Stock indexes add to last week's gains with the S&P 500 and Dow both eking out new record closing highs.
Investors today are highly anxious to see earnings results from Google-parent Alphabet and Microsoft, the first of the big tech giants scheduled to report this week. Both companies report after the market close so those results will have a bigger impact on markets tomorrow (Wednesday) than today. Alphabet and Microsoft earnings will be followed on Thursday by Amazon, Apple, and Facebook-parent Meta.
These five companies, along with Nvidia, have all powered higher on big expectations for Artificial Intelligence and earnings expectations are likewise lofty. Also, keep in mind, Alphabet, Meta, Microsoft, and Nvida all just posted new all-time highs yesterday.
As a group, the big-6 six tech companies are expected to report year-over-year earnings growth of +53.7% in Q4 2023. Wall Street insiders are expecting Microsoft earnings to rise +20% while Alphabet's profits are expected to rise more than +50%.
More important will be guidance for the quarters ahead with investors anxious to start seeing some payoff on these big AI bets.
Earnings overall this week will cover about 20% of S&P 500 companies.
Other results of note today include Advanced Micro Devices, Canadian Pacific Kansas City, Chubb, Danaher, Electronic Arts, General Motors, Johnson controls, Marathon Petroleum, Pfizer, Starbucks, Stryker, and UPS.
Today also marks the start of the US Federal Reserve's two day policy meeting, which will wrap up tomorrow afternoon with what's expected to be no change in the central bank's benchmark interest rate. The March meeting is the one that Wall Street is focusing more attention on now with traders near-evenly divided over whether the Fed will deliver its first a 25 basis point cut at that time or will iot wait until the first week in May.
On the data front, the Job Openings and Labor Turnover Survey, the Case-Shiller Home Price Index, and Consumer Confidence are today's highlights.
Turning to geopolitical headwinds, Wall Street is still closely monitoring the situation in the Middle East after three US soldiers were killed by Iranian-backed militants over the weekend. Iran has denied involvement in the bombing claiming that resistance groups act independently. However, Iran nonetheless supplies weapons and financial support to groups that combined have mounted more than 160 attacks since the Israel-Hamas war broke out.
Average Super Bowl Ticket Costs Nearly $11,000: The Super Bowl matchup is now set, and if you are hoping to catch the big game in person, you need to be prepared to shell out a lot of money. The Kansas City Chiefs and San Francisco 49ers will face off in Super Bowl LVIII in Las Vegas on February 11, and demand for tickets on the secondary resale market is already soaring. According to TicketIQ, a ticket search engine that also conducts ticket market analysis, the cheapest ticket to the Super Bowl as of Monday is $8,872. The average ticket is going for $10,752. Other factors driving this year's market for the Super Bowl are the teams and the location, according to Jesse Lawrence of TicketIQ. This is the first time the NFL has hosted the Super Bowl in Las Vegas. The spectacle of that combination will be too tempting for many to pass up. In addition, the game is being played by two of the NFL's most successful and popular franchises and some of the sport's biggest stars. The only Super Bowl with more expensive tickets 13 days before the game was the 2021 matchup. This year's cheapest ticket 13 days before the Super Bowl is up +49% from last year's game when it was $5,948 to see the Chiefs beat the Philadelphia Eagles. The get-in price for the Chiefs-49ers rematch is up +143% from the 2020 game featuring the same teams. Source Business Insiders
French Farmers Block Highways Around Paris as Protests Swell: French farmers blocked highways around Paris using tractors to pressure the government into further concessions to ease the burden of rising costs and red tape. At least five were closed at key points within 100 kilometers of the capital on Monday, while others were operating with reduced lanes, according to the government’s Bison Futé traffic website. The country’s FNSEA and Young Farmers unions called for a “siege” of Paris after pledges for support by Prime Minister Gabriel Attal in the last three days failed to end protests that began more than a week ago, even as some sought to use more moderate language. “We’re stepping up the pressure because we’ve realized that when it’s far from Paris, the message doesn’t get through,” FNSEA head Arnaud Rousseau said. In neighboring Germany, agricultural workers also continued protests on Monday, focusing on the city of Hamburg and disrupting traffic to and from the country’s biggest port. Some 1,500 tractors and other vehicles took part, according to media reports. Source Bloomgerg
