Wall Street’s rally fizzles after Tesla and Netflix fall

The NYSE logo is displayed on the floor at the New York Stock Exchange
Tesla and Netflix are two of the first huge tech-oriented companies to report their profits for the spring, and a lot is riding on the results. Big Tech stocks have rallied hard this year and been the primary reason for the S&P 500’s big gains.
(Seth Wenig / Associated Press)

Drops for Tesla, Netflix and other big tech-oriented stocks put the clamps on Wall Street’s torrid rally Thursday.

The Standard & Poor’s 500 fell 30.85 points, or 0.7%, to 4,534.87, coming off its highest close since early April 2022 and its seventh gain in the last eight days. The Nasdaq composite dropped 294.71 points, or 2.1%, to 14,063.31, its worst loss in more than four months.

The Dow Jones industrial average was an outlier, rising 163.97 points, or 0.5%, to 35,225.18 because it has less of an emphasis on tech stocks.


Tesla tumbled 9.7% despite reporting stronger-than-expected profit and revenue for the spring. Analysts said investors may be concerned about how profitable the electric vehicle maker will be after cutting prices. Planned factory downtime during the summer for upgrades could also weigh on its upcoming results.

Because Tesla is one of the most valuable companies on Wall Street, its stock movements carry extra weight on the S&P 500 and other indexes.

Netflix sank 8.4% despite also reporting stronger-than-expected profit. One important measure for the company, how much revenue it makes from each paid membership on average, fell during the quarter from a year earlier.

Netflix released strong second-quarter earnings on Wednesday, with subscribers up significantly thanks to the company’s password-sharing crackdown and its ad-supported tier.

July 19, 2023

Tesla and Netflix are two of the first huge tech-oriented companies to report their profits for the spring, and a lot is riding on the results. Big Tech stocks have rallied hard this year and been the primary reason for the S&P 500’s big gains. Netflix is still up 48% for the year so far, and Tesla has more than doubled.

If Big Tech stocks don’t produce the profits to justify the big moves, it could put the rally at jeopardy. Other huge winners from early this year also slid. Nvidia fell 3.3%, though it remains 211.5% higher so far this year.

Other companies across Wall Street reported a mixed set of results.

Zions Bancorp. rose 10% after reporting stronger-than-expected profit and revenue for the quarter. It also said customers added $2 billion in deposits, or 3.2%, over the last three months, which it called a “solid’ number.


Truist Financial sank 7.1% after reporting weaker revenue than expected. It also said average deposits decreased 2.1% from earlier this year, though its profit topped expectations.

Banks have been under intense scrutiny since three failed this spring under the heavy weight of high interest rates. They buckled under the pressure of customers suddenly pulling their deposits at once.

The biggest loss in the S&P 500 came from Discover Financial, which slid 15.9%. It disclosed that it was working with regulators to resolve an accounting error dating from 2007 that misclassified some credit card accounts. It also said it was suspending share buybacks while it conducts an internal review.

Doing the most work to limit the S&P 500’s losses was Johnson & Johnson. It rose 6.1% after reporting profit and revenue that both topped expectations for the latest quarter. It also raised forecasts for financial results for the full year.

Johnson & Johnson’s rally was the main reason the Dow was able to rise for a ninth straight session.

In the bond market, yields climbed after a report suggested the job market remains remarkably solid. Fewer workers applied for unemployment benefits last week than expected, an indication that layoffs aren’t worsening.


The hot U.S. job market, which has been defying a weakening economy and confounding the Federal Reserve for months, is showing signs of cooling.

May 11, 2023

The strong job market has helped U.S. households continue spending despite much higher interest rates meant to bring down inflation, and that has helped keep the economy out of a long-predicted recession.

Inflation has been on the way down since last summer, which has many traders hoping the Federal Reserve’s next interest rate increase, expected next week, will be the last of this cycle. That has many investors betting on what earlier looked like a long-odds result: The economy outlasting high inflation, and upcoming, easier interest rates allowing economic growth and corporate profits to keep rising.

But after Wall Street’s big rally this year, some professionals are cautioning investors not to get carried away.

The economy continues to face challenges from still-high inflation and interest rates, with cuts to rates unlikely before March, said Gregory Daco, chief economist at EY. He also pointed to possible strikes by unions and repayments on student loans as some of the vulnerabilities that could dent the economy. That’s leading to what he calls “nuanced optimism and realism.”

The yield on the 10-year Treasury rose to 3.85% from 3.75% late Wednesday. It helps set rates for mortgages and other important loans.

The two-year Treasury yield, which moves more on expectations for the Fed, climbed to 4.85% from 4.77%.


In markets abroad, stocks were higher across much of Europe and lower across much of Asia.

AP writers Yuri Kageyama and Matt Ott contributed to this report.