Alphabet Inc. (GOOGL) released its latest quarterly earnings on Tuesday, October 24. Despite reporting better-than-expected revenue, the tech titan’s shares dropped nearly 7% following the earnings release.

The company reported revenue of $76.69 billion, up 11% from $69.09 billion during the same quarter last year. Revenue surpassed analysts expected quarterly revenue of $75.97 billion.

“I am pleased with our financial results and our product momentum this quarter, with AI-driven innovations across Search, YouTube, Cloud, our Pixel devices and more,” said Alphabet CEO, Sundar Pichai. “We are continuing to focus on making AI more helpful for everyone; there is exciting progress and lots more to come.”

Alphabet posted net income of $19.69 billion or $1.55 per adjusted share for the third quarter. This was up 42% from $13.91 billion or $1.06 per adjusted share during the same time last year.

Alphabet, the parent company of Google, reported Google advertising revenue of $59.65 billion for the quarter, up from $54.48 billion during the same quarter last year. Within the Google advertising revenue, YouTube advertising revenue increased to $7.95 billion compared to $7.07 billion at the same time last year. Google Cloud revenue came in at $8.41 billion, up from $6.87 billion one year ago. Operating income for the quarter was $21.34 billion, up 25% from one year ago.

Alphabet Inc. (GOOGL) shares ended the week at $122.38, down 9% for the week.

Boeing’s Earnings Report Released

Boeing Company (BA) announced third quarter earnings on Wednesday, October 25. Despite the aircraft manufacturer reporting increased revenue, the company’s shares fell 2.5% after the release of the report.

Boeing reported quarterly net revenue of $18.10 billion, above analysts’ estimates of $18.01 billion. Last year at this time, quarterly net revenue was recorded at $15.96 billion.

“We continue to progress in our recovery and despite near-term challenges, we remain on track to meet the financial goals we set for this year and for the long term,” said Boeing CEO, Dave Calhoun. “The important work we are doing to add rigor around our quality systems and build a culture of transparently bringing forward any issue, no matter the size, can bring short-term challenges – but it is how we set ourselves on the right course for our long-term future.”

The company reported a net loss of $1.64 billion or $2.70 per adjusted share. During the same quarter last year, the company had a net loss of $3.31 billion or $5.49 per adjusted share.

The Seattle-founded aerospace giant saw an increase in revenue across all segments. Boeing’s Commercial Airplanes revenue increased to $7.88 billion, a 25% increase from $6.30 billion in the same quarter last year. Defense, Space & Security revenue rose to $5.48 billion, a 3% increase from $5.31 billion this time last year. Global Services revenue increased 9% to $4.81 billion from $4.43 billion in the third quarter of 2022. Boeing is working to resolve production issues identified in select 737 Max aircraft. As a result of the necessary inspections and refinement of these planes, the company now expects to deliver between 375 to 400 737 aircraft for the full year, down from its previous estimate of 400 to 450 aircraft.

Boeing Company (BA) shares closed at $179.86, relatively unchanged for the week.

Microsoft Releases Quarterly Report

Microsoft Corp. (MSFT) released its first quarter earnings report on Tuesday, October 24. The multinational technology corporation reported revenue and income that beat analysts’ expectations, causing its shares to rise more than 3% following the release of the report.

Microsoft reported $56.5 billion in quarterly revenue. This was up 13% from revenue of $50.1 billion at the same time last year and exceeded analysts’ estimates of $54.5 billion.

"We are off to a strong start to the fiscal year, driven by the continued strength of the Microsoft Cloud, which surpassed $31.8 billion in quarterly revenue, up 24%,” said Microsoft CEO, Satya Nadella. “With copilots, we are making the age of AI real for people and businesses everywhere. We are rapidly infusing AI across every layer of the tech stack and for every role and business process to drive productivity gains for our customers.”

Microsoft posted net income of $22.3 billion or $2.99 per adjusted share for the first quarter. This was an increase from a net income of $17.6 billion or $2.35 per adjusted share reported at this time last year.

Microsoft experienced strong growth for the first quarter, with an increase in revenue for all segments. Microsoft’s Intelligent Cloud revenue saw a 19% increase year-over-year to $24.3 billion, primarily driven by Azure and other cloud services revenue growth of 29%. The company’s Productivity & Business Processes revenue rose by 13% to $18.6 billion, while More Personal Computing revenue came in at $13.7 billion, up 3% from this time last year. Microsoft completed the acquisition of Activision Blizzard earlier this month and returned $9.1 billion to shareholders through share repurchases and dividends in the first quarter of fiscal 2024.

Microsoft Corp. (MSFT) shares ended the week at $329.81, up 1.3% for the week.

The Dow started the week at 32,993 and closed at 32,418 on 10/27. The S&P 500 started the week at 4,210 and closed at 4,117. The NASDAQ started the week at 12,931 and closed at 12,643.

Treasury Yields remained steady earlier in the week as economists digested the Federal Reserve’s remarks from last week’s meeting concerning the central bank’s commitment to reducing inflation. Yields fell toward the end of the week as investors assessed conflicting signals from the U.S. economy and corporate sector.

On Thursday, the Commerce Department’s Bureau of Economic Analysis announced that the Gross Domestic Product (GDP), a monetary measure of the market value of all the final goods and services produced in a given time period, increased 4.9% in the third quarter of 2023, marking the fastest growth since 2021. This was above economists’ expectations of 4.3% growth.

"We have seen for a period of time now a post pandemic induced negative bias about an imminent recession and persistent inflation," said economics professor at Boston College, Brian Bethune. "But not only is the economy surprisingly resilient, we also got productivity-driven growth for two consecutive quarters in 2023, meaning the business cycle still looks very solid."

The benchmark 10-year Treasury note yield opened the week of October 23 at 4.93% and traded as high as 4.99% on Thursday. The 30-year Treasury bond opened the week at 5.09% and traded as high as 5.14% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment increased by 10,000 to 210,000 for the week ending October 21. This was greater than analysts’ estimates of 207,000. Continuing claims increased to 1.79 million, up by 63,000.

“Initial jobless claims edged higher, but remain at low levels consistent with few layoffs,” said Lead U.S. Economist at Oxford Economics, Nancy Vanden Houten. "The upturn in continued claims suggests that, while the labor market may be characterized by few job losses, unemployed individuals are finding it more difficult to find new jobs, which would be consistent with a slower pace of hiring."

The 10-year Treasury note yield finished the week of 10/23 at 4.84%, while the 30-year Treasury note yield finished the week at 5.02%.

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, October 26. The survey showed 30-year mortgage rates continue to edge closer to 8% amid a stronger-than-expected economy.

This week, the 30-year fixed rate mortgage averaged 7.79%, up from last week’s average of 7.63%. Last year at this time, the 30-year fixed rate mortgage averaged 7.08%.

The 15-year fixed rate mortgage averaged 7.03% this week, up from 6.92% last week. During the same week last year, the 15-year fixed rate mortgage averaged 6.36%.

“For the seventh week in a row, mortgage rates continued to climb toward 8%, resulting in the longest consecutive rise since the Spring of 2022,” said Freddie Mac’s Chief Economist, Sam Khater. “Rates have risen two full percentage points in 2023 alone and, as we head into Halloween, the impacts may scare potential homebuyers. Purchase activity has slowed to a virtual standstill, affordability remains a significant hurdle for many and the only way to address it is lower rates and greater inventory.”

Based on published national averages, the savings rate was 0.46% as of 10/16. The one-year CD averaged 1.79%.

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