STORY: A steep decline in shares of Netflix dragged down the tech-heavy Nasdaq on Wednesday, as the streaming giant's first drop in subscribers in a decade shook investor confidence in other high-growth companies ahead of their earnings reports.
Shares of Netflix ended the day down a whopping 35% or the equivalent of losing more than $54 billion in one session.
Netflix blamed inflation, geopolitical turmoil and fierce competition for the subscriber decline and predicted deeper subscriber losses ahead.
The ripple effects were felt both by tech names and companies whose fortunes were seen to have been boosted by stay-at-home trends.
Shares of streaming rivals Walt Disney, Roku and the newly formed Warner Bros Discovery all dropped, as did Zoom Video Communications and Peloton Interactive.
Overall, the major indexes ended mixed. The Dow finished higher and the S&P 500 finished about flat, while the Nasdaq lost more than a percent.
Liz Miller is president of Summit Place Financial Advisors.
"Today, the market news really feels dominated by the incredible downdraft in Netflix. You know, they reported after the close yesterday, very disappointing. But, despite that, we actually have a positive day in the markets. And what I think is really driving that is we are getting into earnings season and we're actually hearing pretty good earnings from corporate America. There's a lot of stresses this quarter. Investors have been focused intensely on inflation, rising interest rates and the conflict in Ukraine. And so, it is surprising and a nice turn to see in the markets today that we're starting to see businesses on the ground this quarter actually were pretty good. And they have a rather constructive outlook as they look at the rest of the year."
Among those posting strong results: Procter & Gamble, shares of which gained 2.52% as the company raised its annual sales view.
And shares of IBM ended up an impressive 7.10% after it forecast hitting the top end of its revenue growth estimate for 2022.