Netflix Woes Hit Nasdaq; Dow Rises

The tech-heavy Nasdaq dropped on Wednesday as Netflix's surprise decline in subscribers weighed on both the streaming giant and other high-growth companies, which investors feared may face similar post-pandemic performance issues.

By contrast, the blue-chip Dow was driven to a second-successive higher close by positive earnings from consumer giant Procter & Gamble and IT firm IBM. The duo rose 2.7 and 7.1 percent respectively.

Netflix plunged 35.1 percent, its largest one-day fall in over a decade, after it blamed inflation, the Ukraine war and fierce competition for the subscriber decline and predicted deeper losses ahead.

The ripple effects were felt both by financial technology names and companies whose fortunes were seen to have been boosted by pandemic trends such as lockdown measures.

Streaming peers Walt Disney, Roku and Warner Bros Discovery all dropped more than 5.5 percent, while stay-at-home darlings Zoom Video Communications, Doordash and Peloton Interactive saw their shares fall between 6 percent and 11.3 percent.

Suffering financials included PayPal Holdings and Block, which both fell more than 8.5 percent. Marqeta and SoFi Technologies declined 5.6 percent and 6.2 percent respectively.

"Once profits move so far, it becomes harder to get that next little bit of growth, and it's harder to obtain it in the late cycle," said Jason Pride, chief investment officer of private wealth at Glenmede.

"I think the market is beginning to comprehend that, and will need to comprehend that as we go through the year."

Overall, the earnings season has started on a strong note. Of the 60 companies in the S&P 500 index that have reported results so far, 80 percent exceeded profit expectations, as per Refinitiv data. Typically, 66 percent beat estimates.

The Dow Jones Industrial Average rose 0.71 percent, to 35,161, the S&P 500 lost 0.06 percent, to 4,459 and the Nasdaq Composite dropped 1.22 percent, to 13,453. (Reuters)