Stocks struggled for direction in back-and-forth trading on Wednesday A two-day walk Driven by a better start than feared earnings season faltered.
S&P 500 Index (^ Salafist Group for Preaching and Combat) down 0.3% after the index gained more than 4% in the past two days, while the Dow Jones Industrial Average tumbled (^ DJI) rose by 30 points, or 0.1%. Nasdaq Technology Heavy Vehicle (^ ninth) by 0.4%.
Netflix (NFLX) in the spotlight after a Big profits won on Tuesday afternoonn which included 2.41 million new subscribers — a key metric that analysts watch — more than double Wall Street’s estimate of 1 million additions. In the earnings statement, executives noted that the company is “on track to re-accelerate growth” after a challenging first half of the year. Shares jumped 16%.
Elsewhere on the earnings front, United Airlines Holdings (UAL) rose nearly 8% Wednesday morning after the airline reported Higher than expected earnings results for the third quarter Due to strong travel demand and earnings expectations for the current quarter that beat Wall Street estimates.
Strong reports from Netflix and United Airlines add to a raft of upbeat corporate results released earlier in the week from companies including Goldman Sachs (pand Johnson & JohnsonJNJ).
Although the numbers have so far been better than expected, the companies reporting third-quarter results so far have only 69% reported actual earnings per share above estimates — below the 5-year average of 77%, According to FactSet Research. Among those that beat estimates, earnings beats came in 0.1% above estimates, well below the 5-year average of 8.7%.
Several Wall Street strategists emphasized that the valuations did not fully reflect the lower earnings that dovetail with the slowdown in the ongoing economic growth, citing expectations for future earnings that are still too high.
“If third-quarter earnings are disappointing, as we expect, and forward earnings expectations head lower, we could see another downside move for stocks,” Gargi Choudhury, head of investment strategy at iShares at BlackRock, said in a note. “Don’t be fooled or chased after these bear market rallies.”
“The market, of course, will eventually bottom out, but until the Fed’s earnings or dividends are properly reduced, we think the time is not ripe,” Chaudhry said.
In commodity markets, oil rose on concerns that new European sanctions on Russia could increase supply pressure. On Wednesday, the Biden administration is expected to announce a plan to free up 15 million barrels of US strategic reserves to cool gas prices. West Texas Intermediate (WTI) crude futures rose nearly 1.5% to trade around $84 a barrel.
Across the Atlantic, the UK has stretched into a volatile expanse as investors rate a Double digit inflation print for September by 10.1%, which puts the latest emergency move by the Bank of England to sell government bonds into question. The pound weakened and the price of gold fell.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter Tweet embed
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