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Beyond the Numbers

Netflix Likely To Lead Continued Pullback By The Nasdaq
4/21/2021 8:50 AM

The major U.S. index futures are currently pointing to a lower open on Wednesday, with stocks likely to see further downside following the pullback seen over the two previous sessions.

The Nasdaq futures are pointing to a lower open than their counterparts, with a steep drop by shares of Netflix (NFLX) likely to weigh on the tech-heavy index.

Netflix is tumbling by 8.3 percent in pre-market trading after the video streaming giant reported first quarter earnings and revenues that beat estimates but much weaker than expected subscriber growth.

As earnings season continues to pick up steam, most major companies have reported better than expected quarterly results.

However, buying interest has remained subdued over the past few sessions, as the upbeat results have been overshadowed by valuation concerns.

A number of big-name companies are scheduled to report their results in the coming days, including Intel (INTC), American Airlines (AAL), AT&T (T), American Express (AXP) and Honeywell (HON).

The U.S. economic calendar remains quiet for the third straight day following the avalanche of data seen to close out the previous week.

Looking ahead, trading on Thursday may be impacted by reaction to reports on weekly jobless claims and existing home sales.

Following the pullback seen on Monday, stocks saw further downside during the trading day on Tuesday. The major averages all showed notable moves to the downside on the day.

The major averages climbed off their worst levels of the day but still closed firmly in negative territory. The Dow slid 256.33 points or 0.8 percent to 33,821.30, the Nasdaq slumped 128.50 points or 0.9 percent to 13,786.27 and the S&P 500 fell 28.32 points or 0.7 percent to 4,134.94.

The weakness that emerged on Wall Street came as traders continued to cash in on the recent strength in the markets.

Profit taking also contributed to the pullback on Monday after the Dow and the S&P 500 ended last Friday's trading at new record closing highs.

A new wave of coronavirus infections overseas also weighed on the markets amid concerns about new restrictions and the impact on the global economy.

Meanwhile, traders largely shrugged off upbeat earnings news from companies like Procter & Gamble (PG), Johnson & Johnson (JNJ) and Travelers (TRV).

Energy stocks showed a substantial move to the downside on the day, moving lower along with the price of crude oil.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plunged by 4.6 percent and the NYSE Arca Oil Index tumbled by 3.1 percent.

Significant weakness was also visible among airline stocks, resulting in 4.4 percent nosedive by the NYSE Arca Airline Index. The index ended the session at a two-month closing low.

United Airlines (UAL) helped lead the sector lower, plummeting by 8.5 percent after reporting a wider than expected first quarter loss.

Housing, financial, and tobacco stocks also saw considerable weakness, while interest rate-sensitive utilities and commercial real estate stocks bucked the downtrend.

Commodity, Currency Markets

Crude oil futures are plunging $1.64 to $61.03 a barrel after sliding $0.76 to $62.67 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,788.20, up $9.80 compared to the previous session’s close of $1,778.40. On Tuesday, gold climbed $7.80.

On the currency front, the U.S. dollar is trading at 108.04 yen compared to the 108.11 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.2010 compared to yesterday’s $1.2036.

Asia

Asian stocks ended deep in the red on Wednesday as a resurgence of coronavirus infections in some countries cast doubt over an economic rebound from the pandemic.

Chinese shares recovered from an early slide to end largely unchanged on the back of upbeat earnings results from some banks. Hong Kong's Hang Seng Index ended down 513.81 points, or 1.8 percent, at 28,621.92.

Japanese shares tumbled as investors braced for another state of emergency expected to be imposed in the capital and other major cities.

The Nikkei 225 Index slumped 591.83 points, or 2 percent, to 28,508.55 as the country reported nationwide daily infections of around 4,500. The broader Topix closed 2 percent lower at 1,888.18.

Market heavyweight SoftBank Group rose over 1 percent, while Uniqlo operator Fast Retailing lost 2 percent.

Automakers Honda Motor, Toyota and Nissan fell between 1.9 percent and 2.6 percent, while shares of Mitsubishi Motors lost plunged 5.4 percent. In the tech space, Advantest, Tokyo Electron and Screen Holdings fell around 3 percent.

Australian markets extended losses from the previous session as a new case of the novel coronavirus detected at Auckland airport sparked worries of a pause in the trans-Tasman quarantine-free travel.

