US stocks edge higher; Netflix plunges on subscriber losses

The New York Stock Exchange is seen in New York on Thursday, Feb. 24, 2022. Stocks are edging mostly higher in early trading on Wall Street Wednesday, April 20, with the notable exception of Netflix, which lost nearly a third of its value after reporting its first subscriber loss in more than a decade and predicting more grim times ahead. (AP Photo/Seth Wenig, File)

NEW YORK (AP) — Stocks edged mostly higher in afternoon trading on Wall Street Wednesday, but were held back by streaming entertainment giant Netflix, which lost lost more than a third of its value after reporting its first subscriber loss in more than a decade and predicting more grim times ahead.

The S&P 500 rose 0.1% as of 3:37 p.m. Eastern. The Dow Jones Industrial Average rose 311 points, or 0.9%, to 35,212 and the Nasdaq fell 1.1%.

Health care stocks made some of the biggest gains. CVS rose 2.8% and medical device maker Boston Scientific added 2.9%.

Banks and a mix of household product makers also helped lift the market. Bank of America rose 0.5%. Charmin and Dawn maker Procter & Gamble rose 2.9% after beating analysts' quarterly earnings forecasts.

Big technology companies did some of the heavy lifting after helping to power the market higher a day earlier. IBM rose 7% after reporting solid financial results. Cisco rose 2.5%.

Netflix slumped 36.4%. The company suffered its first subscriber loss in more than a decade and expects a steeper decline during the current quarter. It is also considering changes that it has long resisted, including minimizing password sharing and creating a low-cost subscription supported by advertising. Netflix stock is now down about 68% from the all-time high it reached in November.

Investors continue focusing on the latest round of corporate earnings as they try to determine how companies are dealing with rising inflation and cost pressures. Railroad operator CSX, electric vehicle maker Tesla and United Airlines will report their results later Wednesday. American Airlines and Union Pacific will report results on Thursday.

Inflation has been putting increasing pressure on a wide range of industries and increasingly squeezing consumers. Rising prices have prompted the Federal Reserve and other central banks to raise interest rates in order to help temper inflation’s impact. The Fed has already announced a quarter-percentage point rate hike and Wall Street expects a half-percentage rate hike at its next meeting in two weeks.

“The market knows the Fed’s going to hike rates a bunch," said Scott Wren, senior global market strategist at Wells Fargo Investment Institute. “But, the market is feeling pretty good that once we get to neutral, then in 2023 maybe you don't go a lot further.”

Interest rates are considered “neutral” when they neither push nor restrict economic growth. Currently, investors expect rate hikes to increase the benchmark interest rate to a range between 2.75% and 3% by the end of the year, according to CME Group’s FedWatch tool.

Bond yields have been rising throughout the year as Wall Street prepares for higher interest rates. The yield on the 10-year Treasury note eased to 2.85% from 2.91% late Tuesday, but it's still near its highest level since late 2018.

Higher bond yields have been pushing up mortgage rates and increasing pressure on an already tight housing market. The National Association of Realtors reported Wednesday that sales of previously occupied U.S. homes fell in March to the slowest pace in nearly two years as higher mortgage rates and already record-high prices discouraged would-be homebuyers.

Russia's invasion of Ukraine and the ongoing conflict has only added to the worries about rising inflation crimping economic growth. The conflict has pushed energy and commodity prices higher.

U.S. crude oil prices rose 0.2% Wednesday and are up nearly 40% for the year, pushing gasoline prices higher. Wheat prices are up 41% for the year and that has the potential to increase prices for a wide range of food products globally.

Stocks have mostly struggled this year because of the confluence of concerns. Meanwhile virus lockdowns in China are easing. Authorities in Shanghai allowed 4 million people to leave their homes, but the lockdowns have left the Chinese economy damaged.

___

Veiga reported from Los Angeles.