While markets decided to ignore what are destined to be doomed attempts to cover over intractable debt crises in Greece and China, the real action in the markets last week took place in two high-flying NASDAQ stocks - Netflix, Inc. (NASDAQ:NFLX) and Google, Inc. (NASDAQ:GOOG).
Netflix stock split 7-to-1 and the company announced strong subscriber growth, pushing its stock up from a split-adjusted $98.13 on Wednesday to $114.77 at the end of the week. The 18% pop increased its market cap to $48.7 billion and its price/earnings ratio to 210x as Wall Street analysts competed with each other to raise their price targets to ever higher levels.
If you think that sounds giddy, look at what Google did...
The Stocks Driving the NASDAQ This Week
But Netflix's gains paled in comparison with those of Google, whose stock market capitalization gained an extraordinary $65 billion in a single day after the company announced better-than-expected second quarter earnings and hinted at possible stock repurchases or future dividends and showed spending discipline for the first time.
GOOG shares rose by $93.08 per share on Friday to a record $672.93 per share, giving the company the second largest market cap of any company after Apple, Inc. (NASDAQ:AAPL) of $468 billion.
These stocks dragged the NASDAQ Composite Index (INDEXNASDAQ:.IXIC) to a new record high of 5210.15, rising 4.3% or 213 points on the week. The Dow Jones Industrial Average (INDEXDJX:.DJI) jumped by 2% or 326 points to 18,086.45 while the S&P 500 (INDEXSP:.INX) rose 2.4% of 50 points to 2125.64.
Investors laid aside worries about a possible Greek exit from the Eurozone despite the fact that such an exit would in fact be well-advised - both for the Greeks and the rest of Europe. The deal that was reached after torturous negotiations does virtually nothing to pave a path for Greek solvency; it includes no debt relief and its first move was to lend Greece another €7 billion that it can't afford to pay back to repay loans on which it recently defaulted.
Greece's economy will now sink deeper into depression while Europe's politicians can stick their heads deeper into the sand until reality comes and chops the rest of their bodies off.
Meanwhile, China picked an awkward time to try transparency for a change.
About the Author
Prominent money manager. Has built top-ranked credit and hedge funds, managed billions for institutional and high-net-worth clients. 29-year career.
Or to contact Money Morning Customer Service, click here.