Following a new record high for the Nasdaq composite and two days of modest gains, US stock markets look like pulling back on the open on Wednesday. Greece parliamentary and IMF differences over the latest proposals from Athens dampened investor risk appetite that had been lifted by hopes of an imminent deal.
Creditors then rejected the Greek proposals, adding to downside momentum in European stocks which is spreading across the pond. The reaction to the downside in stocks has been a lot more tempered than the rally seen over the past two days. European stocks were up close to 5% in the past two days but are down just 1% on news the deal was rejected.
The markets are showing a bit more of a propensity to melt up than melt down. This likely reflects an idea that Greece has turned a corner in its negotiation tactics. Greece’s PM Tsipras has shown more of a willingness to give in on some of the “red lines” like taxes, so the institutions are pushing for all they can get in the last days before the June 30 payment deadline.
Strength in the US Dollar took the wind out of the sails of major US benchmarks on Tuesday following hawkish comments from the Fed’s Powell. Whether that hawkish bias has any merit will be tested in today’s core PCE numbers which the Fed use of one of their primary inflation gauges.
The final US first quarter GDP estimate is expected to show an improvement from -0.7% to -0.2%. While backwards looking, essentially flat growth in Q1 would be a lot easier to rebound from in the second quarter and is supportive of the Fed’s projection of stronger growth in the second half of the year.
Netflix (NASDAQ:NFLX) shares are expected to open higher on Wednesday after the video-streaming company reported a 7-for-1 stock split. It will start trading at the new price beginning July 15.
Netflix shares have more than doubled since the start of the year and are up sevenfold in the last two and a half years as users watching habits have shifted online and the company has expanded internationally. The split should theoretically make the stock more widely affordable, and if the recent experience of Apple (NASDAQ:AAPL) is anything to go by, could help spur further gains.
Monsanto Company (NYSE:MON) and Bed Bath & Beyond Inc (NASDAQ:BBBY) report earnings on Wednesday
Futures suggest the:
S&P 500 will open 5 points lower at 2,119 with the
Dow Jones expected to open 19 points lower at 18,095 and the
Nasdaq 100 2 points lower at 4,538.
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