US STOCKS-Nasdaq set for lower open after disappointing Netflix forecast

The Nasdaq index was set to open lower on Friday after a weak forecast from Netflix sent its shares along with other streaming companies spiraling lower, with Wall Street's main indexes headed for another week of losses. Netflix Inc plunged 19.4% in premarket trading after the streaming giant fell short of market forecasts for new subscribers at the end of last year and offered a downbeat outlook for early 2022.

The Nasdaq index was set to open lower on Friday after a weak forecast from Netflix sent its shares along with other streaming companies spiraling lower, with Wall Street's main indexes headed for another week of losses.

Netflix Inc plunged 19.4% in premarket trading after the streaming giant fell short of market forecasts for new subscribers at the end of last year and offered a downbeat outlook for early 2022. Shares of technology and media companies including Walt Disney Co, ViacomCBS and Roku that have invested heavily in streaming also fell between 2.2% and 4.0%.

Analysts also raised doubts about business prospects of pandemic market favorites including Netflix and Peloton Interactive on Thursday. However, shares of Peloton recovered somewhat from the previous day's fall, gaining 5.5% after its chief executive denied a report that the exercise bike maker was halting some production and it estimated its second-quarter revenue to be about $1.14 billion, compared with the previous forecast of $1.1 billon to $1.2 billion.

"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."

Other megacap growth companies such as Microsoft, Tesla and Apple are scheduled to report earnings next week. Wall Street's main indexes tracked at least third straight weekly declines, with the Nasdaq Composite and the S&P 500 set for their worst week since October 2020. The Nasdaq on Wednesday closed more than 10% below its all-time high hit in November, confirming it was in correction territory.

The tech-heavy index has particularly 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 fight against surging inflation, after data earlier this month showed consumer prices rising to its highest level in four decades in December.

"Maybe by the middle of next week if we get some clarity from (Fed Chair Jerome) Powell, some of that pressure on stocks can subside as investors get more comfortable" Lynch added. At 8:29 a.m. ET, Dow e-minis were down 85 points, or 0.25%, S&P 500 e-minis were down 19.75 points, or 0.44%, and Nasdaq 100 e-minis were down 111.5 points, or 0.75%.

The second-largest single stock option expiry of all time due on Friday could further exacerbate market volatility towards the end of the session. The U.S. Senate Judiciary Committee on Thursday approved a bill that would bar tech giants like Amazon.com from giving preference to their own businesses on their websites, despite hefty lobbying from top executives like Apple Chief Executive Tim Cook.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)