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The figures Netflix posted seemed to affect US stocks as index futures performance was unbalanced between the DIJA, Nasdaq Composite, and the S&P 500.
On the heels of an uninspiring earnings report from streaming giant Netflix (NASDAQ: NFLX), the index futures of US stocks were trading mixedly. For instance, during pre-trading hours on Friday, the Dow Jones Industrial Average futures contracts were up by 66 points or 0.14%. The futures contracts pegged to the S&P 500 showed little to no movement, while Nasdaq 100 futures were down by 0.47%. These developments were an extension of the major average declines recorded during the previous regular trading session.
During regular trading, the Dow gave up 313 points, equivalent to 0.89%. However, at one point during the same session, the stock benchmark accrued by more than 450 points. This similar reversal twist also defined the other major averages. For instance, the Nasdaq Composite concluded the trading session with a drawdown of 1.3% after initially being up by 2.1%. Furthermore, the S&P 500 initially advanced up to 1.53% before ending the day with a 1.1% drop.
Stocks of US Companies Netflix, Peloton, Give Up Massive Gains Owing to Waning Demand
Netflix stock dropped by 19% during extended trading on Thursday after the company’s Q4 earnings report revealed reduced subscriber growth. Exercise and media company Peloton (NASDAQ: PTON) also plummeted by 23.9% during the regular trading session. This resulted from a drop in demand for the firm’s fitness products such as bikes and treadmills. Following this development, Peloton now reportedly looks to temporarily halt the production of the aforementioned products.
Scott Redler, a professional trader and co-founder of T3 Live, a financial information publishing and analytical platform, weighed in. According to Redler, the current state of the market is hardly surprising. This is because indicators were leading up to the latest state of affairs. In his own words:
“The market has been flashing faulty signals for the past few weeks and it seems as if the broader indices are finally breaking down.”
In addition, Redler also suggested that there was added significance in the S&P’s latest outing. The index closed below 4,500 on Thursday for the first time since October 18th. According to Redler, this paves the way for a further targeted drop to 4,320, and represents a decline of 10% for the S&P 500.
A Generally Underperforming Consecutive Week
Both the Dow and S&P 500 seem to be inexorably heading for a third straight week of losses. Furthermore, the NASDAQ Composite is down nearly 5% on the week and is on track for its fourth-straight losing week. In addition, this development also marks its biggest weekly loss since October 2020. Small-cap stock market indexes also seem affected by the general market unease. For example, the Russell 2000 is well on course for its worst week since June 2020.
However, some believe it is not all doom and gloom in the ongoing technology sell-offs. For instance, Robert Schein, chief investment officer at Blanke Schein Wealth Management, suggested some select stocks still posed value. As he put it:
“With the broader Nasdaq in correction territory, we see opportunities in specific areas of the tech sector, such as semiconductors, cloud stocks and mega-cap stocks.”
Schein also pointed out that the pullback does not necessarily translate to an opportunity to “buy the dip”.