What's influencing markets: Netflix, Trump's nomination, and outages

 

 19/7/2024,

Netflix is set to take centre stage on Friday, as the company exceeded forecasts for net adds while providing cautious advice on revenue. While Wall Street appears destined to close the week lower due to a sectorial rotation, Donald Trump accepted the Republican Party's presidential candidature.

1. Netflix forecasts net additions but raises revenue guidance

Even while the streaming behemoth posted better-than-expected second-quarter earnings after spectacular subscriber gains, powered by a great content slate and a continuing crackdown on password sharing, Netflix's third-quarter revenue estimate fell short of expectations.

 

Netflix's (NASDAQ: NFLX) shares were virtually unchanged in premarket activity on Friday as a result of the conflicting results, which were made public after the market closed on Thursday. This year, the stock has already increased in value by over one-third.

 

Netflix topped projections of $4.74 per share on $9.53 billion in revenue with second-quarter earnings of $4.88 per share on $9.56 billion in revenue.

 

Additionally, the streaming behemoth added 8 million new subscribers in the quarter, surpassing the 4.8 million forecast but falling short of the 9.3 million recorded in the preceding three months.

Given that it is reaching saturation in the US market and intends to cease regularly reporting new subscriber additions in the upcoming year, the business had projected lower net subscriber additions in the second quarter.

 

However, it missed projections of $9.81 billion in sales for the third quarter and guided for $9.37 billion; furthermore, it stated that revenue growth would not be primarily driven by the company's advertising division until at least 2026.

 

The company's comparatively recent advertising division has attracted investors' attention as a possible development avenue.

2. Futures fluctuate during a weekly cycle.

Amidst the ongoing quarterly results season, U.S. stock futures continued to decline on Friday. This weakness began during the previous session.

The Dow futures contract was down 75 points, or 0.2%, at 04:15 ET (08:15 GMT), the S&P 500 futures were down 9 points, or 0.2%, and the Nasdaq 100 futures were down 60 points, or 0.3%.

 

Thursday saw a decline in all three major indices, with the Dow Jones Industrial Average losing over 500 points and snapping a six-day gaining streak.

 

In summary, the week has shown signs of a market rotation, with the DJIA up 1.7% and the tech-heavy Nasdaq Composite down nearly 3% and 1.3%, respectively, down.

Friday is another big day for earnings, with reports coming in before the opening bell from companies like Comerica (NYSE: CMA), Travellers (NYSE: TRV), and American Express (NYSE: AXP).

 

 

3. With Biden's doubts growing, Trump accepts the nomination.

 

Donald Trump formally accepted the Republican Party's presidential nomination on Thursday at the Republican National Congress in Milwaukee, Wisconsin.

 

 

After last week's attempted assassination, Trump's popularity seemed to be steadily increasing.

 

 

"We see Biden dropping his re-election bid as a question of when, not if," TD stated, "but the final say in the matter rests with Biden."

"We expect (a) potential second term to be all gas, no brake... should Trump win in a GOP sweep of the House and Senate, we suspect he would read that as a MAGA mandate for his American First policies." 

 

4. Microsoft is experiencing major problems as a result of a crowdstrike.

On Friday, there was a significant disruption for businesses all across the world, including cybersecurity firm CrowdStrike (NASDAQ: CRWD) and software behemoth Microsoft (NASDAQ: MSFT). As a result, at least two American low-cost airlines were compelled to cease operations.

 

The outage was triggered by an issue with the most recent version, according to Crowdstrike, and the company is presently rolling back the update globally.

The company made this announcement in a recorded statement: "CrowdStrike is aware of reports of crashes on Windows hosts related to the Falcon Sensor."

 

A note on the company's website attributed the Azure outage to a "configuration change in a portion of our Azure backend workloads, caused interruption between storage and compute resources which resulted in connectivity failures that affected downstream Microsoft 365 services dependent on these connections." Microsoft announced an outage in its Azure cloud computing platform late on Thursday.

 

On its service health status page, the business indicated that numerous Microsoft 365 apps and services will not be available to users due to the "degradation" of the 365 service.

 

5. Weekly loss on crude heads

 

A weekly loss was anticipated for crude prices as they declined on Friday due to investor anxiety over China's economic slowdown and the strength of the dollar.

By 4:15 PM ET, WTI oil futures in the United States had dropped 0.5% to $80.91 per barrel, while the Brent contract had dropped 0.3% to $84.89 per barrel.

 

This week, the second consecutive losing week for both benchmarks, is expected to see slight losses as a result of the dollar's strengthening for the second straight session, which reduced demand for oil denominated in dollars from investors holding foreign currencies.

Following softer-than-expected growth numbers for the second quarter, worries about weak demand in China the largest oil importer in the world remained prominent.

The results followed those released last week that revealed China's oil imports fell in June.

 

The U.S. government's estimate of a larger-than-expected weekly reduction in oil stockpiles, which suggests continuous demand during the summer driving season, has limited this week's losses.

 

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