A specialist trader works on the floor of the New York Stock Exchange (NYSE) in New York City, October 17, 2022.
Brendan McDermid | Reuters
Here are the most important news items that investors need to start their trading day:
1. Let’s see if this holds
Stocks jumped again Tuesday, cementing a strong start to the week, although futures didn’t look too bright Wednesday morning. The tech-heavy Nasdaq looked set to be buoyed by Netflix and its strong earnings report (more on that below). Overall, even though its early in earnings season, companies’ reports have been pretty solid so far, even though fears of a Fed-driven recession linger. Investors will have more earnings to chew on Wednesday, with Procter & Gamble reporting before the bell and IBM and Tesla set for after the close. Read live market updates here.
2. Netflix changes things up
The Netflix logo is seen on a TV remote controller, in this illustration taken January 20, 2022.
Dado Ruvic | Reuters
Netflix came through with a strong earnings report Tuesday, easily beating expectations on its top and bottom lines. But its strongest metric was the number of subscribers it added in the third quarter. The stock surged in off-hours trading, as it appeared that Netflix had managed to turn things around after losing subscribers for consecutive quarters. There was a plot twist, though: Netflix said it would no longer provide quarterly forecasts for subscriber additions. Instead, as the company moves toward selling a new ad-supported tier, and its competitors bulk up, Netflix wants to put more emphasis on profit and revenue. “Focusing on subscribers in our early days was helpful, but now that we have such a wide range of price points and different partnerships all over the world, the economic impact of any given subscriber can be quite different,” Netflix executive Spencer Wang said during the company’s earnings call.
3. Turning back the clock
Carin Baer | NBCU
You want to feel old? The last time mortgage demand was this low, according to the Mortgage Bankers Association, was 1997. “Seinfeld” was the top TV show, and Jewel dominated the music charts with “You Were Meant for Me.” Also that year, mortgage rates were consistently above 7%. This time, depending on which organization is keeping track, rates are now hovering near or above 7%. Affordability in the housing market was a concern even before rates started surging this year, but builders and sellers remained bullish since demand was so robust. Now sellers are getting a little warier, and homebuilder sentiment is well into negative territory, as buyers are in no rush to lock in a high mortgage age rate.
4. Flying high again
A United Airlines Boeing 777-200 lands at San Francisco International Airport, San Francisco, California.
Louis Nastro | Reuters
United Airlines is bullish on fourth quarter air travel, as people shake off two years of Covid restrictions and head out for the holidays. Even with inflation at four-decade highs and Wall Street warning of a recession. “Looking forward through the end of the year, the airline expects the strong Covid recovery trends to continue to overcome the recessionary pressures in the macroeconomic environment,” the company said in its earnings release Tuesday. United’s outlook follows a similar rosy report from rival Delta Air Lines, which projected a profit during the fourth quarter. American Airlines is set to report before the bell Thursday.
5. P&G’s forex warning
Daniel Acker | Bloomberg | Getty Images
Procter & Gamble, the consumer goods giant known for producing Tide detergent and Crest toothpaste, said it expects foreign exchange to weigh on its results during the fiscal year. The U.S. dollar has strengthened considerably against other nations’ currency in recent months as the Federal Reserve has jacked up interest rates to fight surging inflation. The company’s earnings and revenue, by the way, topped expectations in the most recent quarter, as price increases offset a decline in sales volumes.
– CNBC’s Tanaya Macheel, Sarah Whitten, Alex Sherman, Diana Olick, Leslie Josephs and Amelia Lucas contributed to this report.
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