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Afternoon Note

Digesting Q2 Reports

By Charles Payne, CEO & Principal Analyst
7/17/2019 1:56 PM

All three major indexes are lower as investors digest Q2 reports. The Dow edged lower by 52 points at 27,828, the S&P 500 retreated 10 points to 2,994, while Nasdaq is lower by 9 points to 8,213. The parade of earnings started with Bank of America (BAC). The second-largest bank by assets reported better-than-expected results, with earnings of $0.74 per shares, compared with estimates of $0.71. Other financial firms that reported today were Bank of New York Mellon (BK) and PNC (PNC).

Shares of CSX Corp. (CSX) are down after the rail company cut its full-year sales projections, citing economic uncertainty. The Transportation index (DJT) is down about 3% with the lone bright spot being United Airlines (UAL).  Industrials are lower as well; however, Boeing (BA) is up 1%.

S&P 500 Index

-0.29%

Communication Services (XLC)

-0.45%

Consumer Discretionary (XLY)

-0.56%

Consumer Staples (XLP)

-0.25%

Energy (XLE)

-0.61%

Financials (XLF)

-0.46%

Health Care (XLV)

+0.44%

Industrials (XLI)

-1.65%

Materials (XLB)

-0.39%

Real Estate (XLRE)

-0.64%

Technology (XLK)

+0.20%

Utilities (XLU)

+0.71%

 

Netflix (NFLX)

Netflix has a history of extreme volatility associated with earnings releases, but generally, the stock is lower a week after reporting.  That has been the case for the past year except in the April release that saw the stock rally.

Investors should be bracing, as the average result is a 24% beat, but the stock is normally 4% lower a week afterwards.

Right now, Wall Street is betting big time the stock will get hit on earnings as 31% of the float is short. 

 Still, we would hold into earnings. 

Netflix

Results

Share Reaction

Apr 2019

Beat $0.19

+5.8%

Jan 2019

Beat $0.06

-7.7%

Oct 2018

Beat $0.21

-3.6%

Jul 2018

Neat $0.06

-9.6%

The market is awaiting the release of the Fed’s Beige Book at 2 pm for direction on interest rates.


 

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