Julex Weekly Market Review – July 21, 2023

The Dow gained for the tenth straight day on Friday, up 2.08% on the week.  The S&P 500 Index gained 0.69%, while the Nasdaq Composite index rose by 0.54%.  

Bank Earnings Reports

Amid high interest rates among other factors, many banks released positive earnings reports alongside other banks such as JP Morgan Chase and Wells Fargo last week.  

Bank of America saw its net interest income rise 14% in the second quarter, as the stock price increased 4.2% on Tuesday.  Morgan Stanley’s stock price jumped by over 6% on Tuesday , as its net revenue rose 16% during the quarter despite a 14% drop in profits.  Capital One also beat projections with its  net interest income increasing by 9%. .  

Goldman Sachs’ revenue dropped 58% in the second quarter  of 2023 compared to that of 2022 to $1.1 billion.  It was the only large bank to miss estimates in earnings per share.  However , the stock price rose almost 1% on Wednesday, in part reflecting the extent of the pessimism prior to the earnings report. 

Tesla Earnings Report

Tesla stock fell 9.7% on Thursday after profit margins continued to fall.  Reuters reports the automotive gross margin excluding regulatory credits dropped from 19% to 18.1% during the second  quarter of 2023, down from 26% a year prior.  

The dip in margins comes as Tesla tries to increase its electric vehicle market share and develop AI self-driving technology. CEO Elon Musk believes this new self-driving technology will make up for the lost profitability, but numerous crashes and other challenges have led to skepticism about the implementation of this plan.  

Netflix Earnings Report 

Netflix shares dropped 8.9% during after hours trading on Wednesday following the release of their earnings report.  While the company added 6 million subscribers in the quarter, which exceeded estimates, the  revenue per subscriber dropped 3%. As a result, the streaming giant missed revenue estimates by around $100 million.  The company’s third-quarter projections were also below analyst expectations.  

This report comes amid the writers and actors strike, which analysts expect Netflix to weather better than other media companies due to a higher amount of available content, especially from international sources.  

Housing Market Update

House prices continued to rise in June  due to a lack of supply as many homeowners had no incentive to sell their homes because of their low mortgage rates.  However, the June’s sales pace was the lowest for any June since the housing crisis in 2009.  Meanwhile, prospective buyer traffic is at the highest since June 2022.  

While builder confidence reached the highest in a year amid high demand, the growth in the figure has slowed down, as builders were getting frustrated by the availability of funds and material shortages. .  Single-family housing starts dropped 7% in June, and the amount under construction fell to the lowest in two years.  Multi-family housing starts also dropped by  11.6%.

What Will Happen Next Week

The Fed will meet on Tuesday and Wednesday, and is largely expected to raise interest rates to between 5.25% and 5.50%, as it attempts to quell inflation after a pause in the June meeting.  

Earnings reports next week include Microsoft, Alphabet, Visa, Verizon, Ford, Meta, Coca-Cola, Boeing, Mastercard, McDonalds, Comcast, T-Mobile, Intel, ExxonMobil, and Chevron. 

The BEA will release an advanced estimate Thursday about the second-quarter US GDP.  

Are you a financial advisor or institutional investor?

You must be a financial advisor or institutional investor to visit this site.