US Close: Market jitters ahead of Fed and massive earnings week, Netflix tanks

Wall Street has gone from debating how aggressive one should rotate out of tech into cyclicals, to sell it all. US stocks have been on a rollercoaster ride after abysmal results from Netflix. Investors have two big worries:  it seems every day traders are reminded inflationary pressures are not going away anytime soon and could prompt the Fed into becoming overly aggressive in tightening monetary policy. The other concern is that profit growth expectations may have been too optimistic and underpriced in the ballooning labor costs. Geopolitical risks are also adding fuel to the selling pressure.

Next week will be massive for tech earnings as Apple, Microsoft, Tesla, and Samsung report. Netflix shocked and if the other mega-cap giants hugely disappoint, the Nasdaq will be in trouble.

Netflix

Netflix shares collapsed over 20% after delivering disappointing subscriber guidance for the first quarter.  The streaming giant acknowledged that the competition has intensified and the impact to COVID disruptions is still being felt. The company is still posting strong revenue numbers and has a strong revenue outlook and has growth potential outside of North America.

It comes as no surprise that after today’s plunge, at least nine firms lowered their ratings for Netflix.  Netflix is still the king of content and while this is the first heavyweight to post a rather disappointing outlook, it really isn’t that bad.  The mega-cap stock’s overall subscriber growth for the past few quarters was solid, and it could easily be expected that the first quarter would be soft as many people will be returning to pre-COVID behavior. 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya