Stocks rallied globally as investors rushed back into technology and health-care firms on bets that the U.S. election results will mean no major tax hikes or regulatory changes that would derail the sectors. The dollar weakened to the lowest level in more than two years.
The S&P 500 jumped more than 1 per cent for a fourth straight day and is headed for the best week since April. The tech-heavy Nasdaq 100 surged more than 2 per cent, pushing its advance this week around 9 per cent. Vote counting continues in four states, with Democrat Joe Biden needing to win just one to unseat President Donald Trump. Republicans are still expected to retain control of the Senate.
That outcome would produce a divided legislature that is less likely to pass a multi-trillion-dollar stimulus package. The dollar retreated the most versus the euro since March. Investors will turn attention to the Federal Reserve’s response to the potential status quo in Congress when it announces its policy decision at 2 p.m. in New York.
“Global risk-on sentiment continues as this marks yet another day of overwhelmingly positive action for equity markets,” said Yousef Abbasi, global market strategist at StoneX. “No change is expected from Powell and company — however, investors will be listening intently to see if any clarity on future plans emerge.”
Increases in tech shares and some strong corporate results buoyed the Stoxx Europe 600 index. Chipmakers including Dialog Semiconductor Plc were among the biggest gainers following an upbeat forecast from Qualcomm Inc. on demand for 5G devices. Uber Technologies Inc. and Peloton Interactive Inc. will release results after the close of U.S. trading.
Investors are banking on a split Congress to leave Trump’s corporate tax policy unchanged while pursuing lighter-touch regulation of the tech sector. With a divided legislature less likely to boost spending, traders may see room for more aggressive action from the Fed to pump money into an economy still reeling from the coronavirus. The central bank is likely to hold off from any major changes when it announces policy later today with the U.S. election still in the balance.
“Up until about last week, the consensus belief was a full blue sweep — now that’s changing you’re seeing a repricing taking place in the market,” Anna Han, equity strategist at Wells Fargo Securities LLC, said on Bloomberg TV. “We’re seeing a boost today because a more status quo Senate may ease the burden of regulations on the tech sector.”
In the latest election developments, Joe Biden won Michigan and Wisconsin, putting him on the brink of taking the White House from Trump, hours after the president’s team opened legal fights to stop vote counting in a least two states. Some votes in battleground states are still being counted.
Elsewhere, U.K. government bonds reversed an early advance as investors shifted their focus to the slower pace of debt-buying implied by the Bank of England’s new asset-purchase targets. Bitcoin climbed by more than US$1,000 to over US$15,000, more than doubling its value in 2020.
These are some of the main moves in markets:
Stocks
The S&P 500 Index increased 2.1 per cent to 3,515.51 as of 11:46 a.m. New York time, the highest in more than three weeks. The Dow Jones Industrial Average climbed 2 per cent to 28,391.35, the highest in almost three weeks. The Nasdaq Composite Index increased 2.4 per cent to 11,867.02, the highest in more than three weeks. The Nasdaq 100 Index jumped 2.4 per cent to 12,054.07, the highest in more than three weeks. The Stoxx Europe 600 Index advanced 1 per cent to 367.03, hitting the highest in almost three weeks with its fifth straight advance. The MSCI All-Country World Index jumped 2.2 per cent to 591.43, the highest in more than three weeks on the biggest surge in more than 20 weeks.
Currencies
The Bloomberg Dollar Spot Index dipped 0.8 per cent to 1,155.05, the lowest in more than two years on the largest decrease in almost 10 weeks. The euro increased 0.7 per cent to US$1.1812, the strongest in almost two weeks on the biggest increase in more than 14 weeks. The Japanese yen appreciated 0.8 per cent to 103.65 per dollar, the strongest in eight months on the largest rise in more than two weeks.
Bonds
The yield on two-year Treasuries climbed one basis point to 0.15 per cent. The yield on 10-year Treasuries gained two basis points to 0.78 per cent. The yield on 30-year Treasuries increased one basis point to 1.55 per cent. Germany’s 10-year yield advanced less than one basis point to -0.64 per cent. Britain’s 10-year yield jumped three basis points to 0.236 per cent.
Commodities
West Texas Intermediate crude fell 1.3 per cent to US$38.66 a barrel, the largest fall in a week. Gold surged 2.4 per cent to US$1,947.67 an ounce, the highest in almost seven weeks on the biggest jump in seven months.
Netflix (NFLX) stock slid as much as 9.6% Friday after the company gave a second quarter revenue forecast that missed estimates and announced it would stop reporting quarterly subscriber metrics closely watched by Wall Street.
