Netflix Subscriber Numbers Add to a Perfect Storm of Positives
Stock pickers are being nicely rewarded now, but a danger lurks.
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Despite some concerns about potential tariffs on Canada and Mexico, stocks rallied nicely on Donald Trump’s first full day in office. There was a little sell-the-news action to start the day, and the Magnificent Seven names lagged, but they bounced back as the day progressed, and all the indexes finished with gains. Breadth was very good at better than 3 to 1, and stocks at 12-month highs expanded to more than 560 names.
The one disappointment was Apple AAPL, which fell over 3% due to concerns about slow sales in China. The index gains would have been substantially higher if Apple had not acted so poorly. Apple’s problem is that it has a very aggressive valuation and can’t afford any disappointments.
Small-caps were leaders, with a gain of nearly 2%. Falling interest rates helped the group as the 20+ Year Treasury Bond Fund TLT rallied for the fourth straight day. Interest-rate concerns have cooled off, and that is helping drive more speculative action in smaller stocks. Space-related stocks were the leading speculative group, while energy lagged.
The focus is now turning to earnings, and Netflix NFLX delivered good results and is trading up around 12% to a new all-time high after the close. The company had a huge number of new customer additions that far exceeded guidance. It is also doing a $15 billion buyback.
A good report like this, Trump-driven economic optimism, and falling interest rates are a perfect storm of positives to keep the market moving higher. Stock pickers are being nicely rewarded right now.
The biggest danger out there is the potential for tariffs, but nothing is certain at this point.
Have a good evening. I’ll see you Wednesday.
At the time of publication, Rev Shark had no positions in any securities mentioned.
