Before the Open (Jul 19)

Good morning. Happy Tuesday.
The Asian/Pacific markets closed mixed. Japan rallied 1.4%; Indonesia and New Zealand also did well. Hong Kong dropped 0.6%. Europe currently leans to the downside. Germany and Italy are down more than 1%; France, Austria, Switzerland and Spain are also weak. Greece, Turkey and Hungary are up. Futures here in the States point towards a down open for the cash market.
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The dollar is up. Oil and copper are up. Gold is up; silver is down. Bonds are up.
Earnings season is picking up. Netflix missed their already-reduced projections and lowered guidance going forward. The stock is down about 13% in premarket trading. They signed up less people and also lost some subscribers with their price increase. I’m not surprised for two reasons: 1) Some of their competitors have increased their advertising, and 2) I’ve heard a lot more talk lately about Netflix being kosher with people sharing their passwords – almost to the point of encouraging it. This told me they were losing people and hoping to retain some by letting everyone know it was ok to share. NFLX has dropped to its May and June low, which is about 5 bucks above its ytd low.
IBM is up after releasing earnings – not because they knocked the ball out of the ball park, but because they successfully guided low enough so they could beat their guidance. The stock has moved from $115 to the $160’s the last five months, so it does make you wonder how companies will set guidance going forward. Should they take the hit in the near term by purposely shooting low and then enjoy a ride up with lowered expectations…or be optimistic and aim high, knowing they’ll have a tough target to hit? Managing exceptions is a full time job for publicly traded companies.
The S&P has rallied about 170 points since bottoming in June. Volume has been very light lately, and volatility has been nonexistent. There’s an old adage (“don’t short a dull market”) that warns us to not get bearish here, but it’s hard to justify being very aggressive on the long side either. Given how quiet things have been, the market could jump (in either direction) at any time.
My bias remains to the upside, but it feels like we’re in nose-bleed territory. No way an I abandoning my SPX target, but in the near term I’d be a little more careful. More after the open.
Stock headlines from barchart.com…
Netflix (NFLX +0.43%) plunged 12% in pre-market trading after it said it sees Q3 international streaming net adds of 2 million, below consensus of 2.54 million, and said it sees Q3 EPS of 5 cents, weaker than consensus of 7 cents.
Seagate Technology PLC (STX +4.33%) was upgrraded to ‘Neutral’ from ‘Sell’ at Citigroup.
Fiat Chrysler Automobiles NV (FCAU -0.30%) dropped 4% in pre-market trading as U.S. authorities are investigating the company on allegations it inflated vehicle sales figures.
International Business Machines (IBM +0.05%) climbed nearly 3% in after-hours trading after it reported Q2 operating EPS of $2.95, higher than consensus of $2.89.
Super Micro Computer (SMCI +1.31%) sank 18% in after-hours trading after it reported preliminary Q4 adjusted EPS of 15 cents-17 cents, well below an April 28 estimate of 46 cents-58 cents.
VMWare (VMW +0.81%) jumped 8% in after-hours trading after it reported Q2 adjusted EPS of 97 cents, better than consensus of 95 cents.
Spirit Airlines (SAVE +0.74%) lost over 6% in after-hours trading after it reported Q2 TRASM (total revenue per available seat mile) down -14.3% y/y at the lower end of initial guidance range.
Hyatt Hotels (H +0.77%) was downgraded to ‘Hold’ from ‘Buy’ at Stifel.
Yahoo! (YHOO +0.61%) rose nearly 1% in after-hours trading after it reported Q2 revenue ex-TAC $841.2 million, higher than consensus of $839.6 million.
Rambus (RMBS +0.47%) slipped nearly 3% in after-hours trading after it reported Q2 adjusted EPS of 15 cents, higher than 13 cents, but then forecast Q3 revenue of $75 million-$80 million, below consensus of $84 million.
EMC Corp. (EMC -0.04%) gained over 1% in after-hours trading after it reported Q2 adjusted EPS of 45 cents, higher than consensus of 42 cents.
Enviva Partners LP (EVA -1.65%) was rated a new ‘Buy’ at DA Davidson with a 12-month target price of $28.
Wynn Resorts Ltd. (WYNN +4.81%) lost 1% in after-hours trading after MGM Resorts International launched its easyPLAY Mobile Tournaments and is the first regulated casino to host an interactive digital gaming platform.
Hudson Technologies (HDSN +7.98%) surged over 30% in after-hours trading after the U.S. Department of Defense awarded Hudson a 5-year contract worth up to $400 million.
Monday’s Key Earnings
Bank of America (NYSE:BAC) +3.3% after topping expectations.
Charles Schwab (NYSE:SCHW) +0.3% on rising rates.
EMC Corp. (NYSE:EMC) +1.9% AH following positive Q2 results.
Hasbro (NASDAQ:HAS) -6.6% with concerns over boy sector sales.
IBM (NYSE:IBM) +2.4% AH as the shift to cloud paid off.
Netflix (NASDAQ:NFLX) -11.6% AH on slowing customer growth.
VMware (NYSE:VMW) +9.9% AH beating profit estimates.
Yahoo (NASDAQ:YHOO) flat AH awaiting the firm’s next moves.
Today’s Economic Calendar
8:30 Housing Starts
8:55 Redbook Chain Store Sales
Today’s Earnings here
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers