The Week's Top Stories is a guided tour through the biggest market stories of the week, from winning stocks to brutal dips to the facts and forecasts generating buzz on Wall Street.
NETFLIX CRATERS
The streaming wars left a crater in Netflix's stock price Wednesday after the company reported a loss of 200,000 subscribers in the first quarter. Shares plunged 35 percent, wiping out $50 billion in value in a single day, and marking the streamer's worst day on Wall Street since 2004. While analysts were expecting subscriber growth to slow given increasingly fierce competition from the likes of Disney, Warner Bros. Discovery, and Paramount, the steep drop-off was a surprise and a signal that the streaming market may be bumping up against its limit. Netflix is also the second FANG stock (Facebook, Amazon, Netflix, Google) to endure a brutal sell-off this year. Meta dropped 26 percent back in February, lopping off $232 billion in value from its market cap. The other members of the tech giant-quartet, which has been a reliable investment for several years now, are set to release their earnings next week. So we'll know soon if the bearish contagion spreads.
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TESLA EARNINGS IMPRESS
Maybe Musk was just feeling himself after a Tesla earnings report knocked it out of the park this week. The company reported a record profit of $3.3 billion in the quarter, and Musk projected that the company would produce 1.5 million vehicles in 2022. That's a 60 percent jump from last year, despite signals in the report that supply chain issues were finally catching up with the EV maker and could curb production in the next quarter. The stock jumped around 3 percent on the news, and Tesla bulls rejoiced.
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WINNERS AND LOSERS
While Netflix plunged and Tesla popped, the rest of the stock market was a similarly mixed bag. Used-car retailer Carvana reported its first-ever quarterly sales decline, and the stock fell as much as 24 percent after-hours on Wednesday before leveling off. On the same day, United Airlines forecasted it would be turning a profit in 2022, sending shares up nearly 18 percent, as investors anticipated a resurgent airline industry this summer. Bank of America shares jumped on an earnings beat, and Charles Schwab shares fell after missing analyst estimates. Shares of Chinese ride-hailing giant Didi, meanwhile, sank on the news that it plans to delist from the New York Stock Exchange before finding another venue for its U.S. shares.
MORE FED RATE HIKES
When Federal Reserve Chair Jerome Powell speaks, markets listen, and this week the country's top banker hinted in recent months that sharp interest rate hikes are coming. He even signaled that a half-point increase was on the table, putting him in line with some of the more hawkish Fed governors who have been calling for faster, steeper hikes to rein in inflation.
RISE OF THE DOLLAR
One beneficiary of looming rate hikes is the U.S. dollar. The dollar index (DXY), which tracks the dollar's value against other major currencies, hit a two-year high this week. The U.S. dollar is up 12 percent from last year, and other currencies are sinking against it, with the Japanese yen, in particular, tumbling to a 20-year low.
Nvidia on Wednesday became the first public company to reach a market capitalization of $5 trillion. The ravenous appetite for the Silicon Valley company’s chips is the main reason that the company’s stock price has increased so rapidly since early 2023.
Chris Williamson, Chief Business Economist at S&P Global, breaks down September’s CPI print and inflation trends, explaining what it means for markets.
A big-screen adaptation of the anime “Chainsaw Man” has topped the North American box office, beating a Springsteen biopic and “Black Phone 2.” The movie earned $17.25 million in the U.S. and Canada this weekend. “Black Phone 2” fell to second place with $13 million. Two new releases, the rom-com “Regretting You” and “Springsteen — Deliver Me From Nowhere,” earned $12.85 million and $9.1 million, respectively. “Chainsaw Man – The Movie: Reze Arc” is based on the manga series about a demon hunter. It's another win for Sony-owned Crunchyroll, which also released a “Demon Slayer” film last month that debuted to a record $70 million.
The Federal Aviation Administration says flights departing for Los Angeles International Airport were halted briefly due to a staffing shortage at a Southern California air traffic facility. The FAA issued a temporary ground stop at one of the world’s busiest airports on Sunday morning soon after U.S. Transportation Secretary Sean Duffy predicted that travelers would see more flights delayed as the nation’s air traffic controllers work without pay during the federal government shutdown. The hold on planes taking off for LAX lasted an hour and 45 minutes and didn't appear to cause continued problems. The FAA said staffing shortages also delayed planes headed to Washington, Chicago and Newark, New Jersey on Sunday.
Boeing workers at three Midwest plants where military aircraft and weapons are developed have voted to reject the company’s latest contract offer and to continue a strike that started almost three months ago. The strike by about 3,200 machinists at the plants in the Missouri cities of St. Louis and St. Charles, and in Mascoutah, Illinois, is smaller in scale than a walkout last year by 33,000 Boeing workers who assemble commercial jetliners. The president of the International Association of Machinists says Sunday's outcome shows Boeing hasn't adequately addressed wages and retirement benefits. Boeing says Sunday's vote was close with 51% of union members opposing the revised offer.
The stunning indictment that led to the arrest of more than 30 people — including Miami Heat guard Terry Rozier and other NBA figures — has drawn new scrutiny of the booming business of sports betting in the U.S. The multibillion-dollar industry has made it easy for sports fans — and even some players — to wager on everything from the outcome of games to that of a single play with just a few taps of a cellphone. But regulating the rapidly-growing industry has proven to be a challenge. Professional sports leagues’ own role in promoting gambling has also raised eyebrows.
Tesla, the car company run by Elon Musk, reported Wednesday that it sold more vehicles in the past three months after boycotts hit hard earlier this year, but profits still fell sharply. Third-quarter earnings fell to $1.4 billion, from $2.2 billion a year earlier. Excluding charges, per share profit of 50 cents came in below analysts' estimate. Tesla shares fell 3.5% in after-hours trading. Musk said the company's robotaxi service, which is available in Austin, Texas, and San Francisco, will roll out to as many as 10 other metro areas by the end of the year.
