Dj T-Mobile Pops As Earnings Accelerate In 'Biggest Growth Year Ever' - Ibd

US benchmark equity indexes were lower intraday as markets awaited the Federal Reserve's latest monetary policy decision and financial results from three mega-caps.

The Nasdaq Composite was down 0.7% at 19,587.8 after midday Wednesday, while the S&P 500 fell 0.4% to 6,044.1. The Dow Jones Industrial Average lost 0.1% to 44,812.4. Among sectors, technology saw the steepest decline, while consumer staples paced the gainers.

Markets widely expect the central bank's Federal Open Market Committee to hold interest rates steady, according to the CME FedWatch tool. Fed Chair Jerome Powell's press conference is scheduled for 2:30 pm ET.

"The Fed is likely to focus on the elevated and uncertain pathway of price pressures and the reduced risk of weakness in the labor market as justification to pause further policy adjustments, at least for now, as the committee continues to assess the incoming data and impact of fiscal policy," Stifel said in a note to clients.

The US two-year yield was up one basis point at 4.21% intraday, while the 10-year rate was little changed at 4.55%.

Mega-caps Microsoft , Meta Platforms and Tesla are scheduled to report results after Wednesday's closing bell, along with other names such as IBM and ServiceNow .

In company news, officials in the Trump administration are considering additional curbs on the sale of Nvidia chips to China, Bloomberg News reported, citing unnamed sources. The chip-making giant's shares were down 5.8%, the steepest decline on the Dow and the Nasdaq and among the worst on the S&P 500.

Starbucks shares were up 8.1%, the best performer on the Nasdaq and the second-best on the S&P 500. Late Tuesday, the coffee giant's fiscal first-quarter results topped Wall Street expectations as higher prices helped cushion a blow from weak volume.

T-Mobile US reported better-than-expected fourth-quarter results Wednesday aided by its postpaid phone subscriber additions that came in ahead of the Street's projections. The wireless company's shares jumped 7.1%, among the top gainers on the S&P 500.

West Texas Intermediate crude oil decreased 1.7% to $72.55 a barrel intraday.

In economic news, mortgage applications in the US declined last week mainly due to weak refinancing activity across conventional and government loans, the Mortgage Bankers Association said.

Gold was up 0.1% at $2,769.20 per troy ounce, while silver gained 1.8% to $31.45 per ounce.

The telecom sector recorded a robust performance over the past year, highlighted by the impressive gains of the S&P Telecom Select Industry Index, which outperformed the broader S&P 500. The telecom sector index has added about 31.98% over the past year, as compared to the S&P 500’s gain of 22.93%.

The sector’s outlook remains optimistic, driven by optimistic AI forecasts. Additionally, interest rate cuts throughout 2024, coupled with expectations of further reductions driven by President Trump's push for lower rates also creates an optimistic outlook for the sector. Both AT&T and Verizon Communications Inc. reported relatively healthy fourth-quarter results.

Below, we highlight fourth-quarter earnings results of these companies.

Earnings in Detail

Verizon Communications

On Jan. 24, before market open, Verizon Communications VZ reported relatively healthy fourth-quarter results, with the bottom and top lines beating the Zacks Consensus Estimate.

Shares of the company has gained about 2.8% after the earnings release (as of Jan. 27). VZ has a Value Score of A, along with Zacks Rank #3 (Hold). This indicates that investors should hold on to VZ shares with a strong value bias.

The company recorded consolidated postpaid net additions of 1,413,000 in the quarter, along with retail postpaid phone net additions of 568,000.

Net income in the quarter was $5.11 billion or $1.18 per share, on a GAAP basis, against a net loss of $2.57 billion or a loss of $0.64 per share in the prior-year quarter. The significant improvement was primarily attributable to a pre-tax gain from special items of $477 million in the reported quarter and a goodwill impairment charge of $5.84 billion in the year-ago quarter.

Excluding non-recurring items, quarterly adjusted earnings came in at $1.10 per share compared with $1.08 in the prior-year quarter, beating the Zacks Consensus Estimate by a penny. For 2024, Verizon recorded a net income of $17.95 billion or $4.14 per share compared with $12.09 billion or $2.75 per share in 2023.

Total quarterly operating revenues improved by 1.6% to $35.68 billion, beating the Zacks Consensus Estimate of $35.4 billion, driven by growth in service revenues and higher wireless equipment revenues. For 2024, revenues improved 0.6% to $134.79 billion.

Total operating expenses decreased 18.2% year over year to $28.3 billion, while operating income improved to $7.42 billion.

For 2025, Verizon expects wireless service revenue growth of 2%-2.8%. and adjusted earnings to grow by 0-3%.

