The S&P 500 futures trade 11 points, or 0.3%, above fair value as the market holds onto yesterday’s rally while investors digest some key earnings news.
Netflix ( NFLX 255.19, -93.42, -26.8%) is the main draw, as shares plunge 27% in pre-market action after the company lost 200,000 global paid subscribers in the first quarter and estimated it will lose another 2 million in the second quarter.
Weakness in NFLX is spreading to other stocks of companies with streaming exposure, but the broader futures market is holding up relatively well in the face of this disappointment. That could be because of a modest pullback in Treasury yields.
In addition, IBM ( IBM 132.18, +3.03, +2.4%), Proctor Gamble ( PG 161.50, +2.09, +1.3%), and Abbott Labs ( ABT 121.00, +1.02, +0.9%) are picking up the slack following their better-than-expected earnings reports, as is lululemon athletica ( LULU 413.20, +8.54, +2.1%) after announcing plans to double revenue by 2026 to $12.5 billion.
Currently, the 2-yr yield down two basis points 2.56%, and the 10-yr yield down four basis points to 2.87% after hitting 2.97% last evening. The U.S. Dollar Index is down 0.6% to 100.38. WTI crude futures are up 1.5%, or $1.58, to $103.63/bbl.
Separately, the People’s Bank of China made no changes to its one-year and five-year loan prime rates despite expectations for rate cuts. China’s Shanghai Composite fell 1.4% on Wednesday.
On the data front, investors will receive Existing Home Sales for March (Briefing.com consensus 5.80 million) at 10:00 a.m. ET, followed by the April Beige Book at 2:00 p.m. ET. Earlier, the weekly MBA Mortgage Applications Index decreased 5.0% following a 1.3% decline in the prior week.
In U.S. Corporate news:
- Netflix (NFLX 255.19, -93.42): -26.8% after losing 200,000 global paid subscribers in Q1 and estimating it will lose 2 million more subscribers in Q2. Netflix beat EPS estimates but missed revenue estimates and issued downside Q2 guidance. The company is open to offering a lower priced service with advertising.
- IBM (IBM 132.18, +3.03): +2.4% after beating top and bottom-line estimates and expecting FY22 revenue growth (constant currency) at the high end of the mid-single digit range.
- Procter & Gamble (PG 161.50, +2.09): +1.3% after beating top and bottom-line estimates.
- Abbott Labs (ABT 121.00, +1.02): +0.9% after beating top and bottom-line estimates.
- Lululemon athletica (LULU 413.20, +8.54): +2.1% after announcing a five-year growth plan to double revenue by 2026 to $12.5 billion.
Reviewing overnight developments:
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Equity indices in the Asia-Pacific region ended the midweek session on a mixed note. Japan’s Nikkei: +0.9% Hong Kong’s Hang Seng: -0.4% China’s Shanghai Composite: -1.4% India’s Sensex: +1.0% South Korea’s Kospi: UNCH Australia’s ASX All Ordinaries: UNCH.
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In economic data:
- Japan’s March trade deficit JPY412.40 bln (expected deficit of JPY100.80 bln; last deficit of JPY669.70 bln). March Imports 31.2% yr/yr (expected 28.9%; last 34.1%) and March Exports 14.7% yr/yr (expected 17.5%; last 19.1%)
- Australia’s March MI Leading Index 0.3% m/m (last 0.4%)
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In news:
- The People’s Bank of China made no changes to its one-year and five-year loan prime rates despite expectations for cuts.
- A former PBoC official called for a temporary easing of curbs on property debt.
- The Bank of Japan offered to buy unlimited amounts of 5- and 10-yr JGBs after the country’s 10-yr yield climbed above 0.25% to a level not seen since early 2016.
- Australia’s Finance Ministry now expects that 2022 deficit will be about 3.0% of GDP, up from October’s projection of 2.3% of GDP.
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Major European indices trade in the green. STOXX Europe 600: +0.9% Germany’s DAX: +1.1% U.K.'s FTSE 100: +0.1% France’s CAC 40: +1.2% Italy’s FTSE MIB: +0.8% Spain’s IBEX 35: +1.2%.
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In economic data:
- Eurozone’s February Industrial Production 0.7% m/m (expected 0.2%; last -0.7%); 2.0% yr/yr (expected 0.8%; last -1.5%). February trade deficit EUR7.6 bln (last deficit of EUR27.30 bln)
- Germany’s March PPI 4.9% m/m (expected 2.6%; last 1.4%); 30.9% yr/yr (expected 28.2%; last 25.9%)
- Italy’s February trade deficit EUR1.662 bln (last deficit of EUR5.128 bln)
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In news:
- Credit Suisse warned that it will report a loss for Q1 due to higher provisions for legal matters.
- Danone refuted speculation that it is looking to sell parts of its business.
- The governor of Sweden’s central bank said that he is not worried about a recession at this time while the Czech central bank governor said that more rate hikes are in the cards.
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U.S. equity futures:
- S&P 500 Futures: +11 @ 4,473
- DJIA Futures: +119 @ 35,030
- Nasdaq 100 Futures: +30 @ 14,240
Overseas:
- Europe: DAX +1.1%, FTSE +0.1%, CAC +1.2%
- Asia: Nikkei +0.9%, Hang Seng -0.4%, Shanghai Composite -1.4%
Commodities:
- Crude Oil +1.54 @ 103.59
- Nat Gas +0.071 @ 7.247
- Gold -3.50 @ 1955.50
- Silver -0.031 @ 25.360
- Copper -0.0537 @ 4.6643