4:22pm: Netflix stock climbs ahead of earnings report
The Dow closed Tuesday up 754 points, 2.4%, at 31,827, the Nasdaq Composite jumped 353 points, 3.1% to 11,713 and the S&P 500 added 106 points, 2.8%, to close at 3,937.
Notably, the three major benchmarks finished higher than their 50-day moving averages for the first time since April.
However, as Wedbush analyst Kevin Merritt argued in a note to clients Tuesday, markets may not be out of the woods just yet.
″[While] I acknowledge sentiment is bad and we could see a large, tactical rally, I am currently more concerned about protecting downside than missing upside, in the aggregate,” Merritt wrote, as reported by CNBC.
Shares of Netflix jumped more than 5% to $201.63 in anticipation of earnings after the closing bell. The media streaming giant reported a loss of 970,000 subscribers in the second quarter, which came as a relief after warning shareholders it could lose 2 million.
12:05pm: Stocks remain in positive territory
US stocks remained in positive territory at noon buoyed by better-than-expected earnings from financial services giants Goldman Sachs and Bank of America yesterday, as anticipation remains high for results from the likes of Netflix after the bell.
At noon, as the Dow Jones added 1.73% to 31,609 points, the S&P 500 was up 1.56% to 3,902, and the Nasdaq jumped 2.18% to 11,608.
Inflation fears ease somewhat, with dollar weakness and stock market strength coming as UK wages and commodity prices head lower, according to Joshua Mahony, senior market analyst at online trading platform IG.
“If markets had grown accustomed to the pattern of equity weakness and dollar strength, this week has brought welcome reprieve. While many have been worried over the mental implications of investors being repeatedly of the gloomy economic outlook, we appear to be seeing a sell-the-rumour-buy-the-fact scenario play out this earnings season,” Mahony said.
10.42am: Proactive North America headlines:
Apple to slow hiring and investment ahead of potential downturn - report
Endexx launches Blesswell skincare products in select Target stores in the US
Tissue Regenix 'well-positioned to deliver persistently strong sales growth', says analyst
Hotel Chocolat the latest retailer to crash and burn in the US
Sidus Space grows relationship with Teledyne Marine after highest revenue quarter since partnership began
Chesapeake Financial sees 1Q earnings rise to $4.06M thanks to strong asset quality
American Resources posts record preliminary revenue growth in 2Q
Transition Metals looks ahead to summer 2022 exploration at three of its Ontario properties
Nickel North Exploration amends its non-brokered flow-through (FT) private placement to gross proceeds of up to $300,000
Vicinity Motor announces Northwest US distribution agreement with Portland-based dealership Schetky Bus and Van Sales
Psyched Wellness announces that its proprietary Amanita Muscaria Extract (AME-1) is now available for preorder in the USA
Hillcrest Energy Technologies remains on track to deliver commercial prototypes of electric vehicle inverter to customers by 4Q
Power Nickel releases initial NI 43-101 resource for Nisk project in Québec showing over 2.5M indicated tonnes at 1.20% nickel-equivalent
Lobe Sciences files patent for preparation of stable psilocin prodrugs and analogues
Nextech AR launches upgrades to its spatial mapping platform, ARway
Minto Metals reports 16% increase in copper sales in latest quarter; hires new directors of corporate development and investor relations
Marvel Discovery applies for permits for maiden diamond drilling at KLR-Walker Uranium Project in Athabasca Basin
Bloom Health Partners closes second tranche of its previously announced non-brokered private placement for gross proceeds of C$554,000
BioNTech and Pfizer in talks to delay Covid vaccine deliveries amid EU glut
Anacortes says drill results from the first two completed diamond drill holes at Tres Cruces demonstrate near-surface high-grade continuity
9.35am: Choppy trading to continue
US stocks opened higher after Monday’s sell-off with volatile trading expected to continue with the release of key corporate earnings and economic data this week.
Just after the open, the Dow Jones Industrial Average had added 228 points at 31,301 points, while the S&P 500 was up 40 points at 3,871 points, and the Nasdaq Composite had gained 142 points at 11,502 points.
On the economic data front, June housing starts declined 2% to 1,559,000 from an upwardly revised 1,591,000 in May – falling below the market expectation of 1,580,000 and indicating cooling in the housing market amid rising interest rates.
Pantheon Macroeconomics chief economist Ian Shepherdson noted that the headline housing data had been flattered by rebounds in the volatile multi-family components, but core single-family starts and permits fell by 8% in their fourth straight declines.
“Homebuilders are responding to plunging demand, but the adjustment has some way yet to run,” he said. “Applications have dropped by more than a quarter since the turn of the year, and even if the June flattening is sustained - it probably won’t be - the data suggest that single-family housing construction needs to fall by a further 20% or so over the next few months.”
6:30am: Gains to return
US stocks were expected to open higher on Tuesday, recovering after a later sell-off on Monday, with the focus staying on corporate earnings beyond the banking sector.
Trading is predicted to remain cautious as investors settle down to expectations that the US Federal Reserve will likely stick to a 75-basis point interest rate hike at its upcoming rate meeting instead of a bigger increase.
Futures for the Dow Jones Industrial Average were trading 0.6% higher pre-market, while those for the broader S&P 500 index were up 0.8% and futures for the tech-laden Nasdaq-100 added 0.7%.
Given that it is a quiet day on the economic data front, market direction will likely come from the next set of earnings, said Swissquote Bank senior analyst Ipek Ozkardeskaya.
“Today, Netflix will release its latest earnings, and will likely reveal further weakness in subscriptions. If that’s the case, we could see the Netflix shares take another hit. But, because the expectations are low, we could also see a positive surprise this quarter,” she said.
Investors continue to digest news that tech giant Apple would slow hiring and cut spending as it prepares for the possibility of a recession fears. Gazprom’s declaration of force majeure and the likelihood of a shutdown in gas supplies to Europe have also weighed on sentiment.
Ozkardeskaya noted that Elon Musk recently announced he would cut 10% of jobs in Tesla, while Alphabet, Amazon, Meta, Snap and Goldman announced they would need fewer people to work for them as businesses would slow.
“And the slowing jobs news is feeding into recession worries, worries that the economy will really start slowing this time, as a result of tighter monetary conditions from the Federal Reserve, to fight inflation,” she added.
Against that backdrop, investors will be looking to earnings from Johnson & Johnson, Halliburton and Lockheed Martin before the market today for fresh direction.
In energy markets, benchmark prices held back above the $100 level, although WTI crude oil futures were 0.1% lower at $102.49 a barrel, while Brent crude futures were down 0.3% at $105.91.
Contact the author at jon.hopkins@proactiveinvestors.com