2024-07-23 23:16

Tesla drops, Alphabet flat before reporting numbers UPS slumps to lowest close since July 2020 after earnings GM beats Q2 expectations, raises forecast; shares slump Spotify jumps after results Indexes down: Dow 0.14%, S&P 0.16%, Nasdaq 0.06% July 23 (Reuters) - Wall Street's main indexes ended slightly lower on Tuesday, having given up meager intraday gains in the final minutes of trading, as investors switched their focus to the latest earnings from Alphabet (GOOGL.O) , opens new tab and Tesla (TSLA.O) , opens new tab. The duo kicked off results from the so-called Magnificent Seven stocks after the market closed, with both recording positive revenue numbers for the second quarter, Tesla recorded a surprise rise in revenue as it handed over more vehicles than analysts had expected, helped by price cuts and incentives. Alphabet, meanwhile, surpassed revenue estimates driven by a rise in digital advertising sales and healthy demand for its cloud computing services. Before publishing numbers though, the electric vehicle maker's dropped 2%, with the Google parent's shares rising 0.1%. Earnings from technology giants will be key in determining if 2024's record rally can be sustained, or if U.S. stocks are overvalued. The question of whether a rotation away from megacaps in favor of underperforming sectors will continue is also on investors' minds. The small-cap Russell 2000 (.RUT) , opens new tab was up 1% on the day. "We're paying attention to earnings, as that's what matters this week and next, and the price reaction to those earnings will be very telling," said Jack Janasiewicz, lead portfolio strategist at Natixis Investment Managers. On the rotation into smaller-cap stocks, he added: "The jury is still out and we need some more proof of evidence that this is sustainable, and that's again going to come down to earnings." The megacaps initially buoyed markets on Tuesday, with all three benchmarks trading in positive territory. However, despite most of the megacaps continuing to trade higher - Apple (AAPL.O) , opens new tab, Microsoft (MSFT.O) , opens new tab, Meta Platforms (META.O) , opens new tab and Amazon.com (AMZN.O) , opens new tab all gained between 0.3% and 2.1% - the overall market advances ebbed away in the afternoon, culminating in the small overall declines. Helping subdue equity markets were disappointing earnings from household names. United Parcel Service (UPS.N) , opens new tab, seen as a bellwether for the global economy, slumped 12.1% after missing earnings estimates on subdued package delivery demand and higher labor-contract costs. The stock closed at its lowest level in four years. General Motors (GM.N) , opens new tab dropped 6.4% despite a second-quarter results beat and a higher annual profit forecast, while Comcast (CMCSA.O) , opens new tab lost 2.6% after missing revenue estimates. NXP Semiconductors (NXPI.O) , opens new tab slumped 7.6% after forecasting third-quarter revenue below estimates, dragging the Philadelphia SE Semiconductor index (.SOX) , opens new tab 1.5% lower. Among others, Spotify (SPOT.N) , opens new tab jumped 12% after posting a record quarterly profit slightly ahead of expectations, while Coca-Cola (KO.N) , opens new tab rose 0.3% after it increased its annual sales and profit forecasts, Of the first 74 S&P 500 companies that reported quarterly results during this earnings season, 81.1% beat expectations, according to LSEG data. Janasiewicz cautioned that while it is early to draw specific conclusions, the pattern seen so far in the earnings season was that companies missing numbers were getting hit hard, while even outperforming doesn't guarantee much of a pop in your stock, given where market prices and expectations are currently. "If you miss based on where we are right now, maybe there's going to be more punishment doled out," he said. The S&P 500 (.SPX) , opens new tab lost 8.67 points, or 0.16%, to 5,555.74 points, while the Nasdaq Composite (.IXIC) , opens new tab lost 10.22 points, or 0.06%, to 17,997.35. The Dow Jones Industrial Average (.DJI) , opens new tab fell 57.35 points, or 0.14%, to 40,358.09. Eight of the major S&P sectors ended in negative territory, with the energy index (.SPNY) , opens new tab the worst performer, down 1.6%, as U.S. crude prices hit a six-week low. Volume on U.S. exchanges was 10.45 billion shares, compared with the 11.33 billion average for the full session over the last 20 trading days. Sign up here. https://www.reuters.com/markets/us/futures-dip-focus-moves-tech-earnings-2024-07-23/

