Finances

Hewlett Packard Enterprise Co. (HPE) released its second quarter earnings report on Tuesday, May 30. The company's stock dropped 4% following the release of the report.

Hewlett Packard Enterprise reported quarterly revenue of $6.97 billion. This is up 4% from revenue of $6.71 billion during the same quarter last year but below analysts' expectations of $7.31 billion.

"Building on a great start to the fiscal year, HPE grew revenue, increased the contribution of recurring revenue through the HPE GreenLake edge-to-cloud platform, and delivered exceptional profitability to generate a strong second quarter performance," said Hewlett Packard Enterprise CEO, Antonio Neri. "Our shift to a higher-margin portfolio mix led by the Intelligent Edge segment, and the strong demand for our AI offering, further strengthen the investment opportunity for our shareholders."

The company announced net income of $418 million or $0.32 per adjusted share for the quarter. This was an increase from $250 million or $0.19 per adjusted share during the second quarter last year.

Hewlett Packard Enterprise's Intelligent Edge segment saw a 50% year-over-year increase in revenue to $1.3 billion. The company's High Performance Computing and Artificial Intelligence segment revenue was up 18% from the prior year reaching $840 million. Financial Services revenue totaled $858 million, a 4% increase from the same period last year. The company announced a regular cash dividend of $0.12 per share on the company's common stock, payable on July 14, 2023, to stockholders of record on June 15, 2024. Hewlett Packard raised its guidance for 2023 and expects earnings between $1.42 and $1.50 per adjusted share.

Hewlett Packard Enterprise Co. (HPE) shares closed at $15.24, down 2% for the week.

Chewy Announces Earnings

Chewy, Inc. (CHWY) released its first quarter earnings report on Wednesday, May 31. The online pet supply company's stock rose more than 13% in after-hours trading following release of the report.

The company reported net sales of $2.78 billion for the quarter. This was up 15% from $2.43 billion in the same quarter last year and exceeded analysts' expectations of $2.73 billion.

"2023 is off to a strong start for Chewy. Our first quarter results reflect accelerating double-digit topline growth and continued expansion of adjusted EBITDA margin. Net sales per active customer and Autoship customer sales also both reached new record highs for the company and continued to fuel customer loyalty and spend towards our platform," said Chewy CEO, Sumit Singh. "The superior value proposition of the Chewy brand continues to resonate, and our team continues to demonstrate operating discipline and high-quality execution."

The company reported net income of $22.2 million this quarter or $0.20 per adjusted share. This was an increase from net income of $18.5 million or $0.11 per adjusted share during the same time last year.

Chewy reported 20.4 million active customers in the quarter, down almost 1% compared to the same time last year. The company's net sales per active customer increased 15% in the quarter to just over $500. Chewy's Autoship subscription program, which allows customers to automatically reorder and deliver products, increased sales by more than 18% to $2.08 billion for the first quarter. Chewy announced that it will begin expansion into international markets by delivery to Canada beginning in the third quarter. For the second quarter of fiscal 2023, Chewy expects 13% to 14% growth in net sales ranging between $2.75 billion and $2.77 billion.

Chewy, Inc. (CHWY) shares ended the week at $35.51, up 14% for the week.

Salesforce Posts Quarterly Report

Salesforce, Inc. (CRM) posted its quarterly earnings report for the first quarter on Wednesday, May 31. Despite reporting revenue and earnings that beat analysts' expectations, the company's stock declined 7% following the release.

The San Francisco-based company reported revenue of $8.25 billion, up more than 11% from $7.41 billion in revenue at this time last year. This exceeded analysts' expected revenue of $8.18 billion for the quarter.

"Q1 represented another strong step forward as we accelerate our transformation and profitable growth strategy," said Salesforce CFO, Amy Weaver. "Our team delivered another double-digit growth quarter on the top and bottom line as we help customers increase productivity, drive efficiency, and become AI-first companies."

Salesforce posted net income for the quarter of $199 million or $0.20 per adjusted share. During the same quarter last year, the company reported net income of $28 million or $0.03 per adjusted share.

Salesforce's subscription and support revenue grew 11% year-over-year to $7.64 billion. The company's professional services and other revenues reached $605 million, a growth of 9% from the year prior. For the second quarter, Salesforce anticipates an increase in revenue ranging between $8.51 to $8.53 billion. For the full fiscal year 2024, Salesforce raised its earnings forecast to $7.41 to $7.43 per adjusted share on revenue of $34.5 to $34.7 billion.

Salesforce.com, Inc. (CRM) shares ended the week at $213.03, down 3% for the week.

The Dow started the week of 5/30 at 33,104 and closed at 33,763 on 6/2. The S&P 500 started the week at 4,227 and closed at 4,282. The NASDAQ started the week at 13,109 and closed at 13,241 .

Yields on U.S. Treasuries declined earlier in the week as investors waited for a resolution on the debt ceiling crisis. Yields continued to fall during the holiday-shortened week as investors weighed lower-than-expected jobless claims and uncertainty on a possible interest rate hike by the Federal Reserve.

On Tuesday, the Conference Board reported that its consumer confidence index for May fell to 102.3 from 103.7 in April. The consumer confidence level has declined four out of the past five months and reached its lowest level since November 2022.

"Consumers' view of current conditions became somewhat less upbeat while their expectations remained gloomy," said Senior Director of Economics at the Conference Board, Ataman Ozyildirim. "While consumer confidence has fallen across all age and income categories over the past three months, May's decline reflects a particularly notable worsening in the outlook among consumers over 55 years of age."

The benchmark 10-year Treasury note yield opened the week of May 30 at 3.81% and traded as low as 3.62% on Wednesday. The 30-year Treasury bond opened the week at 3.96% and traded as low as 3.84% on Wednesday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment increased 2,000 to 232,000 for the week ending May 27. Continuing unemployment claims increased 6,000, reaching over 1.80 million. The May jobs report revealed that 399,000 positions were added, exceeding expectations. Yields pared back from lows earlier in the week after the report's release on Friday.

"Labor market conditions are still tight," said lead U.S. economist at Oxford Economics, Nancy Vanden Houten. "While we expect the Fed to leave rates steady at its upcoming meeting, a more sustained loosening of labor market conditions is needed to keep rate hikes permanently off the table."

The 10-year Treasury note yield finished the week of 5/30 at 3.70%, while the 30-year Treasury note yield finished the week at 3.89%.

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, June 1. The 30-year mortgage rate increased for the third consecutive week.

This week, the 30-year fixed rate mortgage averaged 6.79%, up from last week's average of 6.57%. Last year at this time, the 30-year fixed rate mortgage averaged 5.09%.

The 15-year fixed rate mortgage averaged 6.18% this week, up from 5.97% last week. During the same week last year, the 15-year fixed rate mortgage averaged 4.32%.

"Mortgage rates jumped this week, as a buoyant economy has prompted the market to price-in the likelihood of another Federal Reserve rate hike," said Freddie Mac's Chief Economist, Sam Khater. "Although there has been a steady flow of purchase demand around rates in the low to mid 6% range, that demand is likely to weaken as rates approach 7%."

Based on published national averages, the savings rate was 0.40% as of 5/15. The one-year CD averaged 1.59%.

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