Wall Street rebounded on Wednesday after a two-day decline in a broad rally as a tilt toward stocks poised to benefit from a recovering economy offset Netflix Inc’s sell-off after its disappointing results a day earlier.
Shares of Netflix slumped 7.4%, one of the largest on wall street after the world’s largest streaming service said slower production of TV shows and movies during the pandemic hurt subscriber growth in the first quarter. Netflix’s results dashed expectations but technology remains a major market focus.
But stocks rallied throughout the day, building steam as the tech-heavy Nasdaq Composite Index overtook the S&P 500 in percentage gain shortly before the close.
Intuitive Surgical Inc surged 9.9% on wall street to an all-time high as its results trounced estimates. The maker of robotic surgical systems vied with Microsoft Corp and Tesla Inc for much of the session as the biggest contributor to the S&P 500’s upside.
Nine of the 11 S&P 500 sectors rose, with communication services, led by Netflix, and the defensive utilities sectors falling.
Economically sensitive value stocks rose 1.1% on wall street, outpacing the 0.8% gain in growth even as the growth-oriented but more concentrated Nasdaq climbed more than the S&P.
The Russell 2000 Index of small-cap stocks gained 2.4% in its biggest single-day advance since March 1.
“You take Netflix out of today’s equation, it’s simply a broad-based rally,” said JJ Kinahan, chief market strategist at TD Ameritrade, adding technology shares still had room to run.
The VIX, CBOE’s market volatility index, slid below 18, suggesting the market in days to come could be range-bound while shrugging off a rebound in COVID infections, he said.
Analysts expect S&P 500 companies to post first-quarter earnings growth of 30.9% from a year earlier, Refinitiv IBES data shows.
“Investors feel more confident of the earnings growth prospects for technology,” said Sam Stovall, chief investment strategist at CFRA Research in New York. “They would rather gravitate toward the sure thing, which right now is tech stocks.”
Wall Street Performance Overview
The Nasdaq Composite added 1.19% to 13,950.22. The Dow Jones Industrial Average rose 0.93% to 34,137.31, while the S&P 500 gained 0.93% at 4,173.42. Volume on U.S. exchanges was 9.22 billion shares, down from 10.44 billion average for the full session over the previous 20 trading days.
Verizon Communications Inc slid 0.4% after it lost more wireless subscribers than expected in the first quarter. Shares of T-Mobile US Inc and AT&T Inc rose.
U.S. railroad operator CSX Corp rose 4.3% on wall street even after it missed estimates for first-quarter profit, hurt by frigid polar vortex temperatures, ongoing pandemic disruptions and higher fuel costs.
Advancing issues outnumbered declining ones on the NYSE by a 3.82-to-1 ratio; on Nasdaq, a 3.55-to-1 ratio favored advancers while the S&P 500 posted 86 new 52-week highs and no new lows; the Nasdaq Composite recorded 71 new highs and 58 new lows.