Nasdaq, S&P stumble as Netflix, chip stocks drag; AmEx boosts Dow

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., April 1, 2024. REUTERS/Brendan McDermid/File Photo

By Chuck Mikolajczak

NEW YORK (Reuters) -The Nasdaq and the S&P 500 fell on Friday, as Netflix weighed but American Express kept the Dow on the plus side after quarterly earnings from each, while growing pessimism that the Federal Reserve would cut interest rates soon also dented sentiment.

Netflix slumped 8.77% as one of the bigger drags on the benchmark S&P index and Nasdaq after the video streaming company’s second-quarter revenue view fell short of analysts’ expectations while the company also unexpectedly said it would no longer provide subscriber counts.

But the price-weighted Dow Industrials rose, thanks in part to a 5.81% climb in American Express, after the payments company reported first-quarter profit that was above expectations.

Equities have struggled recently following a five-month rally that started in November, in part due to expectations the Fed was likely to cut interest rates in the first half of the year.

But a recent string of hotter-than-expected inflation data, strong labor market data, geopolitical tensions in the Middle East that have sparked a rise in oil prices, and comments from Federal Reserve officials including Chair Jerome Powell has caused market participants to dial back the timing of any rate cut from the central bank.

“You’ve seen rate-cutting expectations just continue to come out of the market, and they should be because there’s nothing about the data that says they should cut,” said Mike Dickson, head of research and quantitative strategies at Horizon Investments in Charlotte, North Carolina.

“So in that environment when you’re sitting here near highs, that means it’s not going to be rates going down and multiples expanding because of that, that has to be driven by earnings growth. And so just the more the rate picture doesn’t look super-favorable for lower rates, even more important is the earnings growth picture.”

The Dow Jones Industrial Average rose 179.06 points, or 0.48%, to 37,957.05, the S&P 500 lost 33.71 points, or 0.67%, to 4,977.78 and the Nasdaq Composite lost 256.75 points, or 1.65%, to 15,344.75.

Progress on bringing down inflation has “stalled” this year, said Chicago Fed President Austan Goolsbee, the latest U.S. central banker to drop an earlier focus on the coming need for interest rate cuts.

Chip-related stocks, some of the best performers of the year thanks to their association with artificial intelligence, also tumbled, with the Philadelphia Semiconductor Index down about 3%. The index was poised for its biggest weekly percentage decline since October 2022.

While the Dow was on track for a slight weekly gain, both the S&P 500 and Nasdaq were on pace for weekly losses, as the S&P eyed its biggest weekly decline since September and the Nasdaq its biggest since October 2022.

Shares of Paramount Global surged 12.63% after a person familiar with the matter told Reuters that Sony Pictures Entertainment and Apollo Global Management are discussing making a joint bid for the company.

Advancing issues outnumbered decliners by a 1.9-to-1 ratio on the NYSE and by a 1.04-to-1 ratio on the Nasdaq.

The NYSE recorded 25 new 52-week highs and 67 new lows, while the Nasdaq recorded 28 new highs and 176 new lows.

(Reporting by Chuck Mikolajczak in New YorkEditing by Matthew Lewis)