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Friday September 30, 2022



United Airlines' Revenue Soars

United Airlines, Inc. (UAL) released its third-quarter earnings on Tuesday, October 19. The company's revenue exceeded expectations for the quarter.

Revenue came in at $7.75 billion for the quarter, up from $2.49 billion during the same quarter last year. Analysts expected revenue of $7.64 billion. During the third quarter of 2019, United reported earnings of $11.38 billion.

"The recovery was delayed by the Delta variant, but the United team remains focused on our long-term vision - and not getting sidetracked by near-term volatility - meaning we're solidly on track to achieve the targets we set for 2022," said Scott Kirby, United Airlines CEO. "From the return of business travel and the planned re-opening of Europe and early indications for opening in the Pacific, the headwinds we've faced are turning to tailwinds, and we believe that United is better positioned to lead the recovery than any airline in the world."

United posted net income of $473 million, up from a net loss of $1.84 billion last year at this time. During the third quarter of 2019, United reported net income of $1.02 billion.

Air travel decreased significantly during the height of the COVID-19 pandemic. As with businesses in many other pandemic-affected sectors, United's earnings report provided comparisons between the most recent quarter and the same quarter in 2019. Revenue per available seat mile was down 5.1% from the comparable quarter while cost per available seat mile dropped 5.6%. "Available seat miles" is an industry term which equals the number of miles flown divided by the number of available seats.

United Airlines, Inc. (UAL) shares ended the week at $46.73, down 2.0%.

Tesla Releases Earnings

Tesla, Inc. (TSLA) reported its latest quarterly earnings on Wednesday, October 20. The automotive company posted increased revenue and profits.

The company posted revenue of $13.76 billion during the quarter. This was up from $8.77 billion in revenue at this time last year.

"The third quarter of 2021 was a record quarter in many respects," the company stated in its report to shareholders. "We achieved our best-ever net income, operating profit and gross profit. Additionally, we reached an operating margin of 14.6%, exceeding our medium-term guidance of 'operating margin in low-teens.'"

Tesla reported net income of $1.62 billion. This was up from $331 million last year at this time.

Tesla continues to expand its product offerings in the automotive industry and beyond. The company's latest automobile, the Cybertruck was introduced in 2019 and is anticipated to be released in 2022. Beyond the realm of cars and trucks, Tesla also recently showcased its upcoming humanoid robot project during its "AI Day" presentation.

Tesla, Inc. (TSLA) shares ended the week at $909.68, up 6.8%.

Johnson & Johnson Posts Strong Earnings

Johnson & Johnson (JNJ) reported its third-quarter results on Tuesday, October 19. The pharmaceutical company's shares rose more than 2% following a strong earnings report.

The company posted revenue of $23.34 billion during the quarter. This was up from $21.08 billion during the same quarter last year.

"Our third-quarter results demonstrate solid performance across Johnson & Johnson, driven by robust above-market results in Pharmaceuticals, ongoing recovery in Medical Devices, and strong growth in Consumer Health," said Johnson & Johnson Chairman and CEO Alex Gorsky. "In the face of evolving marketplace dynamics resulting from the effects of COVID-19 and other global trends, we have continued to demonstrate the responsiveness and agility required to meet the needs of our stakeholders, while also successfully investing in a pipeline of innovation and key commercial platforms to drive our future growth."

Johnson & Johnson reported net earnings of $3.67 billion, or $1.37 per share. This was up from $3.55 billion, or $1.33 per share last year at this time.

The company developed and distributed one of the three COVID vaccines available in the United States. Administration of the single-dose vaccine was briefly paused in early 2021 by the CDC and FDA due to concerns about potential side effects, but was restarted several days later. Johnson & Johnson's Pharmaceutical segment posted revenue of $12.99 billion during the quarter, up 13.8% from the prior year. The company's Medical Devices and Consumer Health Segments posted 8.0% and 5.3% increases, respectively.

Johnson & Johnson (JNJ) shares ended the week at $163.72, up 2.2%.

The Dow started the week at 35,221 and closed at 35,677. The S&P 500 started the week at 4,464 and closed at 4,545. The NASDAQ started the week at 14,840 and closed at 15,090.

Weekly Jobless Claims Fall, Lifting Treasury Yields

U.S. Treasury yields rose this week following the release of the latest weekly jobless claim numbers. However, remarks on Friday by the Federal Reserve Chair tempered the rise in yields.

On Thursday, the U.S. Department of Labor released the latest unemployment insurance weekly claims report. The report showed 290,000 initial jobless claims, down 6,000 from the previous week.

"While mass layoffs have been avoided of late, helping jobless claims to decline, many who are employed feel some combination of empowerment, restlessness and/or exhaustion," said Bankrate senior economic analyst Mark Hamrick. "This is borne out in the record number of workers quitting their jobs and strikes among union members popping up around the nation."

The yield on the benchmark 10-year Treasury note opened the week at 1.575% and reached a Thursday peak of 1.702% before returning to a more modest 1.641% during the day on Friday. The 30-year Treasury bond yield was at 2.042% on Monday and rose to 2.159% on Thursday before settling at 2.083% during trading on Friday.

On Friday, Federal Reserve Chairman Jerome Powell indicated that the existing supply chain issues and accompanying inflation will likely continue into next year. Chairman Powell stated that the Federal Reserve needs to be ready to address this possibility.

"Supply constraints and elevated inflation are likely to last longer than previously expected and well into next year, and the same is true for pressure on wages," said Powell. "If we were to see a risk of inflation moving persistently higher, we would certainly use our tools."

The 10-year Treasury note yield closed at 1.65% on 10/22, while the 30-year Treasury bond yield was 2.08%.

Mortgage Rates Rise Further

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, October 21. The report showed a continued increase in rates from the prior week.

The 30-year fixed rate mortgage averaged 3.09% this week, up from last week's average of 3.05%. Last year at this time, the 30-year fixed rate mortgage averaged 2.80%.

This week, the 15-year fixed rate mortgage averaged 2.33%. This was up from last week's average of 2.30%. During the same time last year, the 15-year fixed rate mortgage averaged 2.33%.

"Mortgage rates continued to rise this week due to the trajectory of both the economy and the pandemic," said Freddie Mac's Chief Economist Sam Khater. "Even as the availability of existing homes is improving, prices remain high due to homebuyer demand and limitations on housing starts and permits resulting from the ongoing labor and material shortages. Despite these countervailing forces, we expect the housing market to remain strong as we head into the end of the year."

Based on published national averages, the savings rate was 0.06% as of 10/18. The one-year CD averaged 0.14%.

Published October 22, 2021
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