Netflix Causes Stocks to Plunge 07/17 09:29
U.S. stock indexes are dipping Tuesday as investors back away from some of
market's highest-flying companies.
NEW YORK (AP) -- U.S. stock indexes are dipping Tuesday as investors back
away from some of market's highest-flying companies. Netflix is plunging after
the streaming video company gained fewer subscribers than Wall Street had hoped
in its latest quarter and also projected weak results over the next three
months. Facebook and Amazon are also falling. Health care products company
Johnson & Johnson is rising after it reported strong sales in its latest
KEEPING SCORE: The S&P 500 index slid 4 points, or 0.2 percent, to 2,793 as
of 10 a.m. Eastern time. The Dow Jones Industrial Average fell 54 points, or
0.2 percent, to 25,010. The Nasdaq composite retreated 22 points, or 0.3
percent, to 7,783. The Russell 2000 index of smaller-company stocks rose 5
points, or 0.3 percent, to 1,684 and most of the stocks listed on the New York
Stock Exchange traded higher.
ARE YOU STILL WATCHING? Netflix's weak subscriber totals have the stock on
track for its biggest loss in two years. It's down 11.7 percent to $353.63. The
company has regularly beaten its own subscriber forecasts but failed to do so
in the second quarter and its third-quarter estimate was lower than analysts
expected. Even with Tuesday's loss, the stock is up more than 80 percent this
DE-FANGED: Other Wall Street favorites in technology and retail also sank.
Netflix is part of what investors call the "FAANG" stocks, along with Facebook,
Apple, Amazon and Google's parent company, Alphabet. The other companies are
some of the most valuable in the U.S. and much larger than Netflix, and all
have fared extremely well in recent years. On Tuesday, Apple lost 0.7 percent
to $189.57 and Amazon gave up 0.4 percent to $1,815.22.
BAND-AID: Johnson & Johnson's second-quarter profit grew thanks to better
results from its prescription drug business, and it posted higher sales than
analysts expected. The stock gained 3.1 percent to $128.57, which helped
household goods companies fare better than the rest of the market.
INSURER GETS QUEASY: UnitedHealth, the largest U.S. health insurance
company, once again beat expectations in the latest quarter and raised its
annual profit forecast. But the company's spending on medical costs was higher
than analysts expected, and the stock lost 3 percent to $249.34.
Advertising companies also traded lower after a disappointing report from
Omnicom. The advertising conglomerate lost 6.5 percent to $73.01 and
Interpublic Group shed 3.9 percent to $22.79.
EU-JAPAN DEAL: The European Union and Japan signed a broad trade deal
Tuesday that will eliminate nearly all tariffs. Their agreement covers a third
of the global economy and more than 600 million people. Prices of European wine
and pork will fall for Japanese consumers. Japanese machinery parts, tea and
fish will get cheaper for Europe. The deal has been in the works for years and
contrasts with the more protectionist approach of U.S. President Donald Trump.
FED COMMENT: Federal Reserve Chairman Jerome Powell is delivering a positive
view of the economy and says he expects the Fed to keep gradually raising
interest rates. Powell is testifying before Congress on Tuesday and investors
will look for clues about the Fed's approach toward raising interest rates. In
a statement released before his testimony began, Powell said the Fed believes
the economy will stay strong and inflation will remain at around 2 percent for
the next few years.
BONDS: Bond prices edged higher. The yield on the 10-year Treasury note fell
to 2.85 percent from 2.86 percent.
ENERGY: Benchmark U.S. crude lost 0.9 percent to $67.44 a barrel in New
York. Brent crude, used to price international oils, lost 0.3 percent to $71.64
a barrel in London.
CURRENCIES: The dollar rose to 112.74 yen from 112.30 yen. The euro fell to
$1.1693 from $1.1714.
OVERSEAS: Germany's DAX shed 0.1 percent and the CAC 40 in France was down
0.3 percent. The British FTSE 100 index rose 0.1 percent.
Japan's benchmark Nikkei 225 gained 0.4 percent after reopening from a
public holiday. South Korea's Kospi lost 0.2 percent and Hong Kong's Hang Seng
shed 1.3 percent.