2024-07-23 23:05

LONDON, July 24 (Reuters) - Britain's King Charles, who has spent a lifetime campaigning on environmental issues, has installed solar panels at Windsor Castle and plans to convert the royal family's Bentley cars to run on biofuel, palace officials said. Charles installed solar panels on part of the Windsor Castle estate known as the Lord Chamberlain's Upper Store, replacing the existing lead roof, and the plan will be to add more panels in the future, officials said. The royal family has Bentley limousine cars and these will be converted to run on biofuel in the next year as an interim step before the household's fleet of cars eventually becomes electric, the officials said. The king has long been outspoken on conservation and in 2020 described global warming and climate change as the greatest threat that humanity has faced. Palace officials provided the information as they explained details of the annual report into the king's taxpayer-funded spending and income, known as the Sovereign Grant, published on Wednesday. This showed that official expenditure for 2023-24 had been 89.1 million pounds ($115 million), above the 86.3 million pounds allocated, forcing the royal household to dip into reserves to fund the deficit, though by less than last year. Overall expenditure fell by 17% compared with the financial year 2022-2023, helped by a 10.8 million pound fall in the cost of property maintenance. Additional income to supplement the Sovereign Grant more than doubled to 19.8 million pounds helped by a rebound in ticket sales to visit royal palaces, which almost returned to the levels before the COVID-19 pandemic. The royal family also plan to take delivery of two new helicopters this financial year, the accounts show. The report justified the cost of the new helicopters, saying the existing ones are 15 years old, and it will help members of the royal family complete multiple engagements on a single day. Overall, travel costs amounted to 4.2 million pounds, with the biggest overseas expense the king and queen's state visit to Kenya which cost 167,000 pounds. ($1 = 0.7745 pounds) Sign up here. https://www.reuters.com/world/uk/uks-king-charles-installs-solar-panels-windsor-castle-2024-07-23/

