After rising for as long as what seemed to be too good to be true, the S&P 500 (SPY) fell for a fifth straight day on Thursday. This is the worst week in nearly six months.
Today, Netflix (NFLX) will pull back by around 5%. Shares traded at a 35.9 times forward price-to-earnings ratio ahead of the first-quarter earnings report. The firm added 9.33 million paid net additions and now has $269.6 million. Despite revenue increasing by 15% to $9.37 billion and $2.63 billion in operating income, up by 54%, markets are worried.
Netflix will stop disclosing its quarterly membership figures. Instead, shareholders must rely on overall free cash flow and profits.
Rate Cut Hope Faded
Q1 earnings are not leading the market’s direction. For example, Taiwan Semiconductor (TSM) posted strong revenue growth, despite seasonally weak smartphone markets. TSM stock dropped by 4.86% yesterday.
Anticipation for the Fed delaying rate cuts until at least September hurt the market’s sentiment. REITs are especially vulnerable. REITs are in a steep correction phase. Their cash flow is less attractive to investors when rates remain high. Prologis (PLD) lost 12.94% last week and American Tower (AMT) fell by 4.3%. Conversely, Realty Income (O) and W.P. Carey are mostly unchanged in that time.
