Wall Street extends losses at open as Netflix falls

Netflix results were felt as a real blow by Wall Street traders. REUTERS/Mike Blake

Wall Street's main indexes opened lower on Friday and were on course for their third straight week of declines as Netflix's disappointing first-quarter subscriber growth outlook sent shockwaves through the tech sector.

The Dow Jones (^DJI) slumped 0.5% points to 34,41 while the S&P 500 (^GSPC) fell over 1% to 4,431.

The technology-heavy Nasdaq (^IXIC) dropped 1.7% to 13,932 as investors positioned themselves for the likelihood that the Federal Reserve will tighten monetary policy more aggressively to stave off inflation.

The FTSE 100 (^FTSE), the CAC (^FCHI) and the DAX (^GDAXI) all dropped deeper into the red, in late trading.

Nasdaq is trading at a seven-month low. Chart: Yahoo Finance UK

“The Fed this time will be far more prudent about quantitative tightening especially given high leverage in the system,” according to Sebastien Galy, senior macro strategist at Nordea Asset Management.

Netflix (NFLX) share price shares fell more than 20% after the world’s largest streaming service dashed hopes for a quick rebound as it forecasted weak first-quarter subscriber growth.

For Netflix stock, trading confirmed the overnight session’s worst fears, with the streaming giant losing around a quarter of its value. Chart: Yahoo Finance UK

Craig Erlam, senior market analyst, UK & EMEA, OANDA, commented: "The banks didn't give us much to cheer about and if the Netflix results are anything to go by, big tech may also underwhelm. 

"The subscriber numbers were a real blow and investors are being forced to adjust to the reality that there is nowhere near the momentum that the last couple of years was expected to generate. Immense competition in the space and higher costs are also major headwinds".

US Treasury yields were slightly lower along the curve on Friday, having risen sharply earlier in the week.

Yields on benchmark 10-year notes were at 1.7470%, their lowest in a week, having hit a two-year high of 1.902% on Wednesday.

Shares have declined in Europe and Asia after the sell-off wiped out gains for stocks on Wall Street

The London benchmark has dropped 98 points to around 7500 points, the lowest in over a week. 

Scottish Mortgage Investment Trust (SMT), one of the main avenues for UK investors to tap into the US tech sector, dropped over 4%.

Victoria Scholar, head of investment at interactive investor, said: “Risk-off sentiment and a sell-off on Wall Street are sending shockwaves across global markets with main European markets shedding more than 1% each on the final trading session of the week.

Read more: UK retail sales plunge after Omicron spread

"The FTSE 100 is flirting with critical support at 7,500 with a break below potentially paving the way for further declines. Just a handful of stocks in the UK basket are trading in the green while the miners such as BHP Group, Rio Tinto and Anglo American languish at the bottom.”

The London benchmark was also pulled down by heavyweight mining stocks with BHP (BHP.L) being among the top losers as it prepares to exit the index next week.

Wall Street jitters put FTSE 100 on track to end the week down. Chart: Yahoo Finance UK

Asian markets finished lower with shares in China leading the region. The Shanghai Composite Composite (000001.SS) is down 0.91% while Japan's Nikkei 225 (^N225) is off 0.90% and Hong Kong's Hang Seng (^HSI) is lower by 0.12%.

Meanwhile, oil dropped as OPEC+ struggled to meet its scheduled increases in production targets and the spectre of Russia invading Ukraine sent jitters through global markets.

Brent crude oil (BZ=F) lost almost 2% to $86.77 a barrel and the US crude (CL=F) fell 0.7% to $84.95 per barrel on Friday.

Read more: The markets and sectors where investors can make best returns

“More gloom is descending as investors digest some major earnings disappointments, adding to concerns of an accelerating monetary tightening schedule,” Richard Hunter, head of markets at interactive investor, said.

By Matt Earle

Matthew Earle is the Founder of MiningFeeds. In 2005, Matt founded MiningNerds.com to provide data and information to the mining investment community. This site was merged with Highgrade Review to form MiningFeeds. Matt has a B.Sc. degree with a minor in geology from the University of Toronto.

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