US stocks edge higher; Netflix plunges on subscriber losses


US stocks edged mostly higher on Wall Street overnight, but were held back by streaming entertainment giant Netflix, which lost more than a third of its market value after reporting its first subscriber loss in more than a decade and predicting more grim times ahead.

After a roller-coaster session, the S&P 500 ended little changed with eight of 11 industry groups advancing. The benchmark index closed 0.1 per cent lower at 4459.45. The Dow Jones Industrial Average rose 249.59 points, or 0.7 per cent, to 35,160.79 and the Nasdaq fell 1.2 per cent.

Procter & Gamble and International Business Machines climbed after reporting better-than-estimated results. In extended trading, Tesla rose after earnings beat estimates. Alcoa declined as its sales of aluminium were weaker than expected.

Streaming giant Netflix has lost over two thirds of its market value over the past five months.Credit:AP

Netflix slumped 35.1 per cent. The company suffered its first subscriber loss in more than a decade and expects a steeper decline during the current quarter. It is also considering changes that it has long resisted, including minimising password sharing and creating a low-cost subscription supported by advertising.

Netflix stock is now down about 67 per cent from the all-time high it reached in November. Its latest decline also weighed on other streaming and media companies such as Walt Disney, Warner Bros. Discovery Inc. and Paramount Global.

Investors continue focusing on the latest round of corporate earnings as they try to determine how companies are dealing with rising inflation and cost pressures.

Inflation has been putting increasing pressure on a wide range of industries and increasingly squeezing consumers. Rising prices have prompted the Federal Reserve and other central banks to raise interest rates in order to help temper inflation’s impact. The Fed has already announced a quarter-percentage point rate hike and Wall Street expects a half-percentage rate hike at its next meeting in two weeks.

“The market knows the Fed’s going to hike rates a bunch,” said Scott Wren, senior global market strategist at Wells Fargo Investment Institute. “But, the market is feeling pretty good that once we get to neutral, then in 2023 maybe you don’t go a lot further.”

Interest rates are considered “neutral” when they neither push nor restrict economic growth. Currently, investors expect rate hikes to increase the benchmark interest rate to a range between 2.75 per cent and 3 per cent by the end of the year, according to CME Group’s FedWatch tool.



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