S&P 500 eyes another record high on Netflix earnings, chip stocks boost
Reuters
Published Jan 24, 2024 22:18
Updated Jan 25, 2024 01:23
By Ankika Biswas and Johann M Cherian
(Reuters) -Wall Street was poised for a record-breaking rally on Wednesday as Netflix (NASDAQ:NFLX) surged after smashing expectations for subscriber growth, while chip stocks gained on ASML's strong earnings.
The benchmark S&P 500 was seen hitting an intraday record high for the third time in less than a week, fueling a bull-market run it confirmed on Friday after closing at an all-time high. The blue-chip Dow had also surpassed the 38,000-point mark for the first time on Monday.
Shares of Netflix rose 10.8% in premarket trading after the firm's largest-ever fourth-quarter subscriber growth indicated it had won the streaming wars with its password-sharing crackdown and a strong content slate.
"The Netflix number caught everybody by surprise, and my expectation was that the subscriber growth for all the streaming services will continue to contract and that was a bit of an anomaly," said Phil Blancato, CEO of Ladenburg Thalmann Asset Management.
Other content-streaming companies Roku and Paramount Global also gained 2.9% and 1.3%.
Keeping investor euphoria in check, AT&T (NYSE:T) shed 2% after forecasting annual profit below expectations, while DuPont (NYSE:DD) De Nemours slid 11.4% as the materials and chemicals maker forecast a fourth-quarter loss, compared with a year-ago profit.
With the S&P 500 trading around 20 times forward 12-month earnings, compared with its long-term average of 16 times, the results of the "Magnificent 7" group of companies will be in focus to determine whether their valuations are justified.
Megacaps such as Microsoft (NASDAQ:MSFT), Amazon.com (NASDAQ:AMZN) and Meta Platforms gained around 1% each, as U.S. Treasury yields fell.
Tesla (NASDAQ:TSLA) rose 1.6% ahead of its fourth-quarter results later in the day. A Reuters report said the company had informed suppliers it wants to start production of a new mass-market electric vehicle code-named "Redwood" in mid-2025.
Chip stocks including Nvidia, Advanced Micro Devices (NASDAQ:AMD) and Intel (NASDAQ:INTC) gained between 0.7% and 2.3% after European chip-making equipment maker ASML Holding (AS:ASML) beat fourth-quarter earnings estimates and posted record-high quarterly orders.
At 8:36 a.m. ET, Dow e-minis were up 145 points, or 0.38%, S&P 500 e-minis were up 26.75 points, or 0.55%, and Nasdaq 100 e-minis were up 150.25 points, or 0.86%.
"We're getting to a situation where stocks are set up for failure if we get even a hint of bad news," Blancato added.
On the data front, the S&P Global (NYSE:SPGI)'s flash readings of the Purchasing Managers Index (PMI) are in focus.
A resilient U.S. economy and uncertainty over the timing of interest rate cuts have led investors to reassess their bets.
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Traders now see an 87% chance of a rate cut in May, according to CME Group's (NASDAQ:CME) FedWatch Tool. They were earlier expecting a rate cut as early as March.
Among others, cloud firms Cloudflare (NYSE:NET), Snowflake and ServiceNow jumped more than 2% each on the back of German software firm SAP's strong annual revenue growth forecast.
Texas Instruments (NASDAQ:TXN) shed 2.6% after forecasting first-quarter revenue and profit below market estimates.
U.S.-shares of Alibaba (NYSE:BABA), Bilibili and Li Auto (NASDAQ:LI) added between 1.9% and 4.3% after China's central bank announced a deep cut to bank reserves in an attempt to support the country's fragile economy and plunging stock markets.
Written By: Reuters
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