US stock index futures fell during overnight trading Thursday after a disappointing earnings report from Netflix, based on lower major averages during regular trading.
Futures linked to the Dow Jones Industrial Average fell 14 points. S&P 500 futures are down 0.24%, while Nasdaq 100 futures are down 0.6%.
Netflix shares fell 19% during extended trading Thursday after the company’s fourth-quarter earnings report showed a slowdown in subscriber growth. Meanwhile, Peloton fell 23.9% during regular trading after CNBC reported that the company had temporarily halted production of its fitness products.
During normal trading, the Dow Jones lost 313 points, or 0.89%. At some point during the session, the 30 stock index rose more than 450 points. A similar reversal occurred for the other major averages. The S&P is down 1.1%, having earlier advanced 1.53%. The Nasdaq Composite ended the day with a loss of 1.3%, reversing the previous move that lifted the tech-heavy index by 2.1%.
“The market has been flashing false signals over the past few weeks and it looks like the broader indicators are finally collapsing,” said Scott Riddler of T3 Live. The S&P 500 closed below 4,500 on Thursday for the first time since Oct. 18, which Riddler said is technically significant and “opens the door to a target move to at least 4320, which would see the S&P drop 10%.”
Thursday’s slide puts the Nasdaq Composite Index in a correction territory — more than 10% below the record for November — as higher interest rates pressure tech stocks since future earnings are starting to look less attractive.
The yield on the benchmark 10-year Treasury bond touched 1.87% on Thursday, ahead of the Federal Reserve’s two-day meeting next week.
“While a handful of rate increases over the next year or two would represent a shift in Fed policy, we would not view policy as constraining and do not expect an initial rate hike to derail economic recovery,” said Scott Rehn, chief executive officer. Global Market Strategist at Wells Fargo Investment Institute. However, he added that raising interest rates would inject volatility into the market.
The Dow and S&P 500 are on track for the third consecutive week of losses. The Nasdaq Composite is down nearly 5% on the week, putting it on track for its fourth consecutive week of losses and the biggest weekly loss since October 2020. Small businesses are also hit hard, and the Russell 2000 is on track for the worse. 1 week since June 2020.
Amid the massive sell-off of tech names, some believe there is value in the stocks selected.
“With the broader Nasdaq in correction territory, we see opportunities in specific areas of the technology sector, such as semiconductors, cloud stocks and mega-caps,” said Robert Shen, chief investment officer at Blank Sheen Wealth Management. But he was quick to point out that he does not see the pullback as a “widespread buying moment.”
On the earnings front, Schlumberger will announce results before the market opens on Friday.
CNBC’s Patti Doom contributed reporting.