- US stocks were mixed on Wednesday, with the Nasdaq 100 weighed down by a more than 35% drop in Netflix shares after earnings.
- The S&P 500 remained sideways above 4,450 and the Dow advanced back above 35,000 amid strong gains in other sectors.
- The weaker US dollar and lower long-term yields also created a more favorable environment for equities.
US stock markets were mixed on Wednesday, with a sharp drop of more than 35% in Netflix shares weighing on the Nasdaq 100 Index and tech stocks in general after the company reported a surprise drop in subscribers. The company blamed its first decline in subscribers in decades on the Russo-Ukrainian war and competition from rivals like Disney+, though analysts also noted that the global post-pandemic “reopening” effect is also taking its toll.
The Nasdaq 100 Index was last trading down about 1.4% and flirting with the 14,000 level, with the 50 day moving average at 14,250 acting as a ceiling for price action this week. In terms of the other major US indices; The S&P 500 last traded just above the 4,450 level, having failed in an earlier attempt to test its 21 DMA at 4,490, while the Dow was up about 0.6% and trading above his 200 DMA just above 35,000.
Decent earnings from consumer staples giant Procter & Gamble and IT giant IBM helped boost value and cyclical stock market sectors that are disproportionately represented on the Dow. The S&P 500 GICS consumer staples sector rose 1.4%, real estate rose 1.8% and health care rose 1.2%.
Profit-taking-induced US dollar weakness and a pullback from recent highs in US yields, particularly at the long end of the curve, created a positive backdrop for equity markets. The Fed’s speech on Wednesday was aggressive, but this is what the markets expect at the moment. The Fed’s latest Beige Book also pointed to still very high inflationary pressures, but this did not worry investors.
Looking ahead, the main focus for investors on Thursday will be on comments from Fed Chairman Jerome Powell, who is expected to signal 50bp rate hikes at upcoming Fed meetings (as other politicians have given). his approval in recent days). There will also be some level two economic data releases, including weekly jobless claims and the Philadelphia Fed manufacturing survey for April.
More immediately, though, Tesla is scheduled to post earnings after the bell on Wednesday and investors will be praying there isn’t a repeat of what happened to Netflix’s share price.
Technical levels
Source: Fx Street
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