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Stocks Slip on Mixed Start to Earnings Season

Jim Giaquinto

Stocks posted a second straight day of losses on Wednesday as an early read of earnings season is showing a mixed bag of corporate results.

For example, Bank of America had a positive report this morning, but it was tempered by a disappointment out of railroad staple CSX.

Welcome to earnings season!

Investors are a bit more skittish this time, though, as they worry about the impact of tariffs and slower global growth. Plus, we have some pretty tough comparisons from last year.

Therefore, a little caution seems understandable here in the very early stages of the season, especially after the runup we’ve had so far in July.

The S&P moved back under 3,000 on Wednesday by slipping 0.65% to 2984.42, while the NASDAQ was off 0.46% (or about 37 points) to 8185.21. The Dow slipped 0.42% (or around 115 points) to 27,219.85.

All of the major indices finished at their lows of the sessions.

Stocks rallied to new all-time highs right in front of earnings season, which added onto a very strong month of June. Investors are going to need some encouragement out of these reports to continue moving higher.

Unfortunately, they probably won’t get much help tomorrow after Netflix’s release. This was actually the most anticipated report of the day, though it didn’t come out until after the close.

The streaming giant missed expectations for global paid subscribers. It also lost 126,000 paid subscribers domestically.

As of this writing, shares of NFLX are down approximately 11% afterhours. Ouch! That’s going to leave a mark on Thursday.

Fortunately, more than 90% of earnings season is yet to come.

Today's Portfolio Highlights:

Options Trader: The Building Products – Concrete & Aggregates space is in the top 22% of the Zacks Industry Rank, and Martin Marietta Materials (MLM) is one of only two names from this area with a Zacks Rank #1 (Strong Buy). The company has a positive Earnings ESP of 2.06% for the quarter coming on Thursday, July 25th. Kevin decided to add a bull call spread in MLM on Wednesday by buying to open an October 230.00 Call AND selling to open an October 250.00 Call. If it gets to $250 or higher by the mid-October expiration, then this move will bring a return of 158%. See the complete commentary for more. 

Home Run Investor: "I know I promised some action today, but everything that I found just didn’t have what it takes to be a Home Run stock. The action in the broader market was one that kept most buyers on the sidelines, but the sellers really didn’t make a move until the close.

"The last five minutes of the day saw the only signs of conviction. Sellers hit stocks across the board and many stocks that were close to break even for the day slipped into 1% and 2% losses. The silver lining to all of this is that the market isn’t really moving all that much, it was up a little bit the other day and down a little today.

"With earnings season just getting underway, it is clear that investors are in wait and see mode. We are going to take the same stance for now."
-- Brian Bolan

All the Best,
Jim Giaquinto

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