JUly 17, 2018. Stocks traded with little stability yesterday – on the heels of a strong market performance the week prior. With that said, the Dow Jones resumed its gains, thanks to the large banks. The Dow closed at a daily high, despite the fact that when push came to shove, it only edged up 0.18%. This time around, the needed boost came from J.P. Morgan (JPM), which soared 3.93%, and Bank of America (BAC), which tacked on 4.34%. JPM reported on Friday – and BAC reported solid numbers before opening yesterday.
That, though, was all the good news we would get when it came to the indexes. The S&P 500 ended off 0.1%, and beneath the 2,800 point level, after having crossed up above it on Friday for the first time since February. The NASDAQ ended off 0.26%, after having closed at an all-time high the 2 days prior.
Yesterday, Netflix (NFLX) was the first of the FANG stocks to report, and investors didn’t like what the company had to offer. Last week, there were concerns that the expectations from the company were too high, and it seems like that is in fact the situation on the ground. The video streaming giant fell short of analysts’ new subscriber forecasts, reporting that it added 5.15 million new subscribers, far short of the 6.2 million projection. The company did indeed outstrip its earnings and revenues forecasts, but slashed its Q3 forecast. NFLX traded sharply down by 14% after closing.
If NFLX had not traded linearly up since its last earnings release it could very well be that we would have seen a different response, but now, the stock is declining rapidly in the direction of the $336 level, the level at which it was at the day subsequent to its surge after reporting Q1 numbers. NFLX reported one of its best days ever after reporting its numbers for last quarter, but didn’t give the market much in the way of support back then. We’ll see what effect NFLX will have on today’s sentiment, though presumably, its report will be seen as an isolated event, part and parcel to the company alone and not indicative of anything larger in the market.
In Summary: Despite the large banks’ strong movement yesterday which helped the Dow end up, the undercurrent was one of sizable weakness, the overall picture not an inviting one. The market certainly needs good earnings reports and reactions in turn the like of which we saw yesterday on the part of the large banks, in order that is for things to move in the right direction.
Have a great trading day!
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