4:10pm: Netflix shares rally on earnings beat
The Dow closed Wednesday up 51 points, 0.2%, at 31,878, the Nasdaq Composite added 185 points, 1.6%, to 11,898 and the S&P 500 rose 23 points, 0.6%, to 3,960.
It was an up and down day for the benchmarks, especially the Dow, which teetered around the flatline for most of the session. However, when the closing bell rang, all the major indices reached their highest levels since early June.
“It kind of speaks to the risk-on environment we continue to be in that started the beginning of this week, and has played through this Tuesday and into Wednesday time frame,” said Art Hogan, chief market strategist at B. Riley Financial, as reported by CNBC.
Netflix Inc (NASDAQ:NFLX), which reported earnings after the bell Tuesday, saw its shares gain more than 7% to reach $216.44. The streaming giant lost 970,000 subscribers in the second quarter, less than the 2 million it warned investors it could lose, and its earnings beat Street expectations.
12:30 pm: Stocks strengthen at midday
US stocks are in the green at midday, after a weaker opening affected by a drop in existing home sales in June, which fell to 5.12 million from 41 million, well below the consensus of 5.36 million.
At noon, the Dow Jones added 0.2% to 31,892 points, the S&P 500 was up 0.74% to 3,965, and the Nasdaq jumped 1.8% to 11,922.
“Sales continue to track the steep decline in mortgage applications since the turn of the year, falling at a 38% annualized rate in 2Q, and the bottom likely is still some way off. This is a rollover, not a softening. Soaring rates have severely curtailed potential buyers’ spending power, and consumers’ confidence has been hammered by the surge in gas prices and the correction in the stock market,” Ian Shepherdson, chief economist with Pantheon Macroeconomics wrote in a note.
Meanwhile, the deterioration in sentiment in today’s European session has “translated into a weaker open for US markets today, with another drop in existing home sales in June, falling 5.4% the fifth successive monthly decline,” Michael Hewson, analyst at CMC Markets, wrote in a note.
9.50: Proactive North America headlines:
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Wishpond Technologies expects to report record revenue for 2Q 2022
Royal Fox Gold (TSX-V:FOXG) hails latest drilling results from northern part of Arctic Fox zone at Philibert project, Quebec
Goldshore Resources announces assay results from ongoing 100,000-meter drill program at the Moss Lake Project in Northwest Ontario
Skye Bioscience reports slight delay in the production of its Phase 1 drug to treat glaucoma
NorthWest Copper (TSX-V:NWST) welcomes first drill results from Kwanika deposit, which hit 'significant' copper-gold grades
CULT Food Science says investee company Pearlita Foods successfully develops cultivated oyster prototype
The Valens Company (TSX:VLNS, OTCQX:VLNCF) nominates marketing and branding expert Aida Moudachirou-Rebois for election to company’s board
9.35am: All eyes on earnings
US stocks opened mixed on Wednesday as investors continued to focus on corporate earnings.
Just after the open, the Dow Jones Industrial Average had dipped 76 points at 31,751 points and the S&P 500 was down 4 points at 3,932 points, while the tech-laden Nasdaq Composite was up 22 points at 11,35 points.
Netflix Inc (NASDAQ:NFLX) was up about 2% at about $206 per share at the open following the release of better-than-expected earnings after the bell on Tuesday.
“The biggest fear for investors is that Netflix has reached peak growth,” said CityForex.com market analyst Joshua Warner.
“The stock has not only broken past the 50-day moving average that has proven to be a firm ceiling for the stock over the last eight months, but also the $204 level of resistance that has hung over the share price during the last three months.”
6:30am: Slight gains seen
US stocks were expected to open higher on Wednesday after Netflix’s results, released after hours yesterday, proved less bleak than expected.
Focus continues to be on corporate America, and Tesla’s earnings, due after market close today, will be of particular interest.
Futures for the Dow Jones Industrial Average were trading 0.2% higher pre-market, while those for the broader S&P 500 index were up 0.2% and futures for the tech-laden Nasdaq-100 added 0.3%.
Expectations for Netflix were so poor that news of a 970,000 drop in subscriptions last quarter came in as a good surprise, said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, noting that the share price jumped 8% in after-hours trading, on top of the 5% added during the session.
“The motivation behind yesterday’s equity rally was rather obscure. A softer US dollar certainly helped (to boost) optimism about the earnings season," she said.
“Yet, the predictability and the visibility remain low, and any rebound could be considered as a bear market rebound until we have proof that gains could be sustainable," she said, adding that any bad news could rapidly hammer the positive mood.
“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 continued.
Tesla’s second-quarter earnings are expected to have dropped by around 2.5% following production shutdowns at its Shanghai factory.
“The net adjusted income, and profit may have dropped up to 10%. Tesla will likely maintain its yearly delivery growth target, but that would imply acceleration of deliveries in the second half," said Ozkardeskaya.
Earnings aside, investors are still predicting that the US Fed will raise interest rates by 75 basis points this month as rate setters continue to try to rein in inflation.
In energy markets, WTI crude oil futures were 1.6% lower at $99.17 a barrel, while Brent crude futures were down 1.4 % at $105.80.
Contact the author at jon.hopkins@proactiveinvestors.com