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Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
Stocks finished nearly unchanged today as investors digested a round of middling earnings reports from McDonald's (NYSE: MCD ) and others. The Dow Jones Industrial Average (DJINDICES: ^DJI ) finished down 7 points, or 0.05%, its second flat performance in a row as investors awaited tomorrow's delayed September jobs report. With the S&P 500 at record highs, the Federal Reserve taper hanging in the balance, and another debt-ceiling crisis potentially around the corners, investors seem unlikely to bid stocks significantly higher without some strong data, either macroeconomic or earnings-related, to convince them of better times ahead.
Back to earnings reports. McDonald's stock finished down 0.6% after it came up short in its quarterly update. McDonald's has struggled to boost sales recently, and today was no different, as revenue in its third quarter grew just 2% to $7.32 billion, shy of estimates at $7.33 billion, while same-store sales ticked up 0.9%. Earnings per share of $1.52 beat estimates by a penny, but the fast-food chain's recent initiatives into healthier foods and chicken wings didn't seem to be moving the dial significantly. CEO Don Thompson called the global economy "challenging" and said that same-store sales were expected to be similar this quarter, indicating that slow growth may be here for at least a few more quarters. McDonald's has been one of the poorer performers on the Dow this year, gaining just 7%.
After hours, Netflix (NASDAQ: NFLX ) shares were soaring, up 11% following yet another blockbuster earnings report. The company added another 1.3 million domestic streaming subscribers in its third quarter to reach 31.1 million, better than rival Time Warner's HBO with its 29 million paying customers. Earnings per share quadrupled to $0.52 a share, beating estimates of $0.48, while revenue increased 22% to $1.1 billion, in line with expectations. Netflix shares had moved up 6.4% during the regular trading session as investors anticipated a strong report, giving the company an 18% gain over the past 24 hours. The stock is now up more than 500% over the past year, prompting CEO Reed Hastings to note the "euphoria," perhaps exaggerated, around the stock, as he has twice seen his company's shares crash before.
Finally, Apple (NASDAQ: AAPL ) shares gained for the ninth day in a row, up 2.5%, and hit a nine-month high on an upgrade from Societe Generale from "hold" to "buy." Analyst Andy Perkins said he thought the stock still had room to run because of better-than-expected iPhone demand and bumped up his price target. With an iPad event scheduled for tomorrow and earnings out next Monday, the tech giant should stay in the headlines over the next few days, but Apple's growth strategy still seems suspect. The company has faced compressing gross margins as average selling prices have come down on the iPhone and iPad, and without a new category, it seems unlikely to be able to grow profits significantly. Some may argue that the stock is a value play, but declining profits tend to make a cheap share price irrelevant.
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