Wednesday October 19th


Stock futures give up earlier gains, turn negative despite Netflix’s strong results

U.S. stock markets index futures gave up gains from earlier in the day Wednesday, even after the release of strong quarterly results from Netflix. Dow Jones Industrial Average futures were down 121 points, or 0.4%. S&P 500 and Nasdaq 100 futures traded lower by 0.5% each. Netflix shares rallied 13% after the streaming giant posted earnings and revenue that beat estimates as well as strong subscriber growth for the third quarter. Other tech-related names such as Meta, Amazon and Microsoft traded higher in the premarket. United Airlines, Intuitive Surgical and Procter & Gamble were among the other names rising in premarket trading after strong quarterly reports. The solid start to earnings season comes as many on Wall Street have been resetting their earnings projections lower and investors are worried about a recession. Even though equities have rallied in the first two days of the week, Treasury yields remain high and were climbing on Wednesday, suggesting that recession fears are still intact. “On the plus side, corporate earnings season may help investor confidence somewhat, just given current oversold conditions and reduced expectations. That should help equities keep their footing, but until we see 2-year and 10-year yields start to decline we think traders and investors should remain wary of expecting too much from this rally,” said Nick Colas of DataTrek Research. Tech earnings will be in full swing next week, but IBM and Tesla are on deck to report Wednesday. Social media firm Snap will report later in the week. Wednesday’s moves came after another strong day for stocks, with the Dow rallying about 337 points Tuesday and the S&P 500 gaining 1.1%. Housing starts fell more than expected in September, dropping 8.1% month over month to an annualized rate of 1.44 million. Economists surveyed by Dow Jones were expecting a 6.7% decline. Building permits rose 1.4%, but that was below the 1.5% expected. Shares in the Asia-Pacific were mixed on Wednesday following a second day of gains in major U.S. indexes. The Hang Seng index in Hong Kong fell around 2.38% to 16,511.28, with the Hang Seng Tech index slipping 4.19% following leader John Lee’s policy address. Mainland China’s Shanghai Composite shed 1.19% to 3,044.38 while the Shenzhen Component lost 1.43% to 11,027.24. South Korea’s Kospi declined 0.56% to close at 2,237.44. The Nikkei 225 in Japan added 0.37% to 27,257.38 and the Topix gained 0.19% to 1,905.06. The Japanese yen remained above 149 against the U.S. dollar, touching a new 32-year high of 149.48 per dollar. Oil prices rose slightly on Wednesday amid plenty of caution as bullish signals like falling U.S. crude stocks and a generally undersupplied market were countered by bearish factors such as uncertain Chinese demand growth and falling gas prices. Brent crude futures for December settlement rose 76 cents, or 0.8%, to $90.79 a barrel. Earlier in the session, Brent hit a low of $89.32. U.S. West Texas Intermediate crude for November delivery, expiring on Thursday, was at $83.82 a barrel, up $1 cents, or 0.9%. The December contract was at $82.92, up 85 cents, or 1%. In the previous session, the contracts fell to their lowest in two weeks on reports of U.S. President Joe Biden’s plans to release more barrels from the Strategic Petroleum Reserve (SPR). Gold inched lower on Wednesday as the dollar gained some ground, while the U.S. Federal Reserve’s commitment to tightening its monetary policy also weighed on zero-yield bullion’s appeal. Spot gold was down 0.1% at $1,650.02 per ounce, as of 0317 GMT, while U.S. gold futures were flat at $1,654.80. The dollar index ticked 0.1% higher, having hit its lowest level since Oct. 6 on Tuesday.