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BAC Earnings, Boeing Updates And The Uncertain State Of The Market

US stocks closed mixed on Friday as traders weighed increasingly disappointing quarterly numbers from some big tech companies including Netflix (NASDAQ:NFLX) and gloomy consumer sentiment data.

But both the S&P 500 and Dow Jones industrial average finished the week with gains slightly exceeding 1%.

Netflix (NASDAQ:NFLX) missed expectations for second-quarter profits and third-quarter subscriber additions on Friday, and its stock ended with a 6.5% loss.

With U.S. COVID-19 cases rapidly increasing and the death toll rising, businesses are shutting down, schools cannot fully reopen and jobs are disappearing. Congress has little choice but to engineer another costly rescue package. Without a successful federal plan to control the outbreak, Congress heads back to work with no endgame in sight.

Across the pond, according to Reuters, European Union leaders did not reach solidarity on a coronavirus stimulus plan on Sunday, German Chancellor Angela Merkel said as marathon negotiations ran into the third day.

Overall, the financial results of the biggest U.S. banks in the second quarter were better than expected but were given a big boost from the trading profits earned in a very volatile market. The future does not look clear as the banks were forced to build huge pileups of money to provide for future loan losses.

The biggest disappointment was certainly the Bank of America’s (NYSE:BAC) recent earnings release. BAC’s earnings per share fell 50% over the past year to $0.37, which, however, beat the estimate of $0.27. Revenue of $22.45 billion declined by 3.35% YoY, again, slightly above the consensus estimate of $22.01 billion. But since stock market investments for banks are the only visible remedy against bad loans, it’s worth noting several high-profile forecasts that in the third and fourth quarters of this year, trading revenues will be at least 20 to 30 percent lower than in the second quarter. Volatility just cannot stay as high as it has been in the second quarter.

Boeing’s (NYSE:BA) reputation remains under siege even after the much-advertised test flight of Boeing 737 MAX couple of weeks ago. The company was forced to release a catastrophically damning set of documents to congressional investigators last week that included “conversations among Boeing pilots and other employees about software issues and other problems with flight simulators” for the 737 Max, the plane involved in two fatal crashes.

The messages further complicate Boeing’s tense relationship with the Federal Aviation Administration, which can’t be satisfied to read the disdain with which Boeing treated the civil aviation regulators. After the undisclosed outcome test flight, the Boeing share edged up almost 6.5% to $176, but its quarterly earnings date of July 29 will be Boeing’s judgment day because there is nothing to cheer up its shareholders with. The company reported a net loss of $5.72 a share in the previous quarter which is expected to further deepen this time around, so Boeing is a definite short which will be easy to cover at a profit thereafter.

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