Five things you need to know before the market opens on Thursday, July 20:
1. -- Stock Futures Mixed As Tech Sector Outlooks Dim
U.S. equity futures traded mixed Thursday, while the dollar slipped lower against its global peers and Treasury yields steadied, as investors reacted to softer-than-expected earnings from the tech sector while testing the resilience of Wall Street's solid July rally.
Taiwan Semiconductor, the world's biggest the world's biggest contract chipmaker and a lead supplier for Apple iPhones, slashed its 2023 sales forecast Thursday by around 10%, noting it sees weaker consumer demand into the final months of the year.
That vision was evident in outlooks from Tesla and Netflix, both of which reported second quarter earnings after the close of trading last night. Tesla's Elon Musk said "turbulent" economic times would likely lead to more EV price cuts, while Netflix forecast near-term revenues that were light of Wall Street forecasts.
The pessimism could test markets Thursday, even with the Dow running its best daily winning streak in nearly four years and the S&P 500 only 5% shy if its January 2022 all-time peak.
Away from equities, the U.S. dollar index was marked 0.1% lower at 100.187 following a move by the People's Bank of China to support the weakened yuan by allowing banks to lend more money in foreign currencies.
Benchmark 2-year Treasury note yields edged higher in overnight dealing and were last seen trading at 4.843% ahead of weekly jobless claims data at 8:30 am Eastern time. Benchmark 10-year notes were holding at 3.791%.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 were indicating a 6 point opening bell gain while those linked to the Dow Jones Industrial Average were priced for a 38 point move to the upside. Nasdaq futures were down 115 points.
The Europe-wide Stoxx 600 was marked 0.23% higher in early Frankfurt trading while Britain's FTSE 100 gained 0.72% in London.
Overnight in Asia, the region-wide MSCI ex-Japan index gained 0.04% into the close of trading, while the Nikkei 225 was marked 1.243% lower in Tokyo.
2. -- Tesla Shares Slide As Elon Musk Signals More EV Price Cuts
Tesla (TSLA) -) shares moved lower in pre-market trading after CEO Elon Musk said the carmaker may need to keep cutting prices in order to offset what he called "turbulent economic times."
Speaking with investors following a better-than-expected second quarter earnings report that included record revenues of $24.5 billion, Musk said it "make' sense to sacrifice margins in favor of making more vehicles', a view that is likely to pressure profit margins over the back half of the year.
For the three months ending in June, Tesla said adjusted earnings rose 20% from last year to 91 cents per share, 9 cents ahead of Street forecasts, while adjusted automotive margins were pegged at 18.7%, Tesla said, up from the 18.3% figure recorded over the first quarter but down from last year's second quarter tally of 22.4% following a series of price cuts in its biggest global markets.
"The challenges of these uncertain times are not over, but we believe we have the right ingredients for the long-term success of the business through a variety of high potential project," Tesla said.
Tesla shares were marked 2.75% lower in pre-market trading to indicate an opening bell price of $283.35 each.
3. -- Netflix Slumps As Blowout Subscriber Numbers Can't Offset Revenue Miss
Netflix (NFLX) -) shares slumped lower in pre-market trading after the online streaming service posted softer-than-expected second quarter revenues, as well as a muted near-term outlook, that offset blowout subscriber gains.
Netflix, which has cracked down on password sharing while introducing more membership tiers, including an ad-supported service, added 5.89 million new subscribers over the three months ending in June, a tally that more than tripled Street forecasts.
Group revenues, however, were up only 3% from last year at $8.19 billion, narrowly missing Street estimates, suggesting the new subscriber additions were opting for lower-priced membership options.
Netflix, which no longer provides specific guidance on new subscriber additions, said its sees earnings in the region of $3.52 per share and revenues of $8.52 billion for the September quarter, again shy of Street forecasts of around $8.7 billion.
Netflix shares were marked 7% lower in pre-market trading to indicate an opening bell price of $444.15 each.
4. -- Johnson & Johnson Earnings On Deck Following Kenvue Spin-Off
Johnson & Johnson (JNJ) -) shares edged higher in pre-market trading ahead of the pharmaceutical group's second quarter earnings prior to the opening bell.
Analysts expected Johnson & Johnson to post an adjusted bottom line of $2.62 per share for the three months ending in June, with revenues pegged at $24.625 billion. The results won't be directly comparable to last year's second quarter, as the group spun-off its $41 billion consumer health care division, Kenvue, on May 4.
The group forecast full-year earnings of between $10.60 and $10.70 per share in April, with adjusted operational sales growth of between 4.5% and 5.5%, thanks in part to solid revenues from its pharma division.
Johnson & Johnson agreed to pay $8.9 billion in April -- more than four times its original forecast -- to settle a class-action lawsuit linked to allegations its talc-based products, including its iconic Baby Powder, caused cancer.
Johnson & Johnson shares were marked 0.8% higher in pre-market trading to indicate an opening bell price of $160.02 each.
5. -- United Airlines Shares Higher After Solid Q2 Earnings, Outlook Lift
United Airlines (UAL) -) shares moved higher in pre-market trading after the carrier topped Street forecasts, and boosted its full-year profit outlook, amid the ongoing surge in domestic and international travel.
United said adjusted earnings for the three months ending in June came in at a record $5.03 per share, up more than two and a half times from last year and well ahead of the $4.04 Street forecast. Group revenues were up 17.3% from last year to $14.2 billion.
Looking into the back half of the year, United said it expects adjusted earnings of between $11 and $12 per share, $1 ahead of its prior forecast, with third quarter revenue growth of between 10% and 13%.
"United's financial performance in the second quarter and our outlook for the remainder of the year and beyond make it clear that United Next is working and is the right strategy at the right time," said CEO Scott Kirby "Our focus now is on executing that strategy well – because we know it will deliver huge benefits for our customers, our employees and our owners."
United Airlines shares were marked 3% higher in pre-market trading to indicate an opening bell price of $56.43 each.
