The stocks closed mostly along the flatline on Friday as traders ended a volatile week, while a sharp drop in Netflix kept other major tech stocks at bay.
The Dow Jones Industrial Average fell 62.76 points, or 0.2%, to close at 26,671.95. The S&P 500 gained 0.3% to end the day at 3,224.73. The Nasdaq Composite rose 0.3% to 10,503.19. The Dow and S&P 500 saw weekly gains, while the Nasdaq closed lower during that period.
Netflix reported earnings in the second quarter that failed to meet analyst expectations and pushed the stock down 6.5%. The company's weak forecasts for subscriber growth in the third quarter – an important metric for the streaming giant – also contributed to the strong sell-off of the stock.
"This revenue is lava," Evercore ISI analyst Lee Horowitz wrote in a note. Horowitz added that these results were "not good enough compared to the exuberant expectations that went into print and pushed NFLX stocks to an all-time high."
The stocks of other large technology companies also had problems on Friday. Amazon withdrew by 1.2%. Microsoft fell 0.5% and Apple fell 0.2%.
Netflix's decline came during a difficult week for the big tech names. Facebook, Alphabet and Microsoft were up to date every week. Amazon saw its first weekly decline in 11 weeks, falling more than 7%. It was also Amazon's worst week-long performance since the week ending February 28.
Tech's fight this week led to a significant divergence between the Nasdaq and two other major indices, the Dow and the S&P 500. The S&P 500 and the Dow rose 1.3% and 2 this week, respectively, 3% and posted their third weekly gain in a row. The tech-heavy Nasdaq, however, fell 1.1% for its first weekly loss in three years.
"In some of these segments, this is more of a necessary break," said Michael Hans, CIO at Clarfeld Citizens Private Wealth. "I would say the market action this week was pretty healthy with the rotation we saw. You want a wider market, you want more participation."
The Russell 1000 Value Index, which came under pressure this year, outperformed its growth counterpart this week, rising 3.5%. The Russell 1000 Growth Index fell 0.8% this week.
Friday's moves followed a volatile session that triggered a four-day winning streak for the Dow. These losses were due to a mixed set of US economic data and emerging coronavirus cases.
The U.S. reported 77,200 coronavirus cases on Thursday, a record, according to Johns Hopkins University. This peak brought the total number of confirmed US infections to more than 3.57 million. Covid deaths are up to 138,000.
"We are in this phase of increasing coronavirus cases and there have been some stoppages," said Gregory Faranello, director of US interest rate trading at AmeriVet Securities. "So there is definitely a feeling of nervousness in the market."
– Yun Li from CNBC contributed to the reporting.
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