Tesla, Netflix drag Nasdaq down; Dow eyes ninth day of gains

  • Tesla falls as CEO Musk hints at more price cuts
  • Netflix tumbles as revenue hit overshadows subscriber jump
  • Johnson & Johnson rises on upbeat FY forecast
  • Dow eyes nine-day winning streak
  • Indexes mixed: Dow up 0.75%, S&P off 0.31%, Nasdaq down 1.20%

July 20 (Reuters) – The tech-heavy Nasdaq fell on Thursday, as Tesla and Netflix results underwhelmed investors, while a strong annual forecast by Johnson & Johnson set the blue-chip Dow on course for its ninth day of gains.

Tesla’s (TSLA.O) shares fell nearly 7% after the electric-car maker on Wednesday reported a drop in its second-quarter gross margins to a four-year low and CEO Elon Musk hinted at more price cuts.

“The price cuts have opened up the proverbial can of worms,” said Michael Matousek, head trader at U.S. Global Investors.

“You’re going to see more manufacturers become competitive with their pricing because these (EV) vehicles were very high margin before and now they’ve got room to cut.”

Other big names in the EV space such as General Motors (GM.N) and Ford Motor (F.N) slid over 1% each.

Meanwhile, Netflix (NFLX.O) fell 9.4%, on track for its worst percentage drop in nearly 15 months, after the streaming video company’s quarterly revenue fell short of estimates, while analysts said its new money-making ventures will take time to bring in returns.

An annual profit forecast raise by Johnson & Johnson (JNJ.N) pushed up its shares 6%, lifting the Dow.The Dow”] (.DJI) is on course for its ninth-straight day of gains, its longest winning streak in almost six years.

“The Dow was simply neglected in this recent growth rally and now people are redeploying capital in some of the more traditional non growth names,” said David Russell, vice president of market intelligence at TradeStation.

The tech-heavy Nasdaq (.IXIC) has advanced 35.5% so far this year, supported by a scorching rally in megacap growth and technology stocks on optimism over artificial intelligence, a resilient U.S. economy and hopes that the Federal Reserve was nearing the end of its aggressive rate-hike cycle.

At 11:28 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 263.64 points, or 0.75%, at 35,324.85, the S&P 500 (.SPX) was down 14.31 points, or 0.31%, at 4,551.41, and the Nasdaq Composite (.IXIC) was down 172.14 points, or 1.20%, at 14,185.88.

United Airlines (UAL.O) advanced 3.9% after [USN:L1N3952Y2 TEXT:”lifting its full-year profit outlook and posted the highest ever quarterly earnings on booming demand for international travel.

U.S.-listed shares of Taiwanese chipmaker TSMC fell 4.5% after warning of a 10% drop in 2023 sales.

Overall earnings across industries are expected to decline 8.2% for the second quarter, according to Refinitiv data on Wednesday.

Meanwhile, data showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, pointing to persistent strength in the labor market.

Declining issues outnumbered advancers for a 1.93-to-1 ratio on the NYSE and a 1.86-to-1 ratio on the Nasdaq.

The S&P index recorded 20 new 52-week highs and two new lows, while the Nasdaq recorded 46 new highs and 40 new lows.

Reporting by Bansari Mayur Kamdar and Johann M Cherian in Bengaluru; Editing by Shinjini Ganguli

Our Standards: The Thomson Reuters Trust Principles.

Bansari reports on the global financial markets and writes Reuters’ daily flagship market reports on equities, bonds and currencies. An economist by training and winner of the Arthur MacEwan Award for Excellence in Political Economy, she has written for renowned global papers and magazines including The Diplomat, Boston Globe, Conversation, Huffington Post and more.

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