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Netflix falls after downbeat forecast
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Tesla down on latest cuts to US prices; to report Q1
results
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Morgan Stanley slips as Q1 profit falls
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Futures down: Dow 0.35%, S&P 0.51%, Nasdaq 0.79%
(Updates prices throughout; adds details, comments)
By Sruthi Shankar and Ankika Biswas
April 19 (Reuters) - U.S. stock index futures fell on
Wednesday as Treasury yields rose on expectations the Federal
Reserve could keep interest rates higher for longer, while a
slide in Tesla and Netflix shares was set to weigh on the
tech-heavy Nasdaq.
Tesla Inc dropped 2.0% in premarket trading after
the electric-vehicle maker cut prices on some of its Model Y and
Model 3 vehicles in the United States, the sixth time it has
lowered prices this year.
The company is due to report January-March quarter results
after the closing bell on Wednesday.
Netflix Inc fell 1.7% after the video-streaming
pioneer beat Wall Street earnings estimates for the first
quarter but offered a downbeat forecast.
Morgan Stanley slipped 1.2% after the Wall Street
bank reported a fall in quarterly profit, a day after peer
Goldman Sachs Group Inc posted a 19% fall in profit on
hit to dealmaking and losses from the sale of some loans from
its consumer unit, Marcus.
The CBOE Volatility index , also known as Wall
Street's fear gauge, rose to 17.47 after falling to its lowest
level since January 2022 in the previous session.
The benchmark S&P 500 closed at a more than two-month
high on Tuesday as strength in some big technology stocks
countered disappointing quarterly reports from Johnson & Johnson and Goldman Sachs.
While the start of the earnings season has been largely
supportive for equities, investors will be closely watching
updates from market heavyweights as well as consumer companies
for signs of inflation and economic slowdown hurting margins.
Mixed economic data recently has fueled bets that the U.S.
central bank will hike interest rates by 25 basis points in May,
with traders giving nearly 85% odds for such a move, as per CME
Group's Fedwatch tool.
The 2-year Treasury yield , most reflective of short-term rate expectations, hit a one-month high of 4.29% on Wednesday and the 10-year yield hit a four-week high as traders scaled back expectations of rate cuts later this year. "Although some of the economic indicators suggest the economy is likely to avoid a recession, the fact is that the cost of borrowing is now at such a level as to deter some consumers from financing their debt," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. "This will cause the economy to enter a mild recession, however, it will be only short-lived and may last for a quarter." Major technology and growth stocks such as Apple Inc , Microsoft Corp , Alphabet Inc and Meta Platforms Inc were down between 0.6% and 1.5%. The Fed's "Beige Book", a snapshot of the health of the U.S. economy, will be released at 2:00 p.m. ET (1800 GMT), and investors will scrutinize it for the impact of the recent banking crisis on economic activity.
Chicago Fed President Austan Goolsbee and New York President John Williams are set to speak later in the day. At 7:10 a.m. ET, Dow e-minis were down 120 points, or 0.35%, S&P 500 e-minis were down 21.5 points, or 0.51%, and Nasdaq 100 e-minis were down 104.75 points, or 0.79%. Further on the earnings front, Citizens Financial Group Inc fell 1.5% after its first-quarter results missed estimates.
Western Alliance Bancorp rallied 18% after the regional bank posted stronger-than-expected earnings and said its deposits had stabilized after the March banking crisis. Shares of banks First Republic Bank , Zions Bancorporation and Pacwest Bancorp rose between 2% and 4.8%. (Reporting by Sruthi Shankar and Ankika Biswas in Bengaluru Editing by Vinay Dwivedi)
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