Important points
- The S&P 500 Index fell 0.9% on Friday, April 19, 2024, to close below 5,000 for the first time since February as the tech sector continues to decline.
- The supermicrocomputer's stock price fell after the data storage provider opted not to pre-announce its quarterly results, raising concerns about its success in leveraging AI.
- Paramount Global shares soared after reports that Sony was in talks with Apollo Global Management for a joint acquisition of the media giant.
Major U.S. stock indexes were mixed on Friday, ending a week of pressure on stocks as hopes for interest rate cuts waned and investors reacted to various earnings reports.
The S&P 500 fell 0.9%, ending below the 5,000 level for the first time since February. A sustained decline in the tech sector dragged down the Nasdaq index, which fell 2.1%. Strong performance in financials and health care pushed the blue-chip index up 0.6%, with the Dow Jones Industrial Average closing in positive territory for the second day in a row.
Super Micro Computer (SMCI) stock price plummeted 23.1%, the biggest decline among the S&P 500 stocks. The server and data storage provider was unable to make an announcement ahead of its third-quarter earnings. Wells Fargo analysts said the lack of a pre-announcement makes it less likely that profits will explode from the artificial intelligence (AI) opportunity, since Supermicro has a track record of strong prior earnings results. he pointed out.
Beyond the downdraft in super microcomputers, a less optimistic outlook for AI has put pressure on other stocks that have benefited from connections to the technology. The stock price of AI chip giant Nvidia (NVDA) fell 10.0%. Fellow semiconductor stocks Advanced Micro Devices (AMD), Micron Technology (MU), and Broadcom (AVGO) also fell 5.4%, 4.6%, and 4.3%, respectively.
Shares of Netflix (NFLX) fell 9.1% after the streaming platform reported lower-than-expected earnings guidance. The company beat revenue and profit expectations and achieved strong subscriber growth, but the impact of a crackdown on password sharing and low-cost advertising inventory remains unclear. Netflix also announced that it will stop reporting quarterly subscriber numbers starting in 2025.
Paramount Global (PARA) stock was the best performer among the S&P 500 on Friday, jumping 13.4%. Prices rose after reports that Sony Group's (SONY) studio division is in talks with Apollo Global Management about a possible joint bid for Paramount. Paramount is still in exclusive merger talks with Skydance Media, and the two suitors have not yet submitted formal proposals.
American Express (AXP) stock rose 6.2% after the financial services company reported better-than-expected first-quarter sales and profits. Unlike many of its peers in the financial industry, the payment card issuer posted better-than-expected net interest income for the quarter. The CEO said American Express has been successful in attracting high-spending customers with good credit ratings.
Fifth Third Bancorp (FITB) shares rose 5.9% after the Cincinnati-based company reported better-than-expected first-quarter sales and profits. The decline in adjusted expenses during the quarter suggests that the local bank's management achieved some success in its efficiency efforts.