It was a mixed bag as the Dow was up and the NASDAQ was down. At the close the Dow tacked on another 49 points to 18,053. Trading volume was higher across the board making this an accumulation day for the Dow but a distribution day for the NASDAQ. Banks and material stocks were up while techs were down.
The big news is actually a chain of events. An oil worker strike in Kuwait pushed up oil prices which in turn pushed up currencies of oil dependent countries like Canada and Australia. This in turn brought the US dollar lower which boosted the price of gold and silver. While gold was up about 1.4% or $17 an ounce to $1,252, silver jumped over 4.4% in value to close at a one year high of $16.95. It was “hi ho silver……..away!” The reason for the big jump in silver was the weak US dollar but historically silver tends to lag gold and then make big moves to catch up with gold.
In earnings reports Netflix was hammered after an earnings report that disappointed the gurus in terms of revenue growth even as profits came in better than expected. Netflix now has over 81 million global users and while this is a high water mark the growth rate of new customers is slowing down. Netflix had 24% higher revenue and earnings were down 8%. The stock was whacked and fell 13% today. Netflix has been a growth stock with a PE ratio of 417 which is high enough to mean that any signs of weakness in the story will whack the stock. A PE in tripple digits usually means the company is priced to perfection.
IBM also reported weak sales and shares were down 6% even after beating earnings estimates. Big Blue is undergoing a huge shift from legacy tech to cloud and big data and while they are making progress the effort has taken longer than expected. Analyst sold off shares today because IBM’s forward guidance was not up to snuff.