Tobacco and Autos Lead the Charge in a Big Earnings Day
In a surprising turn of events, two of America’s oldest industries – tobacco and automobiles – stole the show on a massive day of earnings reports. Philip Morris International (PMI) and General Motors (GM) were the top gainers in the S&P 500, both surging over 8% after their impressive quarterly results.
Philip Morris Sees Strong Growth
PMI’s revenue rose 8.4% year-over-year to $9.91 billion, with an 11.6% jump on an organic basis. The company’s CEO, Jacek Olczak, attributed the success to “excellent momentum across all regions and categories.” PMI also raised its full-year adjusted EPS forecast to $6.45-$6.51, up from its previous outlook of $6.33-$6.45.
GM’s Internal Combustion Engine Business Shines
GM’s internal combustion engine business, which accounts for over 80% of its U.S. sales, drove the company’s success. Despite struggling in China, where market share shrank to 6.5% from 8.3% a year ago, GM’s CFO Paul Jacobson said the company’s profitability challenge in China was due to a “sizable inventory build” that necessitated incentive pricing. GM raised its bottom-line profit forecast for the remainder of 2024 to $14 billion-$15 billion.
Other Earnings Reports
GE Aerospace fell after reporting revenue growth of 6%, shy of the consensus estimate. Verizon reported a marginal bottom-line beat and a slight top-line miss, but reaffirmed its annual guidance. Lockheed Martin reported disappointing sales growth, while Genuine Parts plunged nearly 20% after its disappointing Q3 results and lowered guidance.
IMF Lowers Global Economic Outlook
The International Monetary Fund slightly lowered its global economic outlook for 2025, citing risks such as elevated policy uncertainty, geopolitical tensions, and protectionist policies. The IMF made upward revisions for Brazil, Spain, Russia, and the U.K., while Mexico and Japan saw downward revisions.
Walmart Launches Prescription Delivery Service
Walmart is launching a new prescription delivery service that could disrupt the industry. The service will deliver prescriptions to households in the U.S. in as little as 30 minutes, and will be free for Walmart+ customers. Walmart aims to have prescription delivery available in 49 states by the end of January.
Goldman Sachs Predicts Better Environment for Income Investors
Goldman Sachs strategist David Kostin forecasts a better environment for income investors than what’s priced in by the market. He predicts S&P 500 dividend per share of $80 in 2025, up 5% from market pricing. Kostin recommends investors consider names in Goldman’s Dividend Yield and Growth Basket, including Interpublic Group, eBay, and Wells Fargo.
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