The Nasdaq composite and S&P 500 index hit new highs as techs continued to reassert market leadership. Netflix (NFLX), Amazon.com (AMZN), Facebook (FB) and Microsoft (MSFT) all hit record highs. Netflix soared on subscriber gains while Amazon will sell Kenmore appliances from Sears (SHLD), sending the latter sharply higher but hitting several retailers, including the Dow's Home Depot (HD). The Dow Jones industrial average also was hit by General Electric and banks, though blue-chip Visa (V) and American Express (AXP) continued the good news for payment stocks.
Nasdaq Leads As Dow Lags
X The Nasdaq composite rose 1.2%, hitting record highs during the week, rising 10 straight sessions through Thursday. Netflix and other FANG stocks, such as Facebook and Amazon, contributed. The S&P 500 index climbed 0.5%, also hitting fresh highs during the week. Dow industrials fell 0.3%, weighed down by Goldman Sachs (GS), General Electric (GE) and Home Depot.
Netflix Smashes Subscriber Growth Forecasts
Internet television network Netflix added 5.2 million net new subscribers in the June quarter vs. Wall Street's consensus estimate of 3.22 million. It also guided higher for the current quarter, with a forecast of 4.4 million net new subscribers, topping the consensus view for 3.97 million. Bulls pointed to its strong subscriber growth, while bears voiced caution about its ballooning video-content obligations, including original TV series like "Stranger Things" and "Glow." Netflix ended Q2 with 103.95 million subscribers worldwide, including 51.92 million in the U.S. and 52.03 million in foreign markets. Netflix's international streaming subscribers topped those in the U.S. for the first time in Q2.
Netflix skyrocketed 17% to record highs for the week.
Amazon Teams Up With Sears: Home Depot, Best Buy Hit
Sears will sell Alexa-enabled Kenmore appliances via Amazon, sending its shares soaring on Thursday but the gave up most of that gains on Friday. But Whirlpool (WHR) and major sellers of appliances Home Depot, Lowe's (LOW) and Best Buy (BBY) were hit. Home improvement chains Home Depot and Lowe's had been seen as Amazon-proof, or at least Amazon-resistant. Best Buy, which has bounced back in recent years from Amazon's initial onslaught, was hurt earlier this month on news that Amazon is creating a Geek Squad rival.
Amazon appears to be getting more government attention as its size and scope grow, with an FTC probe and antitrust rumblings.
Microsoft Crushes Earnings Estimates
Software giant Microsoft earned 98 cents excluding items for the June fiscal fourth quarter, up 42% year over year and well above views for 71 cents. Revenue rose 9% to $24.7 billion after forecasts for $24.27 billion. Microsoft credited demand for cloud-computing services like Azure and Office 365 as well as its acquisition of LinkedIn. But the Dow component gave cautious guidance for the current quarter. Shares dipped Friday but remain in buy range.
RELATED:
Microsoft Crushes Earnings Estimates; Stock Dips On Outlook
General Electric Dives To 21-Month Low
General Electric fell 2.9% on Friday after saying full-year EPS is trending to the low end of its $1.60-$1.70 target, citing oil and gas weakness. GE reported smaller earnings and revenue declines for Q2, though some analysts cited some weakness below the headline figures. Fellow industrial conglomerate Honeywell International (HON) also beat on top and bottom lines, but guided full-year estimates slightly higher. Honeywell shares rose Friday, retaking a buy point.
RELATED:
General Electric Stock Dives On Earnings Outlook
Visa, American Express Beat Estimates
American Express beat on the top and bottom lines, though provisions for losses jumped 26% due to loan-portfolio growth and a rise in the rate for lending write-offs. Visa earnings also topped, with strong cross-border travel – helped by the stronger dollar – and global payment volumes driving results, according to Mizuho analyst Thomas McCrohan. The company also hiked its full-year revenue growth outlook above views. Visa and American Express, both Dow components, rose 2.8% and 0.4%, respectively, with both still in buy range.
TD Ameritrade, E-Trade Jump On Earnings
TD Ameritrade (AMTD) stock broke out from a long consolidation on July 18 as the online broker beat on both the top and bottom lines, even as industry trading fees for stocks and ETFs have plunged this year. Charles Schwab (SCHW) that day matched views, with shares falling below a 42.71 buy point that they had cleared in late June. E-Trade (ETFC) shares gapped up to make a new 52-week high on Friday after the company scored an overall beat Thursday. Shares are now out of buy range.
ASML, Qualcomm, Skyworks Kick Off Chip Earnings
Chip-gear maker ASML (ASML) and wireless-communications chipmaker Qualcomm (QCOM) were the first major semiconductor industry players to report June-quarter earnings this year. ASML rose to record highs after posting better-than-expected sales and earnings during the second quarter. Qualcomm disappointed with its current-quarter profit outlook that came up short of views, even though it beat estimates for its fiscal Q3. Apple (AAPL) chip-supplier Skyworks (SWKS) reported better-than-expected fiscal Q3 sales and earnings and guided higher for the current period.
