Sometimes, investors just want results they can bank on – and today, the nation's largest banks certainly came through, helping push the S&P 500 (^GSPC 0.91%) to another new all-time high.
The impetus for today's bump higher was the fantastic earnings results from JPMorgan Chase (JPM -0.10%) and Wells Fargo, which delivered in a big way for the Dow Jones Industrial Average and the broad-based S&P 500. JPMorgan delivered a 31% increase in profits compared to the year-ago period, with Wells Fargo chipping in a not-too-shabby 19% improvement. As Foolish banking guru John Maxfield points out, for JPMorgan, it was a matter of stronger investment banking income, while for Wells Fargo, fewer loan loss provisions proved to be the decisive factor.
The results from some of the U.S.'s biggest banks was more than enough to counter the producer price index, which rose by 0.8% in June, and pushed the annual price of finished goods higher by 2.5%, which, as Fool Dan Caplinger notes, is its highest level in a year. If producer prices continue to rise, businesses may find it difficult to pass along price increases to consumers, ultimately hurting their margins.
By the end of the trading session the S&P 500 had advanced 5.17 points (0.31%), to close at 1,680.19, its 11th gain in the past 13 sessions.
Topping the list of today's best performers is rare-disease drug developer Alexion Pharmaceuticals (ALXN), which rallied 12.6% after rumors surfaced via a Bloomberg report that Roche may be arranging financing for a possible takeover bid. Both companies declined to comment on the rumors but, if it goes through, it will mark the biggest deal to date this year. Despite the overwhelming success of Alexion's Soliris, the most expensive drug in the world, I would strongly suggest keeping your distance, as these are nothing more than rumors here, and the current value of Alexion is well beyond five times where I estimate Soliris will peak in total sales.
Regeneron Pharmaceuticals (REGN 3.78%) also shared the limelight with Alexion, running 7.3% higher following an upgrade from Lazard Capital Markets, to buy, from neutral. Lazard points out that Allergan's setback with DARPin should clear the way for Eylea to continue to pick up big market share gains in treating wet age-related macular degeneration. I happen to agree that Eylea is certainly set to run wild for the remainder of the decade, but would consider tempering your expectations, as future growth appears more than baked into Regeneron's share price here.
Finally, streaming content provider Netflix (NFLX 2.44%) found its way back into the day's biggest gainers, jumping 5.4% after Barclays boosted its price target to $250, from $220, on the expectation of strong subscriber growth because of its original new shows. An added boost came from the news that Hulu no longer plans to sell itself, which could be a boost to Netflix, as it really doesn't have the cash to effectively compete against Netflix or Amazon. But, to continue with today's theme, I'm not in the least bit attracted to Netflix at its current price, and consider the potential for rising content costs, changing consumer habits, and its valuation, to be worrisome liabilities.
