Updated from 1:12 p.m. ET, Tuesday, July 18.
Wall Street was split on Tuesday, July 18, with the Nasdaq setting itself up for a record closing high and the Dow Jones Industrial Average heading in the opposite direction.
The S&P 500 fell 0.04%, the Dow was down 0.32%, and the Nasdaq rose 0.3%.
Dow component Goldman Sachs Group Inc. (GS) declined after reporting a drop in trading revenue over its recent quarter. Revenue of $7.89 billion exceeded forecasts of $7.52 billion. Trading revenue dropped 17%, a far steeper decline than a 14% slide at JPMorgan Chase & Co. (JPM) and 7% dip at Citigroup Inc. (C) . Bond trading fell 40%.
Bank of America Corp. (BAC) posted higher quarterly profit than analysts estimated as lending growth and higher interest rates made up for a slide in bond-trading revenue. The bank earned 46 cents a share, 3 cents higher than expected, while net income increased 10%. Revenue of $23.07 billion exceeded estimates of $21.78 billion.
Financials shares were among the worst performers on Tuesday. Bank of America, HSBC Holdings PLC (HSBC) , Banco Santander SA (SAN) , U.S. Bancorp (USB) and Morgan Stanley (MS) were all lower. The Financial Select Sector SPDR ETF (XLF) declined 0.5%.
A failed repeal-and-replace bill from the Senate GOP dragged on healthcare stocks and increased worries over how effective the Trump administration can be in enacting its agenda. Major insurers including UnitedHealth Group Inc. (UNH) , Anthem Inc. (ANTM) , Cigna Corp. (CI) and Aetna Inc. (AET) were all lower on Tuesday.
Senate Republicans' efforts to repeal and replace Obamacare collapsed overnight after two more GOP senators, Mike Lee and Jerry Moran, announced they would not support the bill. The likelihood of Senate Majority Leader Mitch McConnell passing the bill in the near term already looked unlikely with Sen. John McCain recovering from surgery.
McConnell's plan to repeal Obamacare with a two-year transition period to write a replacement was also dead on arrival after three Republican senators voiced their dissent. President Donald Trump and McConnell had both backed a repeal-now, replace-later bill. The Republicans' inability to pass healthcare reform, a widely touted promise on the campaign trail, raises doubts over other agenda items, including tax reform.
Netflix Inc. (NFLX) traded at all-time highs after better-than-expected subscriber additions in its recent quarter. Netflix reported second-quarter revenue of $2.79 billion, an increase of 32%, and earnings of 15 cents a share. Revenue was slightly above a $2.76 billion consensus, while earnings missed estimates by a penny.
Netflix reported 1.07 million U.S. streaming subscriber net adds and 4.14 million international net adds, respectively smashing guidance for 600,000 and 2.6 million net adds. With U.S. subs standing at 51.92 million and international subs at 52 million at quarter's end, a majority of Netflix's streaming users reside outside the U.S. for the first time.
The stock rose 13.6% to $183.77.
Other tech stocks followed Netflix's lead to pull the Nasdaq higher. Alphabet Inc. (GOOGL) , Facebook Inc. (FB) , Alibaba Group Holding Ltd. (BABA) and Nvidia Corp. (NVDA) were higher. The Technology Select Sector SPDR ETF (XLK) increased 0.2%.
Lockheed Martin Corp. (LMT) moved slightly lower even after topping quarterly estimates on its top- and bottom-lines. The quarter was primarily driven by the near 20% increase in sales in its aeronautics unit, which includes its F-35 stealth fighter, the world's largest defense program. Lockheed's aeronautics business accounted for 41% of total group revenue and operating profits during the second quarter.
Harley-Davidson Inc. (HOG) declined by 9% after reducing guidance for the full year. CEO Matt Levatich said in a statement that a lowered outlook was the result of "U.S. industry challenges in the second quarter and the importance of the supply and demand balance for our premium brand." The motorcycle company anticipates shipments of 241,000 to 246,000 units to dealers this year, a 6% to 8% drop from 2016.
Overall, analysts anticipate another quarter of above-average strength. CFRA Research said it anticipates 6.2% year-over-year earnings growth among S&P 500 companies, better than a 1.7% earnings decline seen in the same quarter a year earlier. The energy sector is expected to lead the pack, recovering from weakness over the previous two years.
"If during the first real week of the earnings season (this week) we see a few stocks that disappoint, folks tend to extrapolate that we're going to see more disappointment as the earnings season wears on," Helene Meisler wrote over on our premium site for investors, Real Money. Get her insights with a free trial subscription.
So far, 9% of S&P 500 companies have reported on their second-quarter performance. Of those, 74.4% have exceeded earnings and sales estimates, according to Thomson Reuters data.
Import and export prices declined at a faster-than-expected pace in June. Import prices dropped 0.2%, double the decline of May. Export prices fell 0.2%, a surprise to analysts expecting a flat reading after a 0.5% drop in May.
Homebuilder confidence declined in July. The National Association of Home Builders' housing market index dipped to 64 in July, worse than consensus of 67. The index was at its lowest level since November 2016. The decline was largely tied to growing worries over the cost of materials, such as lumber. The measure sat at 66 in June.
Advanced Micro Devices Inc. (AMD) fell 3.6% Tuesday following a downgrade from Barclays. The firm downgraded the stock to a price target of $9, giving it a rating of underweight from equal weight, saying that the valuation was pricing in a high degree of success but there is little evidence of share gains.
Chipotle Mexican Grill Inc. (CMG) tumbled 7% Tuesday on news the company had closed a restaurant in Sterling, VA. after multiple reports of customers falling ill after eating there. Chipotle said it was "aware of a small number of reported illnesses" at the single location. Chipotle has had a difficult time recovering from a 2015 health food scandal.
Eat, Drink and Talk Money with Jim Cramer
Meet Jim Cramer at an exclusive reception at his Bar San Miguel in Brooklyn, N.Y., on Tuesday, July 25, from 6:30 p.m. To 9 p.m.
The evening will start with a screening of Jim's CNBC show Mad Money. Afterwards, Jim will join the party fresh off of the CNBC set to mingle, take photos and answer your investing questions.
Tickets include dinner, drinks and an autographed copy of Jim's book Get Rich Carefully.
Click here for more information or to buy tickets.
Where: Bar San Miguel, 307 Smith St., Brooklyn, N.Y.
When: Tuesday, July 25, 6:30 p.m. to 9 p.m.
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