Stock Market Today: Stocks Rise Despite Rate Worries and Mixed Earnings
The major indices traded well in the green on Tuesday, and they did so flying in a few headwinds.
Rising interest rates, which have helped keep equities grounded lately, have continued to climb in 2022, with the 10-year Treasury hitting 2.948% today as it heads towards a 3-year low. % crossed for the last time at the end of 2018.
Meanwhile, the corporate earnings calendar was largely mixed.
Johnson & Johnson (JNJ, +3.1%) beat first-quarter earnings expectations but missed revenue and lowered its full-year 2022 sales and earnings guidance. It did, however, report its 60th annual rise dividend payout — a 6.6% increase to $1.13 per share per quarter — to expand its Dividend Aristocrats membership.
defense contractor Lockheed Martin (LMT, -1.6%) dipped after beating revenue, but missed both first-quarter revenue and its full-year 2022 sales outlook.
Insurer Travelers (TRV, -4.9%) reported a better-than-expected 48% jump in profits on lower catastrophe losses, although it suffered a decline in its loss and related cost ratio on premiums received.
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Also on Tuesday, new data showed housing permits rose 0.4% month-over-month in March to an annualized 1.873 million, while housing starts rose 0.3%. % to 1.793 million units on an annualized basis.
“Housing starts rose sharply in March; residential construction contributed to real GDP growth in the first quarter,” said Bill Adams, chief economist at Comerica Bank. But he adds that supply chain issues are a huge problem for housing. “The backlog of homes licensed or started but not completed is the largest since the 1970s.”
the Nasdaq Compound rose 2.2% to 13,619, while S&P500 (+1.6% to 4,462) and Dow Jones Industrial Average (+1.5% to 34,911) also ended with substantial gains.
After the closing bell, netflix (NFLX) reported its first quarterly drop in subscribers in more than a decade. Shares fell 23% in early after-hours trading as Netflix said it suffered a loss of 200,000 subscribers in the first quarter, keeping revenue $7.78 billion below analysts’ expectations. . That eclipsed an easy beating in earnings of $3.53 per share against estimates of $2.89.
Other news on the stock market today:
- Small cap Russell 2000 continued to rebound at the 2000 level, gaining 2.0% to 2030.
- U.S. crude futures fell 5.2% to end at $102.56 a barrel, weighed by a strengthening U.S. dollar and concerns over slowing Chinese demand.
- A stronger dollar under pressure gold futures also, ending the day down 1.4% at 1,959.00 an ounce.
- Bitcoin recovered another 1.4% to $41,349.59. (Bitcoin trades 24 hours a day; prices shown here are as of 4 p.m.
- Hasbro (HAS) rose 5.2% after the toymaker reported first-quarter revenue of 1.16 billion – in line with analysts’ expectations – and raised its revenue forecast business for 2022, now expecting mid-single-digit sales growth this year versus previous guidance for low-single-digit growth. This helped make up for a shortfall, with HAS reporting earnings of 57 cents per share against the consensus estimate of 62 cents per share. “The company reported 76% sales growth in entertainment as the division benefited from the resumption of productions and deliveries and 32% sales growth in digital games as it sees continued momentum in the space,” said Zachary Warring, an analyst at CFRA Research (Buy). “We believe HAS will outperform as its entertainment and digital segments will drive higher margins and sales.”
Real estate with rising payments
Having itself a day was equity real estate (+2.1%), a sector that has so far delivered an average 2022 year.
Help push him higher was Prologis (PLD, +4.0%), a logistics-focused real estate investment trust (REIT) that reported higher earnings on the street and raised its full-year guidance amid “record demand” thanks to supply chain issues.
The displacement of the sector was also American university communities (ACC), which jumped 12.5% after The Wall Street Journal registered management company black stone (BX, +4.9%) will buy the student housing developer in a $12.8 billion deal that includes debt.
“The Monday closing premium [for ACC stock] is around 15%,” says Piper Sandler analyst Alexander Goldfarb. “While we certainly weren’t expecting this deal, it’s not entirely surprising given that the street has long valued the company below of net asset value against the bubbling private market which clearly showed the demand for student accommodation. »
So far in 2022, rising rates have held back REITs, which as a sector are down just over 4% year-to-date. But a team of portfolio managers at Janus Henderson believe any headwind on future rates should be largely contained.
“If bond yields and interest rates rise significantly, this could affect the value of home equity,” the portfolio managers say. “However, most REITs have been very proactive in recent years to expand and repair their debt portfolios, which should reduce their exposure to short-term rate hikes.”
Remember: real estate investment trusts are widely favored by the income investing crowd because their mandate to put at least 90% of taxable profits back in the hands of investors typically results in above-average returns.
But what sweetens the pot even more are REITs that can also deliver exceptional dividend growth. We recently explored seven real estate games that have reliably increased payouts in previous years and seen double-digit growth lately.