AT&T

On Jan. 27, before market open, AT&T T reported relatively healthy fourth-quarter 2024 results, with the bottom and top line beating the Zacks Consensus Estimate. AT&T recorded strong subscriber growth backed by a resilient business model and robust cash flow position, driven by a diligent execution of operational plans.

The market reacted positively to the quarterly results, with AT&T gaining about 6.8% on Jan. 27, after earnings release.

On a GAAP basis, AT&T reported a net income of $4.03 billion or $0.56 per share compared with $2.13 billion or $0.30 per share in the year-ago quarter. Excluding non-recurring items, adjusted earnings from continuing operations remained flat at $0.54 per share. Adjusted earnings for the fourth quarter beat the Zacks Consensus Estimate by 6 cents.

For 2024, AT&T reported a net income of $10.75 billion or $1.49 per share compared with $14.19 billion or $1.97 per share in 2023 owing to higher asset impairment and restructuring charges.

Quarterly GAAP operating revenues increased 0.9% year over year to $32.3 billion, largely due to higher Mobility service and equipment sales and Consumer Wireline revenues. Adjusted operating income decreased to $5.4 billion from $5.8 billion. AT&T witnessed solid subscriber momentum with 839,000 post-paid net additions.

While optimizing operations, AT&T is aiming to increase efficiencies to lower operating costs while focusing on 5G and fiber-based connectivity. The company is also aiming to reduce its debt burden by monetizing non-core assets. The company anticipates wireless service revenues to improve by 2%-3%, with adjusted earnings projected to be $1.97 and $2.07 per share.

ETFs in Focus

Below, we highlight a few ETFs for investors to gain exposure to the U.S. Telecom industry.

Vanguard Communication Services ETF (VOX)

Vanguard Communication Services ETF has gained 6.82% over the past three months and 33.1% over the past year.

Fidelity MSCI Communication Services Index ETF (FCOM)

Fidelity MSCI Communication Services Index ETF has gained 6.78% over the past three months and 33.19% over the past year.

iShares U.S. Telecommunications ETF (IYZ)

iShares U.S. Telecommunications ETF has gained 6.62% over the past three months and 20.54% over the past year.

SPDR S&P Telecom ETF (XTL)

SPDR S&P Telecom ETF has gained 6.75% over the past three months and 34.74% over the past year.

Invesco S&P 500 Equal Weight Communication Services ETF (RSPC)

Invesco S&P 500 Equal Weight Communication Services ETF has gained 4.91% over the past three months and 18.20% over the past year.

Zacks Investment Research

The Nasdaq Composite and S&P 500 Index were both down in late-morning trading Wednesday, while the Dow Jones Industrial Average was up slightly as investors await the Federal Reserve's first rate decision of 2025 in the afternoon.

In company news, ASML Holding reported Q4 earnings Wednesday of 6.84 euros ($7.12) per diluted share, up from 5.20 euros a year earlier and above the consensus estimate of analysts polled by FactSet of 6.72 euros. Fourth-quarter net sales were 9.26 billion euros, up from 7.24 billion euros in the year-ago period and above the FactSet consensus of 9.06 billion euros. For the ongoing quarter, ASML expects sales to be in a range of 7.5 billion euros to 8 billion euros, compared to the FactSet consensus of 7.21 billion euros. Shares of ASML were up 3.4% around midday.

T-Mobile US reported Q4 earnings Wednesday of $2.57 per share, up from $1.67 a year earlier and above the FactSet analyst consensus estimate of $2.29. Fourth-quarter revenue was $21.87 billion, up from $20.48 billion in the year-ago period and above the FactSet consensus of $21.33 billion. For the ongoing year, adjusted earnings before interest, taxes, depreciation and amortization is expected to be in a range of $33.1 billion to $33.6 billion, reflecting annual growth of 5% at the midpoint. Capital expenditures are estimated to be at roughly $9.5 billion. T-Mobile shares were up 8.8%.

Danaher reported Q4 adjusted earnings Wednesday of $2.14 per diluted share, up from $2.09 a year earlier but below the FactSet analyst consensus estimate of $2.16. Fourth-quarter revenue was $6.54 billion, up from $6.41 billion in the year-ago period and above the FactSet consensus estimate of $6.44 billion. For Q1, the company expects non-GAAP core revenue to decline by low-single digits year over year. For 2025, the company expects non-GAAP core revenue to increase by about 3% year over year. Danaher shares were down 8.7%.

Microsoft-backed OpenAI said it has evidence that Chinese artificial-intelligence startup DeepSeek used the San Francisco-based company's AI models to train its offering in a possible infringement of OpenAI's intellectual property, the Financial Times reported Wednesday. Microsoft shares were down 0.8%.

Trump Media and Technology Group said Wednesday that it plans to enter the financial services sector via Truth.Fi, investing up to $250 million from its $700 million in cash reserves across various assets, including bitcoin. Trump Media shares were up 8.6%.