Frankfurt, New York A week of heavy losses on the stock market ended again in the red for the US stock markets. The pressure emanating from the expected interest rate hikes, especially on tech stocks, was intensified on Friday by bad news from the streaming provider Netflix. The tech-heavy Nasdaq 100 fell another 2.75 percent to 14,438 points, its lowest level since early October. The index has now lost almost 14 percent from the record high in November.
For the Nasdaq 100, it was the week with the heaviest losses since March 2020. But the leading index Dow also fell significantly on Friday with minus 1.3 percent to 34,265 points. The weekly loss adds up to 4.6 percent. The market-wide S&P 500 fell 1.89 percent to 4398 points on Friday and fell to its lowest level since mid-October.
Netflix shares fell more than 21 percent on Friday. “The winners of the pandemic are under pressure and it is likely to remain so. When everyone already has Netflix, it’s difficult to improve subscriber growth,” said investment strategist John Lynch of wealth manager Comerica Wealth Management. “Perhaps investors’ expectations were a little overblown.”
Netflix only expects to add 2.5 million subscribers from January through March, which is less than half of what analysts were hoping for. Other stocks in the US entertainment industry also suffered. The shock surrounding the streaming provider runs deep and is grist to the mill of those who consider tech stocks to be overvalued. Because of concerns about inflation, the industry papers have been sold for weeks. “Rising interest rates and then even lower growth expectations,” commented market observer Jochen Stanzl from broker CMC Markets. In his view, Netflix “could be symptomatic of what lies ahead for the stock market in the coming weeks and months.”
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Netflix sent shock waves, especially in the streaming industry, with the disappointing outlook on the current number of customers. The price losses of other providers such as Walt Disney, Amazon, ViacomCBS and FuboTV ranged from six to more than nine percent.
In the coming week, the big tech stocks like Apple and Microsoft will publish numbers. The streaming market leader could have given a first indication of how this could turn out with its most recent data. Apple was down 1.27 percent at market close, Microsoft 1.84 percent.
Technology stocks remain ailing. In the run-up to the US Federal Reserve meeting, at which investors expect a course towards a turnaround in interest rates, investors reacted nervously, said strategist Lynch. “Perhaps by mid-next week, when we get some clarity from Fed Chair Jerome Powell, some of that pressure on stocks may ease as investors become more comfortable.”
The course of Peloton, a manufacturer of fitness equipment, also showed how nervous the market is at the moment. Reports about an upcoming production stop caused the share to fall by 23 percent on Thursday, only a denial by the CEO caused an increase of nine percent after the trading session. On Friday, the paper closed more than 11 percent in the plus.
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Look at other individual values
Schlumberger: The share of the oilfield service provider fell 1.86 percent in a weak market environment. The company beat estimates for the fourth quarter on both sales and earnings. Schlumberger earned an adjusted 41 cents per share, two cents above estimates. Higher oil prices boosted demand for drilling services.
Intel: The chipmaker plans to invest $20 billion in new manufacturing facilities outside of Columbus, Ohio. The systems are to produce intelligent semiconductors. The share reacted to this with an increase of 0.8 percent, but turned slightly negative at the end of the trading day.
Rio Tinto: Protests by environmentalists have brought down a multi-billion dollar project by the mining company to mine lithium in Serbia. Shares in the British-Australian company continued their slide on Friday, shedding as much as 4.8 percent on the US stock exchange after the Serbian government revoked mining licenses on Thursday evening over environmental concerns. Rio Tinto’s goal was to become one of the leading producers of lithium, a key component in batteries.
Under Armour: Shares of the sportswear maker rose 1.4 percent. The US bank Citi had upgraded the share from “neutral” to “buy”. According to Citi, Under Armor is emerging from the pandemic in North America in a very strong position.
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