Futures were flat heading into the open this morning. After Monday’s market sell-off following a massive fall from the major equity indexes, the Dow, in particular, impressively recovered nearly all of its losses by yesterday’s closing bell. Nasdaq and the S&P 500 have also regained strength. Find out what’s concerning investors, and what’s exciting them in the full article.
As second-quarter earnings reports continue, Netflix (NFLX) came in with modest numbers, despite beating expectations on subscriber growth as it ventures into more original content and gaming.
Meanwhile, Chipotle (CMG) also reported its quarterly earnings yesterday, impressively surpassing expectations as in-person dining has increased. What could be in store for the popular Mexican Grill and the dining industry as whole, considering the current rising infection numbers?
Learn more about these eventful stories from Wall Street and all the crucial details in the full article below.
The Dow ended yesterday with a more than 500 point gain, reversing Monday’s decline, as the other indexes bounced back as well...
As investors raced in to buy shares that had been knocked down in Monday’s severe sell-off, stock prices in the U.S. climbed dramatically yesterday, with the S&P 500 having its best day in over four months. Even as the fast-spreading Delta strain of the coronavirus throws a shadow over the country’s economic prospects, the rise showed that many investors still see few appealing alternatives to equities.
The Dow Jones Industrial Average rose 549.95 points, or 1.6%, to 34511.99, while the S&P 500 index rose 64.57 points, or 1.5%, to 4323.06. That was the index’s most significant one-day increase since March 26th and nearly reversed Monday’s decline. The Nasdaq Composite, heavily weighted in technology, rose 223.89 points, or 1.6%, to 14498.88. All three indices are within 2% of their July 12th highs, demonstrating the strength of the equities market surge in the first half of the year. In 2021, the S&P 500 has thus far increased by 15%, while the Dow has risen by 13%. These gains are difficult for many investors to resist in a low-interest-rate environment.
As the recovery is underway, analysts said yesterday’s gains indicated the belief that Monday’s selloff was exaggerated, while concerns about stock market values remain. In a recent interview, Art Hogan, chief market strategist at B. Riley National, noted that markets tend to price in the worst-case scenario rather rapidly, especially during the summer. Other analysts say that Monday’s sharp decline is related to concerns that the spread of the delta variant will stifle the global economic recovery. If inflation continues to increase, it may lead to further restrictions on travel and activities.
Netflix surpasses expectations for payroll subscriber growth, despite modest revenue growth...
Netflix (NFLX) reported late yesterday that it had surpassed analyst expectations for new subscribers in the second quarter. However, the leader in streaming video reported profits coming up short. In the June quarter, NFLX attracted 1.54 million new customers, above its goal of 1 million. According to Wall Street, 1.15 million additional customers were expected in the quarter, compared to 10.09 million the year before. The streaming business boasts 209.18 million members globally at the end of the June quarter. According to the Refinitiv poll of analysts, earnings per share (EPS) are $2.97 against $3.16 predicted. Netflix’s overall revenue was reported as $7.34 billion against $7.32 billion expected. According to Street Account analysts, global paid net subscriber additions were 1.54 million vs. 1.19 million predicted.
Netflix had to contend with challenging comparisons to last year’s figures when it saw massive membership growth during the early months of the Covid-19 epidemic due to stay-at-home orders. NFLX aims to attract 3.5 million new streaming customers in the current quarter. On the other hand, Wall Street expects Netflix to attract 5.63 million new members in the September quarter. It attracted 2.2 million new customers in the same period last year.
The business has confirmed once more that it will enter the gaming industry. Netflix has described gaming as a “new content category,” likening it to the company’s push into original films, animation, and unscripted television. NFLX has said memberships would potentially include games at no additional cost. The focus will initially be on mobile gaming. “We’re as excited as ever about our movies and TV series offering, and we expect a long runway of increasing investment and growth across all of our existing content categories,” the company said.
Chipotle’s profitability rose above expectations, and revenues increased as dine-in customers are returning...
Chipotle (CMG) beat Wall Street forecasts in its second-quarter earnings report yesterday, mainly due to a significant return of consumers following COVID-19 restrictions and continued success in digital sales. According to a Bloomberg consensus estimate, CMG posted the following results compared to Wall Street expectations: $1.9 billion in revenue vs. $1.88 billion anticipated. Earnings per share (EPS) came in at $7.46 vs. $6.54 predicted, and same-store sales were reported at 31.2%, compared to 29.8% anticipated. Even as it faces criticism for boosting prices to mitigate the impact of the labor shortage, the restaurant business outperformed on all criteria. Chipotle’s stock climbed 1.5% in after-hours trading, bringing its year-to-date gain to 14%.
What accounts for these numbers is that dine-in consumers returned in force, resulting in a 31.2% increase in comparable restaurant sales; nevertheless, digital sales did not suffer due to the comeback. The rising category accounted for 48.5% of revenue, up 10.5% from the previous year. The business intends to add around 200 restaurants this year, and it made remarkable headway this quarter with 56 new outlets and one relocation, 45 of which including a drive-thru “Chipotlane.”
According to CMG, same-store sales growth in the low-to-mid double digits is expected in the third quarter if present trends continue. According to CEO Brian Niccol, the delta Covid variant has not yet impacted customer behavior. Chipotle’s CFO, Jack Hartung, warned analysts that rising meat and freight prices, as well as staffing shortages at its suppliers, will result in higher food expenses next quarter. However, these forecasts shouldn’t take away from their recent success as a restaurant in the face of a pandemic.
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