Day Traders Diary

4/20/22

The major averages finished mixed as traders evaluate the flood of first-quarter earnings. The Dow Jones Industrial Average rose 249 points or 0.71% on the back of strong earnings from Procter & Gamble and IBM. The Nasdaq Composite dropped 166 points dragged down by Netflix.

Netflix fell 35% after its quarterly results showed a loss of 200,000 subscribers in the first quarter, its first reported subscriber loss in more than 10 years. That was its biggest decline since 2004, and the streaming company is now the worst performing stock in the S&P 500 this year, down 63.1%. The company's quarterly results were followed by a wave of downgrades by 10 Wall Street analysts, who also cited its weak financial guidance.

The Netflix blow-up dragged shares of other streaming companies lower. Disney fell 5.5%, Roku and Warner Bros. Discovery each lost 6.1%. Paramount lost 8.6%.

It also scared investors away from buying other technology stocks ahead of earnings. Tesla, which is scheduled to report earnings after the bell, fell 4.9%. Amazon and Salesforce lost more than 2%.

On the flipside, Procter & Gamble gained 2.6% and helped lift the Dow after reporting better-than-expected results and hiking its full-year revenue guidance. IBM, another Dow component, rose more than 7.1% following a beat on earnings and revenue.

Roughly 12% of S&P 500 companies have reported first-quarter earnings thus far, with 80% of those names beating analyst expectations, according to FactSet. But the real story that's behind the market's tepid reaction during earnings so far is the lack of corporate guidance.

Beyond company earnings, investors were also keeping a close eye on the 10-year U.S. Treasury yield, which retreated Wednesday after touching 2.94%, its highest level since late 2018, on Tuesday.

Jablonski also noted that the consumer is still strong, with spending up and $2 trillion in savings, and corporations continue to show strength in pricing power and on their balance sheets.