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Why Netflix Stock Jumped Wednesday

Daniel Sparks, The Motley Fool

What happened

Shares of Netflix (NASDAQ: NFLX) surged on Wednesday, rising as much as 5.7%; the stock closed the trading day up 5.4%.

The stock's gain was likely primarily fueled by the market's overall rise on Wednesday, as some investors bet a divided Congress -- with Democrats gaining majority in the House of Representatives and Republicans maintaining control of the Senate -- would reduce the risk of potentially disruptive economic policy.

The Netflix logo outside company headquarters

Image source: Netflix.

So what

Capturing the momentum in the overall stock market, the S&P 500 rose 2.1% on Wednesday. The tech-heavy Nasdaq Composite saw an outsize gain of 2.6%. The market's gains on Wednesday helped Netflix and other megacap tech stocks like Amazon and Apple move higher as well; the latter two stocks finished Wednesday up 7% and 3%, respectively.

Now what

While it's often worth looking into what may be moving a stock up or down when the moves are large, investors should stay focused on the fundamentals -- especially when the move is attributable to factors unrelated to the underlying business.

Last month, Netflix added 7 million streaming members to its services, crushing analyst estimates for member growth. In addition, the company guided for an impressive 9.4 million net member additions in its fourth quarter.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Daniel Sparks owns shares of AAPL. The Motley Fool owns shares of and recommends AMZN, AAPL, and Netflix. The Motley Fool has the following options: long January 2020 $150 calls on AAPL and short January 2020 $155 calls on AAPL. The Motley Fool has a disclosure policy.