- US stock futures fell on Wednesday after Netflix earnings disappointed and bond yield gains unsettled investors.
- Netflix said its subscriber numbers fell for the first time in a decade in the first quarter, sending shares tumbling.
- The IMF has slashed its global growth forecasts as the war in Ukraine clouds the outlook.
US stock futures fell on Wednesday as investors digested bearish gains from
and a sharp rise in bond yields.
S&P 500 futures fell 0.06% after paring steeper earlier losses. The benchmark US stock index rose 1.61% on Tuesday as company earnings updates widely beat estimates.
Dow Jones futures were broadly flat on Wednesday, while Nasdaq 100 tech index futures fell 0.16%.
Netflix fell 27.58% in premarket trading after it said it had lost subscribers for the first time in a decade.
The media giant also forecast its subscriber count would fall by around 2 million in the first quarter, with stiff competition and a rising cost of living weighing on growth. Disney, which has a major streaming service, fell 4.49% premarket as investors worried about the health of the industry.
Also weighing on investors’ minds was a sharp rise in government bond yields, fueled by expectations that the
will aggressively raise interest rates this year to control inflation.
So-called real yields on 10-year government bonds, the amount an investor will receive when taking inflation into account, briefly turned positive on Tuesday for the first time since 2020. Analysts said positive real yields could weigh heavily on stocks, as investors can finally make money on bonds again.
The yield on the 10-year US Treasury note fell 4.3 basis points on Wednesday to 2.898%, hovering around its highest level since late 2018.
Also on investors’ radar was the International Monetary Fund’s downgrade of its global growth forecasts on Tuesday. The Fund now believes the global economy will grow 3.6% this year, compared to a previous forecast of 4.4%.
“Global economic prospects have been seriously affected, largely due to the Russian invasion of Ukraine,” said Pierre-Olivier Gourinchas, the IMF’s director of research.
The Stoxx 600 stock index of the entire European continent was up 0.75% in morning trading after falling on Tuesday. Overnight in Asia, China’s CSI 300 lost 1.55%, but Tokyo’s Nikkei 225 rose 0.86%.
Elsewhere in the markets, oil prices rose as the market continued to be rocked by uncertainty about the global economy and Russia’s war in Ukraine.
Brent crude rose 0.75% to $108.05 a barrel, while WTI crude rose 0.81% to $103.39 a barrel.
Earnings season continued in the US, with Tesla and Procter & Gamble due to report on Wednesday. Analysts said relatively strong earnings so far had supported shares in recent days.
“Although it is still early in the season, there are contrasting factors at play, with an estimated 80% of companies so far beating expectations,” said Richard Hunter, head of markets at trading platform Interactive Investor.
“Meanwhile, the general consensus remains rooted in the likelihood that the Federal Reserve will increase pressure on inflation with higher-than-expected interest rate hikes,” he said.
“The country’s ability to withstand such increases without derailing the economic recovery remains a central concern.”
Read more: Stagflation risk is rising, according to 3 top strategists at a $950bn asset manager. They explain why some stocks remain attractive and share 4 ways to prepare a portfolio for the looming combination of high inflation and slow growth.