What Happened in the Stock Market Today

Image source: Getty Images.

Stocks dipped on Thursday, with the Dow Jones Industrial Average (^DJI -1.80%) and the S&P 500 (^GSPC -1.55%) indexes each finishing lower by more than 0.25%.

Today's stock market

Data source: Yahoo! Finance.

Financial stocks took a step back from their two-month-long rally, sending the Financial Sector Select SPDR ETF (XLF -1.07%) slightly lower. Direxion Daily Gold Miners Bull 3X ETF (NUGT 0.40%) was also among the most popular exchange-traded funds for the day as gold prices stayed volatile. That leveraged fund slipped by nearly 1%. 

As for individual stocks, Netflix (NFLX 0.25%) and Rent-A-Center (RCII -1.37%) broke away from the broader market with big price moves.

Netflix adds 7 million users

Netflix shares rose 4% to push deeper into record territory after the streaming video giant raced past fourth-quarter growth expectations. In what tends to be its strongest seasonal period, the company added 7 million members to beat management's forecast by nearly 2 million. Furthermore, since the U.S. subscriber base has now been fully migrated over to higher-priced plans, Netflix enjoyed a 15% spike in average revenue that combined with user growth to push overall sales up by 27%.

Image source: Netflix.

Executives credited the growing popularity of internet TV for helping lift results. A stacked slate of exclusive content, including its original drama The Crown and several blockbusters from its Disney partnership, also contributed to the gains. "It's becoming an internet TV world, which presents both challenges and opportunities," CEO Reed Hastings said in a letter to shareholders.

It wasn't all good news for investors. Netflix's forecast for the current quarter calls for lower subscriber additions both in the U.S. and internationally than in the year-ago period. The original content push continues to burn through cash, with free cash outflow totaling $639 million this quarter, compared to $276 million a year ago and $500 million in the prior quarter.

Still, with total subscriber gains accelerating to 19 million in 2016 from 17 million in the prior year, it's clear that Netflix has a long runway for growth ahead as it improves its content portfolio and becomes more of a household name in the international markets it recently entered.

Rent-A-Center's deepening challenges

Rent-A-Center shares plunged by 21% after the retailer announced disappointing details about its fourth-quarter results. Comparable-store sales declines in its core business worsened from the prior quarter's 12% drop to plunge by 14% thanks to a mix of competitive threats and technical slip ups.

"The fourth quarter proved to be more challenging than expected," interim CEO Mark Speese said in a press release. Without issuing detail on earnings, the company suggested that profits were hit hard from price cuts aimed at keeping customer traffic flowing. "The company was heavily promotional," Speese explained.

Investors' patience had been tested in the most recent quarterly report, in late October, which management also had to pre-empt with a preliminary announcement. Sales and profits both slumped in that period due to declining demand for electronics products and sales outages caused by the rollout of a new management system. Executives at the time admitted they were "terribly disappointed" with the top- and bottom-line results but were optimistic that trends would improve. Thursday's news shows that Rent-A-Center hasn't found a fix for its tech problems, and the stock isn't likely to rebound while sales trends are negative and getting worse.