U.S. stock index futures drifted lower on Tuesday as markets turned to results from Netflix and other major tech companies this week. This was to sustain the positive start to the corporate earnings season.
Netflix will be the first among the FAANG group to report quarterly numbers. This is since the streaming service provider thrived during last year’s lockdowns. In pre-market trading, its shares slipped about 0.5% ahead of its results after markets closed.
International Business Machines Corp added 2.6%, recording its highest quarterly sales growth in more than two years. Notably, it was boosted by its bets on the high-margin cloud computing business.
Chipmaker Intel Corp is set to report results on Thursday.
Marios Hadjikyriacos, investment analyst at online broker XM in Cyprus said that optimism is running very high. The earnings outlook, he said, has likely been priced to perfection at these levels. So anything less than absolutely stellar results might be seen as a negative surprise, he added.
Analysts expect Q1 profit for overall S&P 500 firms to jump 30.9% from a year earlier, according to data. This was after last week’s blockbuster earnings from major U.S. banks.
Easing worries over higher borrowing costs was a pullback in longer-dated bond yields from 14-month highs. It revived demand for high growth technology stocks.
Strong economic data and expectations of a solid rebound in corporate earnings helped the S&P 500 and the Dow to hit record highs last week.
Dow E-minis fell 159 points, or 0.47% at 06:51 a.m. ET. The S&P 500 E-minis lost 20.75 points, or 0.49%, and the Nasdaq 100 E-minis dropped 64.75 points, or 0.47%.
Tobacco companies dipped as much as 2.2% after the Wall Street Journal reported that the Biden administration is considering a rule that would limit nicotine or ban menthol in cigarettes. These include the Altria Group and Philip Morris.
Johnson & Johnson (J&J) beat expectations for quarterly revenue and profit. It raised dividend payouts to shareholders on Tuesday, while reporting $100 million in sales for its COVID-19 vaccine. Last week, the vaccine was put on pause to review reports of rare blood clots.
The company tightened its forecast for profits this year, and its shares slipped 0.2%.
Compared with its prior forecast of $9.40 to $9.60 per share, it now expects full-year adjusted profit of $9.42 to $9.57 per share. This came after sales in its pharmaceuticals business helped boost overall profit.