The Nasdaq closes lower after Netflix crashes and shakes up the technology

The Nasdaq closes lower after Netflix crashes and shakes up the technology

By David French

(Reuters) – The Nasdaq tech index plummeted Wednesday, with a surprising drop in Netflix subscribers weighing on both the streaming giant and other high-growth companies as investors fear they could face similar post-mortem performance problems.

The S&P 500 index closed down 0.06% at 4,459.45 points. The Nasdaq Composite Technology Index fell 1.22% to 13,453.07 points.

The Dow Jones index, of the blue-chips, instead rose for the second consecutive session by 0.71%, to 35,160.79 points. The index was supported following gains from consumer giant Procter & Gamble and IT firm IBM Corp. The companies’ shares were up 2.7% and 7.1%, respectively.

Netflix Inc, meanwhile, plummeted 35.1%, the biggest one-day drop in more than a decade, after blaming inflation, the war in Ukraine and stiff competition for declining subscribers and predicting deeper losses in the future.

The ripple effects have been felt by both fintech names and companies whose fortunes have been strengthened by pandemic-related measures, such as social isolation that has left millions of people confined to their homes.

The streaming pairs Walt Disney, Roku and Warner Bros Discovery all plummeted by more than 5.5%, while Zoom Video Communications, Doordash and Peloton Interactive, loved ones of those who stayed home during the pandemic, saw theirs. shares decrease between 6% and 11.3%.

Financial firms affected included PayPal Holdings Inc and Block Inc, which were down more than 8.5%. Marqeta Inc and SoFi Technologies Inc fell by 5.6% and 6.2% respectively.

“Once the earnings have gone that far, it’s harder to get the next small growth, and it’s harder to get it at the end of the cycle,” said Jason Pride, director of private wealth investments at Glenmede.

“I think the market is starting to understand this and will have to understand it throughout the year.”

Overall, however, the earnings season got off to a great start. According to data from Refinitiv, of the 60 companies in the S&P 500 index that have reported results so far, 80% have exceeded earnings expectations. Typically, 66% exceed estimates.

((Translation by Editora São Paulo, 55 11 56447757)) REUTERS JCG IV