Nasdaq, S&P 500 Futures Slump Ahead Of Netflix Earnings, Another Batch Of Economic Data

Zinger Key Points
  • The earnings season could prove to be a challenging period for the market as traders weigh in on the hits and misses.
  • Economic data has mostly disappointed since the start of the year, adding credence to the theory of an imminent recession.

The index futures point to a moderately lower opening for Wall Street stocks on Thursday, as the negative sentiment carries over into the new trading day.

What Happened: Apprehensions concerning earnings and economic growth appear to have served as a dampener, stifling the nascent recovery that has been taking root in the equity markets since the start of the year.

See Also: Best Futures Brokers

U.S. stocks ended Wednesday’s session sharply lower, reacting to another batch of negative economic data and hawkish Fed speeches. Even as producer prices retreated more than expected, separate reports showed worse-than-expected retail sales and industrial output data. Federal Reserve’s Beige Book also raised the specter of little growth in the months ahead.

Investors, who reacted positively to bad data for most of the past year, are apparently now more worried about growth than inflation.

The major averages opened higher and built up some early momentum only to lose ground in late-morning trading. They declined steadily through the rest of the session and ended near the lows of the session, with the Nasdaq Composite Index breaking a seven-session losing streak.

Consumer staple, utility, real estate, energy, financial, industrial and IT services stocks plunged in a session that saw a broad-based sell-off.

U.S. Indices' Performance On Wednesday
Index Performance (+/-)   Value
Nasdaq Composite -1.24%   10,957.01
S&P 500 Index -1.56%   3,928.86
Dow Industrials -1.81%   33,296.96

Ahead of Wednesday’s retreat, Morgan Stanley equity strategist Michael Wilson said the S&P 500 has simply rallied into key resistance yet again. Until the resistance is broken convincingly, there is no reason to change the firm’s view for lower lows, given its earnings forecast, he said.

“We welcome the change in sentiment and positioning over the past few weeks as a necessary development for the last stage of this bear market to play out,” Wilson said.

Here’s a peek into index futures trading:

U.S. Futures' Performance On Thursday
Index Performance (+/-)  
Nasdaq 100 Futures -0.61%  
S&P 500 Futures -0.57%  
Dow Futures -0.59%  
R2K Futures -0.67%  

In premarket trading on Thursday, the SPDR S&P 500 ETF Trust SPY fell 0.51%, to $389.50, and the Invesco QQQ Trust QQQ retreated 0.60%, to $276.22, according to Benzinga Pro data.

On the economic front, the Labor Department is scheduled to release its weekly jobless claims report at 8:30 a.m. EST. The number of individuals claiming unemployment benefits is expected at 214,000 for the week ended Jan. 14, up from 205,000 the previous week.

Around the same time, the Philadelphia Federal Reserve is due to release the second manufacturing data for the year. The regional Fed’s diffusion index of manufacturing activity is expected to rise slightly from -13.8 in December to -11 in January. Traders could closely watch the reading after the Empire State Manufacturing survey results disappointed.

The Commerce Department will release its housing starts and building permits report at 8:30 a.m. EST. Housing starts may have slipped further from 1.427 units in November to 1.359 units in December, while building permits, an indicator of future housing activity, may have seen a slight uptick from 1.351 million units to 1.370 million units.

Boston Fed President Susan Collins is scheduled to speak at 9 a.m. EST.

The Energy Information Administration will release its weekly oil inventory report for the week ended Jan. 13, a day later than the customary Wednesday schedule due to Monday’s federal holiday. The report is due at 11 a.m. EST.

The Treasury will auction 10-year TIPS at 1 p.m. EST.

Fed Vice Chair Lael Brainard is scheduled to make a public appearance at 1:15 p.m. EST. Federal Open Market Committee member and New York Fed President John Williams is due to speak at 6:35 p.m. EST.

Stocks In Focus:

  • Alcoa Corp. AA and Discover Financial Services Inc. DFS traded down over 10% each in premarket trading, in reaction to their quarterly results reported after the close.
  • Tesla Inc. TSLA dropped over 1.30%. Piper Sandler analyst Alexander Potter lowered the price target on the shares from $340 to $300.
  • German vaccine maker CureVac Inc. CVAC was soaring over 10% after UBS upgraded the stock.
  • The earnings schedule of the day has American Airlines Group Inc. AAL and Procter & Gamble Company PG reporting ahead of the market open and Netflix Inc. NFLX chiming in after the close.

Commodities, Other Global Markets:

Crude oil futures were receding for a second straight session amid concerns regarding a global economic slowdown, which will likely impact demand. A barrel of WTI-grade crude oil fell over 1% and traded at $78.90.

The 10-year Treasury note continues to slide and traded at 3.355%, down 0.02 points.

The Asia-Pacific markets closed Thursday’s session on a mixed note. While Japan’s Nikkei 225 average fell 1.44%, the Chinese, Indonesian, South Korean and Australian markets ended moderately lower. The listless trading reflected the negative cues from Wall Street overnight.

European stocks opened lower and have dropped further in late-morning trading.

Read Next: Will This Week Bring Investors Good News? Netflix, Goldman, P&G And Other Key Earnings Reports To Watch

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Posted In: EarningsNewsSmall CapTop StoriesEconomicsFederal ReservePre-Market OutlookFederal Open Market CommitteeInflationNasdaq Composite IndexRecessionS&P 500US markets
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