Dow Futures Slip Lower as COVID Tames Recovery Bets; Netflix Slumps

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The Wednesday Market Minute

  • Global stocks mixed as Europe rebounds from its worst session of the year on solid earnings while Asia slumps amid another surge in coronavirus infections.
  • World economic forecasts now in questions as travel restrictions add to concerns that the latest infection wave will delay re-openings and investment as developing nations struggle to manage vaccine programs.
  • European earnings impress, with collective Stoxx 600 profits expected to rise 61% from last year, while U.S. earnings remain on past for their best quarter in at least four years.
  • Benchmark 10-year note yields ease to 1.571% in overnight trading ahead of a $24 billion auction of 20-year Treasury bonds later today.
  • CDC data shows 86.2 million Americans have now been fully vaccinated against the coronavirus, with around 213.4 million doses administered as of Tuesday.
  • U.S. equity futures suggest a modestly lower open on Wall Street ahead of earnings from Verizon, Haliburton and Whirlpool.

U.S. equity futures edged lower in early Wednesday trading, following the first back-to-back declines in more than a month, as stock markets struggled to find direction amid an uptick in coronavirus infections in Asia and impressive corporate earnings growth in Europe and north America.

Safe-haven moves into the U.S. dollar, which leaped from a seven-week low to 91.327 against a basket of its global peers, and falling benchmark Treasury bond yields suggest investors are adopting a cautious stance on risk as infections surge in Asia and South America more than fifteen months in to the deadly pandemic.

In the U.S., accelerating vaccine rollouts, which have allowed more than 213 million American to receive at least one dose of either the Pfizer  (PFE) – Get Report, Moderna  (MRNA) – Get Report or Johnson & Johnson  (JNJ) – Get Report treatment, roaring corporate earnings and improving labor markets have taken stocks to record peaks, but recent — albeit modest — pullbacks are likely to persist until authorities can fully address the pandemic’s relentless march in developing economies around the world.

Equity futures contracts tied to the Dow Jones Industrial Average suggest a 10 point dip at the start of trading Wednesday, with a 3 point pullback priced in to the broader S&P 500. 

Nasdaq Composite futures, meanwhile, are looking at a 40 point decline following last night’s first quarter earnings update from Netflix  (NFLX) – Get Report, which showed a surprise slowdown in subscriber growth that sent shares of the streaming entertainment service down as much as 11% in after-hours trading.

In Europe, stocks rebounded from their worst session of the year Tuesday with a 0.4% gain, powered by stronger-than-expected earnings from semiconductor equipment maker ASML Holding  (ASML) – Get Report, which boosted its full-year profit forecast on the basis of improving demand for its $120 million EUV lithography machines.

Overnight in Asia, stocks were caught in the downdraft of last night’s sell-off on Wall Street, as well as Japan’s move to invoke emergency orders and travel restrictions — just 100 days out from the start of the Olympic Games in Tokyo — amid a resurgence in coronavirus infections.

The Nikkei 225 ended the session 2.03% lower at 28,508.55 points, while the region-wide MSCI ex-Japan index was marked 1.15% lower heading into the final hours of trading.

Global oil prices extended their declines into a second consecutive session, as well, following another grim count of fatalities and infections in India, the world’s third largest energy market, and data from the American Petroleum Institute showing a surprise 436,000 barrel increase in domestic crude supplies.

WTI crude for June delivering was marked 72 cents lower at $61.95 per barrel while Brent contracts for the same month fell 71 cents to $65.83 per barrel.