Futures inch up ahead of Powell's comments; Tesla drops, Netflix surges

[October 19, 2023]  By Shubham Batra and Shashwat Chauhan

(Reuters) -U.S. stock index futures rose on Thursday as Tesla and Netflix kicked U.S. earnings season into high gear, while Treasury yields eased off multi-year peaks ahead of remarks from Federal Reserve Chair Jerome Powell.

Netflix soared 13.3% in premarket trading after the streaming giant said it was raising prices for some of its plans in the United States, Britain and France after adding 9 million subscribers in the third quarter.

Tesla, however, slid 5.1% as the electric vehicle (EV) maker missed Wall Street expectations on third-quarter gross margin, profit and revenue.

CEO Elon Musk said on Wednesday that he was concerned about the impact of high interest rates on car buyers, adding that the EV maker was hesitant about its plans for a factory in Mexico.

Legacy automakers Ford Motor and General Motors lost around 1% each.

Yields on benchmark Treasury notes surged on Thursday, with the 2-year yield, which best reflects interest rate expectations, climbing to a 17-year high at 5.2313%. The yield on the 10-year stood at 4.9535%, inching closer to the 5% level last seen in 2007.

Powell is scheduled to speak at 12 p.m. ET, while other Fed officials including Chicago Fed President Austan Goolsbee, Atlanta's Raphael Bostic and Philadelphia's Patrick Harker will also speak during the day.

Fed policymakers on Wednesday signaled a pause in hiking interest rates for another couple of months as they wait for signs of progress in their fight against inflation and the potential for the recent rise in long-term yields to do some of their work for them.

"Even if the Fed decides against raising rates further, the 'higher for longer' reality is slowly sinking in for investors," Raffi Boyadjian, lead investment analyst at forex broker XM said in a note.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 28, 2023. REUTERS/Brendan McDermid/File Photo

Traders' bets of interest rates remaining unchanged in November and December stood at around 94% and around 61%, respectively, as per CME's FedWatch Tool.

On the data front, weekly jobless claims, October Philly Fed Business Index and September existing home sales will be eyed.

Wall Street's main indexes ended around 1% lower on Wednesday amid surging bond yields.

Meanwhile, Israel pounded Gaza with more air strikes on Thursday, as British Prime Minister Rishi Sunak followed U.S. President Joe Biden on visits to demonstrate support for the war against Hamas while urging Israel to ease the plight of besieged Gazans.

At 6:48 a.m. ET, Dow e-minis were up 18 points, or 0.05%, S&P 500 e-minis were up 3.75 points, or 0.09%, and Nasdaq 100 e-minis were up 36.5 points, or 0.24%.

Lam Research fell 2.1% as the chip manufacturing equipment supplier forecast second-quarter revenue slightly below Wall Street estimates.

Las Vegas Sands rose 5.4% following the casino operator's better-than-expected third quarter profit and revenue.

AT&T added 3.3% after the telecom firm raised its annual free cash flow forecast.

(Reporting by Shubham Batra and Shashwat Chauhan; in Bengaluru; Editing by Dhanya Ann Thoppil and Saumyadeb Chakrabarty)

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