Strong quarterly earnings
The giant payment processing companies (IYF)—Visa (V) and Mastercard (MA)—posted strong results for the June quarter, outpacing analyst expectations for revenues and EPS. The primary drivers were positive momentum in the US economy stemming from lower unemployment and strong global spending patterns.
Mastercard’s gross dollar volumes in the United States rose from $419 billion in the first quarter to $442 billion in the second quarter. Visa posted net operating revenues of $5.2 billion in the second quarter, which implies a YoY (year-over-year) growth of 15%. On a currency-neutral basis, Mastercard’s net revenues were $3.7 billion, a rise of 18% YoY.
Moving forward, payment processors are likely to be negatively impacted primarily by trade worries, which can reduce consumer confidence. These headwinds are currently under Mastercard’s watch.
Performance of consumer finance companies
Credit card loans for consumer finance companies Capital One Financial (COF) and Discover Financial Services (DFS) rose sequentially in the second quarter. Capital One had credit card loans of $109.7 billion compared to $107.5 billion in the first quarter. Discover Financial had credit card loans of $67.8 billion in the second quarter and $65.5 billion in the first quarter.
Discover Financial’s payment services business also saw strong momentum in the second quarter compared to Q2 2017, as evidenced by volume growth. Proprietary volumes increased 9% YoY in the second quarter compared to a YoY rise of 8% in the first quarter. The sequential increase was mainly due to gas prices and customer participation. The company also saw an increase of 14% YoY in PULSE volume growth to $44.3 billion.
The Human Pharmaceuticals business generated ~87.5% of Eli Lilly's total revenues in the second quarter.
Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.
The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.
Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.
Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.
As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.
Amazon is discontinuing its Amazon Restaurants service, which has been delivering food for restaurants in parts of the United States. Amazon Restaurants launched in the United States in 2015 and entered the British market the following year. However, it met strong opposition in the British market.