US stocks post worst week since pandemic began as Netflix disappoints investors
New York: Wall Street’s major indices ended sharply lower on Friday as Netflix shares plunged after a weak earnings report, capping a brutal week for stocks that saw the S&P 500 and Nasdaq record their highest steep weekly percentage declines since the start of the pandemic in March 2020.
The benchmark S&P 500 index posted its third consecutive week of declines, ending with an 8.3% drop from its record high in early January.
Losses also deepened for the Nasdaq after the high-tech index earlier in the week confirmed it was in a correction, closing down 14.3% from its November peak.
Shares of Netflix fell 21.8%, weighing on the S&P 500 and the Nasdaq, after the streaming giant forecast weak subscriber growth. Shares of competitor Walt Disney fell 6.9%, dragging down the Dow Jones, while Roku also slipped 9.1%.
“It really was a continuation of a technology rout,” said Paul Nolte, portfolio manager at Kingsview Investment Management. “It’s really a combination of a spin out of tech as well as really bad numbers from Netflix that I think is the catalyst for today.”
The Dow Jones Industrial Average fell 450.02 points, or 1.3%, to 34,265.37, the S&P 500 lost 84.79 points, or 1.89%, to 4,397.94 and the Nasdaq Composite fell 385.10 points, or 2.72%, to 13,768.92.
For the week, the S&P 500 fell 5.7%, the Dow Jones 4.6% and the Nasdaq 7.6%.
The Dow Jones fell for a sixth straight session, its longest streak of daily declines since February 2020.
The S&P 500 closed below its 200-day moving average, a key technical level, for the first time since June 2020.
“When the markets get the way they have been this week, it’s the emotion that takes over,” said Jim Paulsen, chief investment strategist at The Leuthold Group. “Until he finds support, no one will care about anything fundamental.”
Equities are off to a rocky start to 2022 as a rapid rise in Treasury yields amid fears the Federal Reserve may become aggressive in controlling inflation has hit technology and growth stocks particularly hard.
Investors are focused on next week’s Fed meeting for clarity on the central bank’s plans to tighten monetary policy in the coming months, after data from last week showed prices at US consumption in December had recorded the largest annual increase in nearly four decades.
“Between the Fed meeting and the results, there are a lot of things the market could be worried about next week,” said Anu Gaggar, global investment strategist at Commonwealth Financial Network.
Apple, Tesla and Microsoft are among the big companies due to report a busy earnings week next week.