Digesting Earnings Reports: Netflix Down Nearly 8%
Focus on Tesla's Results After Market Close
Gold Down 0.4%... Weakness Continues for Second Day Despite Smaller Drop
All three major indices on the New York Stock Exchange in the United States are declining on October 22 (local time). Netflix, which reported disappointing earnings the previous day, plunged nearly 8% today, dampening investor sentiment. Gold prices, which fell more than 5% the previous day, continue to show weakness today.
A trader is working on the floor of the New York Stock Exchange (NYSE) in the United States. Photo by Reuters Yonhap News
As of 9:34 a.m. on the New York Stock Exchange, the Dow Jones Industrial Average, which focuses on blue-chip stocks, is down 69.89 points (0.15%) from the previous trading day at 46,854.85. The S&P 500 Index, which tracks large-cap stocks, is down 5.72 points (0.08%) at 6,729.63, while the tech-heavy Nasdaq Composite Index is down 62.141 points (0.27%) at 22,891.525.
Stock performance diverged depending on earnings results. Netflix is down 7.98% after announcing third-quarter results that fell short of market expectations after the close the previous day. Apple is down 0.81%, and Amazon is down 1.35%. In contrast, Intuitive Surgical, a robotic surgery equipment company, surged 15.17% as its third-quarter earnings exceeded forecasts. Beyond Meat, a US plant-based alternative meat company, soared 58.84%, benefiting from the "meme stock" craze, where stocks highlighted on online communities experience short-term surges. Recently, Beyond Meat was newly added to the meme stock exchange-traded fund (ETF) managed by Roundhill Investments in the US, attracting a wave of buying.
Investors are focused on Tesla's earnings, which will be announced after the market closes. With Tesla kicking off the earnings season for the so-called "Magnificent 7 (M7)" large-cap tech companies, the market is watching closely to see whether their performance will inject momentum into the stock market. According to financial data provider FactSet, the third-quarter profit of the M7 is expected to increase by 14.9% year-on-year, driven by growth in artificial intelligence (AI). This is twice the average profit growth rate (6.7%) of the other 493 companies.
Alicia Levine, Head of Investment Strategy & Equities at BNY Wealth, analyzed, "Ultimately, if earnings beat expectations and tech stocks demonstrate the strength of AI, the market could move to a higher level," adding, "The S&P 500 Index needs to break through the 6,800 level for confirmation of the next upward phase, and there is a high likelihood of reaching that level both technically and fundamentally."
Investors are also paying attention to the upcoming US-China summit scheduled for next week. The summit is being arranged on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju, South Korea, and the market is focused on the possibility of a trade agreement between the two countries. US President Donald Trump stated the previous day that he "expects to reach a good agreement" with Chinese President Xi Jinping, but also left uncertainty by saying the summit may not take place.
On October 24, the Consumer Price Index (CPI) for September will be released. The market expects last month's CPI to have risen 3.1% year-on-year. This is a slightly larger increase than in August (2.9%).
The US Federal Reserve is expected to decide whether to cut interest rates at the Federal Open Market Committee (FOMC) regular meeting scheduled for October 28-29, based on these inflation indicators and labor market conditions. Last month, the Fed lowered the benchmark interest rate by 0.25 percentage points to a range of 4.0-4.25%.
International gold prices remain weak. On the New York Mercantile Exchange (COMEX) today, December gold futures are trading at $4,091.16 per ounce, down 0.44% from the previous day.
US Treasury yields are steady. The yield on the 10-year US Treasury note stands at 3.96%, and the yield on the 2-year US Treasury note is at 3.45%, both unchanged from the previous trading day.
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