Plus, Chevron and Exxon reported double-digit declines in revenue, U.S. coronavirus cases rose to a new daily record, and McDonald’s announced the McRib will return in December.
Stocks were lower to start Friday with the Dow sliding 350 points, or 1.3%. The S&P 500 dipped 1.5%, while the Nasdaq dropped 2.3%.
Big tech earnings weren’t good enough. Apple shares are down 5% this morning after it surprised Wall Street with lower-than-expected iPhone sales and a 29% slump in China revenue, even as it reported slightly better-than-expected earnings results overall. Amazon is down more than 4% after posting stronger-than-expected results as investors grew weary about its wide guidance range for the fourth quarter of between 28% to 38% growth year-over-year. Facebook shares are down more than 6% after spooking investors by reporting a decrease in users in the U.S. and Canada. Twitter shares are down a whopping 20% after it reported disappointing user growth even as it beat analysts’ expectations on profit and revenue. One bight spot was Google-parent Alphabet, which reported a strong rebound in its core advertising business which had been hit hard by consumer spending pullbacks amid the coronavirus pandemic.
In other earnings news, Under Armour shares opened nearly 11% higher this morning after the athletic apparel maker delivered an earnings beat. Under Armour posted earnings per share of $0.26 on revenue of $1.43 billion, compared to estimates for earnings per share of $0.03 on revenue of $1.16 billion. “The pandemic has given Under Armour, and many others, the permission to not grow revenues and instead focus on profits,” said BMO Capital Markets analyst Simeon Siegel. “And I think that is critical.” Exxon reported its third straight quarter of losses, reporting a loss of $0.18 per share on revenue of $46.2 billion, versus earnings of $0.75 per share on revenue of $65.05 in the same period last year. Chevron delivered its second straight quarter of losses, reporting revenue fell 32% year-over-year. “Third quarter results were down from a year ago, primarily due to lower commodity prices and margins resulting from the impact of COVID-19,” Chairman and CEO Michael Wirth said in a statement. “The world’s economy continues to operate below pre-pandemic levels, impacting demand for our products which are closely linked to economic activity.”
Thursday marked a record high in new daily coronavirus cases of 88,521, bringing the seven-day average of daily new cases to a new high of 76,590. Former FDA Commissioner Dr. Scott Gottlieb said that Americans “should not let their guard down” over the next few months, including around the Halloween and Thanksgiving holidays, and continue to wear masks and avoid large gatherings. “We should try to remain vigilant and be careful these last two or three months as we get through what is going to be the most difficult season,” Gottlieb said. Gottlieb added that, “We’re starting to find ourselves on a steep slope of the epidemic curve, so I think you’re going to see cases accelerate. The epidemic doubling time has fallen to about 80 days. So this is starting to accelerate across the country.” El Paso County, Texas may be a preview of what’s to come as cases rise nationally. The county shuttered all non-essential businesses for two weeks in an effort to curb the rise of COVID-19 cases there rise steadily. “Our hospitals are at capacity,” said Judge Ricardo Samaniego. “Our medical professionals are overwhelmed. If we don’t respond, we will see unprecedented levels of death.”
As cases continue to rise and a new wave of shutdowns begin, House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin traded barbs on stimulus, as the tone between the two becomes decidedly less cordial in the days ahead of the election. Mnuchin called Pelosi’s Thursday letter “a political stunt.” “Your ALL OR NOTHING approach is hurting hard-working Americans who need help NOW,” Mnuchin said in a response, adding that the Trump administration had already come back to Pelosi on her demand for a national COVID-19 testing strategy and that Pelosi has “refused to compromise” on other sticking points. Pelosi in response said that she doesn’t expect responses to Democrats’ other areas of concern to “all be in our favor” when the White House does respond, putting the onus back on Mnuchin. And Pelosi spokesman Drew Hammill said in a tweet that Mnuchin’s letter was a waste of time since it failed to provide answers to any of the Speaker’s ongoing concerns.
And in a spot of good news(?), McDonald’s is bringing its McRib sandwich back on December 2, just in time for the holidays. The pork sandwich will be available for a limited time and will be sold at 10,000 of its 14,000 U.S. locations. The sandwich has historically been hard to find, so McDonald’s released its own McRib locator app to help customers find the locations where it will be available since nothing says “Merry Christmas” like going on a wild hunt for a sandwich with a meat patty formed to imitate having real rib bones in it.
Stocks We’re Watching
8×8 Inc (NYSE: EGHT): 8×8 shares jumped nearly 16% yesterday after the cloud communications platform reported second quarter earnings. The company reported a 17.9% gain in revenue year-over-year to $129.1 million in the quarter fueled by a 19.3% gain in its services revenue to $120.9 million. “Our go-to-market strategy and unique value proposition as the only, single-vendor open communications platform are clearly paying off,” said Vik Verma, Chief Executive Officer at 8×8, Inc. “We delivered a strong quarter across the board and we have a clear line of sight to both profitability and continued growth. This reflects the significant strides made in unlocking the operating leverage in the company as well as strong demand for our platform with mid-market and enterprise customers.”