Earnings and Brexit headlines caused markets to dance back and forth before closing with a 23 point gain at 27,025. Trading volume was lower. IBD has upgraded the market to “rally mode” and Isaac at BTS has a green light for high yield and equities.
Morgan Stanley continued a streak of positive results from bank and financial companies as it beat earnings estimates with a 6% revenue gain and a 3% increase in bottom line profits. Morgan Stanley struggled with the IPO market segment but made up for it with strength in fixed income underwriting and M&A. Morgan Stanley did better than Goldman Sachs which was hit by struggling investments in Uber and WeWork. "We delivered strong quarterly earnings despite the typical summer slowdown and volatile markets," CEO James “Hoppy” Gorman said. Going forward Hoppy added that he remained cautious given the ongoing trade talks between the US and China and the implications of low interest rates. Shares were higher on the news.
Shares of Netflix moved higher after a 31% revenue increase and a 65% jump in net profits. The results were positive in the sense that they were not as bad as feared with the emergence of a “streaming war” with Disney, AT&T and others. Subscriber signups hit 6.8 million in the quarter and total paid subscribers have hit 156 million globally up 21.4% year over year. CEO Reed Hastings noted that streaming is still relatively small compared to regular TV and so feels there is plenty of room for growth despite new competition.
Natural gas pipeline giant Kinder Morgan reported lower than expected results sending shares lower. Revenue was off 9% while net income was up 5%. While the nat gas pipeline segment grew 6.5% the C02, finished product and terminal segments saw lower revenue due to weak product pricing. Going forward the company maintained its cash flow estimates and noted that some projects were taking longer to come online than expected