Nasdaq Correction Deepens as Stocks Slide

U.S. equity markets are falling, with the Nasdaq sinking deeper into correction territory as shares of streaming service providers drop.

Netflix, Inc. (NFLX) is the worst-performing stock in the S&P 500, with shares plunging on its slowing subscriber growth. The news is dragging down shares of The Walt Disney Company (DIS) and others in the online entertainment sector. Shares of smaller banks are continuing their week-long decline, led by Huntington Bancshares Incorporated (HBAN) following its earnings report.

Shares of Intel Corporation (INTC) and other semiconductor companies are higher on Intel’s announcement that it will invest at least $20 billion in two Ohio chip making factories. Under Armour, Inc. (UA) shares are rising on an analyst upgrade, and that’s helping to lift shares of rival Nike, Inc. (NKE).

Crude oil futures are falling for a second day. The yield on the 10-year Treasury note is sinking, now at 1.76%. The euro gained against the dollar.

A major sell-off is underway in the cryptocurrency market. The price of Bitcoin (BTC) is down 10% to less than $39,000. Ether (ETH), XRP (XRP), and Solana (SOL) are also trading lower by double-digit percentages.

Editor’s Picks: Quick Hits

Microsoft Jumps After Bullish Assessments Ahead of Earnings

Fed Releases Discussion Paper on US Central Bank Digital Currency (CBDC)

Top Stocks for January 2022

Fed Fallout: Chart of the Day

The head of the International Monetary Fund (IMF) is warning interest rate hikes by the U.S. Federal Reserve could have significant negative effects on other countries. 

IMF Managing Director Kristalina Georgieva said at the World Economic Forum virtual event the Fed might “throw cold water” on what are already weak economic recoveries in certain nations dealing with dollar-denominated debt. She called on U.S. policymakers to clearly communicate their plans to prevent surprises.

The Fed has signaled that it expects to begin increasing interest rates this year in an effort to tamp down rising inflation. It has kept rates near zero for almost two years in response to the economic crisis caused by the COVID-19 outbreak.

Georgieva added that the IMF expects the global economic recovery to continue but that it is “losing some momentum” because of rising COVID-19 cases, inflation, and debt. Because of that, she indicated, central banks need to have “policy flexibility” to keep growth going.

Netflix (NFLX): Stock of the Day

The sell-off in shares of Netflix, which began following the release of the streaming service’s fourth quarter earnings report yesterday, is continuing, with the shares down 21%.

The impact is being felt throughout the industry. Investors dumped shares after Netflix said subscriptions rose less than the company expected in the period, and subscriber growth in the current quarter will be less than half of what analysts had forecast. Netflix also admitted that it had been affected by intensified competition. The news led several analysts to downgrade the stock.

Shares of rivals Disney, Roku, Inc. (ROKU), Discovery, Inc. (DISCA), and ViacomCBS Inc. (VIAC) are all falling as well on concerns that the streaming market has become saturated, and competition is forcing the companies to spend even more on content in order to attract viewers. 

Another worry is rising subscription prices and whether consumers will be willing to pay them. Netflix announced last week a hike in monthly subscription costs in the U.S. and Canada. Customers will now be charged $9.99 for the basic plan, a $1 increase, while the standard plan moved to $15.49 from $13.99, and the premium plan to $19.99 from $17.99.

Netflix shares have lost about one-third of their value in the past year.