Shares of SVB Financial Group ( SIVB 7.54% ), the parent company of Silicon Valley Bank, traded more than 11% higher. The company recently announced earnings results for the first quarter of 2022. SVB now expects to grow average loan balances in the mid 30s percentage range and net interest income in the low 50s percentage range in 2022. This is significantly higher than past guidance, due to the Fed's new monetary outlook with several rate hikes expected this year. SVB is also predicting huge growth in fee income compared to 2021.
The yield on the 10-year Treasury note is quickly approaching 3%, a level not seen since late 2018. Investors know that rapidly rising rates spell trouble for stocks and the economy. But there may be less reason to worry than investors think. The 10-year yield is considered the benchmark for mortgage lending and the discount rate used to calculate the present value of future cash flows. What is striking now is the speed with which it has risen. The 10-year yield has jumped more than a full percentage point.
Shares of social-media companies Meta Platforms and Pinterest declined Friday alongside Snap after daily active users at the Snapchat parent rose slightly more than expected. Snap (ticker: SNAP) shares were down 2.5% to $28.67. Snap reported revenue in the quarter of $1.06 billion, below estimates of $1.07 billion, Thursday evening. Daily active users in the first quarter at Snap jumped 18% from a year earlier to 332 million.
Facebook parent Meta Platforms Inc. has been one of the worst-performing large stocks this year, plunging 38% amid a weak macroeconomic outlook, rising competition from the likes of TikTok and ongoing digital obstacles from old nemesis Apple Inc.
WHAT ELSE HAPPENED?
The Dow Jones Industrial Average DJIA, -2.82% fell 981.36 points, or 2.8%, to close at 33,811.40, after declining 1,019 points at its session low.
The S&P 500 SPX, -2.77% dropped 121.88 points, or 2.8%, to end at 4,271.78.
The Nasdaq Composite COMP, -2.55% finished at 12,839.29 after a drop of 335.35 points, or 2.6%. The S&P 500 and Nasdaq each suffered their biggest one-day drops since early March.
All 11 major S&P 500 sectors fell Friday, with healthcare dropping 3.6% after a downbeat profit forecast from HCA Healthcare Inc. HCA, -21.82% sent its shares tumbling 21.8%. Other hospital operators, including Tenet Healthcare Corp. THC, -15.65%, Community Health Systems Inc. CYH, -17.93% and Universal Health Services UHS, -13.96% also fell between 14% to 17.9%.
However, of the 99 companies in the S&P 500 that have reported earnings for the first quarter, 77.8% of them have beat market expectations.
Shares in Cisco Systems (CSCO) posted a good run in 2021 amid the market's rotation to "value" stocks tied to the U.S. economy reopening. The outlook for CSCO stock this year depends on spending trends for cloud computing infrastructure as well as corporate and telecom networks. Cisco stock jumped 41% in 2021 amid volatility in the tech-heavy Nasdaq. Cisco's January-quarter earnings were higher considering component shortages and supply-chain issues. Product orders increased 33% year-over-year, marking the third straight quarter of 30%-plus order growth. Demand in the enterprise market has been a bright spot. Cisco continues to hike prices amid supply chain issues.
Shopify (SHOP) earnings fell 14% while revenue rose 41% to $1.38 billion, both beating Q4 views. But management said capital spending and marketing investments would climb as the coronavirus pandemic fades and e-commerce growth normalizes. Shopify said it plans to spend $1 billion annually on a U.S. distribution network to store and ship products for its merchant customers. For full-year 2022, Shopify expects "Year-over-year revenue growth to be lower in the first quarter of 2022 and highest in the fourth quarter of 2022." SHOP stock plunged to its lowest level since May 2020.
WHAT ELSE HAPPENED?
Tesla (TSLA) sold 59,845 made-in-China Model 3 sedans and Model Y SUVs last month. Most of those, 40,499, were exported mainly to Europe. Only 19,346 were sold locally, vs. 70,602 in December. Meanwhile, the National Highway Traffic Safety Administration confirmed it is investigating claims that a Tesla Autopilot system glitch causes phantom braking. And Consumer Reports crowned Ford's Mustang Mach-E its top EV of 2022, dethroning Tesla's Model 3. Tesla stock fell about 1.5% for the week.