Stocks dig out of Israel strike-fueled tumble
Stocks opened mostly lower but were digging themselves out of a deeper sell-off on Friday, after Israel’s retaliatory strike on Iran spooked the market overnight and spurred a rush to safe havens such as gold.
The Dow Jones Industrial Average (^DJI) rose 0.2%. The S&P 500 (^GSPC) fell about 0.1%, while the tech-heavy Nasdaq Composite (^IXIC) slid 0.3% after sharper falls.
The market initially reacted with alarm to overnight reports Israel had attacked an Iranian city home to nuclear facilities, despite urging from allies to restrain from a tit-for-tat cycle of military violence. With few details about the strike then available, prices for oil and gold jumped as stocks and Treasury yields sank, while the CBOE Volatility index — Wall Street’s “fear gauge” — hit a more than five-month high.
Those moves have weakened as some composure returned amid signs the scope of the Israeli strike was limited. But investors are still on high alert, though Iran has confirmed the drone attack and said it failed.
Stocks were already under pressure before the shock amid persistent uncertainty about Federal Reserve interest-rate cuts.
The S&P 500 on Thursday notched five losing days in a row as investors absorbed disappointing earnings from Netflix (NFLX). That weighed on hopes that quarterly earnings will meet high expectations to help revive the equity rally. Shares of the streaming giant, the first of the megacap techs to report, slid more than 7% to start the morning session.
Friday brought results from Procter & Gamble (PG), which raised its full-year profit forecast despite missing quarterly sales estimates. Also on the docket, American Express (AXP) posted a profit beat as wealthy customers kept spending.
Meanwhile, US government bonds pulled back almost fully from their biggest rally of the year. The yield on the safe-haven 10-year Treasury (^TNX) fell to trade around 4.6%, after a fall of 14 basis points.
In commodities, Brent crude futures (BZ=F) — the global oil benchmark — erased an earlier 4% spike above $90 a barrel to trade around 0.4% lower around $86.70. West Texas Intermediate crude futures (CL=F) were down similarly around $82 a barrel. Gold (GC=F) was unwinding earlier gains to trade lower.
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Here’s the most important point on Netflix
Netflix (NFLX) shares are getting hit in the pre-market after another big quarter on almost every line item.
Makes sense, the stock was priced for perfection ahead of the report.
But cutting through the noise, this point by Pivotal Research’s Jeff Wlodarczak is the most important thing to take away on Netflix at this juncture:
“Netflix reported another high quality result with an across the board 1Q subscriber beat driven by core US and Euro markets and stronger than expected average revenue per user (successful 4Q price hikes in U.S./U.K./France) implying the ability to generate strong subscriber growth AND take price/expand margins, a powerful combo.”
With nothing in the report suggesting Netflix’s fundamentals are struggling, you have to wonder if the pullback in the stock will be bought at the open today. One could make the argument the stock isn’t even that expensive, when compared to historical trading norms.
Check out the current valuations on Netflix compared to those seen from 2016 to 2021, when the company was in no way as fundamentally strong as it is today. All data presented to you of course, by the Yahoo Finance platform.
You can analyze more of this data on Netflix by heading to the statistics section on the Netflix ticker page.
Netflix shares may not be as expensive as they look on the surface. (Yahoo Finance)
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