Market Watch:- Dow futures contract increased by 45 points, S&P 500 futures rose 15 points, and Nasdaq 100 futures rose 85 points.
Fed chief Powell suggests higher interest rates may be necessary, but stock futures show positive Wall Street activity, UK inflation declines, and ASML reports strong sales to China.
Netflix subscriber base
Netflix, a tech giant, has seen its strongest growth since the pandemic in the second half of 2023, with 22 million people signing up for its service after global password sharing restrictions were curbed. However, the market is expecting 5 million subscribers in the first quarter ended March, nearly three times the 1.8 million additions seen in the same period last year. Netflix has reported 23 million monthly subscribers for its ad-supported tier, and analysts expect this to grow this year. The company also plans to invest up to $17 billion in content spending.
TSM earnings
Taiwan Semiconductor Manufacturing (TSM), the world’s largest contract chipmaker, reported a 9% rise in net profit in Q1, beating market expectations. This surge in AI has helped TSMC weather the pandemic-led electronics demand, with first-quarter revenue rising 16.5% annually. TSMC’s earnings are seen as a bellwether for global chip demand, given its pivotal role in the chipmaking industry and the importance of customers like Nvidia and Apple. The sector was hit by weaker than expected first-quarter new bookings from ASML, the largest supplier of equipment to TSMC.
Tesla bounce back
Tesla has faced a challenging period, with the company cutting over 10% of its global workforce, totaling around 140,000 employees at the end of 2023. This comes after an 8.5% year-over-year decline in first-quarter deliveries, the first drop since 2020, due to competition in the Chinese market. Tesla’s stock has fallen over 10% in the last week and is now down over 37% this year. However, Morgan Stanley remains optimistic, predicting the company will emerge stronger from the “EV recession” and warns investors against ignoring Tesla’s AI-related developments. The bank believes Tesla has significant attributes to be valued as an AI beneficiary, but must focus on stabilizing its core EV business to avoid negative earnings revisions. Morgan Stanley also emphasizes Tesla’s continued developments, including the recurring revenue opportunity from the Tesla fleet.
Economic Calendar
- 8:30 Initial Jobless Claims
- 8:30 Philly Fed Business Outlook
- 9:05 Fed’s Bowman Speech
- 9:15 Fed’s Williams Speech
- 10:00 Existing Home Sales
- 10:00 Leading Indicators
- 10:30 EIA Natural Gas Inventory
- 11:00 Fed’s Bostic Speech
- 4:30 PM Fed Balance Sheet
- 5:45 PM Fed’s Bostic Speech
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MFitch Ratings has downgraded China’s credit rating outlook to “Negative” from “Stable” due to concerns over growing public debt and slowing growth in the world’s second-largest economy. The agency affirmed China’s rating at A+, citing increasing risks to China’s public finance outlook. Concerns over slowing economic growth have grown in recent months, with Fitch expecting gross domestic product growth to fall to 4.5% in 2024.
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U.S. inflation data for February is expected to provide insights into the future direction of Federal Reserve monetary policy. The overall consumer price index (CPI) is expected to match the previous month’s pace of 3.1% annually, with the core CPI expected to slow to 3.7% from 3.9% in January. However, the month-on-month gauge is expected to shed light on price gains momentum.
Fed officials have made cooling inflation the main objective of interest rate hikes, which have brought borrowing costs to over two-decade highs. They suggest cuts may be coming later this year, but need more evidence that price growth is sustainablely easing back down to their 2% annualized target. Analysts at ING believe inflation is likely too hot for comfort.
U.S. inflation data for February is expected to provide insights into the future direction of Federal Reserve monetary policy. The overall consumer price index (CPI) is expected to match the previous month’s pace of 3.1% annually, with the core CPI expected to slow to 3.7% from 3.9% in January. However, the month-on-month gauge is expected to shed light on price gains momentum.
Fed officials have made cooling inflation the main objective of interest rate hikes, which have brought borrowing costs to over two-decade highs. They suggest cuts may be coming later this year, but need more evidence that price growth is sustainablely easing back down to their 2% annualized target. Analysts at ING believe inflation is likely too hot for comfort.