On Friday, the Nasdaq and the S&P 500 closed in the red, weighed down by declines in Netflix shares, while American Express buoyed the Dow following their quarterly earnings reports. Meanwhile, growing skepticism regarding the Federal Reserve’s stance on interest rates added to market unease.
Netflix’s disappointing second-quarter revenue outlook, coupled with the unexpected decision to cease providing subscriber counts, dragged down both the S&P 500 and the Nasdaq. However, the Dow saw gains, partly driven by an uptick in American Express shares after the company reported stronger-than-expected first-quarter profits.
For the week, the Nasdaq plummeted by 5.52%, and the S&P 500 surrendered 3.05%, while the Dow remained relatively unchanged, inching up by just 0.01%.
Recent market struggles come on the heels of a five-month rally that began in November, fueled in part by expectations of a Federal Reserve interest rate cut in the first half of the year. However, a series of factors, including higher-than-anticipated inflation data, robust labor market indicators, geopolitical tensions in the Middle East impacting oil prices, and remarks from Fed officials, notably Chair Jerome Powell, have led investors to reassess the likelihood and timing of rate cuts.
Mike Dickson, head of research and quantitative strategies at Horizon Investments, noted, “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.”
On Friday, the S&P 500 closed down 0.88% at 4,967.20 points, while the Nasdaq Composite fell 2.05% to 15,281.10 points. Conversely, the Dow Jones Industrial Average rose by 0.55% to 37,984.52 points.
This marked the sixth consecutive day of declines for both the S&P and Nasdaq, their longest losing streak since October 2022.
Concerns over inflation were echoed by Chicago Fed President Austan Goolsbee, who remarked that progress in lowering inflation has stalled this year, diverging from earlier expectations of interest rate cuts.
Chip-related stocks, previously standout performers due to their association with artificial intelligence, faced significant losses, with the Philadelphia Semiconductor Index dropping approximately 4%, marking its largest weekly percentage decline in nearly two years.
Throughout the week, all three major indexes experienced losses, with the S&P recording its most substantial weekly decline since March 2023, and the Nasdaq its largest since October 2022.
In other market news, Paramount Global shares surged following reports that Sony Pictures Entertainment and Apollo Global Management are considering a joint bid for the company.
