Stocks rose on Friday, boosted by some solid corporate earnings, although two major indices ended the week with losses after being weighed down by worries about a slowing economy.
The S&P 500 index rose 73.76 points, or 1.9%, to 3972.61, its first day up after three days of declines. The Nasdaq Composite rose 288.17 points, or 2.7%, to 11140.43, led by shares in Netflix and Alphabet. The Dow Jones Industrial Average rose 330.93 points, or 1%, to 33375.49.
The Dow and S&P still suffered their first weekly declines of the new year, falling 2.7% and 0.7% respectively. The Nasdaq’s rise on Friday gave the index its third straight week of gains.
Stocks have been pressured in recent days by sobering images of companies releasing their financial results for the final three months of 2022.
Google parent Alphabet joined a chorus of tech giants on Friday to announce massive job cuts, fueling fears the US could slide into a recession this year. Microsoft also announced layoffs earlier this week. Alphabet shares rose $4.97, or 5.3%, to $98.02.
Netflix’s stock rose $26.72, or 8.5%, to $342.50 after the streaming giant reported strong subscriber growth that significantly exceeded expectations.
“This week could be pivotal,” said Seema Shah, principal asset management’s chief global strategist. “It appears the market narrative is shifting from a focus on the Fed at the end of its rate-hike cycle to slowing growth.”
Markets got off to a strong start into 2023, buoyed by hopes that inflation would slow further and that the Federal Reserve and other global central banks would pause their interest rate campaigns in the coming months. Weak economic data and mixed earnings reports this week have undermined some of that optimism.
Fresh economic data came on Friday as the National Association of Realtors said U.S. home sales, which make up most of the housing market, fell in 2022 to their lowest level since 2014.
Stocks have come under pressure in recent sessions.
Photo: Angela Weiss/Agence France-Presse/Getty Images
Investors also remain largely at odds with the Fed over how quickly the central bank will begin easing monetary policy, a mismatch that analysts believe could lead to more volatility in markets this year. Some investors are betting that the Fed will start cutting rates later this year, expectations that Fed officials recently pushed back.
Fed Vice President Lael Brainard said on Thursday that rates need to remain tightened “for some time” to ensure inflation returns to its 2% target.
“I just don’t understand how the Fed could start cutting [rates] as soon as it stops moving. I don’t understand why markets see this as an option,” said Agnès Belaisch, chief strategist for Europe at Barings Investment Institute. “It would have to be a huge recession that the market isn’t pricing in either.”
Elsewhere, bond prices fell. That pushed the 10-year Treasury yield to 3.483% from 3.396% the day before. Prices and yields move in the opposite direction.
In commodity markets, futures on Brent, the global benchmark, rose 1.7% to $87.63 a barrel.
Global stocks were mostly higher. The Stoxx Europe 600 rose 0.4%. In Asia, Hong Kong’s Hang Seng index rose 1.8% to its highest close since June, while Japan’s Nikkei rose 0.6%.
Write to Chelsey Dulaney at [email protected] and Corrie Driebusch at [email protected]
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Appeared in the January 21, 2023 print edition as “Stocks Cap Rough Week With Gains”.