Stocks declined on Wednesday as investors digested the latest series of quarterly earnings reports amid outlook headwinds from the U.S. government shutdown pausing the release of key economic readings and uncertainty surrounding U.S.-China trade.
The Dow Jones Industrial Average
Streaming giant Netflix saw shares fall over 10% on Wednesday after the company posted a surprise earnings miss steaming from a Brazilian tax dispute that was not in its quarterly forecast. Company executives said during Netflix's earnings call that they decided to charge the 10% tax to its third-quarter after it became reasonably likely the company would lose a legal challenge on the matter.
"It's not a tax that's specific to Netflix. It's not even specific to streaming," CFO Spence Neumann said on the company's earnings call. "Absent this expense, we would have exceeded our Q325 operating income and operating margin forecast, and we don't expect this matter to have a material impact on our results going forward."
Looking ahead, Netflix expects to report $45.1 billion in full-year revenue, increasing 16% annually, and modified its operating margin guidance to be 29% instead of its previous 30% to reflect the Brazilian tax.
Earnings results from toy maker Mattel
"While our U.S. business was challenged in the third quarter by industry-wide shifts in retailer ordering patterns, the fundamentals of our business are strong," CEO Ynon Kreiz said in a release. "Since the beginning of the fourth quarter, orders from retailers in the U.S. have accelerated significantly.'
The company called for full-year net sales to increase between 1% and 3% on earnings per share in a range of $1.54 and $1.66.
In the news, Alphabet's
The company's new algorithm called Quantum Echos, which operates on Google's quantum chip Willow, demonstrated calculation speeds 13,000 times faster than current supercomputers.
"The key thing about verifiability is it's a huge step in the path toward a real world application," Tom O'Brien, research scientist at Google Quantum AI, told Bloomberg. "In achieving this result we're really pushing us toward finding mainstream," referring to quantum computers being used for practical applications.
Wall Street's attention has been dominated by the third-quarter earnings season as market participants have little else to base forward projections on as the U.S. government shutdown stretches into its third week. Key earnings reports that lay ahead include Tesla
September's consumer sentiment reading due out on Friday will also offer investors some clues on the Federal Reserve's next monetary policy decision ahead of the central bank's meeting later this month.