On Thursday, Netflix guided to second quarter revenue of $9.49 billion, a miss compared to consensus estimates of $9.51 billion.
The company said it will stop reporting quarterly membership numbers starting next year, along with average revenue per member, or ARM.
“As we’ve evolved our pricing and plans from a single to multiple tiers with different price points depending on the country, each incremental paid membership has a very different business impact,” the company said.
Netflix reported first quarter earnings that beat across the board on Thursday, with another 9 million-plus subscribers added in the quarter.
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Subscriber additions of 9.3 million beat expectations of 4.8 million and followed the 13 million net additions the streamer added in the fourth quarter. The company added 1.7 million paying users in Q1 2023.
Revenue beat Bloomberg consensus estimates of $9.27 billion to hit $9.37 billion in the quarter, an increase of 14.8% compared to the same period last year as the streamer leaned on revenue initiatives like its crackdown on password-sharing and ad-supported tier, in addition to the recent price hikes on certain subscription plans.
Netflix’s stock has been on a tear in recent months, with shares currently trading near the high end of its 52-week range. Wall Street analysts had warned that high expectations heading into the print could serve as an inherent risk to the stock price.
Earnings per share (EPS) beat estimates in the quarter, with the company reporting EPS of $5.28, well above consensus expectations of $4.52 and nearly double the $2.88 EPS figure it reported in the year-ago period. Netflix guided to second quarter EPS of $4.68, ahead of consensus calls for $4.54.
Profitability metrics also came in strong, with operating margins sitting at 28.1% for the first quarter compared to 21% in the same period last year.
The company previously guided to full-year 2024 operating margins of 24% after the metric grew to 21% from 18% in 2023. Netflix expects margins to tick down slightly in Q2 to 26.6%.
Free cash flow came in at $2.14 billion in the quarter, above consensus calls of $1.9 billion.
Meanwhile, ARM ticked up 1% year over year — matching the fourth quarter results. Wall Street analysts expect ARM to pick up later this year as both the ad-tier impact and price hike effects take hold.
On the ads front, ad-tier memberships increased 65% quarter over quarter after rising nearly 70% sequentially in Q3 2023 and Q4 2023. The ads plan now accounts for over 40% of all Netflix sign-ups in the markets it’s offered in.
Netflix reported first quarter earnings after the bell on Thursday. REUTERS/Dado Ruvic/File Photo (REUTERS / Reuters)
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
Oil prices initially spiked on Friday due to unconfirmed reports of an Israeli missile strike on Iran.
Prices briefly reached above $90 per barrel before falling back as Iran denied the attack.
Iranian media reported activating their air defense systems, not an Israeli strike.
Oil prices gave up nearly all of early Friday’s gains after an Iranian official told Reuters that there hadn’t been a missile attack against Iran.
Oil surged by as much as $3 per barrel in Asian trade early on Friday after a U.S. official told ABC News today that Israel launched missile strikes against Iran in the early morning hours today. After briefly spiking to above $90 per barrel early on Friday in Asian trade, Brent fell back to $87.10 per barrel in the morning in Europe.
The news was later confirmed by Iranian media, which said the country’s air defense system took down three drones over the city of Isfahan, according to Al Jazeera. Flights to three cities including Tehran and Isfahan were suspended, Iranian media also reported.
Israel’s retaliation for Iran’s missile strikes last week was seen by most as a guarantee of escalation of the Middle East conflict since Iran had warned Tel Aviv that if it retaliates, so will Tehran in its turn and that retaliation would be on a greater scale than the missile strikes from last week. These developments were naturally seen as strongly bullish for oil prices.
However, hours after unconfirmed reports of an Israeli attack first emerged, Reuters quoted an Iranian official as saying that there was no missile strike carried out against Iran. The explosions that were heard in the large Iranian city of Isfahan were the result of the activation of the air defense systems of Iran, the official told Reuters.
Overall, Iran appears to downplay the event, with most official comments and news reports not mentioning Israel, Reuters notes.
The International Atomic Energy Agency (IAEA) said that “there is no damage to Iran’s nuclear sites,” confirming Iranian reports on the matter.
The Isfahan province is home to Iran’s nuclear site for uranium enrichment.
“Brent briefly soared back above $90 before reversing lower after Iranian media downplayed a retaliatory strike by Israel,” Saxo Bank said in a Friday note.
The $5 a barrel trading range in oil prices over the past week has been driven by traders attempting to “quantify the level of risk premium needed to reflect heightened tensions but with no impact on supply,” the bank said, adding “Expect prices to bid ahead of the weekend.”
At the time of writing Brent was trading at $87.34 and WTI at $83.14.
