High-Beta Stocks Struggle Amid Dow’s 3-Week Win Streak (ISRG, GE, BAC, SLB, HTM, AMBO)
As the Dow set a three-week winning streak and was near a two-and-a-half-year high, high-beta stocks, particularly in tech, continued to struggle. It looks like the market is either seeing a sector rotation here, or the start of what could be a pullback, as the former leaders get taken down. Either way, we would continue to be cautious in the near term, and look to reduce risk exposure to momentum stocks.
The Geothermal Stocks Index was the top performing tickerspy Index on the day, led by U.S. Geothermal Inc. (HTM) with a 12% gain. The Chinese Education Stocks Index was the day’s worst performing tickerspy Index, with Ambow Education Holding (AMBO) down -17%.
Stocks had a mixed day, as the Nasdaq continued its recent descent, falling -15 points to 2,690. The Dow climbed 49 points to 11,872, while the S&P added 3 points to 1,283. Oil fell -48 cents to $89.11 a barrel, while gold fell -$5.50 to $1,341.00 an ounce.
In earnings news, shares of Intuitive Surgical (ISRG) surged 12.7% after the medical device maker said its fourth-quarter profit jumped to $121.2 million, or $3.02 per share, from $77.5 million, or $1.95 per share, a year earlier as revenue soared 21% to $389.3 million from $323 million. Those results easily topped analysts’ estimates, which called for a profit of $2.25 a share on sales of $369.6 million. Intuitive Surgical pointed to higher sales of its da Vinci surgical system as one catalyst behind the robust numbers.
Shares of Dow component and industrial conglomerate General Electric (GE) soared 7.1% after the company posted a fourth-quarter profit of $4.46 billion, or 42 cents per share, compared with $2.94 billion, or 28 cents per share, a year earlier. Revenue rose 1% to $41.4 billion. Profit from continuing operations was 36 cents a share. Analysts were forecasting a profit of 32 cents a share on revenue of $40.3 billion. More than 500 pros held GE in their portfolios at the end of the third quarter and over 7,500 tickerspy members own the stock in their portfolios.
Bank of America (BAC) shares fell -2.0% after the largest U.S. bank by assets reported a fourth-quarter loss available to common shareholders of -$1.6 billion, or -16 cents a share, compared with a loss of -$5.2 billion, or -60 cents per share, a year earlier. It was a messy quarter, with the bank setting aside -$4.1 billion for bad loans it may be forced to repurchase from Freddie Mac and Fannie Mae; it had a -$2 billion write-down on the value of its mortgage operations; it recorded a $360 million gain from the sale of non-core assets; and it booked a $1.2 billion tax gain. Revenue slumped by -11% to $22.4 billion.
Shares of Schlumberger (SLB) slid -2.1% after the world’s largest oil services provider said its fourth-quarter profit surged more than 30% to $1.04 billion, or 76 cents per share, compared with $795 million, or 65 cents per share, a year earlier. Revenue soared 58% to $9.07 billion. Excluding charges, Schlumberger earned $1.16 billion, or 85 cents per share. Analysts were expecting a profit of 78 cents on sales of $10.1 billion. Nearly 200 pros owned Schlumberger at the end of the end of the third quarter and almost 1,100 tickerspy members own the stock in their portfolios.
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