Stock Market Today: Netflix Stung by a Downgrade

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

Expect a strong start to the stock market today, as the Dow Jones Industrial Average (DJINDICES: ^DJI  ) gained a solid 54 points in premarket trading this morning. Earnings season kicks off in a few days, and fourth-quarter profits are expected to climb at a 9.7% pace, while sales grow by 3.8% overall, according to a tally by Bloomberg. Meanwhile, news is breaking this morning on a few stocks that could see heavy trading in today's session, including Netflix (NASDAQ: NFLX  ) , IHS (NYSE: IHS  ) , and Commercial Metals (NYSE: CMC  ) .

Netflix shares are under pressure after an analyst at Morgan Stanley downgraded the stock on concerns over increased competition in the streaming video space. Those worries aren't new, but the timing of this call could give it some traction with investors: Netflix was the single best performing stock in the S&P 500 last year and could stand to cool off after its 300% bounce. On the other hand, the company will soon announce earnings results for the fourth quarter, which was its best quarter by far in 2012. Netflix's report boasted adding 2 million subscribers in that period as consumers snapped up tablets and TVs over the holidays, which helped propel the stock to a 70% gain in the days following the announcement. Netflix's stock is down 2.8% in premarket trading.

IHS this morning reported earnings results for its fiscal fourth quarter. Sales at the data analytics company bounced higher by 35%, and adjusted earnings rose by 3% to reach $1.46 a share. IHS beat analysts' estimates on both the top and bottom line in the quarter as organic sales growth in its subscription business clocked in at a solid 7%. The company's new outlook for the next year targeted revenue growth of about 20%, to $2.2 billion, which is even with Wall Street's expectations. The stock is up 4.3% in premarket trading.

Finally, Commercial Metals today announced results for its fiscal first quarter that included flat sales of $1.7 billion and earnings of $0.39 a share, a 7% dip from last year's tally. The metal producer's profitability was pinched by falling prices for nonferrous metals in the quarter, but overall results were still much improved over the previous quarter, when the company booked just $0.03 a share in profit. Commercial Metals said that construction activity in the current quarter should be depressed by winter conditions, but long-term improvement in construction spending should boost sales after that. The stock is up 2% in premarket trading.

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Demitrios Kalogeropoulos

Demitrios covers consumer goods and media companies for, as well as broader moves in the economy.

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Related Tickers

9/3/2015 4:35 PM
^DJI $16374.76 Up +23.38 +0.14%
CMC $15.18 Down -0.03 -0.20%
Commercial Metals… CAPS Rating: ****
IHS $117.70 Up +1.28 +1.10%
IHS, Inc. CAPS Rating: *****
NFLX $101.06 Down -4.38 -4.15%
Netflix CAPS Rating: ***