Nasdaq futures slide as Tesla and Netflix results damp earnings optimism

2023-07-20 - Scroll down for original article

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Nasdaq futures were underperforming early Thursday, after results from Tesla and Netflix were not very well received by traders. On Wednesday, the Dow Jones Industrial Average DJIA, +0.31% rose 109 points, or 0.31%, to 35061, the S&P 500 SPX, +0.24% increased 11 points, or 0.24%, to 4566, and the Nasdaq Composite COMP, +0.03% gained 4 points, or 0.03%, to 14358. What’s driving markets Investors were being reminded Thursday that when stocks rise swiftly and are afforded rich valuations, earnings results that are good on the surface still may not be good enough. The S&P 500 and the Nasdaq Composite closed the previous session at 15-month highs having jumped 18.9% and 37.2% respectively for the year to date, as cooling inflation revived hopes that the Federal Reserve can soon stop raising borrowing costs. Helping drive those gains were Tesla TSLA, -0.71% , up 136% so far in 2023, to sport a price-to-projected 2023 earnings ratio of 86, and Netflix NFLX, +0.59% , up 62% and a P/E ratio of 42, according to FactSet. But results and comments from both market darlings, released after Wednesday’s close, have been found wanting. Shares in Tesla were off 4% in premarket action and Netflix was sliding 8%, dragging futures for the tech-focused Nasdaq 100 lower. “Netflix missed sales estimates and issued lower-than-expected Q3 guidance, while Tesla’s results showed shrinking profitability with squeeze on margins,” said Henry Allen, strategist at Deutsche Bank. Susannah Streeter, head of money and markets at Hargreaves Lansdown, said that both could be vulnerable to a deterioration in household sentiment. “Concerns are growing that a slowing economy, combined with the erosion of lockdown savings will weigh further on spending on discretionary goods and services, particularly big-ticket items like cars and nice to have but not necessary streaming accounts in the months ahead,” said Streeter. Still, the earnings come thick and fast. America Airlines AAL, -0.43% , Johnson & Johnson JNJ, -0.20% and Blackstone BX, +1.21% are among those delivering figures before the opening bell, while after the close its the turn of Capital One COF, +1.63% , CSX CSX, +0.15% and First Financial Bank FFBC, +4.21% , to name a few. U.S. economic updates set for release on Thursday include the weekly initial jobless claims and the Philadelphia Fed manufacturing survey for June, both at 8:30 a.m. Eastern. The June existing home sales and leading economic indicators will be released at 10 a.m.