Nasdaq Futures Climb on Upbeat Netflix Results, Powell Speech in Focus

December Nasdaq 100 E-Mini futures (NQZ23) are trending up +0.35% this morning as upbeat earnings results from Netflix overshadowed disappointing Tesla results while investors looked ahead to a speech by Federal Reserve Chairman Jerome Powell.

Netflix Inc (NFLX) surged about +13% in pre-market trading after the company reported stronger-than-expected Q3 EPS, posted its best subscriber growth in years, and confirmed it would start raising prices. At the same time, Tesla Inc (TSLA) slid over -5% in pre-market trading after the Austin-based company reported weaker-than-expected Q3 results.

In Wednesday’s trading session, Wall Street’s major averages ended lower. United Airlines Holdings Inc (UAL) plunged over -9% after the carrier provided weaker-than-expected Q4 EPS guidance. Also, Morgan Stanley (MS) slid more than -6% after reporting weaker-than-expected Q3 wealth management net revenue. In addition, Albemarle Corp (ALB) tumbled over -9% after Bank of America Global Research downgraded the stock to Underperform from Neutral. On the bullish side, Procter & Gamble Company (PG) rose more than +2% after the company reported Q1 revenue, EPS, gross margin, and organic sales that surpassed analysts’ estimates. Also, Nasdaq Inc (NDAQ) climbed about +4% after delivering upbeat Q3 results. 

Economic data on Wednesday showed that U.S. September Housing Starts stood at 1.358M, compared to a consensus of 1.380M. Also, U.S. Building Permits came in at 1.473M in September, stronger than expectations of 1.455M.

Fed Governor Christopher Waller stated Wednesday that policymakers can wait and collect more data before deciding whether the economy necessitates further monetary restraint, indicating his preference for keeping rates unchanged next month. “I believe we can wait, watch, and see how the economy evolves before making definitive moves on the path of the policy rate,” Waller said. Also, New York Fed President John Williams said interest rates would need to remain at restrictive levels “for some time” to lower inflation to the U.S. central bank’s 2% target.

U.S. rate futures have priced in a 6.1% chance of a 25 basis point rate increase at November’s monetary policy meeting and a 36.8% chance of a 25 basis point rate hike at the conclusion of the Fed’s December meeting.

Federal Reserve Chairman Jerome Powell will speak at the Economic Club of New York later today. Market participants will closely watch whether the strong jobs and CPI data for September prompt Powell to deliver hawkish remarks in alignment with the widespread anticipation of higher rates for longer.

On the earnings front, notable companies like Philip Morris (PM), Union Pacific (UNP), Blackstone (BX), and AT&T (T) are set to report their quarterly figures today.

Meanwhile, investors are keeping a close watch on Middle East peace efforts, with United Nations Secretary-General Antonio Guterres traveling to Egypt and U.K. Prime Minister Rishi Sunak embarking on a two-day visit to the region following U.S. President Joe Biden’s recent trip to Israel.

Today, all eyes are focused on the U.S. Philadelphia Fed manufacturing index in a couple of hours. Economists, on average, forecast that the October Philadelphia Fed manufacturing index will come in at -6.4, compared to the previous value of -13.5.

Also, investors will likely focus on U.S. Existing Home Sales data, which stood at 4.04M in August. Economists foresee the new figure to be 3.89M.

U.S. Initial Jobless Claims data will be reported today as well. Economists estimate this figure to be 212K, compared to last week’s value of 209K.

In the bond markets, United States 10-year rates are at 4.979%, up +1.53%.

The Euro Stoxx 50 futures are down -0.63% this morning, hitting an over 1-week low as a jump in bond yields, tensions in the Middle East, and a series of disappointing corporate earnings kept investors risk-averse. Automobile and rate-sensitive real estate stocks fell the most on Thursday. In corporate news, Nestle Sa (NESN.Z.IX) fell over -2% after the KitKat maker reported the slowest sales growth in almost three years. Also, Nokia Oyj (NOKIA.H.DX) slid more than -4% after the company reported a drop in Q3 sales and announced intentions to reduce its workforce by up to 14,000 positions. In addition, Renault (RNO.FP) slumped over -8% after the French carmaker’s Q3 revenue missed analysts’ expectations.

France’s Business Survey was released today.

The French October Business Survey stood at 98, weaker than expectations of 99.

Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -1.74%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.91%.

