These 2 earnings winners sent the stock market to record highs

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TThe stock market moved generally higher on Friday, with the S&P 500 climb to a new all-time high. the Dow Jones Industrial Average and Nasdaq Composite also improved, although they both still have a bit of a way to go before claiming their own records.

Index

Percent change

Point change

Dow Jones Industrial Average (DJINDICES: ^ DJI)

0.68%

238

S&P 500 (SNPINDEX: ^ GSPC)

1.01%

44

Nasdaq Composite (NASDAQINDEX: ^ IXIC)

1.04%

152

Data source: Yahoo! Finance.

Helping boost investor morale hasn’t been easy, but strong earnings reports have done the trick. Break (NYSE: SNAP) was the big winner of the day, as the emerging social media giant saw its market capitalization surpass the $ 100 billion mark. However, even with much lower percentage gains on the day for its stock, American Express (NYSE: AXP) also made an important impression with implications for the entire consumer economy.

Crack, crack, burst!

Snap shares climbed 24% on Friday. The gains came after parent company Snapchat reported extremely strong financial results for the second quarter of 2021 on Thursday night.

Image source: Getty Images.

The scale of the gains was staggering. Revenue climbed 116% year-on-year, falling to just under $ 1 billion for the quarter. Net losses are more than half of last year’s levels, and when you factor in extraordinary items, adjusted earnings per share came in at $ 0.10 per share, offsetting a loss of $ 0.09 a year ago.

Snap continued to attract users to its platform. Daily active users increased 55 million from 12 months ago to 293 million. Snap is becoming increasingly popular both in its home market in North America and in Europe and the rest of the world.

More functionality is one of the main reasons for the gains. Snap has bragged about breaking new ground with its Lens Studio filters and augmented reality product Connected Lenses, and has made big investments in content development and partnerships.

Snap expecting revenue growth of 58% to 60% for the third quarter despite increasingly difficult comparisons to last year’s numbers, investors are happy with what they see. After a long wait after its IPO several years ago, Snap finally seems to be harnessing its potential.

Consumers don’t leave home without it

American Express stocks didn’t get the boost Snap did. But investors were still happy enough with the card giant’s second quarter results to give the stock a 1.25% rise.

Quarterly figures from American Express clearly showed consumer recovery from the COVID-19 pandemic. Total net interest expense increased 33% to over $ 10.2 billion. Net income nearly increased nine-fold to $ 2.28 billion, and earnings of $ 2.80 per share exceeded what most investors expected to see from American Express.

AmEx’s decision to release $ 866 million from its credit reserves helped boost net income, a dramatic reversal from the $ 1.55 billion in additional provisions for credit losses during the period l ‘last year. Consumers have been able to weather the pandemic in a healthier financial situation than many feared 12 months ago, and the decision to release reserves fell directly into AmEx’s bottom line.

With write-offs down two-thirds from what they were just nine months ago, American Express has done a great job managing its risk. The future looks brighter for the economy, and AmEx is well positioned to take full advantage of consumers who are increasingly willing to spend.

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American Express is an advertising partner of The Ascent, a Motley Fool company. Dan Caplinger has no position in the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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