Netflix drags Wall Street lower ahead of Powell’s testimony

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(Reuters) – Wall Street dipped on Tuesday as Netflix’s slump due to weak subscriber growth weighed on other high-growth stocks, while investors awaited Federal Reserve Chairman Jerome Powell’s Congressional testimony.

Powell is likely to reiterate the central bank’s stance toward gradual monetary policy tightening at his testimony on the economy and monetary policy before the U.S. Senate Banking Committee from 10.00 a.m. ET.

The markets will also look for his comments on recent U.S.-China trade tensions. Powell will answer questions from the House of Representatives Financial Services Committee on Wednesday.

“The main focus of the day will be Powell’s presentation of the monetary policy,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“Investors will be listening very closely at what he’s going to say and see if he addresses the implications of tariffs on economic growth.”

Netflix (NFLX.O) sank 13.1 percent, weighing the most on the S&P 500 and the Nasdaq, after the company’s quarterly subscriber growth missed analysts’ expectations, fanning fears that its rapid expansion is slowing. (AMZN.O) fell 1.0 percent after the ecommerce giant suffered a technology glitch during its summer marketing event, Prime Day.

The two stocks dragged down the consumer discretionary sector .SPLRCD down 0.92 percent, the most among the 11 major S&P sectors.

Shares of other companies in the so-called FAANG group also fell. Facebook (FB.O), Apple (AAPL.O) and Google-Parent Alphabet (GOOGL.O) slipped about 0.5 percent and dragged the technology sector down by .SPLRCT 0.44 percent.

While earnings at S&P 500 companies are expected to have surged about 21 percent in the second quarter, traders and analysts are focusing more on company forecasts to gauge if the growth can be sustained, especially as the U.S.-China trade dispute escalates.

At 9:35 a.m. EDT the Dow Jones Industrial Average .DJI was down 22.28 points, or 0.09 percent, at 25,042.08, the S&P 500 .SPX was down 5.63 points, or 0.20 percent, at 2,792.80 and the Nasdaq Composite .IXIC was down 42.21 points, or 0.54 percent, at 7,763.51.

UnitedHealth (UNH.N) dropped 2.8 percent, weighing the most on the Dow, after the largest U.S. health insurer’s quarterly medical costs was slightly higher than expectations.

Among the gainers on the Dow, Johnson & Johnson (JNJ.N) rose 2.7 percent after it beat quarterly profit estimates.

Goldman Sachs (GS.N) dipped 0.4 percent as growth in bond trading and investment banking drove a profit beat. The bank, a member of the blue-chip index, said David Solomon would replace Lloyd Blankfein as chief executive officer.

Netflix’s report also weighed on the shares of other streaming companies, with Spotify (SPOT.N) down 1.4 percent and Twitter dropping 1.1 percent.

Declining issues outnumbered advancers for a 1.17-to-1 ratio on the NYSE and for a 1.32-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week high and one new low, while the Nasdaq recorded 9 new highs and 12 new lows.

Reporting by Amy Caren Daniel and Savio D’Souza in Bengaluru; Editing by Arun Koyyur

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