🖥 Microsoft beats but gets beaten

Good morning investors! Some big names announced earnings yesterday, we’ll cover them all in today’s report.

Today we cover:

• No jobs in the US

• Microsoft beats expectations but falls

• More earnings

Before we start, don’t forget to check our YouTube where we talk about money, finance, and more.

Here’s the latest video:

📊 Economy and News 

No jobs in the US?

Job opportunities in the US are gradually diminishing, with hiring slowing to its lowest pace in a decade (excluding the pandemic downturn).

As a result, more workers are choosing to stay with their current jobs.

The silver lining: Those existing jobs don't seem to be at risk of being cut.

That’s according to the Bureau of Labor Statistics’ latest Job Openings and Labor Turnover Survey, which showed that the number of open positions edged back slightly in June, hiring activity sank, layoffs were muted and the number of people quitting their jobs hit a three-year low, according to data released Tuesday.

It’s yet another sign that the once-scalding-hot labor market is not just settling into a steadier state but potentially drifting closer toward a downswing.

Global hits:

• Stellantis to offer broad buyouts to U.S. salaried workers, warns of possible layoffs.

• Russia approves law allowing use of crypto for global payments as it faces ongoing sanctions.

• CrowdStrike shares plunge 9.7% to lowest level of the year on report that Delta may seek damages.

Good to know: Amazon can now be held responsible for dangerous products sold on its platform.

📈 Stocks

S&P 500 5,436.44 (-0.50%)
DJIA 40,743.33 (+0.50%)
NASDAQ 17,147.42 (-1.28%)
BRENT CRUDE 78.54 (-1.44%)
* Prices as of Jul 30th, 12:20 AM UTC

Microsoft falls despite an earnings beat

Microsoft reported better-than-expected earnings and revenue for the fiscal fourth quarter.

Here’s how the company did, compared with the LSEG consensus:

• Earnings per share: $2.95 vs. $2.93 expected

• Revenue: $64.73 billion vs. $64.39 billion expected

Microsoft’s revenue increased by 15% YOY and net income jumped to $22.04 billion, up from $20.08 billion, or $2.69 per share.

The important sector: The company's leading segment, Intelligent Cloud, generated $28.52 billion in revenue, which includes the Azure public cloud, Windows Server, Nuance, and GitHub.

This total represented a 19% increase but fell short of the $28.68 billion consensus estimate from analysts surveyed by StreetAccount.

Some disappointments: Revenue from Azure and other cloud services grew by 29% during the quarter, slightly below the 31% growth anticipated by experts.

This marks the first time Microsoft's Azure figures have fallen short of consensus since 2022.

There’s competition: Last week, Alphabet, Google's parent company, reported that revenue from its cloud business, which includes Workspace productivity software and Google Cloud Platform infrastructure, also increased by about 29%.

Investors pay special attention to these figures due to competition with Amazon and Google.

The impact: The stock dropped -6% in extended trading.

Excluding the after-hours move, Microsoft stock is up 12% so far in 2024, while the S&P 500 index has gained 13% over the same period.

Something more: Microsoft announced that it will hand out one-time cash awards to non-executive employees. Amounts will depend on role and bonus size, but will top out at 25% of annual bonus.

Some other big names also announced earnings yesterday, here’s all you need to know:

• Starbucks’ quarterly earnings met expectations, but the company’s revenue fell short of Wall Street’s estimates. The coffee giant slashed its forecast last quarter, predicting that its sales slump would not end any time soon.

• Pinterest reported second-quarter earnings, and the social media company beat on both the top and bottom lines. The company’s third-quarter revenue total is projected to range from $885 million to $900 million, which equates to about 16% to 18% year-over-year growth. Analysts were predicting guidance of about $907 million. Pinterest said that it had 522 million global monthly active users (MAU) for the second quarter, topping analyst estimates of 520.1 million.

• First Solar reported second-quarter results that beat revenue and earnings expectations, but the solar technology company left its forecast for the year unchanged.

• JetBlue Airways posted a surprise profit for the second quarter sending the stock up +12%. The carrier said it would defer another $3 billion in aircraft spending through 2029 to improve cash flow.

• Merck reported second-quarter revenue and adjusted earnings that topped estimates as it saw strong sales from its blockbuster cancer drug Keytruda as well as other treatments in its oncology and vaccines portfolios and a new cardiovascular drug.  The pharmaceutical giant also raised its full-year sales forecast to a range of $63.4 billion to $64.4 billion, however it lowered its adjusted profit guidance to between $7.94 and $8.04 per share.

• Procter & Gamble reported better-than-expected earnings, but its quarterly revenue fell short of Wall Street’s estimates. The company’s volume increased for the first time in more than two years.

Worth checking: Meta agrees to $1.4 billion settlement in Texas biometric data lawsuit over Facebook images.

💵 Personal Finance

Three Roth IRA Accounts to Consider

Roth IRAs offer several benefits over traditional IRAs. The chart below highlights some of the main differences between the two. Later, we’ll look at some top Roth IRAs:

Ally Invest Roth IRA

Perfect for beginners, this IRA can be great for people who enjoy the DIY approach. It offers a Self-Directed Trading option to get started.

There is no account minimum or monthly maintenance fees. This commission free IRA offers a mix of stocks, bonds, options, and ETFs, but expect to pay a $0.50 per contract fee for options. Also, beware that there is a $50 full/partial outgoing transfer fee but no annual charges or inactivity fee.

Those who do not wish to invest can still benefit from its excellent 4.25% savings rate on uninvested cash.

Charles Schwab Roth IRA

This IRA allows investors to make after-tax contributions, trade a variety of assets, including stocks, ETFs, and futures, mutual funds, while also enjoying no taxes on qualified withdrawals.

There are no account minimums or monthly service charges but there is a $0.65 per contract fee for options. On the downside, the interest rate on uninvested cash is very low at just 0.45%.

You can get started with just your SSN, and employer’s name and address.

Wealthfront Roth IRA

This robo-advisor offers automated index investing so you can be totally hands-off. However, it has some cons when compared to the two options discussed above.

There is an account minimum of $500 for automated investment accounts. It goes down to $1 for cash accounts and the stock investing account.

ETF expense ratios average 0.08%. Portfolios that include the Wealthfront Risk Parity Fund have an average expense ratio of 0.11%.

Also, you will pay a 0.25% fee for automated investing. There is no management fee or commissions for the stock investing account.

Despite additional costs, we think Wealthfront can be a great option for “set-it-and-forget-it” investors.

💰 Be a Better Investor

Resources:

• Make Money in Retirement

• Side Hustle Ideas

• Stock Deep Dives

• Investing 101 videos

👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.

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