5 Keys to Wall Street By Investing.com


©Reuters.

By Geoffrey Smith

Investing.com – Netflix (NASDAQ:) earnings warning poses the clearest challenge to growth stock valuations to date, while Peloton (NASDAQ:) and wind turbine maker Siemens Energy also fall sharply due to a series of disappointing news.

Russia and the United States are in last-minute talks to avert war in Ukraine, but hopes of avoiding conflict are slim. Intel (NASDAQ:) plans to build another $20 billion chip factory, this time in Ohio.

Oil prices are off seven-year highs on concerns that the economy is in a slump due to Covid.

Here are the top five things to watch for this Friday, January 21, in the financial markets.

1. Netflix struggles to grow; Platoon puts on the brakes

Shares of Netflix lost nearly a fifth of their value after forecasting a sharp slowdown in subscriber growth this quarter. The stock is set to open at its lowest point since April 2020, having effectively reversed nearly all of its gains since the start of the pandemic.

Netflix is ​​not the first technological value to fall in recent months. However, it is by far the largest and most prominent.

Netflix has not been the only great bet for the future that has foundered overnight. Shares in Peloton — another major winner from the pandemic — tumbled after news of its cutbacks in production of stationary bikes and treadmills due to falling demand, while Siemens Energy, which owns one of the biggest companies in wind turbines in the world, falls 13% after warning that it has difficulties in passing on the increase in costs to customers.

2. Blinken and Lavrov go through hoops

US Secretary of State Anthony Blinken is holding talks in Geneva, Switzerland, with his Russian counterpart, Sergei Lavrov, in an attempt to avert war in Ukraine.

The talks are reported to last only 90 minutes and the press conference is scheduled for 1:00 p.m. (CET), giving both sides little time to achieve anything substantial.

Ukraine is a sovereign state and a member of the United Nations. Russia, which already invaded it in 2014, annexing part of its territory and establishing breakaway republics in its eastern part, has consistently argued that the mere possibility that it decides to join NATO in the future is a justification for a pre-emptive military invasion for its part.

French President Emmanuel Macron and German Chancellor Olaf Scholz are also holding talks on Ukraine today. The vulnerability of both countries to the economic pressure of Russian energy supply has prevented any unified response from the West, as happened in 2014.

3. Stocks Head for Another Lower Open; the Nasdaq in correction territory

US stocks are set to open again lower as Netflix’s profit warning and Peloton’s woes deal a further blow to the theory that the market can sustain what remains a historically high valuation.

At 12:20 pm (CET), they lost 0.1%, while they fell 0.4% and 0.8%. He is on track for a more than 3% decline this week, while he is now firmly in correction territory, having dropped more than 10% from his November highs.

Among the stocks due to report on Friday are oil services giant Schlumberger (NYSE:), rail operator Kansas City Southern (NYSE:) and IHS Markit. Estee Lauder will also be in the spotlight after its quarterly results released on Thursday contained no further negative shocks.

4. Intel will “build a new chip plant in Ohio”

The semiconductor cycle continues to turn. With signs that demand will outstrip supply for longer than previously thought, Intel has committed to building a new $20 billion chip factory in Ohio, according to Time magazine and other media.

This is the latest multibillion-dollar capacity expansion announced by the world’s leading chipmakers. Samsung (KS:) and Taiwan Semiconductor, like Intel, have also committed to large-scale investments in the coming years.

Shares of Intel, whose lackluster performance over the past two years has made it less vulnerable to valuation-driven sales, were down 0.4% before the open.

5. Oil falls with the increase in gasoline reserves

Oil prices fell on concerns that the latest wave of Covid-19 will curb global demand in the short term, allowing the recovery of some reserves that had been depleted around the world.

US gasoline stockpiles rose by more than 5 million barrels for the third week in a row last week, though the increase was the smallest in those three weeks. These figures coincide with data indicating that initial jobless claims have spiked to three-month highs as the hospitality and travel sectors have been hit by a sudden change in customer behaviour.

By 12:40 PM ET, futures were down 1.8% at $83.98 a barrel, while futures were down 1.7% at $86.87 a barrel. Baker Hughes active field count and CFTC positioning data will be completed later in the week.

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