By Peter Nurse
Investing.com — U.S. stocks are seen opening marginally lower Wednesday, handing back some of the previous session’s sharp gains although healthy results from streaming giant Netflix are likely to limit the losses as the corporate earnings deluge continues.
At 07:00 AM ET (1100 GMT), the Dow Futures contract was down 80 points, or 0.3%, S&P 500 Futures traded 10 points, or 0.3% lower, and Nasdaq 100 Futures dropped 20 points, or 0.2%.
The main indices on Wall Street closed firmly higher Tuesday, with the blue-chip Dow Jones Industrial Average gaining over 750 points, or 2.4%, the broad-based S&P 500 rose 2.8%, and the tech-heavy Nasdaq Composite climbed 3.1%.
More than half of the S&P 500 companies to report so far have beaten expectations, and Netflix (NASDAQ:NFLX) added to that number after the close Tuesday, predicting it would return to customer growth this quarter, after losing just less than 1 million subscribers in the quarter, much better than the 2 million it had previously projected.
A slew of earnings is left to come this week from a wide range of companies, including Tesla (NASDAQ:TSLA) and Abbott Laboratories (NYSE:ABT) on Wednesday, with investors wondering what executives will say about the outlook moving into the second half of the year.
The latest monthly fund manager survey by Bank of America indicated that investors have slashed their exposure to risk assets to levels not seen even during the global financial crisis, with global growth and profit expectations sinking to all-time lows.
This suggests the market is in full capitulation mode, potentially setting up a buying opportunity, according to the report.
The Federal Reserve is widely expected to raise rates later this month from the current 1.75%, although expectations of a super-sized 1% hike have gradually lessened.
Blackstone expects the Fed to hike by 75 basis points in the July meeting, but the investment bank also stated that the central bank will need to go on a longer tightening cycle and raise interest rates well into next year to control inflation, potentially raising the Fed Funds rate “closer to 5%”.
Turning to economic data, existing home sales are expected at 10:00 AM ET (1400 GMT). Analysts expect an annualized number of 5.38 million for June, which compares with 5.4 million in the prior month, although a further drop is possible after housing starts fell in June to their lowest point since September.
Oil prices slipped lower Wednesday as industry data pointed to weakening demand in the U.S., the largest consumer in the world.
Numbers from the American Petroleum Institute on Tuesday showed U.S. stocks of crude rose by 1.86 million barrels last week, while gasoline inventories rose by 1.29 million barrels, following on from an increase of 2.9 million barrels the previous week.
The back-to-back increases in inventories, even during the busy summer driving season, suggests demand for fuel could be ebbing, and throws the official release from the U.S. Energy Information Administration later in the session firmly into focus.
By 07:00 AM ET, U.S. crude futures traded 1.6% lower at $99.12 a barrel, while the Brent contract fell 1.4% to $105.83.
Additionally, gold futures fell 0.2% to $1,707.70/oz, while EUR/USD traded 0.2% higher at 1.0240.