2024-07-23 22:59

LONDON, July 23 (Reuters) - BHP Group's (BHP.AX) , opens new tab ambition to create a green nickel hub in Western Australia is on hold after the world's largest listed miner announced the entire division will go on care and maintenance later this year. The company has invested $3 billion since 2020 to turn Nickel West into a major supplier of nickel sulphate for use in electric vehicle (EV) batteries. A supply deal with Tesla Inc. (TSLA.O) , opens new tabwas signed , opens new tab in 2021 for what BHP pronounced was "one of the most sustainable and lowest carbon emission" brands of nickel in the world. Since then, low prices have trumped green credentials, a pattern seen in other battery metals, such as lithium and cobalt. Just about every Western producer will tell you metal produced to higher environmental and social standards should command a premium. The problem is right now it does not, and defining green is part of the challenge. DIRTY NICKEL China is the determining factor in the West's battery metals dilemma. The country's investment in its own EV supply chain has led to global excess production and low prices. Indonesia was the single largest recipient of China's Belt and Road Initiative last year, receiving $7.3 billion in investment, according to U.S. think-tank The Center for Strategic and International Studies (CSIS). Much of that money has gone into developing Indonesia's huge nickel deposits. The country's production has leapt to more than 2 million metric tons from 600,000 in the space of five years. Ten years ago the country had just two smelters. At the latest count there are 43 plants with another 28 under construction, according to CSIS. The expansion has had a heavy ecological and social cost. Environmental groups such as Mongabay have highlighted , opens new tab land rights violations, deforestation, pollution and poor work practices in the sector. Safety procedure violations are believed to have caused the fatal fire at a smelter last December that killed 21 workers. Indonesia's nickel also has a high carbon footprint since much of the new processing capacity is powered by coal, often in the form of captive plants. HOW GREEN IS YOUR NICKEL? Not every Indonesian nickel producer is a dirty producer. PT Vale, for example, has been operating in the country for 56 years and cites , opens new tab the pristine water of Lake Matano as an example of its stewardship of mine waste. At the other end of the spectrum, the country's nickel output ticks all the wrong boxes for environmental, social and governance (ESG) standards. The problem is compounded by a lack of transparency around many operations, particularly those that have sprung up in the Chinese nickel rush. Benchmark Mineral Intelligence (BMI), which specialises in battery metals research and has just launched green price assessments, estimates less than a third of global nickel production comes from operators committed to ESG transparency. Given that Indonesia accounts for over half of the world's production, many of its Chinese producers are clearly in that non-disclosure category. This makes it all but impossible to determine how green the nickel is in an EV battery that has been manufactured in China or contains nickel sulphate from either China or Indonesia. CARBON STARTER BMI has identified 79 criteria by which to judge a company's ESG performance, from its carbon footprint to forest management. Such is the spectrum of ESG non-compliance in Indonesia's nickel industry, it's hard to how to start defining what constitutes ethically sound metal. "There is an absence of consensus around standards on what genuinely constitutes green material," according to Robin Martin, head of market development at the London Metal Exchange (LME), which has been lobbied by Western producers to launch a green nickel contract. There is too little nickel produced to transparently high ESG standards to form a liquidity base for a futures contract, Martin told last month's LME's Asia Metals Seminar , opens new tab. The starting point should be carbon footprint, he said, because there are widely-accepted standards in determining emissions in the nickel sector. The LME has partnered with German digital trading company Metalshub to offer a low-carbon nickel option on its platform. After registering just four tons of low-carbon transactions in the prior three months, volumes jumped to 144 tons out of a total 1,847 tons transacted in May. The idea is that if volumes build, it would facilitate the generation of a low-carbon nickel price index, which could ultimately be the basis of a futures contract. But it will take time, which is one thing Western nickel producers do not have. Also it would not tell you whether your nickel has been extracted at the price of contaminated water or loss of tree cover. SUPPLY-CHAIN TRANSPARENCY Nickel is an ESG laggard among the battery metals because Indonesia's mining and processing capacity has grown so big so fast. Cobalt, another battery input, has already been forced to embrace supply-chain transparency to assuage buyer concern that metal may have come from unregulated artisanal mining in the Democratic Republic of Congo. One junior nickel miner, Talon Metals (TLO.TO) , opens new tab, is proposing to do the same with production from its planned Tamarack mine in Minnesota. It has partnered with Circulor, already active in tracing material flows in the cobalt market, to ensure its nickel and carbon footprint can be tracked from mine to battery and eventual recycling. That doesn't mean an automotive company will pay more for it, but it at least offers a clear choice between clean and uncertain provenance. Car-makers should take note because if they are ultimately sourcing the nickel in their batteries from Indonesia, they risk reputational damage and being unprepared for government regulation. In 2027, the EU Battery Passport , opens new tab is coming. It will require detailed information on carbon footprint, environmental impact and full supply-chain transparency of inputs such as cobalt and nickel all the way back to the mine-site. No passport, no entry to the European Union. As Indonesian nickel supply continues to grow, crushing prices and forcing higher-standard operators out of business, automotive companies and their battery suppliers could be in for a rude awakening. If they are not yet prepared to pay a premium for ethically sourced metal, they should at least ensure they can identify what is not clean, green nickel. The opinions expressed here are those of the author, a columnist for Reuters. Sign up here. https://www.reuters.com/markets/commodities/search-elusive-green-nickel-premium-2024-07-23/

2024-07-23 22:48

July 23 (Reuters) - Solar inverter maker Enphase Energy (ENPH.O) , opens new tab beat analysts' estimates for second-quarter operating profit on Tuesday, driven by a recovery in demand in the United States. The Fremont, California-based company's adjusted net operating income came in at $61.1 million for the quarter ending June 30, ahead of analysts' average estimate of $37.8 million, according to LSEG data. Shares of the company rose 4.4% in extended trading. Solar industry analysts have reported that over the past few quarters, inventory levels, which had increased due to manufacturing expansion and low demand, have come down, with most U.S. states, except California, showing signs of recovery. Last year, Enphase reduced its workforce by 10% and cut manufacturing capacity to manage excess inventory. Second-quarter revenue in the United States, Enphase's biggest market, came in at $198.7 million, a nearly 32% increase sequentially. Meanwhile, revenue in Europe remained flat due to a sluggish recovery in demand. On an adjusted basis, the company said gross margin for the second quarter was 47.1%, up from $46.2%, last year. Shipments of its microinverters fell by 73% to 1,402,602 in the second-quarter, compared with 5,198,441, during the same reporting period last year. Enphase forecast third quarter revenue to be between $370.0 million and $410.0 million, compared to analysts' estimates of $403.5 million. Sign up here. https://www.reuters.com/business/energy/enphase-energy-beats-q2-operating-profit-estimates-fueled-by-us-recovery-2024-07-23/

