Dow Outperforms on Valuation Pullback; CSX, COF Report
The blue-chip Dow outperformed the major indices for the first time in a while today, as market valuations have begun to get heady on the Nasdaq, S&P 500 and small-cap Russell 2000. The Dow gained +163 points on the session, +0.47% — for the ninth-straight trading day higher — while the S&P slipped -0.68%. The Nasdaq pulled up the rear, -294 points or -2.05% — its worst single-day performance since early March — while the Russell finally took a breather, -0.89%.
Tesla TSLA and Netflix NFLX, both which reported earnings after the close yesterday, helped sink the Nasdaq and S&P as investors apparently gave a valuation re-think to two of the top-performing stocks of 2023, year to date. Both companies beat earnings expectations and only Netflix came in a tad light on the top line, but by today’s close, Tesla was -9.7% and Netflix -8.4%. In one session, both are headed back to the share prices of a month ago.
Earlier today, Existing Home Sales for June came in beneath expectations to 4.16 million seasonally adjusted, annualized units, -3.3%, to its lowest print since January of this year. Total house inventory was unched month over month to 1.08 million units, -13.6% year over year. By region, only the Northeast put up positive numbers, +2%, while the West was down -5.1% and the South -5.4% (the Midwest was flat). Low inventories remain the story, although the average selling price reached the second-highest ever: $410,200.
Leading Economic Indicators were down for the 15th straight month — yeesh! — on a weakening consumer outlook and increasing unemployment claims (this is June data; the weekly jobless claims for July have been coming down). The headline number came down -0.7%, 10 basis points below the previous month and June expectations, to 106.1. As we’ve seen in other economic metrics, most everything not directly tied to the labor force is pointing to a shrinking economy. Perhaps this is yet another morsel atop the pile suggesting the Fed not raise interest rates again next week.
Railroad major CSX Corp. CSX reported in-line Q2 earnings after the closing bell today, to 49 cents per share. Revenues were slightly below expectations: $3.70 billion versus $3.73 billion. Operating income came down -13% to $1.48 billion. Intermodal and Chinese goods deliveries were down, while merchandise and coal deliveries made significant gains in the quarter. Shares are down -5.5% in late trading.
Capital One COF broke a four-quarter string of earnings estimate misses today by beating consensus on its bottom line: $3.52 per share easily surpassed the $3.31 analysts were expecting (though still down -20% year over year), on revenues in the quarter that were below the Zacks consensus — $9.01 billion versus $9.17 billion anticipated. Net interest margin came down -12 basis points on -2% lower deposits, which reached $343.7 billion. Shares have bounced around on the news; at present, they are +0.31%.
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