Stocks looked poised to get at least a bit of relief on Wednesday morning. Substantial losses on Tuesday brought several major market benchmarks toward their lowest levels in more than a year, but investors appeared to take some solace from signs that ongoing headwinds to economic growth might eventually give way to more favorable conditions. As of 8:30 a.m. ET, futures on the Dow Jones Industrial Average (^DJI 0.95%) were up 272 points to 33,432. S&P 500 (^GSPC 1.33%) futures had gained 25 points to 4,195, while Nasdaq Composite (^IXIC 1.59%) futures had climbed 53 points to 13,069.
A slew of technology companies released their latest earnings reports, creating some cross-currents in that sector of the market. However, many investors are looking more closely at the industrial sector to see whether manufacturing companies are seeing any improvement in the tough conditions that have hampered their ability to meet demand. Boeing (BA +4.11%) and General Motors (GM 1.12%) both released their latest earnings results, and the duo offered some insight that investors can use in judging the health of the overall economy.
Boeing flies lower
Shares of Boeing were down almost 4% on Wednesday morning. That brought the stock to its lowest level since late 2020 as the aircraft manufacturer failed even to come close to meeting the expectations of its shareholders.
Image source: Getty Images.
Boeing's financial results weren't pretty. Revenue was down 8% year over year to $13.99 billion, and losses more than doubled year over year. Adjusted core losses of $2.75 per share reflected not only charges related to the Russia-Ukraine war but also lower sales volumes in its defense segment and charges on some of its fixed-price development programs. Free cash flow remained sharply negative with an outflow of $3.57 billion, and that brought the amount of Boeing's cash and marketable securities on its balance sheet down from $16.2 billion three months ago to $12.3 billion.
There were a few bright spots. Boeing delivered 95 commercial aircraft during the period, up from 77 in the first quarter of 2022. However, even that wasn't enough to keep segment revenue from falling 3% from year-ago levels. Efforts to get the 737 MAX aircraft back into full service and production were encouraging, but Boeing still has work to do on certification of its 787 Dreamliner model.
NYSE: BA
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Yet the poor performance from the defense segment was especially disturbing given the current geopolitical situation. Moreover, as many airline stocks have started to move lower again, it's far from certain that Boeing has successfully weathered the worst of that industry's woes.
GM gets a bounce
Shares of General Motors were up about 1% in premarket trading, clawing back a portion of its 4% drop from Tuesday's market session. The automaker's first-quarter results were mixed, and investors were left trying to figure out whether GM will have what it takes to execute on its identified strategy of embracing electric vehicles wholeheartedly.
General Motors saw revenue move higher, climbing 11% to $35.98 billion. However, net income fell roughly 3% to $2.94 billion, with a slightly larger decline in adjusted earnings to $2.09 per share. GM pointed to the impact of higher commodity costs in its production, as well as the investments that the automaker has made to streamline its transition to more of an EV emphasis. Also, General Motors saw its market share fall about eight-tenths of a percent to 9.1%, with dealer inventory and semiconductor supply concerns hurting its ability to keep up its pace of vehicle deliveries.
NYSE: GM
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The positive for GM is that it's still seeing huge demand for cars and trucks from its North American customers. That should help give it some tailwinds as the automaker is able to overcome supply chain challenges. However, revenue in GM's China segment was weak, with COVID-19 impacts continuing to weigh on results.
General Motors believes it will earn between $6.50 and $7.50 per share in adjusted earnings during 2022. For a stock priced below $40 per share, that's an extremely attractive valuation, but it reflects the great uncertainty investors have about how sustainable the automaker's current business environment will be going forward.