2024-07-23 22:37

July 23 (Reuters) - Visa's (V.N) , opens new tab third-quarter revenue growth fell short of Wall Street targets in a rare miss for the world's largest payments processor as steep borrowing costs limited consumer spending, sending its shares down 4.6% in extended trading. The U.S. Federal Reserve's efforts to curb inflation have taken interest rates to their highest since the global financial crisis of 2008, stretching the budgets of lower-income Americans who live paycheck to paycheck. "In the U.S., while growth in the high-spend consumer segment remained stable compared to prior quarters, we saw a slight moderation in the lower-spend consumer segment," Chief Financial Officer Chris Suh told analysts. Rival credit card giant American Express (AXP.N) , opens new tab also missed expectations for second-quarter revenue last week. "Visa was priced for perfection back in March but has eased since then as unemployment, payment and loan delinquencies, and continued consumer disposable income concerns tick higher," said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors. "There is room for business and consumer spending growth, especially if Fed interest rates decline." Visa's quarterly net revenue of $8.90 billion came in below analysts' estimates of $8.92 billion, according to LSEG data. It was the company's first such miss since early 2020. Payments volume growth cooled down in its Asia-Pacific market, driven primarily by the macroeconomic environment in mainland China. The post-pandemic recovery in the region's travel demand is progressing at a slower pace than what Visa anticipated. Visa's payments volume rose 7% in the quarter on a constant dollar basis, while cross-border volumes excluding transactions within Europe jumped 14%, signaling robust international travel demand. It expects net revenue growth in the "low double-digit" percentages for the fourth quarter ending Sept. 30, compared with 10.6% reported last year. The company also reaffirmed its annual profit and revenue growth forecasts. Visa earned $2.42 per share on an adjusted basis for the third quarter, in line with expectations. Sign up here. https://www.reuters.com/business/finance/visa-quarterly-profit-jumps-20-strong-consumer-spending-2024-07-23/

2024-07-23 22:30

July 23 (Reuters) - Texas Instruments (TXN.O) , opens new tab beat analysts' estimates for second-quarter profit on Tuesday, powered by stabilizing demand for analog chips from markets such as personal electronics and lower manufacturing costs. A rebound in smartphones and personal computers sales has enabled firms to clear an inventory glut created by stockpiling during the pandemic, boosting orders for the company's chips. "Analog demand has bottomed and started to show some incremental growth," said Edward Jones analyst Logan Purk. Shares of Texas Instruments were up 3% in extended trading, set to add to the about 16% year-to-date gain. "Positive reaction after-hours likely reflects in line third-quarter guide after fear of softer-than-expected analog demand following NXP's results last night," said Angelo Zino, senior equity analyst at CFRA Research. Shares had closed down 3.7% in regular trading following a tepid forecast from peer NXP Semiconductors (NXPI.O) , opens new tab. CEO Haviv Ilan said TI's business grew about 20% sequentially in China in the second quarter, and customers "have stopped managing their inventories over there." Second-quarter reported earnings of $1.22 per share beat estimates of $1.16, while the midpoint of its third-quarter revenue forecast of $4.1 billion was in line with analysts' average estimate, according to LSEG data. Profit was also supported by increased factory loadings - the quantity of products being manufactured - which help spread out fixed costs over more output. Chief Financial Officer Rafael Lizardi on a call attributed lower manufacturing unit costs to increased internal manufacturing, with greater focus on 300 millimeter wafer technology. Activist investor Elliott Investment Management had in May urged TI to improve its free cash flow and temper its large investments in building-out 300-millimeter fabs. Elliott on Tuesday welcomed the "capital allocation initiatives announced by CEO Haviv Ilan" on the earnings call. Capital expenditure stood at $1.06 billion, compared to expectations of $1.25 billion. "Lower-than-expected capital expenditures suggests that TI is tightening its belt and responding to activist investor Elliot Management's $2.5 billion position in the company," said Running Point Capital's chief investment officer Michael Schulman. Still, some analysts believe TI is unlikely to steer away from its capital investment strategy. Sign up here. https://www.reuters.com/technology/analog-chipmaker-ti-beats-second-quarter-profit-estimates-2024-07-23/