(New York) The New York Stock Exchange closed on a new decline on Friday, fearing more each day a marked monetary tightening in the United States, against the backdrop of a chaotic earnings season, with Netflix pilloried.
Updated yesterday at 5:01 p.m.
The Dow Jones lost 1.30%, marking its sixth consecutive session of decline, while the NASDAQ, very influenced by technology stocks, lost 2.72% and the broader S&P 500 index, 1.90%.
Since its high in late November, the NASDAQ has dropped more than 15%. Over the past week, the index dropped 5.6%, its worst performance since the start of the pandemic, while the Dow Jones lost 4.5%.
“The Fed remains the big story,” said Baird analyst Ross Mayfield. Investors feel that she “sounds more aggressive with every new talk, every new piece of information. And, logically, it’s bad for tech and growth stocks.
Some analysts are now talking about a 50 basis point hike in the Fed rate (0.50 percentage point) from the March meeting, while the institution generally proceeds by quarter points (0.25 percentage point).
Rolled Netflix
The novelty of the day will have been the descent into hell of Netflix, rolled after announcing, Thursday, a growth forecast for its subscribers considered disappointing.
The platform saw its portfolio grow by 2.5 million net subscribers in the first quarter, which would be its worst figure for this period of the year for twelve years.
The stock ended down 21.79% at $397.50. In two months, the stock fell more than 43%. Netflix has returned to its April 2020 valuation, at the very start of the coronavirus pandemic.
“It scared the market,” according to Ross Mayfield. The VIX index, which measures the volatility of the market, rose sharply, registering close to the levels known just after the discovery of the Omicron variant.
The general nervousness benefited bonds, whose prices rose and yields fell (the two move in opposite directions). The benchmark rate for ten-year US government bonds eased to 1.77% from 1.83% the day before.
Many, many values have followed Netflix in its downfall, especially the stars of the pandemic, which were flying high until last November.
The Coinbase cryptocurrency exchange platform (-13.38%), the Shopify e-commerce site (-13.85%) or the Roblox online gaming platform (-8.57%) were particularly targeted.
The group of companies that have benefited from confinements and teleworking are affected, insisted Ross Mayfield. “We have the feeling that the consumer is changing his uses again”, which causes a “chain reaction”.
The IT infrastructure giants continued to suffer, like the graphics card manufacturer Nvidia (-3.21%) or the microprocessor specialists AMD (-2.53%) or Micron (-3.69%).
All these companies are growth stocks, which must invest massively and could suffer from an increase in the cost of money, following the monetary normalization of the Fed.
Intel limited the damage, ending in equilibrium after the announcement on Friday of an investment of more than 20 billion dollars in the construction of two factories in Ohio.
The current seller carried far beyond technology and growth stocks, from Ford (-5.23%) to Bank of America (-1.81%), passing by the cruise line Carnival (-3.89 %) or iron ore pellet producer Cleveland-Cliffs (-9.73%).
After Thursday’s collapse, following the announcement by CNBC that the group was suspending production, Peloton rebounded (+11.73% to 27.06 dollars). In a letter distributed internally and consulted by the Wall Street Journal, the general manager of the specialist in high-end exercise bikes and treadmills only mentioned a “recalibration” of production.
Under pressure, the group published preliminary quarterly results on Thursday evening, which show a turnover of 1.14 billion dollars, in the forecast range initially given by Peloton, i.e. between 1.1 and 1, 2 billion.
The sports equipment manufacturer Under Armor was one of the few winners of the day (+0.69% to 16.09 dollars), after the publication of several positive notes from analysts, in particular Citigroup, which sees the title double from value.