Nasdaq Closes Lower As Techs Fall After Gloomy Outlook From Netflix; Dow Jones Gains

Tech stocks fell while defensive stocks gained as the Nasdaq closed lower and the Dow Jones rose. Rising rates and high inflation were top of mind for investors as Netflix plummeted on its gloomy outlook.

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The Nasdaq composite closed 1.2% lower. The S&P 500 fell less than 0.1%.

The Dow Jones Industrial Average rose 0.7% as several of its components gained on earnings. The index successfully regained support at the 200-day line after reclaiming its 21-day exponential moving average earlier this week. The Nasdaq, meanwhile, was turned away as it approached the 50-day line.

The small-cap Russell 2000 index gained nearly 0.4%.

IBM (IBM) climbed 7% after the company beat sales and profit estimates, driven by its cloud business.

Procter & Gamble (PG) rose 2.9% after the household and personal care products giant beat March-quarter expectations. P&G also raised its sales forecast for the fiscal year ending in June. P&G stock broke out of a cup with handle that offered a buy point of 161.31 and is in a buy zone to 169.38.

Netflix Plunges 36% On Gloomy Subscriber Outlook

Major tech stock Netflix (NFLX) plummeted over 36% after an earnings miss Tuesday night which also weighed heavily on the Nasdaq. Netflix stock reached its lowest price since January 2018. Volume was heavy after the company stunned Wall Street with a loss of 200,000 subscribers in the first quarter. And company management warned that it expects to lose 2 million subscribers in the current quarter.

Volume rose on the NYSE and Nasdaq compared with the same time on Tuesday, initial figures showed.

The price of U.S. crude oil was flat at $102.56 a barrel. The yield on the 10-year Treasury note eased 9 basis points to 2.85%, giving investors a breather from the rising rates of the past couple weeks.

In the semiconductor sector, ASML (ASML) rose 2.9% after the chip-equipment company beat first-quarter sales expectations and met profit estimates. But it forecast sales below estimates for the current quarter. The stock climbed back above its 50-day moving average but remains well below prior highs.

Life Storage (LSI) rose above the 148.40 buy point of a cup with handle, but volume was light. The relative strength line is at new highs, a positive sign.

Defensive Sectors Lead Stock Market Gainers

Defensive stocks led gainers in the stock market Wednesday. The S&P Real Estate Select ETF (XLRE) closed up 1.8%. The S&P Consumer Staples ETF (XLP) gained 1.5%, and the S&P Health Care ETF (XLV) closed up 1.3%. All three sectors are among those that typically outperform inflation in a high and rising inflationary environment.

Edwards Lifesciences (EW) broke out of a cup with handle in heavy trading. The stock was added to IBD Leaderboard Tuesday. DT Midstream (DTM), a new issue in the fuel pipeline and storage industry, is above the 58.15 buy point of a flat base. But volume is below average.

Innovator IBD 50 ETF (FFTY) gained 0.2%.

Among its movers, Rexford Industrial Realty (REXR) followed through on Tuesday’s breakout from a 78.44 buy point and remains in buy range to 82.36. The industrial property owner reported earnings Tuesday.

Two oil and gas stocks, Earthstone Energy (ESTE) and DT Midstream (DTM), broke out from proper buy points. Earthstone gained over 6% while the stock neared the upper edge of the 5% buy zone. The oil stocks’ RS line notched a new high as well, showing superior relative action vs. the S&P 500.

DT Midstream broke out from a flat base with 58.15 entry. Shares were up 1.2% and remain within the buy zone.

Tesla Jumps On Surging Growth After 2 FANG Stocks Hit Nasdaq

After-Hours Earnings

After today’s close, Tesla (TSLA) announced first-quarter earnings. Analysts expect earnings to more than double to $2.26 a share, according to FactSet. Sales are estimated to climb 69% to $17.595 billion.

The megacap growth stock on the Nasdaq gained 4% in extended-hours trade.

Alcoa (AA), Nasdaq-listed Steel Dynamics (STLD) and Nucor (NUE) are scheduled to report earnings late Wednesday or early Thursday for the metals and mining sector. Investors are looking for clues as to whether strong aluminum and steel stock performance can continue. Both steel and aluminum prices have surged since Russia’s Feb. 24 invasion of Ukraine amid high natural gas prices and supply disruption worries.

Follow Michael Molinski on Twitter @IMmolinski

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