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Average Dow Jones Industrial futures were higher on Wednesday as stocks try to continue their rebound after a one-day rout to start the week.
Better-than-expected earnings reports from members of Dow Coca-Cola and Johnson & Johnson boosted bullish sentiment for the blue chip average. However, Netflix shares were down after disappointing subscriber forecasts weighing on tech stocks and controlling overall market gains.
Dow Jones Industrial average futures rose 90 points, or 0.3%. S&P 500 futures gained 0.1%. Futures contracts on the Nasdaq 100 lost 0.3%.
The Dow Jones fell 725 points on Monday for its worst session in 8 months. He then rallied nearly 550 points on Tuesday. Futures indicate a continuation of this rebound as investors step in again to buy the downside.
The bond market – in particular the 10-year Treasury yield – is the source of stock market volatility. The 10-year rate rebounded slightly on Wednesday, up 3 basis points to 1.23% (1 basis point equals 0.01%). The yield fell to a new 5-month low on Monday, before leveling off on Tuesday. Lower rates are pissing off equity investors by signaling a possible slowdown in the economy due to the spread of Covid variants or a possible Federal Reserve error.
As yields peaked in the pre-market session, futures on Dow gave up some of their gains.
Stocks that would benefit most from a rapid and continued economic reopening are expected to rebound again on Wednesday after rebounding from Monday’s sell-off in the previous session. Carnival shares rose almost 2%. Las Vegas Sands increased 2%.
Energy stocks were higher as oil continued to rebound after falling below $ 70 a barrel on Monday. Energy Select SPDR grew 1% in pre-market.
Dow member Coca-Cola boosted pre-market sentiment after reporting quarterly revenue above pre-2019 pandemic levels and upping its guidance for the year. Coca-Cola shares gained 2% in pre-market trading.
Shares of Dow member Johnson & Johnson rose after the drugmaker reported better-than-expected earnings and earnings in the second quarter and also raised its guidance for 2021. Shares gained around 1% in earnings. exchanges before marketing.
Shares of Verizon are up 1.3% in early morning trading.
Chipotle shares rose 5% in pre-market trading, as the Mexican fast food chain reported quarterly revenue exceeding pre-pandemic levels as restaurant patrons returned to its restaurants.
Netflix reported disappointing third quarter subscriber forecasts after Tuesday’s bell. The streaming giant said it expects 3.5 million net subscribers in the third quarter, nearly 2 million below analyst estimates. The company also reported profits that exceeded expectations.
Netflix shares were last down 0.7% in pre-market trading.
According to FactSet, about 85% of S&P 500 companies that released reports exceeded estimates.
On Tuesday, reopening stocks rebounded sharply after Monday’s sale triggered by a fear of global growth inspired by Covid. American Airlines grew 8.4% and Norwegian Cruise Line 8.3%.
Some strategists see the market entering a volatile period, during which there could be a deeper pullback. Investors are juggling inflation issues, and new cases of Covid are rebounding in the United States as the delta variant spreads.
“I think what we’ve seen here are the first red flags of a correction that we’re likely to see… end of August, September, October,” said Matt Maley, equity strategist at Miller Tabak.
– with reporting from CNBC’s Patti Domm.
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