength across all segments of our business. Guided by Our Credo, I am honored to assume the role of CEO, leading our global teams in continuing our work to deliver life-changing solutions to consumers, patients, and health care providers," said Johnson & Johnson CEO, Alex Gorsky. "Given our strong results, financial profile, and innovative pipeline we are well positioned for success in 2022 and beyond."

Johnson & Johnson reported net earnings of $4.7 billion, or $1.77 per adjusted share. This was up from $1.7 billion, or $0.65 per adjusted share last year at this time.

The company developed and distributed one of the three COVID vaccines currently available in the United States. Johnson & Johnson announced a positive Committee for Medical Products for Human Use (CHMP) opinion for a booster shot and the company's COVID-19 vaccine demonstrated 85% effectiveness against hospitalization when Omicron was dominant. The company's Pharmaceutical segment posted revenue of $14.3 billion during the quarter, up 17.9% from the prior year. The company's Medical Devices and Consumer Health Segments posted 5.3% and 1.8% increases, respectively.

Johnson & Johnson (JNJ) shares ended the week at $171.79, up 4.8% for the week.

Tesla Reports Quarterly Earnings

Tesla, Inc. (TSLA) released its fourth quarter and full-year earnings report on Wednesday, January 26. The electric automotive company posted better-than-expected quarterly revenue.

Revenue came in at $17.72 billion for the quarter, up from $10.74 billion during the same quarter last year. This beat analysts expected quarterly revenue of $16.57 billion. Revenue for the full year came in at $53.82 billion.

"The rate of growth will depend on our equipment capacity, operational efficiency and the capacity and stability of the supply chain," the company stated in its earnings release. "Our own factories have been running below capacity for several quarters as supply chain became the main limiting factor, which is likely to continue through 2022."

The company posted net earnings of $2.32 billion for the quarter. This was up from $270 million at this time last year. Full-year net income was $5.5 billion.

Tesla noted in its earnings release that it would not be introducing new vehicle models this year due to its parts constraints. The company will concentrate instead on working on engineering and tooling to create future vehicles and expanding its full self-driving (FSD) software. Tesla produced 305,840 vehicles and delivered 308,600 in the last three months of 2021. The company's U.S. factory in Fremont, California, achieved record production in 2021 and the company aims to expand capacity at that facility beyond 600,000 cars per year.

Tesla, Inc. (TSLA) shares ended the week at $846.35, down 6.5% for the week.

The Dow started the week at 34,070 and closed a 34,725 on 1/28. The S&P 500 started the week at 4,356 and closed at 4,431. The NASDAQ started the week at 13,481 and closed at 13,770.

Treasury Yields Fall

U.S. Treasury yields dipped throughout the week after the Federal Reserve's key inflation gauge grew faster than expected. Yields fell on Friday despite unemployment falling below pre-pandemic levels.

On Friday, the Commerce Department announced that the Personal Consumption Expenditures price index revealed that U.S. inflation rose 4.9% in December from the prior year. This marks the fastest increase in the consumer spending price index since September 1983.

"At the start of the new year, consumers face a mix of headwinds and tailwinds," said Oxford Economics. "While the Omicron variant and further sharp rise in consumer prices are causing a winter soft patch in spending, consumers will continue to benefit from a tight labor market, healthier balance sheets and excess savings."

The benchmark 10-year Treasury note yield opened the week of 01/24 at 1.763% and traded as high as 1.869% on Thursday. The 30-year Treasury bond yield opened the week at 2.080% and traded as high as 2.168% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment insurance totaled 260,000. This matched market estimates and was a decrease from the previous week's 290,000.

"We think the recent surge in Covid cases continues to prop up claims relative to their pre-Omicron wave level," said lead economist at Oxford Economics, Nancy Vanden Houten."We expect initial claims to gravitate back to the 200k level or lower once the Omicron wave passes, and there continues to be encouraging signs that the surge in new cases has passed its peak."

The 10-year Treasury note yield closed at % on 01/28, while the 30-year Treasury bond yield was %.

Mortgage Rates Hold Steady

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, January 27. The report showed interest rates remaining relatively flat for the week.

This week, the 30-year fixed rate mortgage averaged 3.55%, down slightly from last week's average of 3.56%. Last year at this time, the 30-year fixed rate mortgage averaged 2.73%.

The 15-year fixed rate mortgage averaged 2.80% this week, up from 2.79% last week. During the same week last year, the 15-year fixed rate mortgage averaged 2.20%.

"Following a month-long rise, mortgage rates effectively stayed flat this week," 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 28, 2022
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