Stocks opened generally lower Tuesday, as tech stocks paced the downside and much of the market looked toward Senate testimony from Federal Reserve Chair Jerome Powell after the open.
XNetflix (NFLX) tossed out the big anchor on early trade, opening down 14% after reporting subscriber growth of 5.2 million in its second quarter. That was below Netflix's own target of 6.2 million new, paying viewers. Blue chips dug into their reporting seasons, with Johnson & Johnson (JNJ), UnitedHealth Group (UNH) and Goldman Sachs (GS) all filing early reports.
Oil prices reversed lower, threatening further declines after a sharp drop on Monday. Boeing (BA) edged higher after reporting nearly $20 billion in new orders.
The Nasdaq Composite dropped 0.6%, hauled lower by Netflix, and as Apple (AAPL), Amazon.com (AMZN), Facebook (FB) and Alphabet (GOOGL) all swung lower at the starting bell.
The S&P 500 dropped 0.2%, also hurt by Netflix. The DowJones industrial average held to a 0.1% decline, as UnitedHealth and Intel (INTC) posted sharp early losses, but Johnson & Johnson jumped 2.6%.
Powell Set To Speak To Senate
Federal Reserve Chairman Jerome Powell begins his second appearance before the Senate Banking Committee at 10 a.m. ET. The Fed has signaled the probability of two more rate hikes before the end of year. But investors will be listening carefully to determine whether the economic impact of widening tangle of global trade hostilities might affect the Fed's rate strategy. Powell has said dealing with the economic fallout of the White House's current trade strategy, from a monetary policy standpoint, "would be very challenging."
Powell is scheduled to speak before the House Financial Services Committee on Tuesday.
Japan Gains On EU Deal; Oil Prices Steady
While global headlines buzzed about Monday's Trump-Putin summit in Helsinki, global markets assigned little immediate value or risk to the outcome. Monday's drop in oil prices, however, did send China's markets to considerable losses. The Shanghai Composite fell 0.6% in its third straight loss. Hong Kong's Hang Seng index slumped 1.3%, its first decline in four sessions.
In Japan, Tokyo's Nikkei 225 grabbed a 0.4% gain, adding a third day to its rally. Japan and the European Union finalized an agreement on Tuesday in Tokyo eliminating a wide range of tariffs and other trade barriers.
The deal, dubbed the Economic Partnership Agreement, opens the EU's doors wider to imports of Japan-made autos and other goods. Japan, meanwhile, is lowering barriers to make Europe-based agricultural products more competitive on its markets.
Europe's markets turned mixed in afternoon trade. The CAC-40 in Paris led the declines, down 0.4%. London's FTSE 100 inched up 0.1%.
Oil prices reversed lower, on the heels of two sharp sell-offs in the past week. U.S. benchmark West Texas Intermediate shed early gains and dropped 1%, to below $68 a barrel. Brent crude pared its gains to narrow losses, trading just below $72.
Dow Futures: UnitedHealth Slumps, Intel Downgraded
On the Dow, UnitedHealth dropped 1.8% after reporting better-than-expected second-quarter earnings, but revenue growth that was slightly below analyst targets. The loss put shares back below a 250.89 buy point the sock had cleared in June.
Goldman Sachs slipped 1.4%, despite reporting big beats on its earnings and revenue lines. The investment bank also officially named co-chief operating officer David Solomon to replace Lloyd Blankfein as Goldman Sachs' chief executive, Blankfein will step down on Sept. 30, after 12 years in the CEO role. Goldman shares are plugging away at a third straight weekly advance, attempting to climb the right side of a four-month consolidation.
Johnson & Johnson scaled up 3.3%, after narrow revenue and earnings surprises, and despite lowering its full-year revenue outlook. The stock is trading back above 10-week support in a seven-month consolidation.
Intel carved a 1.3% loss, after Evercore ISI Group downgraded the stock to in-line, from outperform. The note also lowered the stock's price target to 54, from 64. Intel shares rebounded from support at their 40-week moving average. They are six weeks into a potential basing pattern, but face resistance at their 10-week line.
Boeing Nails New Orders; Charles Schwab Tops Views
Boeing traded flat as orders started to roll in from the U.K.'s Farnborough Air Show. The Chicago-based aircraft maker announced orders and commitments for 78 aircraft from Air Lease Corp. (AL), in a deal valued at $9.6 billion. It also announced a combined deal with Russia's Volga-Dnepr Group and U.K.-based CargoLogicHolding for 29 777 freighters, valued at $9.8 billion. Boeing shares are 5% below a 374.58 buy point in a flat base.
Charles Scwhab (SCHW) opened more than 3% higher. The San Francisco-based brokerage reported earnings and revenue above consensus views, and said assets held by its retail banking business rose 46% for the quarter.
Netflix Misses Subscriber Growth, Guides Low
Netflix reported 467% earnings growth and a 40% rise in revenue, to $3.91 billion in its second quarter. Its 5.2 million gain in subscribers included net growth of 670,000 Americans, far below expectations for 1.19 million. International subscribers rose by 4.47 million vs. views for 4.97 million.
Cash burn continued, with negative free cash flow of $559 million. Netflix spent just over $1 billion on marketing in the first half of the year vs. $545 million in the first half of 2017.
The company sees net subscriber growth of 5 million in the third quarter: 650,000 in the U.S. and 4.35 million in international markets. It also guided third-quarter earnings and revenue estimates lower.
Netflix shares sank nearly 13% to 349.25 before the open. That suggests a plunge below its 50-day line, but still above the stock's recent 338.92 buy point. The IBD Leaderboard name has nearly doubled so far in 2018. Premarket trading does not always translate into how a stock opens and closes in the regular session.
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