US stocks close higher, Netflix shares plunge 25% after hours – Market update

US stocks traded higher on Tuesday after a slow start to the week, with all the major indexes closing higher.

The S&P 500 edged 1.6% higher to 4,462.48 to see the blue-chip index notch its best daily return in nearly a month. The Dow Jones Industrial Average also saw gains, adding over 500 points or +1.46% to hit 34,912.88 on the day.

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The Nasdaq Composite once again led the overall gains on Wall Street as the tech-heavy index notched 2.2% to 13,619.66.

European shares close lower

The gains for the US stocks came as companies continued to release their first-quarter earnings reports. The upside for the S&P 500 and the other indexes however came after Asian and European shares had closed largely lower amid continued uncertainty over the Russia-Ukraine war.

The pan-European Stoxx 600 index closed at -0.77% while UK’s FTSE 100 dropped 0.2%.

Losses across Europe also followed an IMF downgrade for global economic growth for 2022, with analysts at the monetary institution now projecting a 3.6% GDP growth- down from the 4.4% forecast earlier in the year.

In other markets

Elsewhere in the market, Treasury yields maintained the upside curve amid the inflationary pressures seen year to date. The 10-year US benchmark rose to 3%, the highest it’s been since 2019.

Oil prices fell more than 5% to settle below $103 a barrel, while gold shed 1.8% to $1,949 per ounce.

In cryptocurrencies, Bitcoin bounced above $40K and was trading at $41,353 at the time of writing. The BTC-USD pair was up 1.3% in the past 24 hours. Other cryptocurrencies were also trading in the green, with ApeCoin (APE) one of the biggest gainers on the day at +13%.

Netflix share plummet 25% post-market

Netflix (NASDAQ: NFLX) reported its first-quarter earnings results on Tuesday.  Although the company’s earnings per share and revenue beat analyst estimates, the shocker came via the number of lost subscribers.

Per the company’s Q1 results, net subscribers fell by 200,000 during the quarter. Analyst estimates had subscriber growth over the quarter at 2.7 million, while Netflix had projected a 2.5 million upside. 

Investor sentiment cratered on the outlook as this marked the first time this had happened since 2011 when the company lost over 800,000 subscribers.

Netflix cited growing competition and password sharing as reasons for the reduced numbers. It also put the dwindling numbers down to the impact of inflation and Russia’s invasion of Ukraine.

Shares of the streaming giant fell 25% in post-market deals.

Tesla’s earnings on Wednesday

Tesla is scheduled to release its Q1 results on Wednesday, with revenues projected at over $17.8 billion for Q1. That would be a 71% year-over-year growth in the three months ending 31 March. EPS is also expected to have jumped significantly to $2.26 for a 143% YoY upside.

Interest in the earnings report will largely be on production, with Tesla’s gigafactories the epicenter of that interest. China and supply chain issues will also be key.

The Tesla stock closed at $1,028.15 on Tuesday, about 2.4% higher on the day.

ARK Invest recently revised its price target for the Tesla Inc (NASDAQ: TSLA) stock. The Cathie Wood-led investment firm remains positive about the electric vehicle maker’s shares after enjoying a massive run in 2021.

In a performance model for the stock released last week, ARK Invest increased its five-year price target for TSLA to $4,600 by 2026. ARK expects the Tesla stock to hit highs of $5,800, while $2,900 would be the trough in case of a bearish flip.

Apart from Tesla, investors will be seeking to crunch numbers and digest the outlook with earnings continuing. Two of the bigger names reporting this week are United Airlines (NASDAQ: UAL) and American Express (NYSE: AXP).