A sharp selloff in tech and communications services stocks weighed on market sentiment Friday, though solid earnings results for a blue chip credit card company kept the Dow Jones Industrial Average above water. And the volatility could continue next week thanks to a barrage of Big Tech earnings and a key inflation update.
At the close, the Dow was up 0.6% at 37,986 thanks to a post-earnings pop for American Express (AXP).
Indeed, AXP was the best Dow Jones stock today, surging 6.2%, after the credit card company disclosed higher-than-expected Q1 earnings of $3.33 per share on in-line revenue of $15.8 billion. AXP also said consumer spending was up 8% year-over-year, with spending among millennial and Gen Z cardholders rising 15%.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Looking ahead, Argus Research analyst Stephen Biggar (Buy) sees "continued healthy spending volume from AXP's generally affluent cardmembers, who are less impacted by inflation, and see marketing efforts leading to good cardmember growth."
Netflix sinks after Q1 results
While the Dow managed to notch its third win of the week, the S&P 500 (-0.9% at 4,967) and the Nasdaq Composite (-2.1% at 15,282) extended their daily losing streaks to six.
Weighing on the indexes was a negative earnings reaction for Netflix (NFLX, -9.1%). While the streaming giant reported top- and bottom-line beats in its Q1 results and said subscriber growth was up 16% year-over-year, it said it will stop reporting paid membership growth in fiscal 2025.
"The market hasn't taken kindly to news Netflix will stop reporting quarterly membership numbers," says Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown. The plan was always to grow the company's customer base, but now that it's at that inflection point, "there will be nerves around what this means for Netflix's label as a higher-octane growth stock," she adds.
The weakness wasn't confined to Netflix, though. Ahead of their appearances on next week's earnings calendar, several Magnificent 7 stocks – including Alphabet (GOOGL, -1.2%) and Meta Platforms (META, -4.1%) – pulled back.
Super Micro Computer spirals 20%
Elsewhere, Super Micro Computer (SMCI) plunged 23% to close at its lowest level since early February. While no concrete news sparked the selloff, media reports suggest investors could be skittish that the company did not preannounce its earnings report as it has done in seven of the past eight quarters. Rather, the AI server, software and infrastructure company said it will release its full fiscal third-quarter results after the close on Tuesday, April 30.
Friday's slump marks a change of pace for the recent S&P 500 addition. To be sure, SMCI has been one of the hottest stocks of 2024, nearly doubling in value for the year to date. As such, some of today's selling could be investors taking profits on the sizzling tech stock.
Inflation data, busy earnings week on deck
Several major events could spark more volatility in the stock market next week. In addition to a number of Big Tech earnings reports, the economic calendar features the March Personal Consumption and Expenditures (PCE) Price Index. The data measures consumer spending and is the Fed's preferred inflation gauge.
Larry Adam, chief investment officer at Raymond James, says investors needn't worry too much about the whipsaw price action. "While market gyrations can be concerning, remember not to panic – pullbacks and interim spikes in volatility are quite common," Adam reminds us, adding that the S&P 500 is still up 20% from its October lows. "This uninterrupted rally is uncommon as it is important to appreciate that the equity market does not go up in a straight line," he says.
Related content
- What Is Bitcoin Halving and Why Is It Important?
- Get These 40 Earth Day Deals and Discounts
- Super Micro Computer: Why This Hot Stock Could Hit $1,500
-
Is the EV Tax Credit Going Away? What You Need to KnowTax Credits There's a lot of chatter about the President-elect's plans to eliminate the electric vehicle tax credit. Here's what's happening.
-
Being Nimble Is Key to This Fidelity Bond Fund's OutperformanceThe Fidelity Total Bond ETF has done well over the long term as managers adjust to changing tides.
-
Why This Fidelity Bond ETF Has Outperformed Over the Long Term
The Fidelity Total Bond ETF has done well over the long term as managers adjust to changing tides.
-
10 Inefficiencies I Look for on Rich Retirees' Tax ReturnsYour tax return could hold clues to several missed opportunities and important gaps in your retirement planning.
-
Estate Planning: How Does the Basis Step-Up Rule Work?The step-up in basis, one of the most powerful tools in estate and tax planning, can make a huge difference in capital gains taxes owed.
-
Stock Market Today: Stocks Drop as Post-Election Party EndsIt was a red finish on Wall Street Friday with tech stocks selling off ahead of Nvidia's upcoming earnings event.
-
Will You Pay Taxes on Your Social Security Benefits?You might, depending on your income, but smart financial planning now can help lower or even eliminate your taxes in the future.
-
A Simple Trick for Better Investing: Stop Timing the MarketInvestors who stay the course are rewarded for their patience and discipline, enjoying the benefits of compounding returns over time.
-
Does a Farm Need a Different Homeowners Insurance Policy?Homeowners insurance is all about providing the right tool for the right exposure, and life on the farm comes with different risks than life in the city.
-
Stock Market Today: Stocks Slip After Powell Talks Rate CutsThe main indexes closed lower Thursday after Fed Chair Powell said there's no rush to cut rates.
