Here are five things you must know for Friday, January 21:
1. -- Stock Futures Mixed Amid Worst Week For Tech Since 2020
U.S. equity futures traded mixed Friday, following on from a tech-lead selloff late Thursday that extended the Nasdaq's worst week in two years, as investors worry the the Fed's inflation fight will intensify just as consumer-lead growth is beginning to wane.
A gloomy demand outlook from streaming service Netflix (NFLX) and a collapse in shares of Peloton (PTON) amid what it called a 'significant' slump in interest in its connected fitness equipment added to concerns of slumping consumer demand, while a series of rate hikes in China raised the prospect of slowing growth from the world's largest exporter as it pursues its 'zero-Covid' policies.
Set against bets of at least three rates hikes from the Fed this year -- and possibly as many as five -- the tech sector weakness bled into broader Wall Street stocks on Thursday and looks to hold sentiment in check for the Friday session as traders navigate options expiries at the close of the day and a surge in equity volatility, with the benchmark Vix index rising 47.5% over the past five days to 26.08 points.
On Wall Street, futures tied to the Dow are indicating a modest 55 point opening bell gain while those linked to the S&P 500 are priced for an 8 point retreat.
Nasdaq Composite futures are indicating a 40 point opening bell gain as benchmark 10-year Treasury note yields ease to 1.792% in overnight trading.
2. -- Netflix Shares Plunge After Weak Subscriber Growth Outlook
Netflix shares plunged lower in pre-market trading, potentially erasing all of the stock's pandemic-earned gains, following a weaker-than-expected outlook for subscriber growth heading into the start of the year.
Netflix said it added 8.28 million subscribers over the period, missing the Street estimate of 8.4 million, and taking the overall total to 222 million. Net additions for the first three months of the year would come in at 2.5 million, Netflix said, compared to a market forecast of 5.9 million citing what it called "Covid overhang" in key overseas markets.
"We're trying to pinpoint what that is. It's tough to say exactly why our acquisition hasn't recovered to pre-COVID levels," CFO Spencer Neumann told investors on a conference call late Thursday. "When we look at the data on a competitive impact, there may be some kind of more on the marginal kind of side of our growth, some impact from competition but we just don't see it specifically."
Netflix shares were marked 20.2% lower in pre-market trading Friday to indicate an opening bell pricec of $406.40 each.
3. -- Peloton Hits Back At "False" Production Pause Reports
Peloton shares moved higher in pre-market trading, following a Thursday slump that wiped $2.5 billion from its market value, as the fitness equipment maker hit back at reports it's prepared to suspend production of its bikes and treadmills.
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CEO John Foley called the CNBC report, which cited an internal memo saying the group was planning a two-month production pause amid a "significant reduction" in post-pandemic demand for its connected bikes and treadmills 'false', but noted the group will nonetheless 'reset' output levels and review the size of its workforce and take "significant corrective actions" to improve profits.
"We now need to evaluate our organization structure and size of our team," Foley said "And we are still in the process of considering all options ... to make our business more flexible."
Peloton shares were marked 8.3% higher in pre-market trading to indicate an opening bell price of $26.24 each.
4. -- Intel Unveils $20 Investment in Two Ohio Chipmaking Plants
Intel Corp. (INTC) unveiled plans Friday to invest $20 billion into two chipmaking plants in Ohio that it hopes have have up-and-running within three years.
Intel, which detailed a similar investment in Arizona last March, said the Ohio investment will create 3,000 jobs -- with another 7,000 needed to build the two plants -- and expand the group's plans to take-on rivals such as Samsung and Taiwan Semi TSMC in the global semiconductor market.
"Intel is bringing leading capability and capacity back to the United States to strengthen the global semiconductor industry," said CEO Pat Gelsinger. "These factories will create a new epicenter for advanced chipmaking in the U.S. that will bolster Intel’s domestic lab-to-fab pipeline and strengthen Ohio’s leadership in research and high tech.”
Intel shares were marked 0.5% higher in pre-market trading Friday to indicate an opening bell price of $52.31 each.
5. -- Microsoft Says 'Call of Duty' Will Remain On PlayStation
Microsoft (MSFT) provided some relief late Thursday for gamers worried about the impact of its planned $69 billion takeover of Activision Blizzard ATVI with a promise to keep its 'Call of Duty' franchise available to users of the Sony PlayStation.
Microsoft's head of gaming, Phil Spencer, Tweeted Thursday that the tech giant will "honor all existing agreements upon acquisition of Activision Blizzard and our desire to keep 'Call of Duty' on PlayStation. Sony is an important part of our industry, and we value our relationship.”
The suggestion that 'Call of Duty' won't be exclusive to Microsoft's XBox could provide some relief for Sony, whose shares were hit hard by news of the Activision takeover earlier this week, but it won't change the broader dynamics of the deal, which have shaken the gaming industry to its core and triggered a wave of speculation as to the next move in consolidation.
Microsoft shares were marked 0.75% higher in pre-market trading Friday to indicate an opening bell price of $303.87 each while Sony ended the session in Tokyo with a 1.37% decline that pegged the stock at 12,955 Japanese yen.
