2023-07-20 20:50:14
The star index of the New York place gained 0.47%, while the Nasdaq fell by 2.05% and the broader S&P 500 index by 0.68%.
The Dow Jones hadn’t had such a winning streak since September 2017.
“Netflix and Tesla releases have led to profit taking in the tech sector,” said Jack Ablin of Cresset Capital.
Tesla (-9.74%) did better than expected in the second quarter, but lower margins, mainly related to price cuts to gain or retain market share, offended investors.
JPMorgan analysts lowered their price target, saying Tesla’s declining profitability no longer justified its current valuation.
As for Netflix (-8.41%), it paid off for having missed the analysts’ target for second-quarter revenue.
In addition, if the group “remains the lion of streaming, it generates less income per subscriber and its costs could increase” in the event of an agreement to end the strike of actors and screenwriters, advanced Edward Moya, of Oanda.
With Tesla and Netflix having taken 136% and 62% respectively since the start of the year, the time had come for some to take their profits.
The slide of these two values dragged down all of tech with it, be it Meta (-4.27%), Amazon (-3.99%) or Alphabet (-2.65%).
“It’s a sector that has become very expensive and has taken off,” said Jack Ablin.
For him, the market’s reaction to these publications, which were generally welcomed by analysts, shows that “the bar is really very high” for these giant tech capitalizations.
Therefore, “we could experience other disappointments” with future publications, over an earnings season that has only just begun, recalls Jack Ablin.
The correction in the values of the new economy has blown into the back of the Dow Jones, which is taking full advantage of a rotation effect towards sectors and companies that have been neglected since the start of the year.
Among the most prominent, Johnson & Johnson (+6.07%), which did better than expected in the second quarter thanks to its activity of devices for medical use, but also the bank Goldman Sachs, and the Merck laboratory.
Elsewhere on the stock exchange, United Airlines (+3.23%) advanced after seeing its profit triple in the second quarter, thanks to the increase in revenue per passenger, but also to a drop in fuel prices compared to the same period last year.
As for American Airlines, it did the opposite (-6.24%), although it did better than expected and raised its forecast for the full year. This decline in the title was attributed in particular to the stagnation of business travel, which is struggling to regain its pre-pandemic level.
Like several other regional banks since the start of the week, the establishment of Salt Lake City (Utah) Zions (+ 9.98%), heckled during the spring banking crisis, reported a stabilization of its activity, as well as a growth in its deposits.
Results also exceeded expectations for the Cincinnati Fifth Third bank (+2.67%), which improved its net interest margin (interest received on loans deducted from those granted to depositors).
The bond market had a bad day, also subject to profit taking, after a jump since early July.
The yield on 10-year US government bonds, which moves in the opposite direction of their price, rose to 3.85%, against 3.74% at the close the day before.
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