Economist's Insights

Today’s Trading Activity – Stocks Diverge on Corporate Results, Treasury Yields and the Dollar Fall on Health Care Failure

Jul 18, 2017

The big three equity indices diverged notably Tuesday as the Dow fell 0.3%, the Nasdaq rallied 0.5%, and the S&P stuck in the middle. Forty-one of the Dow’s 55-point drop were accounted for by Goldman Sachs. Goldman’s woes began after the company reported a 17% drop in trading revenue; a 40% drop in fixed income revenue. The Nasdaq’s rally was sparked by a big day for Netflix Inc. The streaming-video provider reported big gains in the number of subscribers which was enough to offset below-estimate earnings and push the company’s stock up more than 13%. The S&P barely budged as a result of the push and pull of these two forces. Treasury yields added more pressure to financial companies as the curve hit its flattest point between 2s and 10s since June 29. The 2-year yield fell just 0.8 bps to 1.35% while the 10-year yield tumbled 5.3 bps to 2.26%. The Senate’s health care saga continued throughout the day. Enough Senator’s came out against a clean repeal of the ACA to dim the chances for any sort of health care reform and increase concerns about the likelihood of meaningful tax reform. The Dollar remained weaker after the health care failure, closing at its lowest level since late August.