Equity markets ended the day mixed but mostly higher with the DIA finishing lower while SPY and QQQ shook off some early selling to resume the push higher.  A strong showing on Netflix after the bell sets the stage for yet another gap to open the scoring tech sector.  Today we have Mortgage Apps, PMI, Petroleum, and bond auctions as well as a significant increase in earnings events so expect heightened price volatility as traders react.  Also, keep in mind we have the possibility of some big point moves with key economic data coming Thursday and Friday before the bell so carefully plan accordingly.

Overnight Asian markets closed mixed but mostly higher as Hong Kong surged 3.56% and the Shanghai exchange enjoyed a needed relief rally.  European markets are decidedly bullish this morning in reaction to PMI data showing an improvement in economic activity. The strong NFLX report after the bell yesterday sets up another gap open as index futures push higher ahead of earnings and economic reports.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday include TSLA, ABT, AEM, AGI, AMP, APH, ASML, T, CP, CNS, COLB, CCI, CSX, ELV, ETH, FCX, GD, IBM, KMB, KNX, LRCX, MNRO, PKG, PLXS, RJF, RMD, SLM, SAP, STX, NOW, SLG, TEL, TEL, TDY, TXT, URI, WRB, & WFG.

News & Technicals’

Netflix warned its users and investors that it will increase its prices in the future, according to its quarterly investor letter. The company said that it needs to raise its prices to invest more in original and licensed content, as well as to improve its technology and user experience. Netflix also announced that it signed a deal to add 10 years of WWE’s Raw, a popular wrestling show, to its content library. Netflix has not changed the price of its ad tier, which costs $6.99 per month, since it introduced it in 2022. The company reported strong growth in its subscriber base in the fourth quarter of 2023. The company added 13.1 million new subscribers, beating its forecast of 11.5 million. The company now has 260.8 million paid subscribers worldwide, up 18% from a year ago. Netflix also exceeded Wall Street’s revenue estimates, posting $9.9 billion in revenue, up 21% year-on-year. The company attributed its success to its diverse and high-quality content offerings, as well as its global expansion strategy.

Despite surpassing market forecasts on both revenue and profit, ASML, the world’s leading supplier of lithography machines for chipmaking, warned that its sales growth would stall in 2024. The Dutch company, whose products are essential for producing the most advanced semiconductors, has been affected by the escalating tensions between the U.S. and China over technology trade and security. Earlier this month, ASML revealed that the Dutch government had restricted its exports of its latest NXT:2050i and NXT:2100i models to China last year, amid pressure from the U.S. to limit China’s access to cutting-edge chip technology.

The Federal Aviation Administration (FAA) has initiated a probe into Boeing’s aircraft manufacturing practices after a serious incident involving an Alaska Airlines flight. A door panel detached from the plane’s fuselage during the flight, causing a loud bang and a loss of cabin pressure. No one was injured, but the flight had to make an emergency landing. FAA Administrator Mike Whitaker said that the agency had sent several inspectors to Boeing’s factories to conduct a thorough examination of its quality control and safety standards. He said that the FAA was moving away from relying on Boeing’s self-audits and towards a more hands-on approach.

The stock market ended the day mixed but mostly higher, as the tech titans shook off early selling to resume the chase higher. The sectors of consumer goods and telecoms led the gains in the S&P 500, thanks to the impressive quarterly results of P&G and Verizon. The gap between the long-term and short-term Treasury yields widened today, as the 10-year yield climbed to about 4.14% and the 2-year yield dropped to 4.38%. Today the number of earnings ramped up significantly so expect some price volatility as traders react the the substantial amount of data. For the first time this week, we will also have the economic calendar providing some inspiration for the bulls or bears, with Mortgage Apps, PMI Composite, Petroleum Status, Business Uncertainty, and bond auction results. That said keep in mind Thursday morning brings us a slew of market-moving economic reports before the bell so plan your risk accordingly as big point moves are possible.

Trade Wisely,

Doug