Futures edge lower as Netflix tumbles
U.S. stock futures slipped on Thursday after streaming pioneer Netflix posted its first drop in U.S. subscribers since 2011, kicking off earnings for the so-called FANG group on a sour note.
Netflix Inc sank 11.2% premarket as it also missed targets for new subscribers overseas at a time when it has staked its future on global expansion.
“The failure of Netflix to meet its already low subscriber target will hit sentiment. It’s not a great start to the “big tech” earnings season, which shall continue with Microsoft’s results,” said Ken Odeluga, analyst at Cityindex.
Meanwhile, shares of International Business Machines Corp fell 0.7% as its revenue missed estimates even though profit beat on strong growth in its high-margin cloud business.
Earnings from FANG group are crucial for investors as gains in their shares have led a rally in Wall Street’s main indexes so far this year. Technology sector has risen 30% and communication services have gained 22% this year, outperforming the 19% rise in the benchmark S&P 500 in the same period.
On the trade front, U.S. Treasury Secretary Steven Mnuchin said that both sides are set to talk over a phone call on Thursday.
Investors also awaited results from railroad Union Pacific Corp, due at 8:00 a.m ET, a day after it tumbled 6% as rival CSX Corp issued a revenue warning, blaming U.S.-China trade dispute. The transportation sector is considered a barometer of U.S. economic health.
The three main U.S. indexes are headed for their sharpest weekly drop in seven weeks after hopes of an interest rate cut from the Federal Reserve helped them recovered from a slump in May to hit record highs.
At 7:07 a.m. ET, Dow e-minis were down 19 points, or 0.07%. S&P 500 e-minis were down 1.5 points, or 0.05% and Nasdaq 100 e-minis were down 13 points, or 0.16%.
Profit at S&P 500 companies is expected to rise 0.4% in second quarter, according to Refinitiv IBES data.
EBay Inc rose 5.4% after the e-commerce company posted better-than-expected quarterly revenue and profit, helped by growth in its advertising and payments businesses.
Morgan Stanley shares flitted between slight gains and losses shortly after it reported quarterly results, rounding up earnings for the Wall Street banks, which have raised concerns of lower interest rates hurting profits.
Qualcomm slipped 1.5% after the world’s No.1 chipmaker was fined 242 million euros ($272 million) by the European Commission for blocking a rival from the market about a decade ago. (Reporting by Medha Singh and Amy Caren Daniel in Bengaluru; Editing by Arun Koyyur)
Published at Thu, 18 Jul 2019 11:54:38 +0000