- Procter & Gamble raises sales guidance for the fiscal year
- IBM benefits from optimistic forecast, Q1 results exceeded
- Netflix collapses after losing subscribers in the first quarter
- Indices: Dow up 0.71%, S&P slips 0.06%, Nasdaq falls 1.22%
April 20 – The tech-heavy Nasdaq fell on Wednesday as Netflix’s surprise drop in subscribers weighed on both the streaming giant and other high-growth companies that investors feared could face similar post-pandemic performance issues .
In contrast, the blue-chip Dow closed higher for the second consecutive day on positive gains from consumer giant Procter & Gamble (PG.N) and IT firm IBM Corp (IBM.N). The duo rose 2.7% and 7.1%, respectively. Continue reading
Netflix Inc (NFLX.O) plunged 35.1%, its biggest one-day drop in over a decade, after it blamed inflation, the Ukraine war and stiff competition for the drop in subscribers and predicted deeper losses. Continue reading
The domino effects have been felt among both fintech names and companies whose fortunes appear to have been boosted by pandemic trends such as lockdown measures.
Streaming rivals Walt Disney (DIS.N), Roku (ROKU.O), and Warner Bros Discovery (WBD.O) all fell more than 5.5%, while darlings Zoom Video Communications (ZM.O), Doordash ( DASH.N) and Peloton Interactive (PTON.O) saw their shares fall between 6% and 11.3%.
Financials that suffered included PayPal Holdings Inc (PYPL.O) and Block Inc (SQ.N), both of which fell more than 8.5%. Marqeta Inc (MQ.O) and SoFi Technologies Inc (SOFI.O) are down 5.6% and 6.2%, respectively.
“Once earnings have developed that far, it becomes harder to get that next little bit of growth, and it’s harder to get it late in the cycle,” said Jason Pride, Glenmede’s chief investment officer of private wealth.
“I think the market is starting to realize that and will need to realize that as the year progresses.”
Market-leading technology and growth stocks have struggled this year as investors fear rising interest rates will eat away at their future earnings. The Nasdaq is down nearly 14% so far this year, while the benchmark S&P 500 is down 6.4%.
Overall, the reporting season got off to a strong start. Of the 60 companies in the S&P 500 index that have reported results so far, 80% beat earnings expectations according to Refinitiv data. Typically 66% beat estimates.
A trader works on the trading floor of the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S. April 11, 2022. REUTERS/Andrew Kelly/File Photo
The Dow Jones Industrial Average (.DJI) was up 249.59 points, or 0.71%, to 35,160.79, the S&P 500 (.SPX) was down 2.76 points, or 0.06%, to 4,459.45 and the Nasdaq Composite (.IXIC) fell 166.59 points, or 1.22%, to 13,453.07.
The communications services sector (.SPLRCL) declined 4.1%, although eight of the 11 major S&P 500 sectors rose, led by the real estate index (.SPLRCR), which posted its best result since Jan. 4. The consumer staples benchmark (.SPLRCS) was right behind, climbing to a second straight record.
Meanwhile, the latest data points on the US Federal Reserve’s tightening plans were released in the afternoon.
Its Beige Book showed the US economy grew at a moderate pace from February to early April, while San Francisco Federal Reserve Chair Mary Daly said she believes the case for a half-rate hike percentage point are “completed” in the next month. Continue reading
The 10-year Treasury yield fell to 2.85% after a sharp rally that brought it close to the key 3% level at the start of the session.
Tesla Inc (TSLA.O) fell 5% but traded higher after posting record deliveries and higher earnings in its first-quarter results after the close. Continue reading
Investors were concerned about the electric carmaker’s ability to meet its ambitious 2022 delivery target after its largest factory in Shanghai was shut down amid the city’s COVID-19 lockdown.
United Airlines Holdings Inc (UAL.O) is up 1.2%, helping the S&P 1500 Airlines Index (.SPCOMAIR) climb for a sixth time in the past seven sessions. United shares fell slightly after reporting gains after the closing bell. Continue reading
Volume on US exchanges was 10.85 billion shares compared to the average of 11.61 billion for the entire session over the last 20 trading days.
The S&P 500 posted 70 new 52-week highs and three new lows; the Nasdaq Composite posted 88 new highs and 164 new lows.
Reporting by Bansari Mayur Kamdar, Sruthi Shankar and Amruta Khandekar in Bengaluru and David French in New York; Editing by Marguerita Choy and Aditya Soni