Today in the Market (7/25/2023)

Good Evening! On Tuesday, markets moved up, primarily driven by positive earnings from tech companies. 

The Nasdaq Composite led the way gaining 0.61%, while the S&P 500 increased 0.28%. The Dow Jones ended the day in the green – barely – with a small gain of 0.08%.

A BUSY WEEKOF EARNINGS

Microsoft (MSFT) released its earnings and surpassed the Top and Bottom line projections of Wall Street analysts. However, Azure Cloud Revenue experienced a sequential decline for the quarter.

  • Revenue: $56.2 Billion vs. $55.5 Billion Expected
    • Productivity & Business Process: $18.29 Billion vs. $18.1 Billion Expected
    • Personal Computing: $13.9 Billion vs. $13.58 Billion Expected
  • Earnings Per Share: $2.69 vs. $2.55 Expected

So what’s this about Azure Cloud? Cloud service Azure disclosed a 26% YoY increase in revenue during the quarter. However, the growth has been decreasing by 1% every quarter since Quarter 3 of 2022. This trend has drawn the attention of investors, as companies are reducing their capital expenditures due to increasing rates.

Big news for users of Microsoft 365! The company revealed a product known as Copilot ($30 a month per user), which has the capability to provide users with summarized versions of their unread emails, restructure PowerPoints, generate drafts based on demand, and various other AI functions.

TIME IS RUNNING OUT

A tentative five-year collective bargaining agreement has been reached between United Parcel Service (UPS) and the International Brotherhood of Teamsters, covering a workforce of over 300,000 individuals engaged in delivery and warehouse operations.

Why this could have been bad… The existing agreement between the union and the delivery corporation is set to end on August 1st. In response, the Teamsters have issued a warning that in the absence of a mutually acceptable agreement, drivers may engage in a strike. However, if approved through a vote of union members, the agreement would prevent the most significant strike against a company in the history of the U.S., thus avoiding an approximately $7 billion negative impact on the US economy.

Why UPS doesn’t want this to happen? The most recent UPS strike occurred in 1997, during which approximately 185,000 employees engaged in strike. The duration of the work stoppage spanned 15 days, resulting in a substantial financial impact of hundreds of millions of dollars to UPS. The company ultimately accepted demands regarding salary, retirement benefits, and the employment status of part-time employees.

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