April 21, 2014 – April 25, 2014
Earnings season is upon us and this dominated headlines, along with occasional jitters due to increasing tensions in Ukraine. So far, of 204 companies in the S&P 500 that have released earnings, 76% have exceeded analysts’ profit estimates and 53% have beaten sales projections.
On Monday, the Conference Board released its index of leading indicators showing a .8% increase in March, compared to February’s .5% increase.
On Tuesday, March sales of existing homes were down .2% month to month and 7.5% year over year. For the past seven out of eight months existing home sales contracted. Also on Tuesday, the S&P 500 had its first six-day winning streak since September.
On Wednesday, the streak ended on some disappointing earnings as well as sharply lower new home sales. For March, new home sales dropped 14.5% to 384,000 units, far below analysts’ expectations of 455,000. High home prices as well as higher mortgages rates are cited as factors in the slowdown.
On Thursday, tensions in Ukraine as well as profit taking held down the S&P 500. Also released was durable goods orders for March, showing an increase of 2.6% over February, beating expectations of 2.0%. Jobless claims for the week ending April 19 were up 7.9% to 329,000.
Now let’s take a look at some stocks.
Netflix (NASDAQ: NFLX) released their first quarter earnings on Monday and the numbers beat analysts’ expectations of $0.83 per share. The company had earnings of $0.86 per share with revenues of $1.27 billion. For the first 3 months of 2014, Netflix’s user base grew by 2.25 million domestic subscribers and 1.75 million international subscribers, bringing their total user base to 35.7 million. Eventually, Netflix expects their international user base to overtake their domestic users.
Facebook (NASDAQ: FB) yet again beats estimates for their first quarter financials. The company reported revenues up 72% year over year at $2.5 billion, earnings up 184% year over year at $885 million or $0.34 per share. Analysts’ projected $0.24 per share. The increased earnings mainly came from the company’s constantly improving ad business. Currently, more than 60% of Facebook’s ad sales come from mobile devices.
Allergan (NYSE: AGN), known for their Botox treatments, was the talk of the street on Monday as news was released that Valeant Pharmaceuticals is teaming up with Bill Ackman’s Pershing Square Capital Management to propose a takeover bid for Allergan. Valeant (NYSE: VRX) and Pershing Square released on Monday that they will be acquiring more than $4 billion of Allergan stock as the two pharmaceutical giants attempt to merge together. Once finalized, the merger would be one of the largest pharmaceutical deals in history, with Allergan valued at approximately $45 billion.
Apple (NASDAQ: AAPL) was on everybody’s watchlist on Thursday after the company released their 2014 second quarter earnings. The company announced earnings of $10.2 billion or $11.62 a share with revenues at $45.6 billion; beating revenue forecasts of $43.7 billion. With the better-than-expected earnings report, Apple gained over 8% in market value on Thursday.