Nasdaq, S&P 500 futures slide after Q2 reports by Tesla, Netflix

[July 20, 2023]  By Bansari Mayur Kamdar and Johann M Cherian

(Reuters) -The S&P 500 and Nasdaq futures fell on Thursday as Tesla kicked off second-quarter earnings for megacap growth and technology stocks on a somber note, while Netflix slid as its quarterly revenue missed analysts' estimates.

Tesla CEO Elon Musk on Wednesday signaled more price cuts on electric vehicles to boost demand at "turbulent times", even as his all-out price war squeezes the company's margins.

Shares of the electric car maker slid 3.1% in premarket trading after Musk's comments, even as Tesla beat quarterly profit estimates.

"Markets were hoping the bulk of markdowns had been made in the first half and hoped margins would actually start recovering in the second half, but that is now in doubt," said Joshua Warner, market analyst at City index.

The tech-heavy Nasdaq has advanced 37.2% so far this year, supported by a scorching rally in megacap growth and technology stocks on optimism over artificial intelligence, a resilient U.S. economy and hopes that the U.S. Federal Reserve was nearing the end of its aggressive rate-hike cycle.

Netflix fell 6.0% after the streaming video company's quarterly revenue forecast also fell short of estimates, while analysts said its new money-making ventures will take time to bring in returns.

Enterprise software provider IBM slipped 0.6% after its second-quarter revenue missed Wall Street expectations on Wednesday, dragged by a decline in the sales of its mainframe computers as businesses cut tech spending.

At 06:39 a.m. ET, Dow e-minis were up 61 points, or 0.17%, S&P 500 e-minis were down 4.25 points, or 0.09%, and Nasdaq 100 e-minis were down 98 points, or 0.61%.

Raindrops hang on a sign for Wall Street outside the New York Stock Exchange in Manhattan in New York City, New York, U.S., October 26, 2020. REUTERS/Mike Segar/

The Dow registered its longest winning streak in almost four years on Wednesday as investors gauged Goldman Sachs earnings, while major U.S regional banks jumped as their deposits mostly stabilized and net interest income rose after a banking crisis earlier this year.

Overall earnings across industries are expected to decline 8.2% for the second quarter, according to Refinitiv data on Wednesday.

Among other earnings-driven moves, Johnson & Johnson climbed 2.2% after the healthcare conglomerate raised its annual profit forecast, banking on the strength of its medical devices business and demand for its cancer drugs

United Airlines advanced 2.9% on upgrading its full-year profit outlook after posting the highest ever quarterly earnings on booming demand for international travel.

U.S.-listed shares of Taiwanese chipmaker TSMC fell -2.2% after warning of a 10% drop in 2023 sales.

Investors also await weekly jobless claims data and existing home sales data for the month of June, due later in the day.

(Reporting by Bansari Mayur Kamdar and Johann M Cherian in Bengaluru; Editing by Dhanya Ann Thoppil)

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