April 25, 2024

Wall Street Set To Open Lower After Making Strong Gains

On Wednesday, stock indexes in the US were set to open lower, after the previous session had seen Wall Street record some strong gains. This was because investors were going through the earnings reports of different companies to assess the impact of rising inflation on growth.

Uncertainties in the market

Washington said that there were signs of Moscow planning to formally annex the territories that Russia had seized during its invasion of Ukraine in the last five months. According to reports, Russian forces were also shelling southern and eastern Ukraine and the fresh uncertainties associated with the war also brought down investor sentiment.

There was a 4.8% gain in shares of Netflix Inc. in premarket trading, after the company’s prediction about seeing an increase in subscribers in the third quarter of the year. The second quarter saw the company’s subscribers drop by 1 million, which was less than expected.

The streaming service firm was the first one amongst big tech companies to report its results for the second quarter, fueling hopes that performance will be better, despite an uncertain global economic environment.

Gains in previous sessions

On Tuesday, there was a more than 2% gain recorded in the Dow Jones Industrial Average, while a 3% rise was also seen in the Nasdaq Composite because of strong corporate earnings. Market analysts said that futures had been scheduled to open higher, but they had come down since then, likely because of some profit-taking.

They added that once earnings start rolling in, and if they are as good as the last session, then they might climb once more. Even though the upbeat data on Friday regarding consumer sentiment and retail sales had eased some of the concerns about the economy, there are still fears of a sharp slowdown, or a recession, with the US Federal Reserve raising interest rates for keeping inflation in check.

Initially, the runaway inflation figures had driven markets to price in a hike of 100 basis points in the interest rates in the next week’s meeting of the Fed. But, policymakers had signaled that they were likely to stick to a 75 basis points rise.

The reporting season

According to analysts, they are expecting a 5.8% growth in the S&P 500 on aggregate, which is a reduction from the previous estimate of 6.8% at the beginning of the quarter. There was a 0.6% gain in the shares of Tesla Inc., ahead of the electric vehicle manufacturer’s earnings report. Meanwhile, a 0.5% gain was recorded in the shares of both Meta Platforms Inc. and Apple Inc.

There was a 0.34% decline, or of 107 points, in the Dow e-minis by 8:42 a.m., while a 0.32% fall, or of 12.75 points, had been recorded in the S&P 500 e-minis. Likewise, there was also a drop of 0.22% or 27.5 points in Nasdaq e-minis.

A 0.8% fall was also seen in Merck & Co Inc. as the firm’s cancer therapy was unable to meet the goal of a trial being conducted in patients with neck and head cancer.

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