SAN FRANCISCO (Reuters) – A wave of quarterly reports from Netflix and other top-tier, high-growth companies starting on Wednesday will test Wall Street’s willingness to extend a recent really driven by expectations of lower interest rates.
Facebook , Amazon and Google-owner Alphabet , all part of the so-called FANG group of widely held stocks, have jumped over 5% so far in July, with investors increasingly willing to bet on the volatile names thanks to expectations the Federal Reserve will cut rates later this month by as much as half a percentage point to support economic growth.
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The FANG companies, combined with investor favorites Apple and Microsoft , account for about 17% of the S&P 500’s $26 trillion market capitalization, making reaction to their quarterly results key to Wall Street sentiment.
Netflix has been the FANG group’s poorest performer this month, up just 0.2% as investors worry that looming competition from Walt Disney Co in video streaming could limit its already cooling subscriber growth.
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Still, the leading video entertainment company is up 2% since its weaker-than-expected quarterly report in April, and up 37% year to date.
The reports by Netflix, scheduled for after the bell on Wednesday, followed by Microsoft on Thursday, and Facebook, Amazon and Alphabet next week could fuel gains on Wall Street, or put an end to the market’s recent strength.
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“The FANG stocks have done well because of overall market sentiment. But we’ve come a long way in a hurry, and a little bit like a baby, you’ve got to worry if there has to be a little burp,” said John Brady, managing director at R.J. O’Brien & Associates in Chicago.
Netflix in April forecast weaker-than-expected growth in new subscriptions, and concerns since then have only increased following announcements that Netflix will lose its two most-watched shows in the United States – “Friends” and...
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