Marketbites: Chipotle's Earnings Excite Investors
Portfolio Manager Commentary:
The Dow Jones lost more than 200 points as investors' worries over First Republic Bank overshadowed their excitement around Big Tech earnings. First Republic Bank slid another 30% yesterday after shedding 50% of their market cap on Tuesday. That reignited concerns about the health of the banking system initially prompted by the closure of Silicon Valley Bank last month. Bloomberg News reported Wednesday that U.S. bank regulators were considering downgrading their assessments of First Republic, which could hinder the bank’s ability to borrow from the Federal Reserve.
Microsoft climbed more than 7% to trade at its highest point in more than a year after beating Wall Street’s expectations on the top and bottom lines in its latest quarter. The company also said it saw a big jump in revenue from its Intelligent Cloud business segment. Amazon rose more than 2% as some investors grew hopeful that the e-commerce giant’s cloud business could also show strong revenue growth. Alphabet shares finished down 0.1% after trading up earlier in the day. The Google parent posted better-than-anticipated earnings but said revenue grew just 3% from the same period a year ago.
Elsewhere, Chipotle shares jumped nearly 13% to an all-time high on the back of strong earnings. Despite raising prices by 10%, the company saw traffic rise roughly 4%. Also, Chipotle’s chicken al pastor is on track to be the chain’s most popular limited-time protein option ever. Lastly, the company reiterated its plans to open between 255 to 285 new restaurants during 2023.
Chart of the Day:
Home prices rose in February from the prior month, snapping a seven-month streak of declines, as buyers competed for a limited number of homes for sale. The S&P CoreLogic Case-Shiller National Home Price Index, which measures home prices across the nation, rose 0.2% in February compared with January. On a year-over-year basis, the index rose 2% in February. After rising to 20-year highs last fall, mortgage rates declined in December and early this year, bringing some home buyers back into the market. The inventory of homes for sale also remained unusually low, keeping the market competitive in some parts of the country. Existing-home sales surged in February after declining for a year, according to the National Association of Realtors.
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