The Buzz on Business for Thursday, January 25^th, 2024

Stocks opened higher Wednesday morning but ground lower throughout the day on moderate volume to finished mixed. Tech stocks were lifted to a pretty good day by, you guessed it, Netflix. While the Dow was pushed lower by, you guessed it, 3M. Go figure!

Also, an economic indicator that’s spent the last two years wandering in the wilderness surprisingly entered the promised land yesterday morning.

Stock Market Report

For the high crime and misdemeanor of actually exceeding expectations for earnings and guiding to an increase in sales and profits for the coming year, The 3M Company got the privilege of being the worst-performing stock in the Dow Jones Industrials for the second straight day on Wednesday.

• The Dow Thirty finished down ninety-nine points, that’s a quarter of a percent, and they closed at 37,806.
• The S&P 500 managed a minuscule four-point gain, and it closed at 4,869.
• The Nasdaq Composite was up, although the top-line number masked some weakness as declines outpaced advancing stocks. It gained 56 points or four-tenths of a percent and closed at 15,482.
• The RSP—that’s the S&P 500 Equal Weight Index Fund fell about a half of a percent. The SOXL, the Philly Semiconductor Index with three-to-one leverage, was up 4.2%.

Bond Market Report

Rates continued the upward trend they’ve been on since Christmas

• The yield on the 2-year treasury closed at 4.38%. That’s up about three basis points.
• The 20-year was also up three ticks, and it now yields 4.523%

Oil, Gold, and Bitcoin

• Oil was up eighty-nine cents and now changes hands at $75.32 a barrel.
• Gold was off $12.50 and closed at $2,013.30.

We’re going to skip our report on Bitcoin this morning. The way Currency prices are reported does not lend itself to a report on the market close because Bitcoin trading never closes. The price for a given day prints at midnight, eastern time, when we have already published this podcast. We will begin reporting on a closing price for Bitcoin again tomorrow.

3M Crushed for Exceeding, Netflix Celebrated for Missing

Netflix reported earnings after the bell yesterday. The company earned $2.11 versus expectations of $2.21 a share in the fourth quarter. Remember how we always say that Wall Street is an expectations game? Do you remember that?

We were wrong!

The stock moved solidly higher in the overnight session and throughout the day on reports that it did exceed expectations on the number of new subscribers it had signed up. To us, here at World Headquarters, new subscribers seemed a pretty thin reed upon which to support the stock where it was, much less to send it 13% higher.

Netflix has a Price to Earnings ratio over 45, compared to around 20 for the broader market. It looked like it was priced for success. Especially since the day before, the market crushed 3M, which actually exceeded earnings. And has a PE Ratio of around ten.

But that’s why this is so much fun! And everyone here at the Ministry of Truth is busy rewriting everything we’ve ever written on Wall Street being an expectations game. Which, of course, it’s not.

Surprise: Manufacturing Back in the Promised Land

Analysts were caught off guard by a jump in the Standard & Poor's Global US Manufacturing PMI. The index hit 50.3, well above the anticipated 47.9, signaling an unexpected return to growth for the sector after almost two years of contraction. This positive development could fuel cautious optimism in the markets.

Take THAT Motley Fool!!!