Select a category

United Parcel Service (UPS) customers are trading down, another signal from the second-quarter earnings season about the search for value options across the U.S. economy.

"We saw customers trade down between services," the shipping giant's new CFO Brian Dykes said on a conference call Tuesday, a transcript of which was provided by AlphaSense. "Specifically, we saw customers shift from air to ground and from ground to SurePost."

SurePost is the company's "budget" business-to-consumer service. Newer e-commerce customers in particular were "highly leveraging" SurePost, executives said on the call.

Shares of UPS were sinking Tuesday after the company reported second-quarter profits that fell year-over-year and missed analysts' estimates while also narrowing its sales outlook. UPS "revenues fell in the U.S. despite an e-commerce driven return to growth in volumes, indicating that pricing pressures remain a headwind to top-line expansion," CFRA analysts wrote Tuesday.

FedEx (FDX) stock also moved lower Tuesday.

A range of companies have highlighted both consumer and corporate customers' search for lower-price options for goods and services in recent quarterly reports. Coca-Cola (KO) executives also noted a "slightly greater" consumer focus on value in its at-home market during its own earnings conference call earlier today.

Read more on Investopedia

Small-cap stocks moved higher early Tuesday. The Russell 2000 was recently up nearly 1%, outperforming the S&P 500 in morning action.

The morning's trading follows a surge in interest in smaller shares. DataTrek Research said in a note Monday that, based on Google Trends, searches for "IWM"—the iShares Russell 2000 exchange-traded fund—recently jumped to multiyear highs.

That comes as the index itself has climbed lately, outperforming the S&P 500 over the past month and, according to Goldman Sachs research, posting its best performance against the Nasdaq 100 since 2002 in a recent two-week period.

"Now, the Russell’s longer-run underperformance versus the S&P 500 has started to reverse, and small investors are taking notice," DataTrek wrote. "Attention drives capital flows. When that focus and money goes into a single stock, it is fair to call it a 'meme' investment."

Some of their recent rise can be attributed to investors' belief that interest-rate cuts are on the horizon, since lower rates can benefit smaller companies that often carry more debt than their larger counterparts. Second-quarter earnings, however, could take some steam out of smaller shares if they point toward a weaker second half—especially, perhaps, if big companies turn in stronger results.

DataTrek believes small caps can continue to perform. "When that interest and capital flows to an entire segment of the market, we have trouble dismissing it outright as a fad," its note read. "No doubt U.S. small caps will be volatile over the next few months, but we still believe they can do well" over the balance of the third quarter.

Comerica Wealth Management predicts two interest-rate cuts this year, a backdrop it said Monday provides "the potential for future tailwinds as the U.S. economy avoids recession."

Read more on Investopedia

Sherwin-Williams (SHW) shares rose Tuesday after the paint maker posted better-than-forecast second-quarter adjusted profit on higher residential sales. The paint maker also raised its 2024 profit outlook.

Adjusted earnings per share (EPS) of $3.70 jumped 12.5% year-over-year and beat the $3.46 consensus estimate of analysts polled by Visible Alpha. However, revenue of $6.27 billion was up less than 1% and trailed expectations of $6.33 billion.

The company raised its full-year outlook for both EPS and adjusted EPS. EPS for 2024 is now seen between $10.30 and $10.60, up from April's guidance of $10.05 to $10.55, while adjusted EPS projections were revised up to a range of $11.10 to $11.40 from $10.85 to $11.35.

Chief Executive Officer (CEO) Heidi Petz said residential sales were driving demand for the company's paint products, although "General Industrial demand was soft in all regions."

"We are clearly seeing a return on last year’s growth investments in residential repaint, where volume increased by a mid-single digit percentage in a down market," Petz said. "We’re also encouraged by growth in new residential, where we expect continued momentum over the back half of the year."

Sherwin-Williams shares were 3.3% higher at $333.02 as of 10:18 a.m. ET Tuesday. They have gained about 7% this year.

Read more on Investopedia

Shares in NXP Semiconductors N.V. (NXPI) fell sharply ahead of Tuesday’s opening bell after the Dutch-based chipmaker issued a weaker-than-expected current quarter outlook amid a slowdown in spending by automotive customers and rising geopolitical risks.

The company guided third-quarter net sales between $3.15 billion and $3.35 billion, with the high end of that forecast falling short of the $3.36 billion expected by analysts. It sees adjusted earnings in the period of $3.42 per share at the midpoint, missing the Street estimate of $3.61 a share.

For the three-month period ending June 30, sales in the chipmaker’s automotive segment contracted 7% from a year earlier to $1.73 billion, recording its largest quarterly revenue decline in more than three years, as customers in auto end markets reined in spending due to macroeconomic uncertainty.

Like other chipmakers, NXP also faces increasing geopolitical risks from Beijing’s volatile trade relations with Washington and Brussels, with tightening export curbs potentially slowing the company’s sales to China, a country that represented around 33% of NXP’s total revenue last year.

The chipmaker’s share price has oscillated within a rising wedge over the past twelve months helping to establish easily identifiable support and resistance areas. This well-known pattern, consisting of two upward-sloping converging trendlines, typically occurs after an uptrend and signals a potential reversal in a security's price.

Interestingly, share turnover has increased in recent trading sessions, possibly indicating market participants expect post-earnings volatility. Indeed, the stock sits poised to open sharply lower Tuesday, bringing the lower portion of the rising wedge pattern into play.

NXP shares were down 7.9% at $261.38 in recent premarket trading.

Looking ahead, investors should monitor the $248 level, an area on the chart where the price will likely find support from the wedge’s lower trendline. It’s also worth pointing out that there will be a greater chance of the stock resuming its longer-term uptrend from this level if the relative strength index (RSI) flashes an oversold reading below 30 at the same time.

Read more on Investopedia

The Central Bank of Nigeria (CBN) Monetary Policy Committee has raised the interest rate by 50 basis points, from 26.25% to 26.75% amid surging inflation.

CBN Governor, Olayemi Cardoso, announced this at the end of the apex bank’s 296th MPC meeting held in Abuja on Tuesday, July 23.

The MPC adjusted the asymmetric corridor around the MPR from +100 to -300 to +500 to -100 basis points.

The MPC also retained the Cash Reserve Ratio (CRR) of deposit money banks at 45% and merchant banks at 14% and retained the Liquidity Ratio at 30%.

According to him, the decision to further increase the interest rate is to tackle the country’s rising core inflation and food inflation which stood at 34.19 per cent and 40.87 per cent, respectively in June.

He said members of the MPC are not oblivious of the need to address the rising prices of food in Nigeria, necessitating the interest rate hike.

He said despite the June 2024 uptick in inflation, prices are expected to moderate in the near term as monetary policy gaining further traction in addition to further measurers by the fiscal authority to address food inflation.

Continue reading on Instablog