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Resilient Market Bounces Back; Netflix Misses, Chipotle & United Beat

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Betting on near-term market resilience paid off once again today, as bargain shoppers after Monday’s plummet took advantage and picked up some of their wish-list stocks Tuesday. While not all the way back from yesterday, and off today’s session highs, the Dow grew +1.62%, +550 points, while the S&P 500, up for the first day in its last four, was +1.52%. The Nasdaq was even better, +1.57%, while the Russell bested all major indexes +3%.

Investors continue to digest coronavirus news, not only in states like Florida (which reported 20% of all new Covid-19 cases) but around the globe. Closing factories and cancelled flights returned us all to last year-s nightmare scenario, and clearly we’re not completely over the pandemic, emotionally speaking. But today was a different day; even with Building Permits disappointing in the Housing market, market participants held a stiff upper lip.

Q2 reports are also hitting the tape here in the after-hours, with Netflix (NFLX - Free Report) reporting its fifth earnings miss in its past six quarters, $2.97 per share versus $3.16 expected. Still, it’s far better than the year-ago read of $1.59 per share. Revenues topped expectations a bit, reporting $7.34 billion versus $7.31 billion in the Zacks consensus, for roughly 20% growth year over year.

However, the reason Netflix shares sold off more than 5% immediately upon the release was due to the low Q3 guidance in Net Subscriber Adds: 3.5 million now expected, down from the 5.5 million previous guide. Paid Net Adds in Q2 did top estimates: 1.54 million versus the company’s guide of 1.2 million previously. Perhaps this new guidance is more of the company setting easier goals to beat next quarter.

Chipotle (CMG - Free Report) also reported Q2 earnings this afternoon, beating on the bottom line by a solid dollar: $7.46 per share versus $6.46 expected. Revenues eked out a slight beat: $1.89 billion versus $1.88 billion in the Zacks consensus, up more than 37% year over year. Same-store sales grew 31.2%, better than expected. The Zacks Rank #3 (Hold)-rated company was up 3.8% on the news.

Digital Sales continues to be a strength for Chipotle, +10.5% in the quarter, now accounting for 48.5% of overall sales. This helped the restaurant chain obtain 24.5% growth in Operating Margins, a strong number in light of wage hikes for work staff in a highly competitive labor environment. It also represents the highest quarterly gain in Operating Margins in nearly six years.

And United Airlines (UAL - Free Report) has outperformed expectations in its Q2 earnings report Tuesday afternoon, with -$3.91 per share actually beating estimates of -$4.17, and far better than last year’s dismal -$9.31 per share. Revenues also topped expectations: $5.47 billion versus $5.31 billion anticipated. Total Revenue per Seat Mile (TRASM) came in at -11.3%, better than the company’s guide of -12%.

Clearly things are improving for the major airline, although with new outbreaks of Covid in certain patches of the U.S., this may come into question again as Q3 progresses. Currently, the company expects pre-tax profit guidance for next quarter and the full year. Today’s earnings beat breaks a string of four straight quarterly misses. Shares are down 1.4% in after-market trading, but still up +11.3% year to date.

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