Dow rose 200 points, but Nasdaq decreased after the earnings of Netflix disappointed

April 21, 2022: -On Wednesday, Stocks surged even after disappointing Netflix earnings.

The Dow Jones Industrial Average was up 249 points, or 0.7%, while the S&P 500 increased 0.2%. The Nasdaq Composite advanced just 0.03%.

A slew of analysts slashed their ratings on Netflix following its first-quarter results. Although Netflix is posting a 29% loss in its share price in premarket trading, the moves came after reporting a loss of 200,000 subscribers in the first quarter. The news led shares of streaming companies Disney, Roku, Warner Bros. Discovery, and Paramount to decrease investors and could further worry investors about buying technology stocks ahead of earnings.

Meanwhile, IBM increased 5% following a beat on earnings and revenue, which helped lift the Dow. Procter & Gamble, one more Dow component, reported better-than-expected results and hiked its full-year revenue guidance.

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

“There seems to be some fatigue around rate hike and inflation discussion,” said Sylvia Jablonski, CEO, and chief investment officer at Defiance ETFs. “The market has likely priced in the future of rate hikes; inflation is likely nearing a peak, and I think there is some positive sentiment around earnings season. The consumer remains strong, spending is up regardless of sentiment, $2 trillion remains on the sidelines in savings, and corporations continue to show strength in pricing power and robust balance sheet.”

On Tuesday, all the significant averages saw substantial gains, posting their best day since March 16. The Nasdaq Composite bounced back 2.15%, while the Dow Jones Industrial Average increased 499.51 points or 1.45%, and the S&P 500 gained 1.61%.

“Though growth may slow, this year could still be poised for a mid-digit S&P return,” Jablonski added. “Investors may be taking stock of that and deploying cash versus locking in losses on cash due to inflation. If P/E levels continue to look reasonable at these levels, and earnings come through, this could be the catalyst for a positive second half pivot.”

Tuesday’s stock market rally was broad-based, with 10 out of 11 sectors ending the session in the positive, led by consumer discretionary. Some of the most significant gains came from Microsoft and Alphabet, which rose 1.7% and 1.8%, respectively, while airline stocks jumped after TSA lifted mask mandates on planes in response to a Florida court ruling.