The benchmark S&P/ASX 200 Index slipped 20.30 points, or 0.3 percent, to 6,997.50, while the broader All Ordinaries Index ended down 23.20 points, or 0.3 percent, at 7,258.90.

Travel-related stocks paced the decliners, with Qantas Airways and Flight Centre Travel ending down 1.4 percent and 1.9 percent, respectively.

Mining giant BHP Group eased half a percent after reporting a 4 percent decrease in third quarter iron-ore output.

Energy stocks such as Woodside Petroleum, Santos, Origin Energy and Oil Search dropped 1-2 percent as oil prices fell for a second day on fears that the world's third-biggest oil importer India may impose new restrictions on movement.

In economic news, the value of retail sales in Australia was up a seasonally adjusted 1.4 percent sequentially in March, official data showed. That beat expectations for an increase of 1.0 percent.

Seoul stocks ended lower to snap a seven-day winning streak. The benchmark Kospi dropped 49.04 points, or 1.5 percent, to close at 3,171.66 as investors cashed in recent gains amid valuation concerns. Market heavyweight Samsung Electronics fell 1.6 percent and No. 2 chipmaker SK Hynix tumbled 4.3 percent.

Europe

European stocks have advanced on Wednesday as investors digest a batch of strong earnings and look ahead to the ECB rate decision for directional cues.

The European Central Bank holds a policy meeting on Thursday, with investors hoping the meeting will give more clarity about the central bank's stimulus plans.

The French CAC 40 Index is up by 0.4 percent and the U.K.’s FTSE 100 Index is up by 0.2 percent, although the German DAX Index is just below the unchanged line.

ASML Holding shares have moved sharply higher after the semiconductor equipment maker boosted its revenue guidance for 2021.

Brewer Heineken has also shown a strong move to the upside after reporting a higher net profit in the first quarter.

Pharmaceutical group Roche Holding has also risen after confirming its outlook for the year.

Metro AG shares have also advanced. The wholesale food distributor updated its revenue and earnings forecasts for the full fiscal year and said that first-half figures were in line with guidance.

Grocer Carrefour has also surged after it reported higher first quarter sales and announced that it is launching a share buyback program worth at least €500 million.

Luxury goods company Kering has also moved to the upside. The firm's first quarter sales topped forecasts as leading brand Gucci returned to growth.

Pharmaceutical company Hikma has also rallied after announcing it has resumed the launch of its generic version of GlaxoSmithKline's asthma treatment Advair Diskus in the United States.

Meanwhile, shares of Juventus Football Club have plunged as all six English teams backed out of plans for an elite Super League after a storm of protest from supporters.

Bunzl has also fallen. The distribution and services firm reported a rise in first quarter revenue and maintained its outlook for the rest of the year.

Kier Group shares have also slumped. The construction company plans to raise 190-240 million pounds by offering new shares in the coming weeks.

In economic news, U.K. consumer prices advanced 0.7 percent year-on-year in March, faster than the 0.4 percent increase seen in February, data from the Office for National Statistics revealed.

U.K. average house prices grew 8.6 percent year-on-year in February, faster than the 8 percent increase in January, another report showed. This was the fastest growth since October 2014.

U.S. Economic Reports

The Energy Information Administration is scheduled to release its report on oil inventories in the week ended April 16th at 10:30 am ET.

Crude oil inventories are expected to decrease by 3.9 million barrels after falling by 5.9 million barrels in the previous week.

At 1 pm ET, the Treasury Department is due to announce the results of this month’s auction of $24 billion worth of twenty-year bonds.

Stocks In Focus

Shares of Welbilt (WBT) are moving sharply higher in pre-market trading after the foodservice equipment maker agreed to be acquired by rival Middleby (MIDD) in an all-stock transaction with an implied enterprise value of $4.3 billion.

Surgical device maker Intuitive Surgical (ISRG) is also likely to see initial strength after reporting first quarter results that exceeded analyst estimates on both the top and bottom lines.

Shares of Tenet Healthcare (THC) may also move to the upside after the hospital operator reported better than expected first quarter results and raised its full-year guidance.

On the other hand, shares of CSX Corp. (CSX) are moving lower in pre-market trading after the rail operator reported first quarter earnings that missed analyst estimates.
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