After a mixed session on Thursday, stock markets looked poised for further gains across the board on Friday. Once again, the Nasdaq Composite took the lead just after the opening bell, rising about a third of a percent to regain part of its lost ground from the previous day. Investors are generally pleased with how earnings season has gone and with economic data that could point to an end to higher interest rates from the Federal Reserve.
However, two key companies releasing their latest quarterly reports moved lower at the open. The declines for American Express (AXP 0.05%) and Schlumberger (SLB 2.53%) weren't huge, but they nevertheless highlighted some of the pressures that are still hitting parts of the global economy.
American Express falls despite record revenue
Shares of American Express moved lower by 4% at the opening bell. The financial services giant posted extremely strong quarterly results that included some new records, but investors focused on the moves that AmEx is making to prepare for potential economic turmoil ahead.
AmEx's second-quarter results showed considerable strength. Revenue jumped 12% year over year to $15.05 billion, as payment network volumes were up 8% to $426.6 billion. Net income climbed 11% from year-ago levels to $2.17 billion, and that produced earnings of $2.89 per share.
NYSE: AXP
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CEO Stephen Squeri pointed to record spending by cardmembers, as both U.S. consumers and international cardholders boosted their use of their cards by double-digit percentages. Travel and entertainment-related spending was particularly noteworthy, and AmEx's travel business saw booking climb to its best levels since before the beginning of the COVID-19 pandemic. Premium products have gained considerable traction, particularly among millennial and Gen Z consumers.
Yet investors seemed spooked by the big jump in credit loss provisions from American Express, which nearly tripled from year-ago levels to $1.2 billion. Moreover, even though quarterly earnings were better than many had expected, the company didn't boost its full-year guidance. Nevertheless, AmEx emphasized that its credit metrics remain strong, and it's in a good position to weather any downturn that could come in the future.
Schlumberger sees a slump in drilling activity
Shares of Schlumberger also sank early Friday morning, falling 3% just after the market opened. The oil services company reported second-quarter financial results that noted a pullback in drilling activity in the U.S. that could put pressure on future growth.
For now, Schlumberger has seen strong demand. Revenue climbed 20% year over year to $8.10 billion, while adjusted net income jumped 44% to $1.03 billion. That resulted in adjusted earnings of $0.72 per share.
NYSE: SLB
Key Data Points
CEO Olivier Le Peuch noted that significant growth in international markets played a key role in Schlumberger's overall results for the period, particularly in the Middle East and Asia, as well as offshore operations. Although North American revenue climbed from where it had been three months previously, rig counts were still down in the area. Le Peuch suggested that the trends favoring international business over North America might persist, but noted that Schlumberger already gets 80% of its total revenue from overseas and that therefore it's in good shape for the foreseeable future.
Schlumberger has worked hard to concentrate on the most profitable projects, even if it means not maximizing revenue growth. That strategy is working well so far, and even with today's slight move lower in the stock, Schlumberger appears to have its eyes appropriately fixed on the long-term prize.
