U.S. equity futures were mostly unchanged early Wednesday as investors looked ahead to another round of corporate earnings and processed mixed geopolitical signals.
At 03:39 ET, Dow futures edged up 38 points or 0.1%, S&P 500 futures gained 10 points or 0.1%, and Nasdaq 100 futures were nearly flat.
U.S. futures tread water ahead of earnings rush
The major averages ended Tuesday with a muted performance as investors grew wary of elevated valuations and questioned whether the recent stock rally can be sustained.
Geopolitical developments remained in focus. President Donald Trump cast doubt on a potential meeting with Chinese President Xi Jinping in South Korea later this month, saying it “may not happen.” However, he also struck a hopeful tone, stating that if it does go ahead, it would be “very successful” and that he expects a “fantastic” and “fair” trade deal.
Meanwhile, hopes for progress on Ukraine were dented after the planned Trump-Putin summit was postponed when Moscow declined to agree to a ceasefire.
Netflix shares sink on margin shortfall
Netflix (NASDAQ:NFLX) fell more than 6% in after-hours trading after its third-quarter operating margin came in at 28%, slightly below expectations.
The miss stemmed largely from tax-related charges in Brazil. The company said that excluding the expense, its margin would have surpassed forecasts.
Netflix also trimmed its full-year margin outlook to 29% from 30%, citing the impact of the Brazil dispute.
Despite the margin pressure, the company posted higher revenue and profits, buoyed by its strongest-ever advertising quarter, new subscribers, and higher prices.
Tesla earnings up next
Tesla (NASDAQ:TSLA) will report its quarterly results after the closing bell, in one of the most closely watched corporate announcements of the week.
Earlier this month, the automaker reported record deliveries for the third quarter, boosted by discounts and marketing efforts ahead of the expiration of a $7,500 EV tax credit in the U.S. Investors are now focused on how the expiration will affect future demand.
According to analysts at Vital Knowledge, “earnings reports for this company are nearly irrelevant as the bulk of the narrative and equity value isn’t related to the core business of manufacturing and selling autos but instead hope and hype for products that won’t impact income statement in a material way for years to come.”
Tesla CEO Elon Musk has repeatedly highlighted projects such as robotaxis and full self-driving technology as central to the company’s future. Tesla shares are up more than 16% year to date, supported in part by a proposed new pay package for Musk and additional stock purchases.
AT&T (NYSE:T), GE Vernova (NYSE:GEV), and Thermo Fisher (NYSE:TMO) are also scheduled to release earnings before U.S. markets open.
Hermes reports “very slight” China improvement
Hermes (EU:RMS) shares traded modestly higher in Paris after the luxury group signaled a slight pickup in demand from China during the third quarter.
CFO Eric de Halgouet said stronger property prices and stock market gains in key cities contributed to the improvement.
Quarterly revenue climbed 9.6% to €3.88 billion, just shy of the 10% growth expected by analysts, according to Visible Alpha estimates. The update aligns with cautious optimism expressed recently by rivals L’Oreal (EU:OR) and LVMH (EU:MC) regarding stabilization in Chinese luxury spending.
Gold steadies after steep drop
Gold prices rebounded in early Wednesday trade after a heavy sell-off in the prior session, as a weaker dollar and bargain-hunting helped steady the market.
Investors also awaited U.S. inflation figures due later this week, which could influence expectations for the Federal Reserve’s next steps. With the government shutdown delaying other data, Friday’s CPI report is expected to be one of the most closely watched indicators.
Spot gold rose 1.1% to $4,153.24 per ounce at 03:32 ET after briefly slipping to around $4,000 earlier in the day. U.S. gold futures were up 1.2% at $4,156.79.
Tuesday’s 5% plunge marked gold’s sharpest one-day fall since 2020, erasing part of its recent rally to record highs driven by geopolitical uncertainty and expectations of easier U.S. monetary policy.
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