S&P 500 rises but fails to reclaim 4600 level as focus turns of aftermarket Netflix earnings

• US equities were broadly higher on Thursday, aided as PBoC easing boosted global markets and amid dip-buying.
• The Nasdaq 100 index on Wednesday closed more than 10% below its November record highs, confirming a correction.
• There is lots of focus on Netflix earnings after the Thursday market close.

US equities are trading broadly higher this Thursday, as stocks in the region track gains seen in Europe and, before that, Asia markets are the PBoC on Thursday took further steps to ease monetary policy. The Chinese central bank cut its one-year loan prime rate to 3.7% from 3.8% and its five-year loan prime rate (which is a reference rate for mortgages) to 4.6% from 4.65%. As a result, the S&P 500 currently trades around 0.7% higher in the 4560s, though has pulled back sharply from earlier session highs at 4600 where the index was trading with gains of about 1.5%.

Looking across the S&P 500 GICS sectors, the gains are broad, with the big tech-dominated Information Technology and Communications Services sectors up 0.8% apiece, Financials up 1.0%, Health Care up 0.8% and Industrials up 0.6%. The Nasdaq 100 index is up about 0.8% having bounced from yesterday’s closing levels just above 15K back towards the 15.2K area. Much was made of the fact that the index closed slightly more than 10% below its November record highs above 16.7K. Chatter about the move lower from recent highs in the index, which has been driven primarily by fears of a more hawkish Fed, being an “overreaction”, and about “dip-buying” is growing.

Traders have pointed at upcoming Netflix Q4 earnings after Thursday’s close, the first of the major tech companies, as being a key moment for the tech sector’s near-term direction. Traders and analysts will be assessing whether Netflix was able to bring in enough new subscribers to justify big spending on shows in 2022. A solid report may spur dipping buying, not only in Netflix shares but perhaps across the sector. The proximity of next week’s Fed meeting suggests that extent of any post-Netflix earnings dip-buying across the tech sector might ultimately prove fairly limited.

More clarity from the Fed on their potential rate hike timeline in 2022 will be needed if the Nasdaq 100 is to have a run at recuperating recent losses. Elsewhere, the Dow gained about 0.5% and the CBOE S&P 500 volatility index or VIX stabilised below the annual highs it printed on Wednesday at 24.00, dropping back marginally under 23.00.