Futures drop as Middle East tensions simmer, Netflix slumps
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 [April 19, 2024] By
Shashwat Chauhan and Shristi Achar A
(Reuters) -U.S. stock index futures fell on Friday as investors turned
risk-averse following reports of an escalation in the Middle East
conflict, while Netflix dropped after the company forecast
current-quarter revenue below estimates.
Israel launched an attack on Iranian soil on Friday, sources said, in
the latest tit-for-tat exchange between the two arch foes, whose decades
of shadow war broke out into the open and threatened to drag the region
deeper into conflict.
The CBOE Volatility index, also known as Wall Street's "fear gauge", was
up 1.42 points at 19.42, its highest level in more than five months.
"One mistake that causes casualties or hits an unexpected target could
trigger an escalation in reprisals and a deeper, more dangerous
situation in the Middle East," Kathleen Brooks, research director at XTB,
said in a note.
"This is why volatility is likely to stick around, especially as it
comes at a delicate time for financial markets as they recalibrate
expectations for interest rate cuts."
On the earnings front, Netflix slumped 6.4% in premarket trading
following the streaming video pioneer's lackluster second-quarter
forecast.
Shares of other streaming services providers such as Walt Disney and
Roku dropped 1.2% and 1.5%, respectively.
At 6:55 a.m. ET, Dow e-minis were down 126 points, or 0.33%, S&P 500
e-minis were down 23.25 points, or 0.46%, and Nasdaq 100 e-minis were
down 124.25 points, or 0.71%.
The S&P 500 and the Nasdaq closed lower for the fifth straight session
on Thursday, as economic data and comments from Fed officials suggested
that the U.S. central bank was unlikely to cut interest rates in the
near future.
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Traders work on the floor of the New York Stock Exchange (NYSE) in
New York City, U.S., April 1, 2024. REUTERS/Brendan McDermid/File
Photo
Federal Reserve policymakers have coalesced around the idea of
keeping borrowing costs where they are until perhaps well into the
year, given slow and bumpy progress on inflation, and a still-strong
U.S. economy.
Equities were rattled this week as investors readjusted their
expectations over by how much the Fed would cut rates this year,
with both the S&P 500 and the blue-chip Dow poised for a third
weekly decline, while the Nasdaq was set for its fourth consecutive
weekly loss, if current trend holds.
Money markets are now pricing in about 41 basis points (bps) of cuts
from the central bank, down from around 150 bps seen at the
beginning of 2024, according to LSEG data.
Most megacap growth stocks weighed, with Alphabet <GOOGL.O>, Nvidia,
Meta Platforms and Tesla down between 0.7% and 2.1%.
Shares of Paramount Global jumped 10.3% after a person familiar with
the matter told Reuters that Sony Pictures Entertainment and Apollo
Global Management are discussing making a joint bid for the company.
(Reporting by Shashwat Chauhan and Shristi Achar A in Bengaluru;
Editing by Sherry Jacob-Phillips and Maju Samuel)
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