Stocks Open Lower On Price Data; Baidu Jumps, Netflix Inks Killer Deal – Investor's Business Daily

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Stock futures reversed early gains and traded abruptly lower Wednesday, as investors responded to an unexpected surge in January inflation data, and weakness in January retail sales.

X The Dow Jones industrial average and the S&P 500 each opened down 0.4%, while the Nasdaq Composite posted a 0.3% decline.

Consumer prices jumped in January, lifting the Labor Department’s Consumer Price Index 0.5% for the month. That was a sharp acceleration over December’s 0.2% increase, and well above consensus forecasts for a 0.3% advance. Core prices, minus energy and food, rose 0.3% for the month, up from a 0.1% rise in December and above estimates for a 0.2% gain.

Also in January, retail sales slipped 0.3%, according to the Commerce Department, disappointing forecasts for a 0.3% gain. The report also revised December’s sales to a flat performance, down from an early 0.4% gain.

The Commerce Department also reports December business inventories at 10 a.m. ET, and the Energy Information Administration’s weekly oil stockpiles report is due at 10:30 a.m. ET.

Netflix Price Target Hiked, Baidu Beats Views, Chipotle Names CEO

Dow stocks opened almost unanimously lower. United Technologies (UTX), Verizon (VZ) and Coca-Cola (KO) all posted early losses of more than 1%.

Apple (AAPL) eased 0.2% lower and the four FANG stock tech leaders were mixed: two up, two down.

Netflix (NFLX) led the group with a 2.4% gain. The New York Times reported the streaming entertainment leader had signed a three-year deal worth as much as $300 million with “Glee” and “American Horror Story” creator Ryan Murphy to create content specifically for Netflix. Murphy’s contract with 21st Century Fox (FOX) reportedly expires this summer.

SunTrust Robinson Humphrey also boosted Netflix’s price target 54%, to 270, from 175. Netflix shares are consolidating below a Jan. 29 high, and extended after clearing a flat base early in January.

Morning action tied to earnings news was relatively tame, other than Fossil Group (FOSL), which soared 70% after reporting its first profitable quarter in a year. Groupon (GRPN) and Twilio (TWLO) were also on the early radar, down 10% and up 18%, respectively. Molson Coors Brewing (TAP) drafted a 3% gain after a stronger-than-expected report.

Baidu (BIDU), China’s largest search engine, powered up  6% after its late-Tuesday report showed fourth-quarter revenue and earnings above analysts’ expectations. Online video and newsfeed advertising helped boost results, and the company said an accounting change would lower its 2018 guidance. The market’s sell-off knocked Baidu shares out of a basing effort, and left it fighting to regain support at its 200-day moving average.

Light-emitting diode maker Universal Display (OLED) shot ahead 14% after the company reported extending its supply agreement with Samsung through 2022.  Universal shares had plummeted 30% from a Jan. 19 high, but are finding support at their 200-day line.

Chipotle Mexican Grill (CMG) surged 13% after the company named Taco Bell Chief Executive Brian Niccol as its new chief executive. Chipotle founder Steve Ells will exit the CEO role and take the title of executive chairman. Chipotle shares are down 67% from an August 2015 high.

Bonds Dip, Oil Slides; European Markets Lose Altitude

Commodities were mixed, with oil dropping 1% and gold and copper trading about even.  The dollar gained vs. the euro, fell against the yen. Bonds slipped, sending the 10-year yield up 2 basis points, back near four-year highs at 2.86%.

The influence from global markets was generally positive early Wednesday. Hong Kong’s Hang Seng Index rocketed 2.3% higher, while the Shanghai Composite advanced 0.5%. Trading on both indexes was thin ahead of China’s Lunar New Year holiday.  In Japan, Tokyo’s Nikkei 225 slipped 0.4%.

Europe’s markets weakened in afternoon trade, with London’s FTSE 100 and the CAC-40 in Paris up 0.2% each, and the DAX in Frankfurt fighting a 0.1% decline.

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