TSX tanks while Nasdaq extends fall to fourth day on Netflix letdown

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The TSX plunged more than 400 points Friday afternoon as weaker crude oil prices weighed on energy stocks, putting the benchmark index on course for its biggest weekly drop since early December.

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Wall Street’s main indexes also fell on Friday, with the Nasdaq set for its fourth straight day of declines after a weak forecast from Netflix sent its shares along with other streaming companies spiralling lower.

Netflix Inc. plunged 21.6 per cent after missing market forecast for new subscribers at the end of last year and a downbeat outlook for early 2022.

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Other technology and media companies including Walt Disney Co, ViacomCBS and Roku that have invested heavily in streaming also fell between 4.7 per cent and 5.0 per cent.

Seven of the 11 major S&P 500 sectors fell, with communication services down 2.1 per cent at an eight-month low.

Analysts on Thursday raised doubts about business prospects of pandemic market favourites including Netflix and Peloton Interactive.

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However, shares of Peloton bounced from the previous day’s fall, jumping 11.5 per cent after its chief executive denied a report that the exercise bike maker was halting some production and raised second-quarter revenue forecast.

“The pandemic winners are under pressure and that will likely continue. If everybody already has Netflix, it’s hard to improve subscriber growth,” said John Lynch, chief investment officer for Comerica Wealth Management in Charlotte, North Carolina.

“Perhaps investors’ expectations were a little stretched.”

Megacap growth companies such as Microsoft, Tesla and Apple are scheduled to report their results next week.

Wall Street’s main indexes tracked at least their third straight weekly declines, with the Nasdaq Composite set for its worst week since March 2020. The Nasdaq on Wednesday closed more than 10 per cent below its all-time high hit in November, confirming it was in correction territory.

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The tech-heavy index has come under pressure after rising Treasury yields and expectations of a more aggressive Federal Reserve in controlling inflation hit growth shares.

The central bank’s policy meeting next week will offer more clarity on its tightening policy, after data earlier this month showed consumer prices rising to 40-year highs in December.

“While the selling seems to have slowed for now, the prospect of a week filled with big earnings and a crucial Fed meeting means there might not be a rush to buy the dip just yet,” said Chris Beauchamp, chief market analyst at online trading platform IG.

© Thomson Reuters 2022