US open: Stocks go red following Netflix miss
US stocks traded lower at the open on Tuesday, following a disappointing quarterly update from streaming giant Netflix and a Congressional testimony from Fed chair Jerome Powell.
At 1540 BST, the Dow Jones Industrial Average was down 0.22% to 25,009.44, as the S&P 500 lost 0.07% to 2,796.37 and the Nasdaq moved 0.12% softer to 7,796.41.
When discussing the Dow's early movements, Connor Campbell, a financial analyst at SpreadEx, said, "The US index fell 50 points after the bell, taking it back towards 25,000. Since reaching that two-month high the Dow has struggled to extend its recovery, the lingering trade war fears perhaps acting as a capper to its first half of July rebound."
Tech stocks were under pressure in early trading after last night's miss from Netflix, which saw the company undershoot subscriber growth by 1m users in its latest quarter.
Netflix was down 9.05% in early trade after the streaming company said late on Monday that it added 5.2m subscribers in the three months to the end of June, in line with the same period a year ago and below its own forecast for growth of 6.2m. The group said in a statement that it had had a "strong but not stellar" second quarter.
Johnson & Johnson was up 3.63% after reporting second-quarter earnings and revenue ahead of expectations, while UnitedHealth lost 3.06% after posting a premiums miss.
CSX Corp and United Continental were set to report later in the day.
As far Powell's testimony was concerned, the chair's semi-annual Monetary Policy Testimony broke no new ground, according to Ian Shepherdson, chief economist at Pantheon Macroeconomics.
However, Shepherdson noted that Powell's use of "for now", when stating that the Fed expects to keep raising rates "gradually", could be seen as opening the door to more dramatic action down the road if inflation rises much above the target.
"Powell has made it very clear that a modest overshoot won't trigger panic at the Fed, emphasizing again that the target is 'symmetric' and that only inflation 'persistently' above or below the target would make the FOMC 'concerned'," said Shepherdson.
Powell remained bullish on growth, specifically pointing out that the Fed realises that second-quarter GDP was "much stronger" than the first, but made no reference to the possible impact of business tax cuts on future growth or productivity.
On the data front, US industrial production increased in June, driven by a sharp rebound in manufacturing and mining output.
The Federal Reserve revealed that industrial production had risen 0.6% last month after a downwardly revised 0.5% decline in May.
With production increasing solidly, capacity utilization, a measure of how fully firms are using their resources, increased to 78.0% from 77.7% in May, just 1.8% below its 1972-to-2017 average.
Elsewhere, Builders' confidence in the market for new single-family homes held steady as at 68 in July, according to the National Association of Home Builders' housing market index, falling just short of economists' predictions of 69 reading.