Wall Street On Track For 6th Day Of Losses? Netflix, Geopolitical Tensions Drag Futures Down: Analyst Tells Why Next 2 Weeks Are Pivotal

Zinger Key Points
  • April-May weakness is typical during election years before stocks rebound in the final 7 months of the year, an analyst says.
  • While Dow firmed up on Thursday, the Nasdaq Composite and the S&P 500 extended their losing streak for the fifth session.

U.S. stocks appear headed for another losing day, potentially marking a sixth consecutive session in the red for Wall Street. While index futures on Friday clawed back some earlier losses, sentiment remains fragile following Israel’s missile strikes on Iran in response to drone attacks and as explosions were reported in Syria and Iraq.

Netflix, Inc. NFLX, the first major tech company to report earnings, disappointed investors with comments about ending membership guidance. Investors may also turn their attention to upcoming regional bank earnings reports. With commodities retreating from their initial spikes and bond yields falling, a potential reversal in sentiment remains in play despite the extended decline.

The session will also likely see volatility as options contracts tied to about $3 trillion in stocks, equity indexes, and exchange-traded funds expire on Friday.

Futures Performance On Friday ( as of 6:20 a.m. EDT)

FuturesPerformance (+/-)
Nasdaq 100-0.63%
S&P 500-0.42%

In premarket trading on Friday, the SPDR S&P 500 ETF Trust SPY fell 0.41% to $497.49, and the Invesco QQQ ETF QQQ gained 0.67% to $420.58, according to Benzinga Pro data.

Cues From Previous Session:

Stocks struggled to gain momentum on Thursday, remaining in a lackluster phase despite mostly positive economic data that pushed bond yields higher. The S&P 500 saw its first losing streak of this length since late October, just before the current bull market began, while the Nasdaq experienced its longest negative run since January, per CNBC.

Jobless claims came in below expectations, and Philadelphia’s regional manufacturing activity saw significant expansion, although the Conference Board’s leading economic index fell more than anticipated. Additionally, apprehension ahead of the tech reporting season contributed to overall market sentiment. However, sectors like consumer staples, communication services, and financials offered some support.

IndexPerformance In (+/-)Value
Nasdaq Composite-0.52%15,601.50
S&P 500 Index-0.22%5,011.12
Dow Industrials+0.06%37,775.38
Russell 2000-0.26%1,942.96

Insights From Analysts:

Fund manager Louis Navellier said the next two weeks are pivotal to the earnings season, with Tesla, Inc. TSLA, Meta Platforms, Inc. META, and Alphabet, Inc. GOOGL GOOG reporting next week, and Amazon, Inc. AMZN and Apple, Inc. AAPL the week after and Nvidia Corp. NVDA on May 22. 

“These names have been driving earnings growth and their strength is necessary to mount further index growth due to their heavy weight in the indexes,” he said.

Another analyst flagged the possibility of a potential rebound in the coming months. Almanac Traders’ Jeffrey Hirsch said when the first quarter fares well during a presidential election year, one can expect gains solid gains in the final seven months of the year.

“Big Election Year Q1s Dip April-May Before Gains Last 7 Months,” he said in a post, adding that 2024 was the third-best election year first quarter since 1950.

Upcoming Economic Data:

Chicago Fed President Austan Goolsbee is scheduled to speak at 10:30 a.m. EDT.

See Also: How To Trade Futures

Stocks In Focus:

  • Netflix fell about 6% in premarket trading following its quarterly results, while Intuitive Surgical, Inc. ISRG gained over 1.50%.
  • Big techs such as Tesla, Nvidia, and Advanced Micro Devices, Inc. NVDA all retreated in premarket.
  • Coinbase Global, Inc. COIN shares rose as cryptocurrencies gained ground on the geopolitical tensions.
  • Paramount Global PARA gained over 9% after a Bloomberg report said Apollo Global Management Inc. and Sony Group Corp. SONY were considering a joint offer for the company.
  • American Express Co. AXP, Fifth Third Bancorp FITB, Huntington Bancshares Incorporated HBAN, Regions Financial Corporation RF, Procter & Gamble Company PG and Schlumberger Limited SLB are among those reporting earnings ahead of the market open.

Commodities, Bonds, and Global Equity Markets:

Crude oil futures, which spiked past the $86-a-barrel mark in early Asian hours following the Israeli attacks, have come notably off the level. At last check, a barrel of oil fetched a little over $82. Gold futures hit as high as $2,433 a troy ounce but has slipped back since then and traded below the $2,400 mark.

The 10-year note yield has pulled back the 4.60% level.

Bitcoin BTC/USD rallied past the $65K mark, thanks to the uncertainty triggered by the geopolitical tension and the optimism ahead of the halving event. It rose over 5.60% at the last check. The halving is expected to happen anytime between Friday and Saturday when 840,000 Bitcoins have been mined. Bitcoin tracking website Bitaps shows that 839,916 Bitcoins are currently in circulation. 

Most Asian markets fell sharply on Friday on the geopolitical tensions, led lower by the Japanese market. The Indian and the Malaysian markets bucked the downtrend. Parliamentary elections are underway in India to elect the next head of state, with the ruling coalition projected to win by opinion poll.

European stocks traded moderately lower in early trading.

Read Next: Cathie Wood Sees Value In Tesla Wreckage As Ark Buys $13M Worth Of EV Giant’s Stock, Loads Up On Bitcoin And Ethereum ETFs

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Posted In: EarningsEquitiesNewsFuturesPreviewsTop StoriesEconomicsFederal ReservePre-Market OutlookMarketsMoversTrading IdeasAustan GoolsbeeLouis NavellierUS market preview
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