Yahoo Finance Wall Street Opens a Shade Higher; Verizon, Alibaba Gain; Dow up 30 Pts
By Geoffrey Smith
Investing.com -- U.S. stock markets opened a fraction higher on Tuesday, supported by a number of positive earnings report but held back by disappointment at heavyweight Netflix (NASDAQ:NFLX)'s earnings.
By 9:40 AM ET (1340 GMT), all three main indices were struggling to extend the gains that they made on Tuesday. The Dow Jones Industrial Average was up 29 points, or 0.1%, at 35,486 points. The S&P 500 was up 0.2% and the Nasdaq Composite was up 0.1%.
To a large degree, this was due to disappointment at guidance from Netflix after the close on Tuesday. The streaming giant said it would have negative free cash flow in the current quarter due to high amortization costs after a heavy investment in original content. That investment had brought in nearly 1 million more new subscribers than expected in the third quarter, but revenue failed to keep pace with subscriber growth, and user numbers in the higher-paying but largely saturated North American market only inched up. There was also little sign of the company making significant money out of its diversification into videogaming in the near term.
Netflix stock fell 2.5%, downgraded by, among others, Deutsche Bank (DE:DBKGn).
Among the stocks supported by better-than-expected results were Verizon (NYSE:VZ), which added 2.1% after the carrier posted a solid gain in high-paying 5G mobile subscribers, raising its guidance and its dividend in the process. Abbott Laboratories (NYSE:ABT) stock gained 4.0%, and Anthem (NYSE:ANTM) stock rose 6.7%, the latter pulling UnitedHealth (NYSE:UNH) stock up by another 2.3%. Both Anthem's and Abbott's results benefited from a return to normality in the health care system as the pandemic receded.
By contrast, Novavax (NASDAQ:NVAX) stock plunged 16% after Politico reported that it is struggling to meet quality standards dictated by the Food and Drug Administration for its Covid-19 vaccine.
Elsewhere, Winnebago (NYSE:WGO) stock and United Airlines (NASDAQ:UAL) stock both lost premarket momentum, losing 1.4% and 0.1% respectively after trading higher before the opening. The bottom lines of both were better than expected in the last quarter, Winnebago earning more and United losing less than forecast. However, both warned of higher costs in the pipeline. Alibaba (NYSE:BABA) ADRs were another to lose premarket gains as soon as the market opened. They were down 0.1%, having already gained nearly 7% on Tuesday on the back of a report that sighted founder Jack Ma allegedly on vacation in Spain. The report was taken as a sign that relations between Ma and Beijing have eased to the point where vacations are possible again.
Regulatory battles have been at the heart of a decline in Alibaba's stock that goes back to last fall, when regulators intervened to stop Alibaba's financial services affiliate Ant Group listing in Hong Kong. New rules introduced in the wake of that have substantially reduced Ant Group's profitability, while Alibaba has been a lightning rod for broader concerns about the impact of the Chinese government's campaign to reduce inequality.
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