China’s Shanghai Composite today closed lower as investor sentiment continued to be subdued despite indications of stabilization in certain sectors of the economy. Official data showed on Thursday that new home prices in China declined for the third consecutive month in September, highlighting persistently weak demand despite the government’s attempts to revive the crisis-hit real estate sector. Meanwhile, China’s largest private real estate developer, Country Garden, was scheduled to make a coupon payment on a bond on Wednesday, but bondholders told Reuters they were yet to receive it, potentially marking the real estate giant’s first-ever default. In corporate news, major Hong Kong-listed electric vehicle makers experienced a significant decline on Thursday, mirroring the drop in Tesla following the release of disappointing Q3 results. Tech giants traded in Hong Kong also slumped. In other news, foreign capital witnessed net outflows of 11.7 billion yuan through the northbound trading link, the largest daily outflow in two months.

Japan’s Nikkei 225 Stock Index closed sharply lower today as continued worries over unrest in the Middle East and the Fed’s rate trajectory dampened risk appetite. Heavyweight chip-related stocks underperformed on Thursday amid a spike in bond yields. As a result, chip-making equipment maker Tokyo Electron Ltd plunged over -4% and chip-testing equipment maker Advantest Corp slumped more than -3%. Automobile stocks also retreated, with Mitsubishi Motors falling over -4%, Nissan Motor Co Ltd slipping more than -2% and Toyota Motor Corp dropping nearly -1%. Data from the Ministry of Finance showed Thursday that Japan’s exports grew for the first time in three months in September, primarily driven by the growth in shipments of automobiles and automotive parts. Meanwhile, Japanese government bond yields climbed to fresh decade highs on Thursday following the uptick in U.S. Treasury yields, driven by concerns that the Federal Reserve would keep interest rates higher for an extended period. In other news, Makoto Sakurai, a former board member of the Bank of Japan, said that the central bank might scrap negative interest rates by the end of this year to adjust the currently excessive level of monetary easing. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +7.00% to 22.47.

“The level of uncertainty is high, making it difficult to buy dips in stock prices,” said Mitsunari Akino, a director at Ichiyoshi Asset Management.

The Japanese September Trade Balance has been reported at +62.4B, stronger than expectations of -425.0B.

The Japanese September Exports stood at +4.3% y/y, stronger than expectations of +3.1% y/y.

The Japanese September Imports came in at -16.3% y/y, weaker than expectations of -12.9% y/y.

Pre-Market U.S. Stock Movers

Netflix Inc (NFLX) surged about +13% in pre-market trading after the company reported stronger-than-expected Q3 EPS, posted its best subscriber growth in years, and confirmed it would start raising prices.

Tesla Inc (TSLA) slid over -5% in pre-market trading after the Austin-based company reported weaker-than-expected Q3 results.

Las Vegas Sands Corp (LVS) climbed more than +5% in pre-market trading after the company reported stronger-than-expected Q3 revenue and announced a $2 billion stock buyback reauthorization.

Lam Research Corp (LRCX) fell over -2% in pre-market trading after the semiconductor equipment firm reported better-than-expected Q1 results but provided mixed Q2 guidance.

Zscaler Inc (ZS) rose more than +2% in pre-market trading after Jefferies upgraded the stock to Buy from Hold.

Fortinet Inc (FTNT) dropped over -1% in pre-market trading after Jefferies downgraded the stock to Hold from Buy.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Thursday - October 19th

Philip Morris (PM), Union Pacific (UNP), Blackstone (BX), AT&T (T), Intuitive Surgical (ISRG), Marsh McLennan (MMC), CSX (CSX), Freeport-McMoran (FCX), Truist Financial Corp (TFC), Genuine Parts (GPC), Fifth Third (FITB), Watsco (WSO), Snap-On (SNA), Pool (POOL), KeyCorp (KEY), Knight-Swift Trans (KNX), American Airlines (AAL), East West Bancorp (EWBC), Webster Financial (WBS), Iridium (IRDM), Western Alliance (WAL), Home BancShares (HOMB), Alaska Air (ALK), Bank Ozk (OZK), Badger Meter (BMI), ManpowerGroup (MAN), Glacier (GBCI), WNS Holdings (WNS), Texas Capital (TCBI), WD-40 (WDFC), Associated Banc-Corp (ASB), Atlantic Union (AUB), Independent Bank (INDB), BankUnited (BKU), Triumph Bancorp (TFIN), Lindsay (LNN), 1st Source (SRCE), S&T Bancorp (STBA), OceanFirst (OCFC), Dime Community (DCOM), Amerant Bancorp A (AMTB), Insteel Industries (IIIN), Heritage Financial Co (HFWA), Five Point (FPH), Metropolitan Bank (MCB).

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