After a week of rest, bulls were back at it this past week….with our relentless push up. Other than a modest pullback Thursday it was 4 days up! The Federal Reserve will cut rates this week and champagne bottles will be uncorked while others will eat some meatless meat. Speaking of!
As much as I liked that stock about a month ago it is now trading at NASDAQ 1999 type levels. It will be interesting to see how it reacts to earnings this week. But I digress!
Earnings season was in full throttle mode – it is interesting how the U.S. – China trade dispute has completely disappeared from the market’s conscious, as it’s all about EASING. Speaking of…
The European Central Bank laid the groundwork for further cuts to interest rates, announcing Thursday morning that it intends to leave official rates at “present or lower levels,” at least through the first half of 2020.
Earnings growth is pretty muted but no worries – more cheap money to throw at stocks means multiple expansion!
“P/E expansion is responsible for almost all the price appreciation this year, and stocks are starting to look a little pricey. Not yet to scary levels, but something to watch,” wrote Ed Keon, chief investment strategist at QMA.
“Price-to-earnings ratios have gone from 13 to 17.4, and earnings estimates are still too high for next year,” says Bob Doll, chief equity strategist and senior portfolio manager at Nuveen.
No market moving economic data this week.
For the week, the S&P 500 gained 1.65% and is up 20.7% for the year!
Here is the 5 day weekly intraday chart of the S&P 500 … via Jill Mislinski.
Just amazing data on “theFacebook” via Statista:
By the end of 2004, Thefacebook had more than 1 million registered users and the newly-founded company behind it had not only moved to Silicon Valley but also secured a $500,000 investment from PayPal co-founder Peter Thiel. After changing its name to just “Facebook” in 2005, the social network was opened to the general public in the fall of 2006, marking the start of one of the most remarkable growth stories in corporate history.
Within three years, the social network added 350 million users and in the summer of 2012 it became the first online service of its kind to reach 1 billion monthly active users. Until today, despite being shrouded in controversy over its (mis)handling of user privacy, Facebook just keeps on growing. In the past quarter alone, Facebook added 39 million monthly active users, bringing its total user base to an astonishing 2.41 billion.
The week ahead..
The rate cut is coming! The rate cut is coming! Sometimes markets buy the rumor, sell the news but since MORE rate cuts are coming because the market demands them we will see what happens.
Thursday will be ISM Manufacturing and Friday will come the July jobs report. Apple reports Tuesday.
Short term: back to rallying.
The Russell 2000 which reflects smaller companies vs the international focus of the larger two indexes remains stalled.
The NYSE McClellan Oscillator was choppy this past week even as the markets keep rallying.
Long term: can’t complain.
Charts of interest / Big Movers:
Oldie but goodie Coco Cola (KO) hit an all time high Tuesday after reporting better-than-expected earnings and raising its revenue forecast.
Caterpillar (CAT) fell 4.5%, Wednesday after the manufacturer of construction and mining equipment reported quarterly profit that fell below analyst expectations, continuing a trend of subdued performance in industrial stocks during the second-quarter earnings season. But that’s the old economy! On to the new which centers around cat pictures:
Facebook (FB) produced better-than-expected results. Related, the FTC formally announced a $5 billion settlement for deceiving users about its privacy practices. Facebook is also settling with the SEC for $100 mln over a probe into handling of user data. These dollars are rounding errors to a company this size – back to business as usual.
Railroad CSX (CSX) struggled last week (old economy) but UPS (UPS) ended sharply higher Wednesday after the company reported better-than-expected earnings and profit for the second quarter. Thanks Amazon! (new economy)
Snapchat (SNAP) – NEW ECONOMY! – rallied Wednesday after the social media giant reported better-than-expected earnings Tuesday evening.
Thursday, Tesla (TSLA) fell 13.6% after the Silicon Valley car maker late Wednesday reported second-quarter results that missed Wall Street expectations. Tesla said it lost $408 million, or $2.31 a share, compared with a loss of $718 million, or $4.22 a share, in the year-ago quarter. Sales rose to $6.3 billion, compared with $4 billion a year ago. (new economy but not involved enough in the critical mission of cat photo sharing)
Massive day for the “new economy” Friday:
Google (GOOG) soared 10% after reporting second-quarter results that topped Wall Street profit and revenue expectations and announcing a $25 billion share buyback program.
Twitter (TWTR) jumped 9% after the company posted better-than-expected user and revenue growth.
Starbucks (SBUX) ended up 9% after it bested forecasts for profit and sales late Thursday and raised its guidance for the year.
Amazon was a bit of a downer but remains on a path to eliminate 80% of store front retail in the next 2 decades.
Have a great week and we’ll see you back here Sunday!