U.S. stocks turn higher; Netflix slumps on slower growth

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By Damian J. Troise Associated Press

Stocks were mostly higher in late morning trading Wednesday as investors continued to work through company earnings reports and closely watch the bond market.

Health care stocks helped lead the broader market higher after several companies reported solid financial results. The gains were shared broadly, with industrial companies, banks and technology companies also lifting the market.

The S&P 500 index was up 0.5% as of 11:35 a.m. Eastern. The Dow Jones Industrial Average rose 164 points, or 0.5%, to 33,985 and the Nasdaq rose 0.6%.

Small-company stocks far outpaced the broader market after slumping a day prior. The Russell 2000 rose 1.2%.

Bond yields rose. The yield on the 10-year Treasury climbed to 1.58% from 1.56% late Tuesday. Both the gains for small stocks and bond yields are signs that investors are feeling more confident about economic growth.

Netflix led a decline in communications sector stocks with a drop of 7.7%. The video streaming pioneer disappointed investors with its latest report on subscriber additions, which came in below its own forecasts. The gangbuster growth Netflix had seen during the pandemic appeared to be slowing as people start leaving their homes more and as competition from rival services picks up.

Much of the market’s focus over the next two weeks will be on individual companies and how well their quarterly results turn out. This week roughly 80 members of the S&P 500 are due to report results, as well as one out of every three members of the Dow. On average, analysts expect quarterly profits across the S&P 500 to climb 24% from a year earlier, according to FactSet.

Investors are looking to justify the market’s advance this year, despite the lingering pandemic and higher-than-normal unemployment. There are also signs of COVID infections increasing outside the U.S. in major economies such as India and Brazil once again.

Big companies to report their results after Wednesday’s closing bell include Chipotle Mexican Grill and Las Vegas Sands. Both companies have been heavily hit by the pandemic, as fewer Americans have traveled and eaten out at restaurants during the pandemic.