Jan 24 (Reuters) - U.S. stock index futures on Wednesday pointed to an extension in the record-breaking rally on Wall Street after Netflix surged on smashing expectations for subscriber growth, while ASML's strong earnings helped drive gains in chip stocks.
Shares of Netflix (NFLX.O), opens new tab rose 9.6% in premarket trading after the streaming pioneer's largest-ever fourth-quarter subscriber growth indicated that it had won the streaming wars with its password-sharing crackdown and a strong content slate.
"Original content has higher retention rates, making it a serious weapon in the streaming wars," Hargreaves Lansdown's lead equity analyst Sophie Lund-Yates said in a note.
"It doesn't come cheap and some would balk at Netflix's annual content budget, but it's this investment that keeps Netflix's frame gilded."
Roku (ROKU.O), opens new tab and Paramount Global (PARA.O), opens new tab also added gains of 3% and 1.5%, respectively.
Keeping investor euphoria in check, AT&T (T.N), opens new tab slipped 3.1% after forecasting annual profit below expectations, while DuPont De Nemours (DD.N), opens new tab slid 11% as the materials and chemicals maker expects to report a fourth-quarter loss compared to a year-ago profit.
On Tuesday, the S&P 500 closed at a record high for the third day, extending a bull-market run it had confirmed on Friday.
With the benchmark index trading around 20 times forward 12-month earnings, compared with its long-term average of 16 times, the results of the "Magnificent 7" group of companies will be in focus to determine whether their valuations are justified.
Tesla rose 1.5% ahead of its result later in the day. A Reuters report said the company had informed suppliers that it wants to start production of a new mass-market electric vehicle code-named "Redwood" in mid-2025.
Chip stocks including Nvidia (NVDA.O), opens new tab, Advanced Micro Devices (AMD.O), opens new tab and Intel (INTC.O), opens new tab gained between 1.4% and 2.2% following European chip-making equipment maker ASML Holding's (ASML.AS), opens new tab fourth-quarter earnings beat and best-ever quarterly orders.
At 7:14 a.m. ET, Dow e-minis were up 90 points, or 0.24%, S&P 500 e-minis were up 21.5 points, or 0.44%, and Nasdaq 100 e-minis were up 121.25 points, or 0.69%.
On the data front, the S&P Global's flash readings of the Purchasing Managers Index (PMI) are in focus.
A resilient U.S. economy and uncertainty over the timing of a rate cut have led investors to reassess their bets.
Traders now see an 88% chance of a rate cut in May, as per CME Group's FedWatch Tool. They were earlier expecting a rate cut as early as March.
Among others, cloud firms Cloudflare (NET.N), opens new tab, Snowflake (SNOW.N), opens new tab and ServiceNow (NOW.N), opens new tab jumped more than 2% each on the back of German software firm SAP's (SAPG.DE), opens new tab strong annual revenue growth forecast.
Texas Instruments (TXN.O), opens new tab shed 3.5% after forecasting first-quarter revenue and profit below market estimates.
U.S.-shares of Alibaba , Bilibili and Li Auto added between 1.9% and 3.2% after China's central bank announced a deep cut to bank reserves in an attempt to support the country's fragile economy and plunging stock markets.
Reporting by Ankika Biswas and Johann M Cherian in Bengaluru; Editing by Maju Samuel and Anil D'Silva
