Stocks continue to rally as the Dow gained 70 points to close at 18,120. Trading volume was a bit lower but with the NASDAQ hitting highs again this uptrend seems to have leadership which in turn could give it legs. We like legs!
Netflix continues to turn traditional TV on its head by posting solid 2nd quarter numbers. Subscriber growth added 3.27 million more souls to bring the total to 65.55 million and the company continues to invest in content through its original programing initiative. These investments however reduced profits which fell 63% even while revenue was up 23%. Netflix stunned the gurus by upping its forward new subscriber estimates from 600k to 900k. Netflix continues to defy the hexperts as even the unflappable Hedge fund manager David Einhorn (aka Silky Seymour), was vexed over the recent rise in Netflix shares as he appears to be betting against the stock and thanks to this strong earnings report is losing his shorts in a very public way.
Single family home builders continue to feel confident about business even as mortgage rates move higher. The latest builder sentiment index hit a 10 year high coming in at a reading of 60 up from 53 a year ago. David Crowe, Chief economist at NAHB said that while builders face challenges like land and labor shortages the reading is in line with data showing stronger sales in both new and existing home markets as well as continued job growth.
Citigroup reported good earnings today continuing a trend of big bank blowouts. Citi posted an increase in net of 18% and saw revenue rise by 1%. The company continues to improve its margins as this was their best profit report in over 8 years since the 2008 near death experience. Both top and bottom lines beat estimates as restructuring efforts are paying off.
Gas pipeline giant Kinder Morgan reported Q2 numbers that missed both top and bottom lines due to weak energy pricing in both nat gas and oil. The company posted a 12% drop in revenue and a 44% drop in profits. Despite all that Kinder upped its quarterly dividend by 14%.