Wake Up Wall Street (SPY) (QQQ): After Netflix beat, Tesla could charge this rally up
Here is what you need to know on Wednesday, October 19
Equity markets began the week in bullish form as Monday's strong gains were initially built on in the early part of Tuesday's session. However, bond yields remained stubbornly above 4% across the curve, which kept the equity enthusiasm in check and saw the rally falter as Wednesday wore on. However, some renewed vigor is being injected into bulls following another strong set of earnings across the board. Most notable of all was the solid subscriber growth from Netflix, which saw the stock rise 13% afterhours.
This morning already we have seen the trend continue with the airlines now looking strong, and food companies look to be in good shape as Nestle boosts prices with no demand destruction. It is becoming clearer that perhaps for many companies demand is holding up even as inflation rages. This is the start of an inflationary phase, and that can often be the case. Once consumers exhaust savings and interest rate hikes hit, the latter half of an inflationary recession is where the damage is done. All this means there is no hope for a Fed pivot, and even a more aggressive stance may be needed.
The dollar baulks at breaching 150 against the yen, but it is still higher with the Dollar Index up nearly 1% at 112.92. Oil is higher despite the US saying it will tap the SPR again. Bitcoin is lower, and Gold is also lower at $1,633. One headwind for this latest equity rally is the move in bond yields, higher. UK inflation is back above 10%, and the US 10 and 30-year yields are nearing 4.1% now. That will hit the high duration sector hard. Tesla needs to keep this rally going with decent earnings after the close.
European markets are lower: Eurostoxx -0.5%, FTSE -0.7% and Dax -0.2%
US futures are lower Nasdaq, S&P and Dow are all -0.4%.
Wall Street top news (SPY) (QQQ)
UK inflation back up above 10% in September, higher than forecasts.
Proctor & Gamble (PG) beats on earnings on higher pricing.
ASML up 5% after strong earnings.
Tesla (TSLA) earnings after the close.
Amazon (AMZN) makes a push into home insurance in UK.
Netflix (NFLX) beats on subscriber, EPS and revenue.
Elevance Health (ELV) beats on EPS and revenue, raises outlook.
Nasdaq (NDAQ): (the stock not the index!) Beats on both EPS and revenue.
United Airlines (UAL) beats on earnigns and raises forecasts.
Nestle raises full year guidance as it pushed through price hikes with no adverse effect.
Travelers (TRV) beats on top and bottom lines.
JB Hunt Transport (JBHT) mentions subdued holiday season due to lower shipping volumes. It beat on EPS and revenue.
Interactive Brokers (IBKR): net interest margin jumps.
Upgrades and downgrades
Source: WSJ.com
Economic releases
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Author
Ivan Brian
FXStreet
Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.
