By Geoffrey Smith
Investing.com -- U.S. stock markets opened lower on Wednesday with tech stocks underperforming after a disappointingly weak quarter from Netflix (NASDAQ:NFLX) shook some complacency out of the confidence in growth-oriented tech stocks.
Netflix said its subscriber growth in the first quarter was well below estimates at 4 million, and said it expects that to slow to only 1 million in the second quarter as the pandemic-fueled surge in new customers fades.
The Nasdaq Composite fell 0.4% to test a two-week low. The Dow Jones Industrial Average fared a little better, rising 53 points, or 0.2%, to 33,875 points. The S&P 500 was down 0.2%.
Tesla (NASDAQ:TSLA) was one of the stocks to suffer indirectly from the Netflix effect. Assumptions of rapid growth as far as the eye can see have been challenged this week by hints that Beijing could obstruct its sales in China, after a carefully-orchestrated ‘viral’ protest against its alleged quality shortcoming at an auto salon. The stock fell 2.2%.
Netflix was one of the undisputed winners of the pandemic, which accelerated a secular trend toward streaming (which the company said last night is still very much intact) and closed off many alternative forms of entertainment. Other stocks that profited from analogous trends in their sectors also weakened on Wednesday on concerns that what the pandemic granted will be taken away by economic reopening. Peloton Interactive (NASDAQ:PTON) stock, under pressure this week due to a dispute with regulators over product safety, fell another 3.0%.
The flip side of Netflix's more sober outlook was support for reopening plays, with cruise stocks and airline stocks both rising - that despite the International Air Travel Association raising its estimate for the sector's losses this year to $47 billion.
Verizon (NYSE:VZ) stock was another to have its growth estimates reassessed after a quarter in which it lost more mobile customers than analysts expected, a further sign that the merger of Sprint and T-Mobile has seriously affected its competitive position. The stock fell 0.1%. Also under pressure from rising competition was Spotify (NYSE:SPOT), which fell another 2.1% in the wake of Apple (NASDAQ:AAPL)'s decision to launch a podcast subscription services that encroaches on its turf.
Halliburton (NYSE:HAL), Baker Hughes (NYSE:BKR) and Nextera Energy (NYSE:NEE) stocks also all fell after disappointing quarterly updates, the oilfield services companies falling 5% and to a two-month low, and by 1.6% to a four-month low, respectively, while the renewables specialist fell 2.0%.
Elsewhere, ASML (NASDAQ:ASML) ADRs rose over 4% after the Dutch-based maker of machinery for semiconductor foundries forecast a 30% rise in sales this year and reported a stellar first quarter that reflected the extreme tightness in global chip markets.