The S&P 500 drops towards 5,000, the Nasdaq drops

Stocks were mixed Friday morning following a deeper sell-off after Israel’s retaliatory strike on Iran panicked the market overnight and fueled a rush to safe havens like gold.

The Dow Jones Industrial Average (^DJI) rose 0.5%. The S&P 500 (^GSPC) fell about 0.2%, returning the benchmark index to the 5,000 level, while the tech-heavy Nasdaq Composite (^IXIC) fell 0.7% after sharper declines.

The market initially reacted with alarm to reports that Israel had attacked an Iranian city with nuclear facilities overnight, despite pressure from allies to refrain from a cycle of military violence. With few details about the strike available at the time, oil and gold prices rose while stock and government bond yields fell, with the CBOE Volatility Index – Wall Street’s “fear gauge” – hitting a more than five-month high reached.

These steps have been toned down as some calm returned amid signs that the scope of the Israeli attack was limited. But investors are still on high alert, even though Iran confirmed the drone strike and said it failed.

Equities were already under pressure before the shock due to continued uncertainty about Federal Reserve interest rate cuts.

The S&P 500 posted five straight losing days on Thursday as investors absorbed disappointing gains from Netflix (NFLX). That weighed on hopes that quarterly profits will meet high expectations and thus revive the stock rally. Shares of the streaming giant, the first of the mega-cap techs to report, fell 7% in the morning session.

Friday saw results from Procter & Gamble (PG), which raised its full-year profit forecast despite missing quarterly revenue estimates. Also on the docket, American Express (AXP) posted a profit margin as wealthy customers continued to spend.

Meanwhile, US Treasuries almost completely retreated from their biggest rally of the year. The yield on the safe-haven 10-year Treasury note (^TNX) fell to around 4.6%, after falling 14 basis points.

On the commodity front, Brent crude futures (BZ=F) – the global oil benchmark – traded around 0.4% higher to around $87 per barrel. West Texas Intermediate crude futures (CL=F) rose 0.5% to around $83 per barrel. Gold’s gains (GC=F) cooled somewhat after earlier gains, rising 0.3%.

Live4 updates

  • Apple removes WhatsApp and Threads from the Chinese App Store

    Apple has removed WhatsApp and Threads from the App Store in China following a government order, citing national security concerns.

    The censorship demands that access to some of the most popular messaging apps be restricted and marks Beijing’s latest attempt to exert control through Apple’s ecosystem. The move, Reuters reports, also signals a growing intolerance by China’s central government toward foreign online messaging services and less room for the iPhone maker to operate there.

    “The Cyberspace Administration of China has ordered the removal of these apps from the China store based on national security concerns,” Apple said in a statement.

    China’s Great Firewall blocks access to these apps, but they are still commonly used by Chinese users through virtual private networks that bypass the restrictions. As the Wall Street Journal reports, Beijing has expressed concerns that the apps could be used by citizens to spread information that would otherwise be censored by the government or to cause social unrest.

  • Shares open mostly lower

    The pressure that forced stock prices lower largely showed no signs of letting up Friday as rising geopolitical tensions, disappointing earnings and uncertainty over Federal Reserve rate cuts weighed on Wall Street.

    The Dow Jones Industrial Average (^DJI) rose 0.2%. The S&P 500 (^GSPC) fell about 0.1%, while the tech-heavy Nasdaq Composite (^IXIC) fell 0.3%,

  • Amex CEO to Yahoo Finance: Our consumers are feeling great

    Inflation may be persistent and harmful to many households, but wealthy households with American Express (AXP) cards are still feeling great.

    So great, Amex saw revenue increase 11% in the first quarter, the company said this morning.

    Here’s what Steve Squeri, CEO of Amex, told me over the phone:

    “We have a premium consumer, and our premium consumers feel good about the economy and feel good about what they want to do. And yes, inflation is still high, but not growing as fast. And the reality is that our consumers are going to spend.”

  • This is the most important point on Netflix

    Netflix stock (NFLX) is taking a hit premarket after another big quarter on almost every line item.

    It is logical; the stock was perfectly priced prior to the report.

    But through the noise, this point from Pivotal Research’s Jeff Wlodarczak is the most important thing to take away on Netflix right now:

    “Netflix reported another high-quality result with across-the-board subscriber growth in the first quarter, driven by core US and Eurozone markets, and stronger than expected average revenue per user (successful price increases in the fourth quarter in US/UK/France) which implies the ability to generate strong subscriber growth AND increase price/expand margins, a powerful combination.”

    Since nothing in the report suggests Netflix’s fundamentals are struggling, one has to wonder if the stock’s pullback will be bought on the stock market today. You could argue that the shares aren’t even that expensive compared to historical trading norms.

    Take a look at the current valuations on Netflix, compared to those from 2016 to 2021, when the company was in no way as fundamentally strong as it is today. All data is of course presented to you by the Yahoo Finance platform.

    You can analyze more of this data on Netflix by visiting the stats section on the Netflix ticker page.

    Netflix shares may not be as expensive as they seem at first glance.Netflix shares may not be as expensive as they seem at first glance.

    Netflix shares may not be as expensive as they seem at first glance. (Yahoo Finance)