S&P 500, Nasdaq post worst weeks since pandemic start as Netflix woes deepen slide

It would be easy enough to say that today’s rout, the sixth consecutive 3-digit drop in the Dow and Nasdaq, was predictable given that it was allegedly triggered by a bad report from Netflix which sent the Nasdaq and the rest of the indexes plunging. After all, we knew about Netflix. The report came in after the bell yesterday. And the Netflix misfortune also infected other streaming services like Disney and Roku in a big way. The only problem with this explanation is that the market was up, way up, until about 11 a.m.  Any reaction due to Netflix would have come at the opening bell.  So what else is there?  Well, as today’s expert put it, “Emotion is what takes over. Until the market finds support, no one’s going to care about anything fundamental.”  

Translation: the fundamentals remain strong so what has been going on is purely irrational panic. Our expert also says, “Between the Fed meeting and earnings, there is a lot the market could be worried about next week.”  Translation: everyone’s selling this week as a hedge as potentially bad news next week.  But what if the news next week isn’t bad?  Will emotions reverse?  Should we be buying when everyone else is selling, especially since there’s no logical rationale for the selling?  Stay tuned. Volume was huge at 14.6 billion. 

Fri  January 21, 2022  4:32 PM

S&P 500, Nasdaq post worst weeks since pandemic start

as Netflix woes deepen slide

By Lewis Krauskopf and Shreyashi Sanyal, Bansari Mayur Kamdar

DJ: 34,715.39  -313.26        NAS: 14,154.02  -186.24        S&P: 4,482.73  -50.03      1/20

DJ: 34,265.37  -450.02        NAS: 13,768.92  -385.10        S&P: 4,397.94  -84.79      1/21

Jan 21 (Reuters) - Wall Street's main indexes ended sharply lower on Friday as Netflix shares plunged after a weak earnings report, capping a brutal week for stocks that saw the S&P 500 and Nasdaq log their biggest weekly percentage drops since the onset of the pandemic in March 2020.  The benchmark S&P 500 posted its third straight week of declines, ending 8.3% down from its early January record high.  Losses also deepened for the Nasdaq after the tech-heavy index earlier in the week confirmed it was in a correction, closing down over 10% from its November peak. The Nasdaq has now fallen 14.3% from its November peak and on Friday closed at its lowest level since June.

Netflix shares tumbled 21.8%, weighing on the S&P 500 and the Nasdaq, after the streaming giant forecast weak subscriber growth. Shares of competitor Walt Disney (DIS.N) fell 6.9%, dragging on the Dow, while Roku (ROKU.O) also slid 9.1%. read more  "It has really been a continuation of a tech rout,” said Paul Nolte, portfolio manager at Kingsview Investment Management. "It’s really a combination of a rotation out of technology as well as very poor numbers from Netflix that I think is the catalyst for today."

The Dow Jones Industrial Average (.DJI) fell 450.02 points, or 1.3%, to 34,265.37, the S&P 500 (.SPX) lost 84.79 points, or 1.89%, to 4,397.94 and the Nasdaq Composite (.IXIC) dropped 385.10 points, or 2.72%, to 13,768.92.  For the week, the S&P 500 fell 5.7%, the Dow dropped 4.6% and the Nasdaq declined 7.6%.  The Dow fell for a sixth straight session, its longest streak of daily declines since February 2020.  The S&P 500 closed below its 200-day moving average, a key technical level, for the first time since June 2020.

"When markets get like they've gotten this week, the emotion is what takes over," said Jim Paulsen, chief investment strategist at The Leuthold Group. "Until it finds support, no one's going care about anything fundamental."  Stocks are off to a rough start in 2022, as a fast rise in Treasury yields amid concerns the Federal Reserve will become aggressive in controlling inflation has particularly hit tech and growth shares.  Investors are keenly focused on next week's Fed meeting for more clarity on the central bank's plans to tighten monetary policy in the coming months, after data last week showed U.S. consumer prices in December had the largest annual rise in nearly four decades. read more  “Between the Fed meeting and earnings, there is a lot that the market could be worried about next week,” said Anu Gaggar, global investment strategist at Commonwealth Financial Network.

Apple (AAPL.O), Tesla (TSLA.O) and Microsoft (MSFT.O) are among the large companies due to report next week in a busy week of earnings results.  Declining issues outnumbered advancing ones on the NYSE by a 4.26-to-1 ratio; on Nasdaq, a 4.34-to-1 ratio favored decliners.  The S&P 500 posted five new 52-week highs and 24 new lows; the Nasdaq Composite recorded 13 new highs and 1,029 new lows.

About 14.6 billion shares changed hands in U.S. exchanges, compared with the 10.4 billion daily average over the last 20 sessions.