A decline in retail sales for September gave the market a reason to rest after gaining in four of five sessions, but losses were only slight as earnings season continues to impress
The NASDAQ slipped 0.30% (or almost 25 points) to 8124.18 and the S&P slipped 0.20% to 2989.69. The Dow was off by only 0.08% (or nearly 23 points) to 27,001.98.
Therefore, the indices gave back only a fraction of yesterday’s approximately 1% advance on the first (unofficial) day of earnings season.
Retail sales dipped by 0.3% last month, which was the first decline since earlier this year. Naturally, investors are concerned that this data suggests a weakening of the consumer, which has been holding up this economy in the face of slowing trends from areas like manufacturing.
However, it’s hard to be too disappointed when earnings season continues to outperform. On Wednesday, Bank of America (NYSE:BAC) advanced nearly 1.5% after beating expectations for third-quarter earnings and revenue.
Just yesterday, the earnings season got started on a high note with JPMorgan (NYSE:JPM) reporting a positive earnings surprise on record revenue.
But some of the biggest news today didn’t come until after the close.
For example, Netflix (NASDAQ:NFLX) easily beat third-quarter earnings expectations while revenue was inline. Most importantly, it added 6.77 million paid customers worldwide, which marked a nice turnaround from last quarter’s alarming drop.
Of course, the streaming’s giant’s whole world will look different next time it reports with services from Disney and Apple (NASDAQ:AAPL), among others, ready to come online. But for now, investors were happy with the report, sending shares higher by 8% afterhours as of this writing.
This Netflix news should provide the chance for a nice boost heading into Thursday. Of course, a bad headline on any number of topics could complicate matters. Let’s just hope that earnings season keeps crushing it and let the rest of the chips fall where they may.
Today's Portfolio Highlights:
Home Run Investor: The portfolio is looking for more aggressive names right now as Brian is “becoming increasingly bullish on the prospects of the market”. Therefore, on Wednesday he picked up Photronics (PLAB), a Zacks Rank #2 (Buy) worldwide manufacturer of photomasks (a key element in the manufacture of semiconductors). The editor made 15% on this name in one of his other portfolios and now he’s looking for more of the same in this one. PLAB has beaten earnings expectations three times and met once in the past four quarters, so there’s been no misses. Brian thinks more positive trade headlines could send this position sharply higher. Read the full write up for more and don’t be surprised if there’s another buy tomorrow.
Surprise Trader: Airlines have been popping up all over Dave’s screen here in the early days of earnings season. The editor doesn’t want to fight the trend, especially after United Airlines beat expectations last night. He decided to add Hawaiian Holdings (HA) with a 12.5% allocation. This Zacks Rank #2 (Buy) beat by more than 18% last time and has a positive Earnings ESP of nearly 5% for the next report coming after the bell on Tuesday, October 22. Read the full write-up for more on this new buy.
Technology Innovators: It looks like Roku (ROKU) could be headed back to the $150 range, especially after working out a deal that will make the Apple TV app available on its streaming platform. A bit of a pullback this morning gave Brian an opportunity to add this Zacks Rank #1 (Strong Buy) after yesterday’s big move. The editor is looking for more aggressive plays at the moment and believes that ROKU has further to climb. Read the full write-up for more.
All the Best,
Jim Giaquinto
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