Bayer Ordered to Pay $2.25 Billion in Damages: Bayer on Monday was ordered to pay $2.25 billion in damages, the highest amount yet in its ongoing litigation linked to an alleged carcinogenic effect of its Roundup weedkiller. A jury in a Philadelphia court on Friday ordered Bayer to pay $2.25 billion to a Pennsylvania man who said he developed cancer from exposure to the Roundup weedkiller, based on the chemical glyphosate. The total amount includes $2 billion in punitive damages, which are likely to be reduced on appeal because they exceed U.S. Supreme Court guidance, but the verdict poses an added headache for CEO Bill Anderson, who is cutting management jobs in a bid to speed up how business decisions are made. Bayer, which is burdened by financial debt and lack of free cash flow, said it remains committed to taking cases to trial, citing a record of having won 10 of the last 16 cases at trial. Source Reuters
Chief Metaverse Officers Are Out, AI Executives Are In: Advertising giant Publicis Groupe SA made an unusual executive hire in mid-2022 – a lion-headed digital avatar named Leon who would serve as “chief metaverse officer,” guiding clients through the virtual realm that had seized real-world attention. Five months later, ChatGPT debuted, and the buzz that had surrounded the metaverse shifted to artificial intelligence. Leon and other, human officers focused on the metaverse — an immersive digital reality where people can interact with one another — quickly became an endangered species. Instead, businesses are scrambling to appoint AI leaders. Compensation packages average well above $1 million, according to a survey from executive-search and leadership advisory firm Heidrick & Struggles. The C-suite reshuffle illustrates the fickle nature of technology trends — and the difficulty corporations face distinguishing hype from reality. Source Bloomberg
The US Needs Homes, But First it Needs Workers to Build Them: The United States needs an estimated 7 million more homes to house everyone who needs shelter. But to build all those homes, experts say, America would need many more construction workers. Brian Turmail, vice president of public affairs and strategic initiatives at the Associated General Contractors of America, said that for decades, many educators and policymakers have been encouraging students to go to a four-year college, leading to a shortage of skilled tradespeople such as electricians and plumbers. Following both the Great Recession of 2008 and the construction cutbacks of the COVID-19 pandemic, more workers are leaving the industry than entering it. An analysis released earlier this month by the Associated Builders and Contractors found that at the end of November there were about 459,000 job openings in the industry. The 5.4% job opening rate was the highest since 2000. The U.S. construction industry lost nearly 30% of its workforce during the Great Recession of 2008, and had barely recovered before the COVID-19 pandemic hit it again. Another issue is that the industry’s labor force is headed toward retirement. More than 1 in 5 construction workers are 55 and older, and much of the workforce will be retiring in the coming decade. Source Stateline
Canon Wants to Undercut ASML and its Chipmaking Machines: Japanese imaging company Canon wants to recapture its former glory in the semiconductor industry. And to do so, it’s going after the chipmaking equipment made by ASML Holding, Europe’s most valuable tech company and the only producer of the tools that make the most cutting-edge semiconductors. Canon has spent a decade testing a cheaper way to make advanced chips, and now it thinks its solution could be ready to go as soon as later this year. Canon wants to position its new nanoimprint lithography technology as a cheaper alternative to the extreme ultraviolet (EUV) lithography chipmaking machines use to make the most advanced semiconductors, designated as 5-nanometer chips or smaller. The market is currently dominated by Dutch company ASML. Nanoimprint lithography stamps the chip’s design directly onto a silicon wafer, while EUV instead uses light to etch circuit patterns. Canon has previously claimed that its technology can already produce a 5nm chip, and the company is targeting a 2nm chip, the most cutting-edge that companies like TSMC and Samsung hope to mass-produce. Source Fortune
Americans' Casino Spending is Soaring: It's not often - if ever - that gambling gives a noticeable boost to consumer spending. But Americans apparently placed lots of casino bets and bought lots of lottery tickets in December. Buried in government's monthly report on consumer spending was a reference to one of the oldest known vices. Among the largest increases in spending in December, the government said, was a category known as "recreation services (led by gambling)." The amount of money households spent on gambling climbed to a record $202.7 million in December, according to the Bureau of Economic Analysis. That's an 11% increase from one year earlier. Casinos raked in the most of the new dough. There was a big Powerball drawing, too. The prize in December topped $800 million to become the fifth largest jackpot of all time. As to why Americans are gambling more, the vice has been legalized in more and more places, for one thing. Source Marketwatch
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