Thursday July 18th

18-07-2019

Stocks set to fall for a third day on earnings concern, Netflix shares plunge

U.S. stock index futures fell on Thursday as investors were concerned about the latest batch of quarterly corporate reports. Around 7:50 a.m. ET, Dow Jones Industrial Average futures indicated a loss of 8 points at the open. S&P 500 and Nasdaq 100 futures also pointed to declines at the open. Netflix shares plunged more than 10% in the premarket after the streaming giant reported a surprise loss in U.S. subscribers coupled with slower-than-expected international membership growth. Those metrics — which are key for Netflix — offset a better-than-expected earnings per share result for the previous quarter. The stock’s drop dragged the Invesco QQQ Trust ETF down by 0.4%. IBM shares, meanwhile, declined 0.8% after the company reported its fourth consecutive revenue decline. Declining sales from IBM’s IT division offset growth in its cloud business. So far, more than 12% of S&P 500 companies have reported quarterly results this earnings season. Of those companies, nearly 84% have reported better-than-expected earnings, according to FactSet data. “We’re going to see companies beat on earnings, but those beats won’t be very good,” said Kate Warne, investment strategist at Edward Jones. The major indexes closed lower for a second day in a row on Wednesday after The Wall Street Journal reported that trade negotiations between the U.S. and China had faltered over restrictions on Chinese telecommunications giant Huawei, citing sources familiar with the talks. However, Treasury Secretary Steven Mnuchin told CNBC that Huawei was not a sticking point in the negotiations, adding a call between U.S. and China trade officials was scheduled for later on Thursday. Applications for unemployment benefits rose slightly in mid-July, but the rate of layoffs clung to exceedingly low levels that show the U.S. labor market is still going strong more than a decade after the last recession. Initial jobless claims climbed by 8,000 to 216,000 in the seven days ended July 13, the government said Thursday. Economists polled by MarketWatch estimated new claims would total a seasonally adjusted 221,000. Stocks in Japan were the biggest losers among major markets in the region on Thursday, with the other Asian bourses following suit, amid a renewed threat to trade. The Nikkei 225 dropped 1.97% to close at 21,046.24. The Topix also fell 2.11% to end its trading day at 1,534.27. Japan’s exports fell 6.7% in June as compared to a year ago, according to data released on Thursday — against expectations of a 5.6% decline from economists in a Reuters poll. Elsewhere, shares in mainland China also saw losses on the day, with the Shanghai composite declining 1.04% to 2,901.18 and the Shenzhen component down 1.58% to 9,154.65. The Shenzhen composite also fell 1.633% to 1,548.64. Hong Kong’s Hang Seng index declined 0.66%, as of its final hours of trading. South Korea’s Kospi declined 0.31% to close at 2,066.55. Oil edged lower Wednesday unable to shake off the downbeat mood of the last two days in response to a sharp rise in U.S. stockpiles of products like gasoline, pointing to weak demand during the summer driving season in the United States. Brent crude futures were down 10 cents at $63.56 a barrel by 0840 GMT. They fell 1% on Wednesday, and 3% on Tuesday. U.S West Texas Intermediate crude futures were down 19 cents at $56.59. The U.S. benchmark dropped 1.5% in the previous session, and 3% on Tuesday. Gold prices pulled back from a two-week high to trade lower on Thursday, as some investors took advantage of the last session’s gain to book profits. Spot gold was down 0.4% at $1,420.60 per ounce, as of 0736 GMT, after hitting its highest since July 3 at $1,428.40. It rose nearly 1.5% in the previous session as the dollar slipped after weaker-than-expected U.S. housing data increased prospects for an interest rate cut by the Federal Reserve. U.S. gold futures edged 0.1% lower to $1,421.60 an ounce.