Wall Street down after two consecutive sessions of rises, despite the good news coming from the corporate front, which sees the Netflix quarterly as the protagonist.
The stock of the American video streaming giant jumped 13% on Wall Street, after the release of a budget that beat analysts’ expectations. Netflix shares also benefit from the upgrade by JP Morgan analysts, who upgraded the rating from “neutral” to “overweight”, raising the target price from $ 240 to $ 330.
The group’s quotes travel to the record of the last few months.
However, Netflix is not enough to make the earnings that Wall Street has collected in previous sessions sustainable. Fears of a recession and stubbornly high inflation continue to haunt market participants.
Interviewed by Cnbc Gene Goldman, investment manager of Cetera Investment Management, stressed that, although a moderate recession is possible, the market could still struggle to accept downgrades on the profits of listed companies:
“Estimates of earnings growth for companies listed on the S&P 500, expected at a rate of between 7% and 9% year-on-year, are a little too high. Slowing economic growth and Fed rate hikes are likely to put earnings pressure on them. And given that earnings affect stock prices, their downward revision could put the markets under pressure for some time ”.
Yesterday another session of buy for Wall Street, which saw the Dow Jones Industrial Average jump 337.98 points, + 1.12%, to close at 30,523.80 points; the S&P 500 gained 1.14% to 3,719.98, while the Nasdaq Composite was up 0.90%, to 10,772.40.
At about 1 pm Italian time, the Dow Jones is back by more than 100 points (-0.35%); the S&P 500 drops 0.71% and the Nasdaq Composite leaves 0.90% on the ground.
After the end of yesterday’s session, the accounts of the video streaming giant Netflix arrived, which announced that it had reported revenues in the third quarter of $ 7.93 billion, significantly higher than the expected $ 7.85 billion and an eps on an adjusted basis. of $ 3.10, well above the $ 2.22 expected by the consensus of analysts polled by Bloomberg. On a net basis, the number of subscribers increased by 2.41 million, against the expected increase of 1 million.
Net-based subscriber growth was the first this year: in the first and second quarters, Netflix lost 200,000 and 970,000 subscribers, respectively.
It turns around between the titles of the video streaming groups Roku, initially infected by the Netflix rally, while Disney remains positive, with an increase of about 1.5%.
Financial results from Tesla and IBM are expected today.
In the meantime, the Tesla stock turns around the pre-market trend and drops about 0.90%: IBM travels just below par.
Investors are also looking at the uncomfortable rumors about Apple. According to some rumors, Big Tech would have asked a supplier to stop the production of a component of the iPhone 14 Plus, at a time when it re-evaluates the trend in demand for its products.
The Information website specifically announced that one of Apple’s suppliers in China would have received the order to stop production immediately, less than 15 days after the debut of the new smartphone, and that two other Apple suppliers would have asked to proceed. with strong cuts.
In Asia, the stocks of Apple’s suppliers have turned around, while on Wall Street the prices of the American giant fall by 0.50%.
The new flare-up in US Treasury rates is highlighted: 10-year yields fly above the 4.1% threshold and two-year yields exceed 4.5%, a record level since 2007. The markets are now pricing in the fourth consecutive hike in interest rates on fed funds by the Fed of Jerome Powell, equal to 75 basis points, in the next meeting of the FOMC, the monetary policy arm of the American central bank. The Fomc meeting is scheduled for the next 1-2 November.
Nick Colas of DataTrek Research commented on the market trend, underlining that, positive, is the fact that “corporate earnings can somehow lift investor sentiment, considering the fact that the indices are oversold and that expectations are been reduced “.
This factor should therefore assist equities but, added Colas, “we believe that traders and investors should be cautious and not expect too much from this rally, until we see the 2 and 10 year rates start to fall. “.
And in fact, the rally – as today’s session confirms – has already flared up, despite the good news from Netflix.
The protagonist is also United Airlines today, whose stock jumped by more than 7% after the quarterly report released by the American airline.
United Airlines announced that it ended the third quarter with adjusted earnings per share of $ 2.81, better than the consensus expected $ 2.28 per share, and with revenue of $ 12.88 billion, better than $ 12.55 billion. foreseen.