It was a split market on Wednesday as traders assessed a number of first-quarter results. The Dow Jones Industrial Average rose amid strong gains from Procter & Gamble, while the Nasdaq Composite was dragged down by an epic decline in the shares of formerly beloved Netflix. The 30-share Dow rose 249.59 points or 0.7%. The S&P 500 was steady at 4,459.45. Technology-rich Nasdaq Composite fell 1.2% to 13,453.07, but was still on pace for a weekly gain. Netflix fell 35% after its quarterly results showed a loss of 200,000 subscribers in the first quarter, the first reported loss of subscribers in more than 10 years. This was the biggest decline since 2004, and the streaming company is now the worst performing S&P 500 this year at 63.1%. The company’s quarterly results were followed by a wave of downgrades by 10 Wall Street analysts, who also cited weak financial guidance.
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The Netflix explosion has reduced the odds of other streaming companies. Disney fell 5.5 percent to Roku and Warner Bros. Discovery each lost 6.1%. Paramount lost 8.6%. It also scared investors from buying other technology stocks before the gains. Tesla, which is scheduled to report earnings after the bell, fell 4.9%. Amazon and Salesforce lost more than 2%. On the other hand, Procter & Gamble gained 2.6% and contributed to the growth of the Dow after reporting better-than-expected results and increasing its revenue guidance for the full year. IBM, another Dow component, rose more than 7.1% after declining earnings and revenue. “So far, companies are showing strong demand in the industry, despite inflation and supply chain pressures,” said Ross Mayfield, an investment strategy analyst at Baird. “While we expect this year to continue to be volatile, the strength of the gains and the bearish sentiment are a great backdrop for a short-term pop.” About 12% of S&P 500 companies reported earnings for the first quarter so far, with 80% of those names exceeding analysts’ expectations, according to FactSet. But the real story behind the hot market reaction during earnings so far is the lack of corporate guidance. In addition to the company’s earnings, investors also watched closely the 10-year yield of the US Treasury, which retreated on Wednesday after reaching 2.94% on Tuesday, the highest level since the end of 2018. “There seems to be some fatigue about rising interest rates and inflation talks, ”said Sylvia Jablonski, CEO and Investment Director at Defiance ETFs. “The market has probably set the price in the future of rate hikes, inflation is probably nearing a peak and I think there is a positive sentiment around the earnings season.”