Markets Book Profits; Netflix, Intuitive Beat Estimates in Q2

Year-to-date, the Nasdaq is still +20%, the S&P +16%, the Russell +9% and the Dow +7.5%. Read More...

Thursday, July 18th, 2024

OK, so we’ll stop talking about a market rotation. Today was an old-fashioned profit-taking session. We can look at why in a moment, but first the tally: the Dow shed -533 points, -1.29%, the Nasdaq sold off -125 points, -0.70%, the S&P 500 was down -0.78% and the small-cap Russell 2000 lost -1.67%. Over the past couple sessions, we’d been seeing something of a turnaround from tech-heavy buying to more cyclical stocks, but not today.

There were no soul-crushing news items that led to this. So far in Q2 earnings season, companies are faring about as well as expected — in many instances, much better. No economic prints out before today’s opening bell. Even the higher-than-expected jobless claims has a silver cloud lining it: that only means the Fed is more likely to cut interest rates sooner, if the labor market is starting to get crushed under high-rate pressures.

Even with this selloff, the markets are doing quite well. Yes, the Nasdaq is only breakeven over the past month, but the Russell is up +8% and the Dow is +4.5% — on that “market rotation” that I promised I wouldn’t talk about anymore. But year-to-date, the Nasdaq is still +20%, the S&P +16%, the Russell +9% (so it was only up +1% for the year until a month ago) and the Dow +7.5%. Those are pretty good full-year totals, and we’ve got four and a half months left in 2024.

Netflix NFLX outperformed expectations this afternoon. It’s Q2 earnings of $4.88 per share fairly easily surpassed the $4.70 of the Zacks consensus (and the $3.29 per share reported in the year-ago quarter). Revenues of $9.56 billion improved on the projected $9.53 billion, +17% year over year. Paid memberships rose more than 4 million in the quarter, to 274.4 million. And guidance for next quarter was moved up to $5.10 earnings per share, above the previous $4.70 analysts had registered. Late traders initially sold the news, but the stock is back near breakeven at this hour.

Intuitive Surgical ISRG also posted a good Q2 after the closing bell. Earnings per share beat the Zacks consensus by a solid quarter — $1.78 versus $1.53 per share expected — on $2.01 billion in quarterly revenues, slightly outperforming expectations of $1.97 billion. The company’s daVinci system — a minimally invasive robotic surgical procedure device — grew by +17% year over year. After-market shares originally moved way up, but have since come back down to earth.

Tomorrow morning brings us more Q2 results. These include American Express AXP, which is expected to fetch both sales and earnings growth in the single digits, and is looking for its fourth earnings beat in the past five quarters. We’ll also hear from Dow component The Travelers Companies TRV an oilfield services companies SLB SLB and Halliburton HAL.

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