Traders work on the floor of the New York Stock Exchange (NYSE), April 10, 2023.
Brendan McDermid | Reuters
The S&P 500 fell for the first day in three as companies including Netflix and Morgan Stanley declined after posting first-quarter results.
The benchmark index lost 0.4%, while the Nasdaq Composite dropped 0.66%. The Dow Jones Industrial Average lost 124 points, or about 0.4%.
While many of the companies reporting in the last 24 hours topped analysts’ low-bar estimates, traders found something wrong within the results to send the stocks lower. A lack of forecasts from the major companies also left investors on edge with the Federal Reserve set to raise interest rates again in a couple weeks and recession fears swirling.
“This risk-off tone appears to be aligned with heightened recession risk; potentially central bank induced,” according to JPMorgan’s trading desk.
Netflix shares fell 4% as the streaming giant disappointed investors by pushing back plans to strictly clamp down on password sharing. In its latest quarter, Netflix beat analysts’ expectations on earnings per share, and added more subscribers than expected, but fell short of revenue expectations.
Earnings reports from major banking institutions wrapped up with Morgan Stanley. Shares fell 2% despite seemingly strong results as margins for its investment banking, wealth and asset management businesses were weaker than expected, according to Wells Fargo analyst Mike Mayo. He noted that normalizing Morgan Stanley’s tax rate would show weaker-than-expected earnings for the quarter.
Investors have been closely monitoring the industry after bank failures last month spurred fears that contagion would spread.
Across the board, Wall Street this season is on the hunt for signs of weakening demand and conditions likely to put a damper on profitability into the back half of 2023, said Barclay’s Emmanuel Cau in a note to clients.
“Overall, Q1 earnings may not move the needle much, in our view,” he said. “However,…
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