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Markets Up 3 of Last 4 Days; Netflix Mixed but Higher

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Thus far in our current trading week, the moral of the story is, “If at first you don’t succeed — try, try again.” After mounting a strong start to the Monday session, market indices lost their mojo and sank into negative territory by the closing bell. Today, the indices began in the green again, and this time they managed to hold onto — and grow — their gains.

The Dow gained a robust 754 points on the day, +2.42%, while the S&P 500 performed even better: +2.75%. The tech-heavy Nasdaq notched a 3-handle for the session, +353 points, +3.11%. Winning out for the second session in a row is the small-cap Russell 2000, which gained a very healthy +3.50% on the day. With this, the Russell appears ready to emerge from its bear-market throes.

Housing Starts beginning to cool is another measure of recognition that inflation may be (slowly) on the wane in the U.S., and as a result, it appears as if investors are back looking to buy this market, which remains well below its 200-day moving average. We know it’s also a fickle market — there’s no guarantee today’s positive bias is going to stick around tomorrow, let alone the rest of the week — but as long as events are spurring market activity, we may be emerging from a period of bearish intimidation.

After the closing bell, Netflix NFLX posted mixed results in its Q2 earnings report: earnings of $3.20 per share easily surpassed the $2.90 expected in the Zacks consensus, though revenues of $7.97 billion came in slightly beneath the $8.03 billion analysts were expecting. However, we still see revenue growth year over year, even with the company having lost 970K subscribers in the quarter.

Why that translates to good news is because the guide was for the company to lose around 2 million net paid adds in Q2. Netflix also took a $70 million charge on severance costs, due to the adjustment of its model in light of subscriber declines. But these were already things baked into the cake of a company down -60% year to date.

The return of its hit original program “Stranger Things 4” generated a jaw-dropping 1.3 billion hours viewed in the reported quarter; this reminds us that while companies like Amazon AMZN has mothballed their original production studio efforts, Netflix continues to bring forth high-quality series and features — a key to any entertainment brand. Further, Netflix’s $15.49 per month is the highest of any of its peers, such as Disney+, HBO Max or Peacock.

Don’t look now, but we’ve got a bit of a mini-rally emerging, we three of the past four sessions closing in the green. The Dow is up nearly 1000 points since its recent intraday lows Thursday morning, while the other main indices have grown by similar levels since then. So far, Q2 earnings season has been stronger (certainly less dire) than many had been predicting, so a continuation this way would go a long way toward keeping this rally alight.

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