Novartis, J&J
Drug giants Novartis (NVS) and Johnson & Johnson (JNJ) reported better-than-expected earnings Tuesday. Dow component J&J reported adjusted income of $1.83 a share, topping views by 4 cents. But sales of $18.84 billion were light. Novartis' $1.22 a share, excluding various items on $12.24 billion in sales, topped analyst views.
Both drug stocks rose during the week, but were both still in buy range as of Friday's close.
Banks' Trading Woes
Goldman Sachs' fixed-income trade revenue plunged 40% in Q2, the second straight quarter that the trading-heavy bank said it misread the market. Weaker trading and net-interest income also hurt Bank of America (BAC), though Fed rate hikes have helped the bank and it said it expected net-interest income to rise in Q3. Morgan Stanley (MS) reported that trading revenue fell, but less so than rivals. JPMorgan (JPM) and Citigroup (C) have also signaled caution amid slow loan growth and longer-term bond yields, which can indicate flagging confidence over the chances for long-term economic gains. Morgan Stanley cleared a buy point while Goldman undercut its 50-day and 200-day moving averages.
Check Point's Soft Outlook Hits Cybersecurity Stocks
Check Point Software (CHKP) reported better-than-expected second-quarter earnings on Thursday, but gave weak guidance for the current Q3. Check Point tumbled 7.2% that day, falling below its 50-day moving average. Check Point on Wednesday briefly topped a buy point but closed below that trigger. So did four other cybersecurity stocks that day. Those stocks, along with Proofpoint (PFPT), retreated modestly on Check Point's warning.
United Guidance Slams Stock
United Airlines (UAL) on Tuesday offered a disappointing third-quarter unit-revenue forecast as airline competition picks up heading further into the summer, sending its shares plunging 10.4%. Delta Air Lines (DAL) and American Airlines (AAL), which have remained bullish on the key metric, fell significantly as well. United said it could take at least several months out for plans — like expanded service to different parts of the U.S. and the rollout of cheaper "basic economy" fares — to pay off.
UnitedHealth Earnings Jump After ObamaCare Exit
The No. 1 U.S. health insurer's earnings per share rose 25.5%, topping forecasts. Revenue grew 8% to $50.05 billion, roughly in line, though it was the smallest gain in nine quarters. UnitedHealth (UNH) has exited the ObamaCare exchanges, though it's a big player in Medicare and Medicaid coverage. The Optum services unit saw a 9.9% revenue rise. UnitedHealth now sees adjusted full-year profit of $9.75-$9.90 a share. Analysts had expected $9.81 before Q2's results.
UnitedHealth rose 2.6%, with Republicans' health care struggles also influencing shares of insurers and hospitals.
RELATED:
UnitedHealth Raises Full-Year Target After Q2 Earnings Jump 25.5%
Rail Looks Low Energy
Top U.S. rail companies topped quarterly forecasts, but CSX (CSX) said crude oil train shipments have fallen to zero and hinted that returns to shareholders may be more cautious. Union Pacific (UNP) predicted nearly flat volumes in Q3 as coal shipments stabilize, but it still sees second-half volumes improving over the first half. Kansas City Southern (KSU) benefited from auto production and energy market reforms in Mexico. CSX fell 6.2% for the week while Union Pacific lost 4.3%. Kansas City Southern edged up 0.4%.
News In Brief
Vertex Pharmaceuticals (VRTX) stock rocketed 21% to an all-time high Wednesday on strong Phase 1 and 2 data in the trial of a cystic fibrosis treatment. The triple-drug combo aims to treat the genetic disease's underlying cause.
Intuitive Surgical (ISRG) easily topped analysts' second-quarter views Thursday with adjusted income of $5.95 per share on $756 million in sales. Shares of the maker of robot-surgical systems fell 3% Friday afternoon.
Chipotle Mexican Grill (CMG) shares tumbled 12.8% to a four-year low on reports that the fast-casual chain temporarily closed a restaurant in Virginia following reports that diners there had gotten sick. The once-trendy fast-casual burrito eatery has been trying to mend its reputation and sales after a food-borne illness scare that began in 2015.
Harley-Davidson (HOG) cut its motorcycle shipment outlook to 241,000 to 246,000 units to dealers this year, a 6% to 8% drop, down from prior guidance for a flat to modest decline. The iconic motorcycle brand reported a 4.5% EPS decline but that was better than estimates for $1.37. Sales slid 5% to $1.77 billion. Retail sales of new motorcycles tumbled 9.3% amid "weak industry conditions." Shares fell 6.5%.
