Nasdaq futures slip on Netflix earnings shock

Aslump in shares of streaming giant Netflix pointed to a lower open for the Nasdaq on Wednesday, although the other two indexes looked set to extend gains as investors focused on earnings and clues on U.S. interest rates.

Netflix Inc (NFLX.O) slumped 27.4% in premarket trading and dragged down Disney (DIS.N), Roku (ROKU.O) and Warner Bros Discovery (WBD.O) after it blamed inflation, the Ukraine war and fierce competition for subscriber loss for the first time in more than a decade.

It was not all doom and gloom as IT giant IBM Corp (IBM.N) rose 2.6% after saying it expected to hit the top end of its revenue growth forecast for 2022, even as it flagged a $300 million knock to revenue from the suspension of its Russia business. read more

Overall, the earnings season has started off better than expected and may offset some of the impact of the Ukraine war, soaring energy prices, inflation worries and a hawkish Federal Reserve on U.S. stocks.

Of the 49 companies in the S&P 500 index that reported earnings through Tuesday, nearly 80% exceeded profit estimates, as per Refinitiv data. Typically, 66% beat estimates.

The yield on 10-year Treasury Inflation-Protected Securities (TIPS) briefly rose into positive territory for a second straight day. The rise in TIPS yield - essentially borrowing costs once inflation effects are stripped out - poses a headwind for assets such as stocks.

Still, U.S. stocks managed to rally on Tuesday, ending up more than 1% as investors responded to positive earnings from companies like Johnson & Johnson (JNJ.N) and dovish comments from two Federal Reserve officials on interest rate rises.

Investors will be focusing on the Fed’s “Beige Book” of economic conditions from late February to early April for further details on the central bank’s monetary policy tightening plans.

At 06:55 a.m. ET, Dow e-minis were up 61 points, or 0.18%, S&P 500 e-minis were up 3.5 points, or 0.08%, and Nasdaq 100 e-minis were down 10.25 points, or 0.07%.

Tesla Inc (TSLA.O) slipped 0.2% ahead of its first-quarter results after the markets close. Investors will be keeping an eye on whether the electric car company maintains its ambitious 2022 delivery target as its biggest factory in Shanghai grapples with a COVID-19 shutdown and new plants slowly ramp up output. read more

Shares in chip equipment makers Applied Materials (AMAT.O) and Lam Research (LRCX.O) rose over 1.5% after Dutch company ASML (ASML.AS) beat expectations for first-quarter results. ASML’s U.S.listed shares jumped 5.3%.