Bond yields goes down as Netflix fuels stock market sell-off

On Friday, risk aversion dominated markets as stocks sank on Wall Street and in Europe, oil prices fell
from seven-year highs earlier in the week, and bond prices soared as traders flocked to government
debt for its relative safety.
Netflix Inc’s shares fell 21.8 percent after the company announced poor subscriber growth late
Thursday, casting a pall over a market already rocked by fears that the Federal Reserve may tighten
monetary policy too forcefully to combat inflation.
Investors are anticipating specifics from the Fed’s policy meeting next week on how it will proceed at a
time when inflation is such a contentious political issue that a more hawkish attitude may be forced.
However, data won’t start to reflect an expected slowdown in increasing consumer prices for at least a
few months, making Fed Chair Jerome Powell’s job more difficult as he attempts to calm markets.
“We know the Fed is beginning to pivot and the problem is that the inflation numbers are not going to
start to trend lower until later this spring,” said Andrew Slimmon, a managing director at Morgan
Stanley Investment Management.
Despite the dismal Netflix earnings, he believes it is too early to say whether corporate fundamentals
will remain robust.
The German, French, and Italian indices all lost almost 2%, while the broad Euro STOXX index of 600
prominent regional companies fell 1.84 percent. The MSCI global all-country index declined 1.74
percent.
The Dow Jones Industrial Average sank 1.30 percent, the S&P 500 dropped 1.89 percent, and
the Nasdaq Composite dropped 2.72 percent on Wall Street. The S&P 500 and the Nasdaq both
saw their worst weekly losses since the March 2020 market crisis.