It was a divided market on Wednesday as traders evaluated a rush of first-quarter results. The Dow Jones Industrial Average rose on the back of strong earnings from Procter & Gamble, while the Nasdaq Composite was dragged down by an epic plunge in shares of one-time darling Netflix.
The 30-stock Dow was up 249.59 points, or 0.7%, to 35,160.79. The S&P 500 was essentially flat at 4,459.45. The tech-heavy Nasdaq Composite fell 1.2% to 13,453.07.
Netflix fell 35% after its quarterly results showed a loss of 200,000 subscribers in the first quarter, its first reported subscriber loss in more than 10 years. That was its biggest decline since 2004, and the streaming company is now the worst performing stock in the S&P 500 this year, down 62%. The company's quarterly results were followed by a wave of downgrades by 10 Wall Street analysts, who also cited its weak financial guidance.
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The Netflix blow-up dragged shares of other streaming companies lower. Disney fell 5.6%, Roku lost 6.2% and Warner Bros. Discovery slid 6%. Paramount lost 8.6%.
It also scared investors away from buying other technology stocks ahead of earnings. Tesla, which is scheduled to report earnings after the bell, fell 5%. Amazon and Salesforce each lost more than 2%.
On the flipside, Procter & Gamble gained 2.7% and helped lift the Dow after reporting better-than-expected results and hiking its full-year revenue guidance. IBM, another Dow component, rose more than 7.1% following a beat on earnings and revenue.
"Companies so far are highlighting strong demand across industry, despite inflation and supply chain pressures," said Ross Mayfield, investment strategy analyst at Baird. "While we expect this year to continue to be volatile, earnings strength and bearish sentiment is a really nice backdrop for a near-term pop."
Roughly 12% of S&P 500 companies have reported first-quarter earnings thus far, with 80% of those names beating analyst expectations, according to FactSet. But the real story that's behind the market's tepid reaction during earnings so far is the lack of corporate guidance.
Beyond company earnings, investors were also keeping a close eye on the 10-year U.S. Treasury yield, which retreated Wednesday after touching 2.94%, its highest level since late 2018, on Tuesday.
"There seems to be some fatigue around rate hike and inflation discussion," said Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs. "The market has likely priced in the future of rate hikes, inflation is likely nearing a peak and I think there is some positive sentiment around earnings season."
Jablonski also noted that the consumer is still strong, with spending up and $2 trillion in savings, and corporations continue to show strength in pricing power and on their balance sheets.
"Though growth may slow, this year could still be poised for a mid-digit S&P return," Jablonski added. "Investors may be taking stock of that, and deploying cash versus locking in losses on cash due to inflation. If P/E levels continue to look reasonable at these levels, and earnings come through, this could be the catalyst for a positive second half pivot."