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  • Writer's pictureKevin Hurley

Marketbites: Dow Notches a 9-Day Rally


Portfolio Manager Commentary:

The Dow Jones Average jumped for a ninth consecutive day on Thursday after better-than-expected earnings results from drugmaker Johnson & Johnson. JNJ rose 6% after the news and hiking its full-year guidance. Another Dow name, Travelers, beat analyst estimates for revenue in the quarter, boosting the shares 2% higher. These stocks helped push the Dow to its best daily winning streak since 2017.

But the earnings results were uneven and that dragged down the S&P 500 and Nasdaq. Shares of Netflix dropped more than 8% after the streaming giant posted revenue that fell short of analysts’ estimates. Expectations were high into the report with the stock up nearly 50% on the year.

Tesla, meanwhile, tumbled 9.7%. Late Wednesday, CEO Elon Musk and other executives said on the company’s earnings call that vehicle production would slow during the third quarter due to shutdowns for factory improvements.

Of the S&P 500 companies that have reported earnings thus far, 74% have exceeded expectations, FactSet data shows. The strength in corporate earnings have created optimism for a soft landing for the economy.

Chart of the Day:

A lot of people still expect the U.S. to fall into a recession. But for the housing market, the recession could already be in the rearview mirror. Builders are sounding less downbeat than they were a year ago. The National Association of Home Builders on Tuesday reported that its index of industry sentiment rose to 56 in July from 55 a month earlier—still a depressed reading, but up from the low of 31 recorded in December, and the highest level since June last year.

On the basis of that Wednesday report, the Federal Reserve Bank of Atlanta’s gross-domestic-product tracking model now estimates that residential investment grew at a 0.1% annual rate in the second quarter from the first—a modest amount, but it would be the first gain since the first quarter of 2021. Moreover, increases in the number of new building permits suggests that growth in residential investment in the third quarter will be positive.

Source: WSJ

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