A divided Wall Street sent the Nasdaq and S&P 500 to new records, while the Dow Jones Industrial Average retreated into the red.
The Dow was down 0.25% on Tuesday, July 18, weighed on by a slide in Goldman Sachs Group Inc. (GS) shares. The Nasdaq rose 0.47% to end at 6,344, surpassing the record close set on June 8. The S&P 500 inched 0.06% higher, scoring a new record of 2,460.
Dow component Goldman Sachs 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.
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 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 13.5% to $183.60.
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 0.4%.
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 nearly 6% 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.