Netflix Outlook Disappoints, Sentiment Data Ahead

0:05Welcome to the Schwab Market Update Podcast, where we prepare you for each trading day with a recap of recent news and a look at what's ahead.

0:18I'm Colette O 'Claire, and here is Schwab's early look at the markets for Friday, July 17th. With earnings slowing a bit ahead of the weekend, investors might have a chance to collect their breath today. Still, geopolitical tension could keep things volatile, and Netflix appeared to disappoint Wall Street with its updated guidance. Major indexes are on track for declines this week, with tech faring the worst. Rotation away from chip names after their meteoric spring rally drove down most of the major indexes over the last few days, but 8 of 11 S &P 500 sectors were up week over week as of late Thursday, which could indicate some resilience below the surface.

1:05Magnificent Seven stocks, which limited tech losses Wednesday, generally struggled Thursday, especially Alphabet, after a report that its Gemini AI model faced delays. Apple was also an exception, rising to new all-time highs as UBS forecast iPhone share gains, and Microsoft also edged up. Geopolitics remain front and center, pushing Treasury yields back toward recent highs near 4.6 percent for the benchmark 10-year note. President Trump is considering broader attacks on Iran, media reports said late this week, possibly raising market concerns heading into the weekend. Shorter-term yields, tied more closely to Federal Reserve rate policy, outpaced longer-term ones Thursday, though the two-year note yield at 4.15 percent is below recent highs.

1:59Data-wise, preliminary July University of Michigan consumer sentiment looms later this morning, along with June housing starts and building permits after a mixed showing for retail sales Thursday. Relatively benign inflation data earlier this week initially supported stocks and eased Treasury yields before Thursday's broad Wall Street retreat. June housing starts and building permits due at 8.30 a.m. Eastern time are expected to head separate ways, with stats seen improving from May, but permits, a leading economic indicator tracked by the U.S. Department of Congress, seen dropping month over month.

2:39Consumer confidence at 10 a.m. Eastern Time is expected to be 50.7 percent, up slightly from 49.7 percent in June, but still near historic lows. Inflation expectations, which fell in June, will likely be watched closely.

2:59The earnings highlight late this week was streaming firm Netflix, which fell more than 5 % in post-market trading Thursday after quarterly results slightly topped expectations at$0.80 per share. Revenue was$12.56 billion. Analysts had expected earnings per share of$0.79 and revenue of$12.6 billion, according to data gathered by Schwab. Netflix forecast appeared to disappoint as the company's projected third-quarter earnings and revenue were both below FactSet consensus. Large banks broadly beat expectations, helping reinforce the idea that corporate fundamentals remain resilient. About 87 percent of the 40 S &P 500 firms reporting so far have topped consensus earnings per share estimates, CNBC noted.

3:53Meanwhile, softer inflation prints helped ease near-term rate hike worries. Odds of a July rate hike were just 10 percent by late Thursday, according to the CME FedWatch tool, down from 35 percent a week ago. Chances of a hike by September stood at 53 percent, down from 62 percent a week ago. June monthly retail sales growth of 0.2 % missed the 0.3 % consensus, though some elements impressed. Control group retail sales, which include components that factor into GDP, rose 0.5 % in June, the sixth consecutive monthly increase. Consumers took a bit of a step back from restaurants and bars in June, with retail sales for that cohort falling by 0.15 percent month over month, said Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research, or Skiffer.

4:54The Atlanta Fed's GDP Now estimate rose to 1.7 percent Thursday for second quarter gross domestic product, or GDP, growth from the previous 1.3 percent. Initial weekly jobless claims yesterday of 208 ,000 were near the low end of the near-term range and below estimates of 219 ,000. Major U.S. indexes dropped Thursday, reversing Wednesday's gains. For the second time in three days, solid earnings and guidance from a dominant chip firm preceded a pullback in the sector, possibly an ominous sign as tech results accelerate. Taiwan Semiconductor Manufacturing announced a 77 percent annual earnings gain, only to see shares fall more than 3 percent.

5:43The broader market also dipped, and Treasury note yields rose as the U.S. continued striking Iran and crude stayed near recent highs. Despite index weakness, seven of 11 S &P 500 sectors advanced Thursday, though leaders were defensive staples, health care, and real estate. Infotech and communication services brought up the rear, each falling more than 2 percent. Volume remained below average Thursday, a near-constant trend over the last two weeks, while advancing shares outpaced declining ones on the New York Stock Exchange by a moderate amount. Sector leaders lately have been financials and industrials, with energy coming back to life due to the renewed straight tensions.

6:31Among individual movers Thursday, Taiwan Semiconductor Manufacturing lost 2 percent. Concerns appeared to center on its spending plans as it raised its full-year capital expenditures guidance. Alphabet fell 4.4 percent after Bloomberg reported that the company is months behind schedule delivering Gemini 3.5 Pro. This product, a flagship AI model, has faced delays as the company tries to improve its capabilities, especially coding, Bloomberg said. The Philadelphia Semiconductor Index, down 19 percent from recent highs, fell more than 4 percent Thursday as memory names like Western Digital, Micron, and SanDisk felt more pressure.

7:18Worries about competition from China and from more vertical integration among hyperscalers led to double-digit losses for some memory shares. Overall, tech had one of its worst days in a while, with 5 % or worse losses for ARM holdings, advanced microdevices, Oracle, Broadcom, Supermicrocomputer, and Marvell technology. The NASDAQ 100, which includes most of the largest tech firms, has descended 5 % from its early June high. The Philadelphia Semiconductor Index is almost in bear territory, which would be a 20 % decline from the June 22nd peak. At the same time, the S &P 500 Equal Weight Index, which weighs all components equally, had a firm day Thursday, rising 1 % to just below the all-time high close set earlier this month.

8:14Crypto-linked stocks, including Circle Internet Group and Coinbase, both fell moderately amid pressure on Bitcoin and on a downgrade of Circle to underperform from neutral at Mizuho. GE Aerospace dropped 3.5 percent despite solid earnings that exceeded analyst estimates and offering better than expected guidance. JB Hunt Transport Services accelerated 8 percent after earnings per share easily beat analyst estimates and revenue came in just above expectations. Improved intermodal volumes provided a tailwind. Atai Beckley jumped 33 percent as Eli Lilly announced plans to buy the biotech company for$2.8 billion.

9:02Abbott Labs soared more than 10 percent as earnings per share slightly beat expectations and the company raised its fiscal 2026 EPS guidance.

9:16The Dow Jones Industrial Average lost 105.67 points or 0.20 percent Thursday to 52 ,552.97. The S &P 500 Index shed 38.63 points or 0.51 percent to 7 ,533.77, and the Nasdaq composite fell 387.28 points, or 1.47%, to 25 ,881.95. This has been the Schwab Market Update podcast. To stay informed, visit schwab.com slash market update or follow for free in your favorite podcasting app. And if you like what you've heard, please consider leaving us a rating or review. It really helps new listeners find the show. Join us for another update Monday.

10:18For important disclosures, see the show notes and schwab.com slash market update podcast.