Futures mixed, Mag 7 earnings, UPS tanks, Celestica rips, CP Rail beats
Some days I really stretch to find 5 things, today is not that day. With earnings of some of the biggest companies on the planet reporting, today’s struggle is one of abundance.
A new episode of In the Money with Amber Kanwar is out! In this episode I spoke with options trader Mark Sebastian. It was a great chat and he talked about why he is cautious on Nvidia, option fingerprints around Meta, and named a stock he says could be the next Meta. Listen on Apple, Spotify or here. As usual, YouTube out later today.
Abundance: US futures are mixed with Nasdaq futures leading the way on a busy day for earnings (40 companies reporting today, and three of the mag 7 last night). Yesterday’s Fed decision seems like a distant memory. As expected, the Fed kept rates on hold. There was usual volatility around the decision particularly because they removed language around inflation making progress toward 2% target. However, during the press conference, Powell clarified that was just to clean up the statement and not meant as a signal. The Bank of Canada delivered a rate cut as expected and announce it would end quantitative tightening. Tiff Macklem said the Bank of Canada has plenty of room to help the Canadian economy when it comes to potential tariff impacts saying they can make the consequences “less painful and abrupt”. In addition to earnings this morning, the European Central Bank cut interest rates for the fifth time in a row and Q4 GDP in the US came in a little less than expected. We will get confirmation hearings for Kash Patel (FBI Director) and Tulsi Gabbard (Director of National Intelligence) later today. Odds of RFK Jr. becoming the Secretary for Health & Human Services went up after his confirmation hearing yesterday. Pharma stocks have been under pressure since the election on this prospect given his view that there should be less drug use by Americans. After the bell we will get earnings from Apple. On the TSX we had Rogers report quarterly results this morning, beating on the top and the bottom line.
Trading up: Shares of Meta are poised to open at a record high after profit and revenue grew more than expected. The social media giant now boasts 3.5 billion daily active people across all its platforms and 700 million monthly active users. To give you a sense of how much time we are spending, Meta said they saw 4.5 billion Reels shared daily and boasted 325 million monthly active users on Threads (and I thought no one used it!) The blemish on the results is that the forecasted revenue for next quarter was lighter than expectations and spending intentions on things like AI were higher than expected. I encourage you to listen to today’s podcast because Mark Sebastian talked about seeing one of the biggest option trades of his career on Meta. Tesla shares are popping 3% in pre-market on the back of a classic set of Tesla results. I say classic because the results themselves weren’t amazing but the forecast promises better days ahead and that is all Tesla shareholders have ever needed. Total revenue increased just 2% with its EV business dropping 8%. Margins fell because Tesla resorted to promotions to sell their cars. However, the company reiterated its promise to have robotaxis on the road this year. Normally financial forecasts are given as boring numbers, but Elon Musk doesn’t do boring (well, except for Boring Company). He said 2026 was going to be “epic”, 2027 was going to be “ridiculous”, and 2028 was going to be “ridiculously good.” Put that in your model. It’s good enough for RBC who says “moonshots are getting real” in a note to clients this morning. IBM is the big outperformer this morning after results came in better than expected. Importantly, its AI and software business were able to offset continued weakness in consulting. The forecast for 2025 was higher than expected and that is also lifting the stock.
Trading down: Microsoft is falling 4% in the pre-market after earnings failed to impress. Its key cloud business, Azure, didn’t grow as much as expected due to weakness in the non-AI part of the business. While AI revenue came in at $13 billion, a 175% increase from last year, Citi says the results imply that the core Azure business is decelerating. “Azure growth is expected to accelerate slightly but just to 31-32% cc (below 34% consensus) given execution challenges with non-AI consumption and capacity constraints,” wrote Tyler Radke of Citi, “These challenges prompted management not reiterate Azure growth re-acceleration in Q4 than previously expected.” Shares of UPS are headed for a record sell-off this morning with the stock plunging 13%. The logistics and shipping company said its business with Amazon would drop 50% by the second half of 2026. UPS has been seeing reduced business from Amazon as they bring more of their delivery solutions in-house, but the sharp pullback is still a surprise for investors. This is overshadowing the fact that fourth quarter earnings came in better than expected. “It seems as if the structural initiatives taken in the middle of last year are producing results,” wrote Jonathan Chappell of Evercore. “However…the agreement with (Amazon) to reduce volumes by more than 50% in 18 months is a surprise and acceleration of the glide down of this business that has long represented a tail risk.” Caterpillar is also weak this morning, falling 5%. The heavy equipment maker beat profit expectations, but sales struggled and it warned the next quarter would be softer than expected as the business saw weakness in construction and mining.
What DeepSeek?: Celestica got taken down with the DeepSeek market freak (falling 30% on Monday), but the stock is rocketing up more than 15% in the pre-market after earnings crushed expectations. The maker of electronic components for tech companies has seen a huge lift in business thanks to its AI customers. The stock is up more than 200% over the past year. Not only did Celestica best profit expectations this quarter but it also boosted its forecast for the year and signaled the upcoming quarter was going to be better than expected. “Overall, the current demand environment for data center hardware is robust, as evidenced by recent customer forecasts as well as new AI program awards over the last 90 days,” touted CEO Rob Mionis in the earnings statement. The fact that the company boosted its forecast above expectations is made especially compelling, says RBC, because historically the company has provided conservative forecasts. “Celestica has historically provided conservative guidance; Celestica’s FY24 adj. EPS ($3.88) was 44% above its initial guidance for $2.70,” wrote RBC’s Paul Treiber.
Choo-choo: Watch shares of CP Kansas City this morning. The railway reported better than expected profit and improved a key measure of efficiency (operating ratio) as revenue rose and costs came down. Steven Hansen at Raymond James says the forecast for 2025 is “upbeat.” Hansen likes that the company is poised to start buying back its shares this year and says “a modest dividend increase also sounds likely.” The reaction will be interesting because CP and CN Rail have both been laggards, prompting several upgrades on the latter. Perhaps investors will start picking away given the better than expected results.
