Stocks rallied out of the gate overcoming a negative opening bias thanks to strong earnings reports and a delay in possible car tariffs on Germany. At the close the Dow was up 217 at 25,864. Trading volume was higher.
Cisco Systems reported earnings that were better than expected. Revenue was up 4% and net income gained 18% which sent shares gapping higher by 7%. The results boosted tech stocks in general and offset a drop in smaller chip companies that suffered after the White House banned US companies from selling certain chips to Chinese tech biggie Huawei now called “no way Huawei”. Cisco saw growth in product sales and its service business along with an increase in margins. The results cheered the gurus who had been worried about possible negative effects from global economic conditions.
Walmart also reported earnings today and the big retailer posted revenue growth of 1% which missed estimates and net income which, while beating estimates, declined 1%. Shares were higher on the news as comp stores sales were up 3.4% and e-commerce sales were up 37%. Margins did drop a bit thanks to Sam’s Club reducing its tobacco sales this year. Shares were higher on the report.
A recent article about the merger between Occidental Petroleum and Anadarko noted that most oil experts now feel oil prices will be stuck for a while in a range with $50 per barrel marking the bottom and $75 per barrel being the upper limit. Gurus note that when oil gets down to $50 per barrel the Saudi’s cut production but if it gets over $70 per barrel President Trump starts tweeting his displeasure. Oil today was $63 per barrel up a buck. US producers continue to crank out the crude from the Permian Basin in Texas/New Mexico which, if it were a standalone country, would now be the 4th largest oil producer in the world!