Stock futures Open Little Changed
Netflix co-founder, president and CEO Reed Hastings attends Q & A during a Transatlantic Forum in Lille, France.
Stock futures were flat on Thursday night after Netflix’s quarterly report sent stocks tumbling and expressed concern about one of the best performing spaces in the market during the pandemic.
Dow Jones Industrial Average and S&P 500 futures traded marginally higher and Nasdaq-100 futures rose 0.2%.
Netflix reported second-quarter earnings that fell short of analysts ‘ expectations, pushing the stock down 10% in post-close trading. The company’s guidance for third-quarter subscriber growth, a key metric for the streaming giant, also contributed to the strong sell-off in the shares.
Netflix expects to add 2.5 million subscribers in the third quarter. That’s well below a FactSet estimate of 5.27 million.
“This is a terrible number,” Tim Seymour, founder of Seymour Asset Management, told CNBC’s “Fast Money,” referring to Netflix’s subscription growth guide. “There is a very competitive environment. When I look at Disney + and how fast they have built those more than 50 million submarines and look at the saturation in the United States, Netflix has to be an international story Internacional International is not going to be growing as fast as possible.”
Those results come as Netflix, along with other major tech stocks, have struggled this week. Facebook, Amazon, Alphabet and Microsoft are all week down to date.
Wall Street was also coming off a broad decline as investors examined a mixed batch of economic data. The Dow slid 135 points, or 0.5%, to break a four-day winning streak. The S & P 500 and Nasdaq Composite fell 0.3% and 0.7%, respectively.
Initial weekly unemployment claims increased by 1.3 million in the week ending July 11. Economists surveyed by Dow Jones expected a profit of 1.25 million.
Meanwhile, retail sales rose 7.5% last month, beating a Dow Jones forecast of a 5.2% gain. June’s strong gains come after sales rose by a record 17.7% in May.
Gregory Faranello, head of U.S. tariffs operating at AmeriVet Securities, said the market took the better-than-expected retail sales data with “a grain of salt.”
“We are coming into this period of increased coronavirus cases and have had some closures,” Faranello said. “So, there is definitely a sense of nervousness in the market.”
More than 3.5 million coronavirus cases have been confirmed in the United States, according to Johns Hopkins University. Some states, including California, Florida and Texas, have had to reverse reopening measures to curb a recent surge in cases.