Weak Netflix results send US stocks lower
NEW YORK (AP) — U.S. stocks moved lower in early trading on Wall Street Thursday after Netflix reported a slump in new subscribers and dragged down communications companies.
The streaming video service plunged after subscriber additions fell far below Wall Street forecasts during its April-June period. The communications sector, which also includes Walt Disney and Facebook, had the most severe drop.
Health insurer UnitedHealth Group led health care stocks broadly lower.
IBM rose 2.8% after reporting solid financial results and helped lead technology stocks higher. The sector held up the best in the early going. Apple, Nvidia and Applied Materials also made solid gains.
Banks led financial stocks higher. BB&T rose 1.9% and SunTrust Banks rose 1.7%. Both reported earnings that easily beat analysts' estimates.
Corporate earnings are in full swing and investors have been cautiously assessing results and company statements. Only about 13% of S&P 500 companies have reported according to FactSet, and analysts expect profits to fall 2.4% overall.
Several other large companies are expected to report results later Thursday, including Microsoft and Capital One Financial. American Express and Schlumberger will release their results on Friday.
The latest round of corporate earnings comes ahead of a highly anticipated Federal Reserve meeting later this month. Investors expect the central bank to cut interest rates for the first time in a decade.
KEEPING SCORE: The S&P 500 index fell 0.1% as of 10:10 a.m. Eastern time. The Dow Jones Industrial Average fell 16 points, or less than 1%, to 27,207. The Nasdaq composite fell 0.1%.
CHUGGING ALONG: Union Pacific rose 4.8% after the railroad operator reported profit growth and beat Wall Street forecasts despite hauling less freight. The company cut expenses by 7% during the quarter as shipments fell amid ongoing trade disputes. On Wednesday, rival CSX cut its revenue forecast as it deals with a slowdown in shipments.
SHRINKING STREAM: Netflix dropped plunged 10.8% in heavy trading after the streaming service suffered a dramatic slowdown in subscriber growth during the second quarter. The slowdown could mean trouble as the company faces a new wave of competition this year when both Walt Disney and Apple plan to launch their own video streaming services.
LIGHTING UP: Philip Morris rose 6.9% after the cigarette maker raised its profit forecast for the year following a solid second quarter. The maker of Marlboro and other brands reported lower cigarette shipments during the quarter, but saw a surge in electronic cigarette sales. Both profit and revenue beat analysts' forecasts.