US stocks fell on Wednesday, pulling down by a dramatic drop in the Netflix streaming service, despite encouraging earnings reports elsewhere, which indicated that companies could resist the impact of rising inflation and slowing economic growth.
Netflix fell 35 percent on Wednesday after providing a Gloomy update The night before, the biggest loser was in both the high-tech Nasdaq and the Blue-chip S&P 500. The Nasdaq closed the day down 1.2%, while S&P ended the day down 0.1%.
Netflix’s results missed investors in the sector more broadly, with Walt Disney – the owner of Disney Plus – down 5.6%, Rocco down 6.2% and music streamer Spotify down 10.9%.
Still, companies including Procter & Gamble, Danone and Heineken have provided confidence in the health of consumers on both sides of the Atlantic.
The rise in U.S. stocks over the past two days has been aided by so-called short-term coverage – when traders who have been betting on declines need to buy stocks to close their positions – according to a note sent to Morgan Stanley brokerage clients.
The recent sale of government bonds has also been halted, further easing pressure on stock markets. The 10-year yield on the U.S. Treasury Index fell 0.1 percentage points to 2.8 percent. Higher yields reflect lower prices, and rising yields on low-risk government bonds reduces the attraction of riskier assets like stocks.
God Federal Service On Wednesday it published its latest Beige book report, an anecdotal review of economic conditions. The report highlighted continued inflationary pressures as well as the potential for price increases and geopolitics to slow growth.
The report offered “further confirmation of the reality of the current environment for the Fed,” said Ian Lingen, head of U.S. exchange rate strategy at BMO Capital Markets.
The Fed has already signaled its willingness to raise interest rates by 0.50 percentage points – larger than the typical quarter-point increase – at its May meeting, the possibility of which will be fully priced by futures markets.
The yield on the 10-year German Bund decreased by 0.06 percentage points to 0.85 percent, and the 10-year yield in the United Kingdom decreased by 0.05 percentage points to 1.91 percent.
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