Both the Dow Jones Industrial Average and the Standard & Poor’s 500 Index closed at record highs last week. All three major indices posted a positive week – the Dow rose one percent to 43,276 – the S&P gained .9% to 5,865 – while the NASDAQ Composite added .8% to 18,490. All three of these averages have now risen for six consecutive weeks, their longest win streaks of the year.
Corporate earnings were a major factor behind the gains in the stock market last week. Several major banks, including Bank of America and Citigroup, reported better-than-expected earnings and the health in this group is seen as positive for the overall market. The star of the earnings show last week, however, was Netflix. Shares of Netflix (NFLX) jumped over 11% to a record closing high after the company reported both earnings and revenues above consensus expectations. Additionally, total paid subscribers topped estimates, and Netflix said it sees continued growth.
Earnings Season really kicks into high gear this week. Companies scheduled to announce results include Coca-Cola, Boeing, AT&T, Verizon Communications, International Business Machines, Honeywell, 3M, United Parcel Service and Tesla. Texas Instruments and Lam Research will give us a look at the semiconductor group after divergent reports from ASML Holding NV and Taiwan Semiconductor Manufacturing last week created volatile trading within the sector.
Although it is still very early, we do want to peek at the earnings scoreboard. With 14% of companies in the Standard & Poor’s 500 Index reporting actual results, 79% have reported a positive EPS (Earnings Per Share) surprise, which is above both the 5-year average of 77% and the 10-year average of 74%, and 64% of S&P 500 companies have reported a positive revenue surprise, according to FactSet.
Get ready for another busy week of earnings reports!
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All the best – Southport Station Financial Management, LLC