Here are five things you must know for Friday, Jan. 18:
1. -- Stocks Rise on Potential Thaw in U.S.-China Trade Talks
U.S. stock futures rose on Friday, Jan. 18, and global stocks traded higher as markets held gains sparked by a potential thaw in U.S.-China trade talks, despite contradictions from the Treasury, and added to risky positions following a solid start to the U.S. corporate earnings season.
Contracts tied to the Dow Jones Industrial Average rose 147 points, futures for the S&P 500 gained 11.25 points, and Nasdaq futures were up 28.75 points.
The Wall Street Journal reported before the close of trading Thursday that the United States was considering rolling back tariffs on China-made goods in an effort to ensure that ongoing trade talks bear fruit prior to their March 1 deadline, sparking a late-hour surge on Wall Street. A Treasury spokesperson subsequently told CNBC, however, that no such proposal was in place, taking stocks from their session peaks.
Global oil prices, meanwhile, tested one-month highs Friday after OPEC members reported the biggest monthly drop in production in nearly two years as the cartel prepared for broader output cuts to address what it sees as a glut in world markets.
Brent crude contracts for March delivery, the global benchmark, rose 1.4% to $62.04 a barrel, while West Texas Intermediate crude contracts for February gained 1.6% to $52.89 a barrel.
The economic calendar in the U.S. Friday includes Industrial Production for December at 9:15 a.m. ET, and Consumer Sentiment for January at 10 a.m.
2. -- Netflix Slides Amid Cash Burn Questions
However, Netflix's recent price increases in the U.S., which will add nearly $1 billion to 2019 revenue, haven't changed the company's cash burn estimate, which remains at negative $3 billion - after a negative $1.3 billion rate over the fourth quarter - even though operating margins will improve to around 13%. That could prove difficult for a company that's facing increased competition from the likes of Walt Disney Co. (DIS) , AT&T Inc. (T) , Apple Inc. (AAPL) and Amazon.com Inc. (AMZN) .
- Netflix Slides Despite Topping Subscriber Guidance: 8 Key Takeaways
- Jim Cramer's Take on Netflix Earnings (and the Other FAANG Stocks)
"We feel great about our content investment," Chief Financial Officer Spencer Neumann told investors on a conference call. "Obviously the move to more owned content and production has pulled forward some of that spend relative to the former operating model or predominantly licensed model (and) that has put pressure on the cash flows of the business and cash needs of the business over the past few years."
3. -- Tesla Sinks After Saying It Will Trim Workforce by 7%
Tesla Inc. (TSLA) fell 6.9% after the electric vehicle company said it would about 7% of its workforce, and added that fourth-quarter profit likely will be lower than the previous three-month period.
"We unfortunately have no choice but to reduce full-time employee headcount by approximately 7% (we grew by 30% last year, which is more than we can support) and retain only the most critical temps and contractors," CEO Elon Musk said in a statement posted to the company's website. "Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months. Higher volume and manufacturing design improvements are crucial for Tesla to achieve the economies of scale required to manufacture the standard range (220 mile), standard interior Model 3 at $35k and still be a viable company. There isn't any other way."
Tesla said it will post a GAAP-reported profit for the three months ended in December, but cautioned that number will be less than the $312 million it posted for the third quarter. It also said it would ramp up Model 3 production ahead of a scheduled reduction in U.S. tax credits on July 1.
4. -- American Express Falls After Missing Earnings Expectations
Shares of American Express Co. (AXP) declined 1.8% after the credit card company posted adjusted earnings of $1.74 a share, missing estimates of $1.80.
Net income in the period was $2.32 a share, compared with a year-earlier loss of $1.42 a share, when the company recorded a charge because of changes to U.S. tax laws.
Revenue of $10.47 billion also came in light, below forecasts of $10.58 billion.
AmEx said expenses in the quarter rose 9% as it added perks to its reward programs. .
Spending by card members rose 8% in the quarter.
The company said it expects revenue growth in 2019 of between 8% and 10%, while it forecasts adjusted earnings of $7.85 to $8.35 a share.
5. -- Schlumberger Highlights Friday's Earnings Calendar
Schlumberger NV (SLB) earned an adjusted 36 cents a share in the fourth quarter, matching earnings estimates. The stock was up 1.5% in premarket trading.