Finances

Johnson & Johnson (JNJ) reported its second quarter results on Tuesday, July 19. The pharmaceutical company beat earnings estimates and saw an increase in sales and revenue.

The company posted revenue of $24.02 billion during the quarter. This was up 3% from $23.31 billion during the same quarter last year and was above analysts' expected revenue of $23.77 billion.

"Our solid second quarter results across Johnson & Johnson reflect the strength and resilience of our Company's market leadership in the midst of macroeconomic challenges," said CEO of Johnson & Johnson, Joaquin Duato. "I am continually energized by the focus and passion of my Johnson & Johnson colleagues and their dedication toward delivering transformative healthcare solutions to patients and consumers around the world."

Johnson & Johnson reported net earnings of $4.81 billion, or $1.80 per adjusted share. This was down from $6.28 billion, or $2.35 per adjusted share, last year at this time.

Johnson & Johnson's Covid-19 vaccine, which has seen less demand recently as other vaccines become readily available, resulted in $544 million in sales during the second quarter. The company's Pharmaceutical segment posted revenue of $13.32 billion during the quarter, up 6.7% from the prior year. The company's Medical Devices posted 1.1% or $6.9 billion in sales for the quarter. Consumer Health Segments posted 1.3% increase or $3.08 billion for the quarter.

Johnson & Johnson (JNJ) shares ended the week at $172.12, down 3.2% for the week

Bank of America Reports Earnings

Bank of America Corporation (BAC) released its second quarter results on Monday, July 18. The company's revenue and net income increased, causing shares to increase 1% after the release of the report.

Revenue came in at $22.7 billion during the second quarter, up 5.6% from $21.5 billion at this time last year. The results were above analysts' expectation of $22.6 billion for the quarter.

"Solid client activity across our businesses, coupled with higher interest rates, drove strong net interest income growth and allowed us to perform well in a weakened capital markets environment," said Bank of America's CEO, Brian Moynihan. "Our U.S. consumer clients remained resilient with continued strong deposit balances and spending levels. Loan growth continued across our franchise and our markets teams helped clients navigate significant volatility reflecting economic uncertainty."

The company reported net income of $6.2 billion for the quarter or $0.73 per diluted share, down from $9.2 billion or $1.03 per diluted share in the same quarter last year.

Bank of America's Consumer Banking segment brought in net income of $2.9 billion during the quarter. In addition, the segment originated 241,000 new Consumer checking accounts in the second quarter of fiscal 2022 with total outstanding balances at $35.1 million. The segment also noted a 10% increase in deposits for the quarter to more than $1 trillion. The company's Digital Usage segment saw a record 42.7 million active digital banking users and produced $1.6 million in digital sales.

Bank of America Corporation (BAC) shares ended the week at $33.43, relatively unchanged for the week.

Netflix Reports Quarterly Earnings

Netflix, Inc. (NFLX) released its second quarter earnings report on Tuesday, July 19. The streaming entertainment company saw a narrower-than-expected loss of subscribers, causing stock prices to rise more than 8% after the earning's release.

Netflix posted quarterly revenue of $7.97 billion. This is up 9% from $7.34 billion in revenue reported at the same time last year, but below the $8.05 billion analysts predicted.

"Q2 was better-than-expected on membership growth, and foreign exchange was worse-than-expected (stronger US dollar), resulting in 9% revenue growth." wrote Netflix in a letter to shareholders. "Our challenge and opportunity is to accelerate our revenue and membership growth by continuing to improve our product, content, and marketing as we've done for the last 25 years, and to better monetize our big audience."

For the quarter, Netflix reported net income of $1.44 billion or $3.20 per adjusted share. This is up from $1.35 billion or $2.97 per adjusted earnings reported at this time last year and exceeded market estimates of $2.98 per adjusted share.

Netflix saw a loss of 970,000 subscribers to its streaming service during the quarter. This was far below analysts anticipated loss of 2 million subscribers, which would have been the worst quarterly decline in the company's history. Since the launch of Netflix's licensed mobile games last November, the company currently has a total of 24 mobile games in its portfolio and additionally, has acquired three games studios that include Night School, Boss Fight and Next Game Studios. Netflix recently announced Microsoft as its new technology and sales partner to help expand their multi-billion advertising business into premium television video.

Netflix, Inc. (NFLX) shares closed at $220.44, up 14.4% for the week.

Treasury yields pulled back this week as weak economic data and sizeable interest rate hikes from the European Central Bank exacerbated concerns about an economic slowdown.

On Thursday, the European Bank announced a 50 basis point hike to interest rates, above its own prior guidance, marking its first hike in 11 years as concerns about inflation outweighed fears of slowing growth influenced by the Russia-Ukraine war.

"For the first time since 2011, the Bank has hiked interest rates and did so with a bang." said global head of macroeconomics at ING Germany, Carsten Brzeski. "Hiking rates by 50 basis points and softening forward guidance shows that the ECB thinks the window for a series of rate hikes is closing quickly."

The benchmark 10-year Treasury note yield opened the week of 7/18 at 2.919% and traded as low as 2.879% on Thursday. The 30-year Treasury bond yield opened the week at 3.081% and traded as low as 3.043% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment increased by 7,000 to 251,000 for the week ending July 16, up from an adjusted 244,000 claims in the week prior. Continuing unemployment claims rose 51,000 to 1.375 million, the largest weekly increase since November 2021.

"Several large companies have indicated that they intend to lay off various numbers of workers, but the claims data does not suggest that much of this layoff activity has begun in any meaningful way," said economists Thomas Simons and Aneta Markowska of Jefferies Financial Group. "If it has, then the negative impact is overwhelmed by continued strong demand for labor by other firms."

The 10-year Treasury note yield finished the week of 7/22 at 2.759%, while the 30-year Treasury note yield finished the week at 2.975%.

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, July 21. The U.S. mortgage rates continue to climb due to the Federal Reserve's ongoing battle against high inflation.

The 30-year fixed rate mortgage rate averaged 5.54%, up from 5.51% last week. At this time last year, the 30-year fixed rate mortgage averaged 2.78%.

This week, the 15-year fixed rate mortgage averaged 4.75%, up from 4.67% last week. Last year at this time, the 15-year fixed rate mortgage averaged 2.12%.

"The housing market remains sluggish as mortgage rates inch up for a second consecutive week," said Freddie Mac's Chief Economist, Sam Khater. "Consumer concerns about rising rates, inflation and a potential recession are manifesting in softening demand. As a result of these factors, we expect house price appreciation to moderate noticeably."

Based on published national averages, the savings rate cap was 2.33% as of 7/18. The one-year CD national rate cap averaged 4.11%.