US Market: A Record-Breaking Week 21st Oct ?
On Fri, 18 Oct 2024 - both Dow Jones & the S&P 500 surged to new record highs, sealing six straight weeks of gains.
Closing Time.
When US market officially closed at 4pm:
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DJIA: +0.09% (+36.86 to 43,275.91).
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S&P 500: +0.40% (+23.20 to 5,864.67).
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Nasdaq: +0.63% (+115.94 to 18,489.55).
The three major averages cinched their 6th straight positive week.
This also marked the longest string of weekly advances in 2024 for both the Dow and S&P 500, which respectively ended +0.96% and +0.85% higher. The Nasdaq climbed +0.80%.
Main Catalysts.
Two main catalysts helped US market to chart new highs. They were:
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Bank stocks.
Streaming Media Giant.
Prior to Netflix’s (FAANG’s) earnings release, I have a 14 Oct 2024 post on Wall Street’s take on Netflix would be earnings. (click here! to read. Help Repost ok - tks).
True to form, the online streaming media did not disappoint:
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Earnings per share (EPS) : was $5.40 vs $5.12 LSEG consensus vs $3.73 (Q3 2023).
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Revenue : was $9.83 billion vs $9.77 billion anticipated by analysts vs $8.54 billion (Q3 2023).
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Net income: was $2.36 billion vs $1.68 billion YoY (Q3 2023).
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Free cash flow (Non GAAP): was $2.19 billion vs $1.89 billion YoY (Q3 2023).
One of the “surprise” revenue stream came from its ad-supported membership tier, that jumped +35% QoQ.
Netflix did not expect ads to become its primary growth drive until 2026.
However, it did and the ad-tier accounted for > 50% of sign-ups in Q3 2024, in countries where it’s available.
Outlook - Quarter & New Year..
Equally important was its outlook for the current quarter (Q4 2024) and FY 2025.
Q4 2024 revenue: Expects revenue continue to rise +14.7% to $10.13 billion.
FY 2025 revenue: Forecast to be between $43 - 44 billion. This means a growth of between 11% - 13% from FY 2024 expected revenue of $38.9 billion.
According to Citibank’s analysis:
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Q4 2024 outlook exceeded Wall Street’s expectations.
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FY 2025 estimates are largely in line with consensus estimates.
With both earnings and outlook exceeding Wall Street’s expectations, Netflix climbed +11.09% on Friday.
All this as related by Ampere Analysis, Executive director, Richard Broughton: (to CNBC’s Squawk Box EU), is due to Netflix continued investments in content, despite a grim environment for the broader media landscape.
Its strategy is finally paying off now, especially in terms of enlarged membership pool.
Week of 21 Oct 2024
It will be a “tricky” week, heading into the 2nd last week of October.
No significant economic report this week, except for two fringe ones:
S&P 500 Global Flash PMI
(i) S&P Global Flash Purchasing Manager Index (PMI) report - Fri, 25 Oct 2024.
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September PMI was revised lower to 54.00 from a preliminary reading of 54.40. (see above)
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Easing from August PMI of 54.60.
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Preliminary forecast for October PMI remains stable at 54.00.
(ii) US: Michigan Consumer Sentiment - Sat, 26 Oct 2024.
This week, the spotlight will be on companies' earnings again.
As US market enters the heat of earnings season, whether it will continue to test new highs, hinges on the companies’ quarterly earnings.
Based on FactSet, so far > 70 of S&P 500 companies have reported their earnings and 75% have beaten expectations.
Companies reporting this week:
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$GE Aerospace(GE)$ - Tue, 22 Oct 2024. Interesting to find out if GE will outperform Boeing.
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Verizon (VZ)$ - Tue, 22 Oct 2024.
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$Tesla Motors(TSLA)$ - Wed, 23 Oct 2024 **. Highly anticipated !
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Coca-Cola (KO)$ - Wed, 23 Oct 2024.
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Int;l Business Machine (IBM)$ - Wed, 23 Oct 2024.It’s quantum computing progress.
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$Amazon.com(AMZN)$ - Thu, 24 Oct 2024 **. Highly anticipated !
Market Volatility.
Last week after (a) a stronger-than-expected retail sales data and (b) Netflix’s earnings beat, the $Cboe Volatility Index(VIX)$ - Wall Street fear gauge tracking the S&P 500 held steady at just over 18, below the key level of 20 that indicates heightened anxiety.
Will it remain “low” this week with a slate of Mega Cap companies’ earnings reporting in the pipeline, the continuous MIddle East tension and a looming US presidential election ?
All these could throw up surprises for investors over the next few weeks.
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Do you think US market will continue to trend higher this week ?
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Do you think both Tesla & Amazon will surprise US market with stellar earnings report ?
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