Stock futures give up earlier gains, turn negative despite Netflix’s strong performance
US stock futures gave up gains from earlier in the day on Wednesday, even after the release of strong quarterly results from Netflix.
Dow Jones Industrial Average futures were down 120 points, or 0.4%. S&P 500 and Nasdaq 100 futures traded lower by 0.5% each.
Netflix shares rose 13% after the streaming giant posted revenue and earnings that beat estimates, as well as strong subscriber growth for the third quarter. Other technology-related names such as Meta, Amazon and Microsoft traded higher in the premarket.
Those results come as some on Wall Street reset their earnings forecasts lower as investors worry about a recession. Gene Goldman, chief investment officer at Cetera Investment Management, said that while an economic recession may be mild, the market can struggle with these downgrades.
“Earnings estimates are a little too high for the S&P 500 at 7% to 9% per year going forward,” he said. “Slowing economic growth and Fed interest rate hikes are likely to put downward pressure on earnings. Because earnings drive stock prices, they could push markets for a while.”
Tech earnings will be in full swing next week, but IBM and Tesla are on deck to report on Wednesday. Social media company Snap will report later this week.
In economic data, investors are looking forward to housing starts on Wednesday. The Federal Reserve’s so-called Beige Book, the central bank’s report on the current state of the economy, will also come out.
Wednesday’s move came after another strong day for stocks, with the Dow rallying around 337 points on Tuesday and the S&P 500 gaining 1.1%.
