US pre-open: Stocks to nudge down ahead of earnings, Powell testimony; Netflix in focus
US stocks looked set to nudge lower at the open on Tuesday, with Netflix likely to drop following a disappointing quarterly update, as investors eyed a Congressional testimony from Fed chair Jerome Powell and earnings from the likes of Goldman Sachs and Johnson & Johnson.
At 1130 BST, Dow Jones Industrial futures were down 0.1%, while S&P 500 and Nasdaq futures were 0.2% weaker.
CMC Markets analyst Michael Hewson said: "US stocks, particularly in the tech sector could well find themselves under pressure early on after last night’s miss from Netflix, which saw the company undershoot subscriber growth by 1m users in their latest quarter.
"Having seen JP Morgan, Citigroup and Bank of America beat expectations all eyes will be on Goldman Sachs as they announce their latest Q2 earnings update. The bar is likely to be high with particular focus on investment banking, and in particular M&A which has seen a significant amount of activity this year. Its equities business was the outperformer in Q1, largely due to the volatility seen at the beginning of the year. This is likely to be harder to repeat, but higher rates may well offset some of this despite a narrowing yield curve.
"Expectations are for a number in the region of $4.65c a share, with new CEO David Solomon having a tough act to follow as he beds himself in as replacement for Lloyd Blankfein."
Netflix was down nearly 12% in pre-market trade after the streaming company said late on Monday that it added 5.2m subscribers in the three months to the end of June, in line with the same period a year ago and below its own forecast for growth of 6.2m. The group said in a statement that it had had a "strong but not stellar" second quarter.
Johnson & Johnson, UnitedHealth, CSX Corp and United Continental are all slated to report earnings later in the day.
As far Powell's testimony is concerned, Konstantinos Anthis, head of research at ADSS, said the focus will be on remarks regarding domestic growth and interest rates in the face of escalating trade war developments.
"We know that Powell holds a hawkish view over the economy but the question is whether his outlook will be swayed by the prospect of a worsening relationship between the US and its trade partners.
"Depending on his tone and given the lack of any other dollar-related news on the calendar, the greenback will either proceed higher in an attempt to correct its recent losses or continue moving to the downside. Dollar/yen is trading sideways in anticipation of the key event between the 112.20 and 112.80 levels; a break lower will drive prices towards the 111.50 area while the upside target lies around the 113.50 mark."
On the data front, industrial production and capacity utilisation are at 1415 BST, while the NAHB housing market index is at 1500 BST.