My top 10 things to watch Thursday, Jan. 26
1. Bond prices getting killed, inversely yields rising, on low number of jobless claims, sign of a still-strong labor market. Fourth-quarter economic growth was 2.9% versus 2.8% expected. Price index in GDP report in-line but much lower rise than Q3. Wall Street rises, looking past those higher bond yields. Perhaps, numbers supportive of soft landing in the Federal Reserve’s inflation fight.
2. The Dow Jones Industrial Average, the S&P 500 and the Nasdaq on track to open higher as investors also digest more earnings. IBM (IBM) down 2%, despite beating estimates late Wednesday; announces 3,900 job cuts. The market closed mixed after steep morning losses following Microsoft‘s (MSFT) soft guidance. Credit Suisse cuts price target on Club holding to $285 per share from $365. Getting realistic.
3. Tesla day. It’s all the BEST EVER. Beats with fourth-quarter revenue and earnings. Elon Musk says Tesla (TSLA) might be able to make 2 million vehicles this year. Cut prices. Shares, already up more than 17% year to date, look to add 7% early Thursday. Making a dent in last year’s collapse. The Cybertruck coming later this year. Need a telescope to see who can come near him in delivering this kind of technology. Maybe China one day? Is there any risk of commoditization? Not yet.
4. On the Tesla earnings call, Musk also defends his ownership of Twitter. Says he’s not worried about Tesla brand and reputation due to his political tweets. “I’ve got 127 million followers” and growing. He says that speaks for itself. Musk also uses the chance to promote Twitter, saying to use Twitter “in ways that are interesting and informative, entertaining;” will help drive sales.
5. Southwest Airlines (LUV) reports a 38-cent per-share loss in the fourth quarter, wider than the 12-cent loss expected. Revenue was in-line. $800 million hit to pretax results from the flight disruptions. The carrier canceled about 16,700 flights during the busy holiday travel season following severe weather. Says future bookings slow.
6. Different story at American Airlines (AAL), which weathered the tough holiday season. Q4 earnings-per-share $1.17 versus $1.14 expected. Revenue basically matched estimates. American expects capacity to be 8% to 10% higher than Q1 2022, more in line with upbeat booking outlooks from Delta Air Lines (DAL) and United Airlines (UAL).
7. Chevron (CVX) comes out with a monstrous $75 billion buyback and a quarterly dividend increase of 9 cents, or 6.3%, to $1.51. Chevron is set to report quarterly results Friday. The stock gets a 3.5% pop. Our oil-related holdings … Coterra Energy (CTRA), Devon Energy (DVN), Halliburton (HAL) and Pioneer Natural Resources (PXD) … are also higher.
8. Wells Fargo raises price target on Club holding Wynn Resorts (WYNN) to $125 per share from $101 following rosy Macao commentary from Las Vegas Sands‘ (LVS) post-earnings conference call. LVS price target raised to $65 from $53. China reopening after zero-Covid policy boosting the Asian gambling hotspot. Wells Fargo keeps overweight (buy) rating on both of them.
9. Oppenheimer out with a hilarious Alphabet (GOOGL) price target cut to $130 per share from $135; keeps outperform (buy) rating. DOJ antitrust suite over ads. Analysts point out that the Google parent cites in a blog post competition from other companies, including Club names Apple (AAPL) and Amazon (AMZN).
10. Comcast (CMCSA), parent company of NBCUniversal and CNBC, reports earnings per share of 82 cents versus 77 cents expected in the fourth quarter. Dividend boost of 7.4%. Theme parks business remained a bright spot and steep losses at streaming service Peacock. We own Disney (DIS), in some of the same businesses.
(Jim Cramer’s Charitable Trust is long MSFT, DVN, CTRA, HAL, PXD, WYNN, GOOGL, AAPL, AMZN, DIS. See here for a full list of the stocks.)
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