Up, Up and Away With Google
On Thursday, Google Inc. (GOOGL, +7.79%) reported second quarter earnings for the three months ending June 30 which beat expectations. As a result, in after-hours trading, the shares of the search engine giant surged 7.5 percent to trade at $582.65. According to Google, for the second quarter, the company showed improved YouTube advertising and search revenues and reported earnings per share of $6.51 a share, or net income of $3.9 billion. This is up compared to the same period a year ago when Google reported EPS of $4.96 a share, or profit of $3.4 billion. In addition, with one-time items excluded, Google also reported non-GAAP earnings of $6.99 a share. According to FactSet, this beat analysts’ estimations of $6.70 a share. Also on the upside was Google’s total revenue which increased from $16 billion a year ago to $17.7 billion, up 11%. This was in-line with expectations on Wall Street. Revenues of total advertising were also up year over year by 11 percent while the acquisition of traffic costs as a percentage of advertising revenues declined from 23% in the same period a year ago to 21 percent.
On Thursday, U.S. stocks traded higher and the Nasdaq Composite index (COMP) reached a new closing high. This came as Janet Yellen, Federal Reserve Chairwoman, completed her semi-annual 2-day testimony before congress, while fear among investors regarding an exit of Greece from the eurozone subsided. As a result of an increase in Netflix Inc. shares (NFLX, +18.02%), the Nasdaq rose 1.3%, or 64.24 points, to close at a record high of 5,163.18. Netflix rose 18 percent after the company reported better than expected results for the second quarter. Also on the upside was the S&P 500 index (SPX) which rose 0.8%, or 16.89 points, to 2,124.29. Gains were led by the telecom, utilities and tech sectors. Following the upward trend was the blue chip Dow Jones Industrial Average (DJIA) which advanced 0.4%, or 70.08 points, to 18,120.25.
On Thursday, the U.S. dollar (USD) trimmed gains. After data showed that, in July, the manufacturing activity in the Philadelphia-region expanded at the slowest pace in 4-months, the greenback pulled back from a one-and-a-half month peak. On Thursday, the Federal Reserve Bank of Philadelphia reported that its manufacturing index dropped from a reading of 15.2 in June to a reading of 5.7 in July. This missed analyst expectations for the index to decline to 12.0 in July. In a separate report, the Department of Labor in the U.S. reported that, for the week ending 11 July, the number of individuals filing for initial jobless benefits declined to 281,000, down 15,000. The previous week’s total was at 296,000. Analyst expectations were for initial jobless claims to decline to 285,000 last week, down 10,000. The EUR/USD traded at 1.0901, down 0.45% while the GBP/USD traded at 1.5593, down 0.28%. Meanwhile, the greenback traded higher than the currencies in New Zealand, Japan and Switzerland with the NZD/USD down 0.88% to 0.6531, the USD/CHF up 0.39% to 0.9556 and with USD/JPY up 0.21% at 124.02. The U.S. dollar index was at 97.63, up 0.35%.
On Friday, crude oil prices rose in Asian trading. This comes as investors now shift their attention away from the Iran deal over its nuclear program which is likely to lead to an increase the amount of crude hitting the global market in the coming year. The focus is now on the weekly report by the oil services firm Baker Hughes on the U.S. oil rig count which provides further indications of the supply-demand balance in the U.S. energy markets. WTI crude for delivery in August traded at $51.14 a barrel, up 0.44%, on the NYMEX. On Thursday, Brent crude oil for delivery in September traded at $56.90 a barrel, up 0.38%, or $0.21, on the Intercontinental Exchange (ICE) in London.