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Wall Street Closes Higher as Alphabet, Netflix Rise By Reuters

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© Reuters. Traders work on the trading floor of the New York Stock Exchange (NYSE) in New York City, USA, on November 29, 2022. REUTERS/Brendan McDermid

By Chuck Mikolajczak

(Reuters) – U.S. stocks closed higher on Friday, with the Dow and the Dow snapping a streak of three straight losses and the Nasdaq rising more than 2% as quarterly results helped boost Netflix Inc, while Alphabet Inc. parent company of Google (NASDAQ:), rose after announcing job cuts.

Netflix Inc (NASDAQ:) stock jumped 8.46% as the streaming company added more subscribers than expected in the fourth quarter and said co-founder Reed Hastings was stepping down as chief executive.

Netflix’s quarterly report comes as tech and other growth-related sectors struggle with a headwind from the U.S. Federal Reserve’s interest rate hike and recession concerns that have driven companies like Microsoft Corp (NASDAQ:) and Inc (NASDAQ:) to lay off thousands of employees.

Alphabet Inc was the latest company to announce job cuts, as it said it was cutting 12,000 jobs, sending shares 5.34% higher.

The gains sent the communications services index up 3.96% as the top performer among the top 11 S&P 500 sectors, posting its biggest daily percentage gain since Nov. 30.

High-growth sectors such as communications services were among the worst performers in 2022 and were notably weaker in the final months of the year as investors gravitated towards stocks with high dividend yields.

“Today’s stock is probably because we’ve had three days of bears, so it’s gone into an oversold position and they’re just looking for bargains today,” said Ken Polcari, managing partner at Kace Capital Advisors in Boca Raton, Florida.

“If people are seeing an opportunity, if they’re getting more comfortable with the Fed’s narrative…’ because the market is a discount mechanism.”

The S&P 500 rose 330.93 points, or 1%, to 33,375.49 points, the S&P 500 gained 73.76 points, or 1.89%, to 3,972.61 and the added 288.17 points, or 2.66 % to 11,140.43.

For the week, the Dow lost 2.7%, the S&P 500 was down 0.66% and the Nasdaq gained 0.55%.

Comments from Federal Reserve officials largely said they expect interest rates to rise to at least 5% this year as the central bank continues to try to rein in high inflation. On Friday, Fed Governor Christopher Waller said the central bank could be “very close” to a point where rates are “tight enough” to cool inflation, giving stocks an additional boost.

The Fed is expected to raise rates by 25 basis points (bps) in its February 1 monetary policy announcement.

Still, worries about corporate earnings persist as the US economy shows signs of a slowdown and possible recession.

Analysts now expect year-over-year earnings for S&P 500 companies to fall 2.9% in the fourth quarter, according to Refinitiv data, compared with a 1.6% decline at the start of the year.

The Dow’s gains were contained, however, by a 2.54% drop in shares of the Goldman Sachs Group Inc (NYSE:) after the Wall Street Journal reported that the Fed was investigating the company’s consumer business.

Volume on US exchanges was 11.90 billion shares, compared with a full-day average of 10.87 billion over the past 20 trading sessions.

Advancing issues outpaced declining issues on the NYSE by a ratio of 3.55 to 1; on Nasdaq, a ratio of 2.63 to 1 favored investors.

The S&P 500 posted a new 52-week high and four new lows; the Nasdaq Composite recorded 77 new highs and 20 new lows.