Investors watched the debt crisis cautiously on Thursday, but with President Joe Biden not returning from the Group of Seven summit in Japan until Sunday, an agreement is unlikely to be announced by then.
Still, there was plenty for market participants to see today, including solid earnings reports from Bath and body works (BBWI) And Walmart (WMT). But the stock that stole the show was Netflix (NFLX) after it unveiled impressive numbers for its new advertising service.
On Thursday, major indices rallied strongly after Biden and House Speaker Kevin McCarthy both expressed optimism an agreement would be reached debt ceiling. Many experts are confident that lawmakers will come to a resolution before the “X” date, when the US can no longer meet its financial obligations.
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“We believe the government has strong incentives to find a solution to the debt ceiling, although that may not happen before the 11th hour,” he said Wells Fargo Investment Institute writes in a note to customers.
On the earnings front, Bath & Body Works stock rose 10.8% after the personal care products maker reported better-than-expected earnings of 33 cents a share on line sales of $1.4 billion for the first quarter. The company also raised its full-year guidance.
Walmart also reported better sales and earnings in its first-quarter results Dow stock increased by 1.3%. According to the numbers, revenue rose 7.6% year over year to $152.3 billion, while earnings rose 13.1% to $1.47 per share.
“At the headline level, consumer spending has proved resilient, but beneath the surface we continue to see signs that customers remain choosy, particularly in discretionary categories,” Walmart CFO John David Rainey said in an interview with the company result call. However, weakness in general merchandise was offset by strength in groceries, where the company continues to “gain market share and increase unit volume,” the general manager added.
“That was about the most impressive quarter Walmart could have had,” said David Wagner, portfolio manager at Aptus Capital Advisors. “The company delivered strong results throughout the first quarter.” While there was weakness in consumer discretionary in electronics, household goods and apparel, there was also solid growth in average tickets and transactions, particularly at Sam’s Club and at international locations, Wagner adds.
Why Netflix Stock Soared Today
Elsewhere, Netflix stock jumped 9.2% after the streaming giant said it had 5 million monthly active users on its lower-cost subscription tier with ads, and that a quarter of new subscribers signed up for this option, which was first launched just six months ago. “The signals are encouraging: engagement in our advertising plan is similar to our comparable non-advertising plans,” Netflix co-CEO Greg Peters said in one press release. “This is crucial because everything starts and ends with the consumer.”
As for the major indices, the tech-heavy ones Nasdaq Composite rose 1.5% to 12,688, the broader number S&P 500 up 0.9% to 4198 and the blue chip Dow Jones Industrial Average rose 0.3% to 33,535.
The best cheap stocks to buy
At Kiplinger.com, we tend to focus on long-term buy-and-hold investments like those found on the internet Berkshire Hathaway stock portfolio or stable blue chip stocks. Still, some market participants love the thrill that comes with playing cheap stocks.
Certainly, many people avoid these lower-cost names because they tend to be riskier and more volatile than their more expensive counterparts — and their fundamentals tend to be disheartening, too. But others prefer them for their affordability and the potential to make big profits in a short period of time.
If you decide to trade cheap stocksjust know that they can fall just as fast as they can rise. Therefore, it is advisable to buy them in small amounts with capital that you can afford to lose.