To The Moon

In my Tue’s post BofA Will Fuels US Market Rally Today?, I pondered whether Wall Street will focus on BofA “positives” and ignore the rest.

Well? They did and market went on to rally for the 2nd successive day.

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By the time market called it a day:

• DJIA: +1.06% (+388.56 to 34,951.93). This is its 7th consecutive rally-session. Fantastic!

• S&P 500: +0.71% (+32.19 to 4,554.98).

• Nasdaq: +0.76% (+108.69 to 14,353.64).

The partners-in-crime who fueled Tuesday rally were none other than:

• Bank of America.

• Morgan Stanley.

This leaves us with the “golden” question of “which company will continue to boost the US market to rally for another day?”

Following Mega Cap companies will be the catalyst to fuel Wed’s rally (I feel):

• Goldman Sachs.

• Netflix.

• $ASML Holding NV(ASML)$.

• $Tesla Motors(TSLA)$.

Due to limited real estate, I will cover 2 stocks (in BOLD) briefly.

• The KBW regional banking index has climbed and touched its highest intraday level since March 2022.

• Looking at its past month’s performance, the index bottomed on 23 Jun 2023 at $77.60 and it has not looked back since.

• It has chalked up an impressive +6.01% returns based off last month performance only.

• FYI - the KWB Index tracks stock prices of prominent banking companies and be a bellwether for banking industry watchers.

(1) $Goldman Sachs(GS)$.

Goldman Sachs past 6 months performances

It should not be too “difficult” to build on the momentum - initiated and fueled by JP Morgan, Wells Fargo, Citibank, Morgan Stanley & Bank of America.

Wall Street’s expectations: (see below)

• Earnings per share: $3.18, according to Refinitiv.

• Revenue: $10.84 Billion.

• Trading revenue: Fixed income $2.78 Billion; Equities $2.42 Billion, according to FactSet.

• Investing banking revenue: $1.49 Billion.

Bank’s Challenges:

• Like other investment banks, Goldman’s core but volatile businesses of “investment banking & trading” have slumped and does not look to improve in the short term.

• This is as a result of subdued issuance and IPOs; amid the Fed’s interest hikes.

• The bank has said that trading revenue was headed for a -25% decline in the quarter.

• With the banks’ planned exit from consumer banking,it still left to be seen how this will impact the bank overall.

(2) $Netflix(NFLX)$.

Netflix past 6 months performances

Wall Street’s expectations:

• Expects revenue of $8.28 Billion vs $7.97 Billion YoY.

• Revenue should improve with (a) Netflix crackdown on password sharing and (b) the launch of ad-supported plans. Market is curious to find out the quantum.

• In terms of bottom line, surprisingly analysts expect an EPS of $2.85, reflecting a decline on a year-over-year and sequential basis.

• Subscribers: 2.1 Million net additions.

• Analysts have revised Netflix’s target price within the $425 to $475 range.

Content Media’s Challenges:

• Continue to grow its customer base, geographically.

• Rising content costs,

• Regulatory pressures,

• Piracy.

• New entrants.

• Do you think all 4 Mega Cap companies will be reporting a credible set of earnings?

• Do you think the US market will continue to rally for the 3rd day this week?

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