Finance

Dow falls 100 points, Netflix drops 7% to lead tech lower

Stocks slipped Friday as a sharp decline in Netflix shares pressured the rest of the market to end the week. 

The Dow Jones Industrial Average dipped 100 points, or 0.4%. The S&P 500 fell 0.2% and Nasdaq Composite traded 0.4% lower. 

Netflix reported second-quarter earnings that missed analyst expectations, pushing the stock down 7%. The company’s weak guidance for third-quarter subscriber growth — a key metric for the streaming giant — also contributed to the steep sell-off in the stock.

These earnings are lava,” Evercore ISI analyst Lee Horowitz wrote in a note. Horowitz added those results were “not good enough relative to exuberant expectations heading into the print which drove NFLX shares to all-time highs.”

Shares of other major tech companies also struggled. Facebook traded 0.7% lower on Friday while Amazon pulled back by 0.1%. Microsoft and Alphabet dipped 0.6% and 0.2%, respectively. 

Those results come as Netflix, along with other major tech stocks, have struggled this week. Facebook, Amazon, Alphabet and Microsoft are all down week to date.

Tech’s struggles led to a pronounced divergence between the Nasdaq and two other major indexes, the Dow and S&P 500.  The S&P 500 and the Dow are up 1% and 2.4% this week respectively, and were on pace for their third straight weekly gain. However, the tech-heavy Nasdaq has fallen more than 1%, on track to post its first weekly loss in three.

Friday’s moves followed a volatile session that snapped a four-day winning streak for the Dow. Those losses came amid a mixed batch of U.S. economic data and surging coronavirus cases. 

The U.S. reported 77,200 coronavirus cases on Thursday, a record, according to Johns Hopkins University. That spike brought the total number of confirmed U.S. infections to more than 3.57 million. Covid-related deaths are up to more than 138,000.

“We’re rolling into this period of coronavirus cases increasing and we’ve had some shutdowns,” Gregory Faranello, head of U.S. rates trading at AmeriVet Securities. “So, there’s definitely a sense of nervousness in the market.”

— CNBC’s Yun Li contributed reporting.

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