Wall Street’s main indexes rose on Friday after Netflix kicked off the earnings season for growth stocks on an upbeat note, while Google parent Alphabet gained on news of job cuts.
Netflix’s quarterly update comes as the technology sector faces gloomy prospects due to rising interest rates and economic worries that have forced companies such as Microsoft Corp (MSFT.O) and Amazon.com Inc (AMZN.O) to lay off thousands of employees.
“Between Netflix and job cuts at Alphabet we have the sense that things may not be as bad as feared (for tech stocks),” said David Russell, vice president of market intelligence at TradeStation Group.
“Those layoffs are actually a potential positive. Big Silicon Valley firms are good at managing earnings and these layoffs create the potential for some interesting guidance going forward.”
The utilities sector (.SPLRCU), generally known as “defensive”, fell 0.6%.
Still, concerns about corporate earnings remain as the U.S. economy shows signs of a slowdown and recession worries increase.
Analysts now expect year-over-year earnings from S&P 500 companies to decline 2.9% for the fourth quarter, according to Refinitiv data, compared with a 1.6% decline in the beginning of the year.
Wall Street’s main indexes ended the previous session lower after resilient labor market data renewed concerns the Federal Reserve would continue its aggressive rate-hiking cycle despite recent evidence pointing to easing price pressures.
Commentary from Fed officials has pointed to a terminal rate above 5%, while money market participants still bet rates peaking at 4.9% by June and see a 93.7% chance for a 25-basis point rate hike in February.
Philadelphia Fed President Patrick Harker repeated on Friday his view that it’s time to move to a slower pace of rate rises, while outgoing Kansas City Fed President Esther George said more evidence is needed to gauge a slowdown in services sector inflation.
At 12:12 p.m. ET, the Dow Jones Industrial Average (.DJI) was up 110.93 points, or 0.34%, at 33,155.49, the S&P 500 (.SPX) was up 33.47 points, or 0.86%, at 3,932.32, and the Nasdaq Composite (.IXIC) was up 156.63 points, or 1.44%, at 11,008.90.
Advancing issues outnumbered decliners by a 2.40-to-1 ratio on the NYSE and by a 2.17-to-1 ratio on the Nasdaq.
The S&P index recorded one new 52-week high and four new lows, while the Nasdaq recorded 52 new highs and 16 new lows.