Mixed end-of-day indexes, Netflix plunges after losses
NEW YORK – Wall Street’s major stock indexes ended mixed on Wednesday after another choppy day of trading, while Netflix lost more than a third of its value after reporting its first loss of subscribers in more than a year. decade and predicts darker times to come.
The S&P 500 slid 0.1% after a late afternoon fade, while the Nasdaq fell 1.2%. The Dow Jones Industrial Average rose 0.7%, after receiving a boost from IBM, which added 7.1% after reporting quarterly results that beat analysts’ estimates.
Netflix fell 35.1% a day after the streaming giant announced its first drop in subscribers in more than a decade. The company also said it expects a steeper decline in the current quarter. Netflix is now considering changes it has long resisted, including minimizing password sharing and creating a low-cost, ad-supported subscription option. The stock is now down 67% from the all-time high reached in November.
The slippage of Netflix, one of Wall Street’s big tech giants in recent years, weighed heavily on the S&P 500, outpacing gains elsewhere in the benchmark, and hit the services sector the hardest. communications, bringing it down by 4.1%.
“While it’s communication services, it’s also a discretionary action, clearly, in that it’s one of those things that people buy because they want to, not because they have to,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab. .
Tech stocks, retailers and other companies that rely on consumer spending also weighed on the market. Chipmaker Nvidia fell 3.2% and Amazon fell 2.6%.
Healthcare stocks made some of the biggest gains. CVS rose 2.7% and medical device maker Boston Scientific added 3%.
Banks and manufacturers of household products also resisted the overall market decline. JPMorgan Chase rose 0.4%, while Charmin and Dawn maker Procter & Gamble rose 2.7% after beating analysts’ quarterly profit forecast.
Tesla rose 4% in after-hours trading after reporting first-quarter net profit more than seven times higher than a year earlier. The electric vehicle and solar panel company enjoyed strong sales despite global supply chain issues and pandemic-related production cuts in China.
In total, the S&P 500 slipped 2.76 points to 4,459.45, and the Nasdaq fell 166.59 points to 13,453.07. The Dow rose 249.59 points to 35,160.79.
Small company stocks held up better than the broader market. The Russell 2000 added 7.42 points, or 0.4%, to 2,038.19.
Investors continue to focus on the latest round of corporate earnings as they try to gauge how companies are coping with rising inflation and cost pressures. American Airlines and Union Pacific are expected to release their results today.
Inflation is putting increasing pressure on a wide range of industries and increasingly compressing consumers. Rising prices prompted the Federal Reserve and other central banks to raise interest rates to lessen the impact of inflation. The Fed has already announced a quarter-percentage-point rate hike, and Wall Street expects a half-percentage rate hike at its next meeting in two weeks.
“The market knows the Fed is going to raise rates significantly,” said Scott Wren, senior global markets strategist at the Wells Fargo Investment Institute. “But, the market feels pretty good that once we’re neutral, then in 2023 you might not go much further.”
Interest rates are considered “neutral” when they neither push nor restrict economic growth. Currently, investors expect rate hikes to put the benchmark interest rate in a range between 2.50% and 3% by the end of the year, according to the FedWatch tool. CME Group.
Bond yields have risen throughout the year as Wall Street braces for higher interest rates. The yield on the 10-year Treasury note fell to 2.84% from 2.91% on Tuesday evening, but it is still close to its highest level since the end of 2018.
Rising bond yields pushed up mortgage rates and increased pressure on an already tight real estate market. The National Association of Realtors reported Wednesday that sales of previously owned U.S. homes fell in March at the slowest pace in nearly two years as rising mortgage rates and already record prices discouraged potential buyers.
Russia’s invasion of Ukraine and the ongoing conflict have only added to concerns about rising inflation that is holding back economic growth. The conflict has pushed up energy and commodity prices.
U.S. crude oil prices rose 0.2% on Wednesday and are up nearly 40% for the year, pushing gasoline prices higher. Wheat prices are up 41% for the year and this has the potential to raise prices for a wide range of food products around the world.
Equities have mostly struggled this year due to the confluence of concerns. Meanwhile, virus lockdowns in China are easing. Shanghai authorities have allowed 4 million people to leave their homes, but the lockdowns have damaged China’s economy.