- Netflix co-founder Hastings steps down as CEO
- Google parent Alphabet to lay off 12,000 workers
- Goldman Sachs falls on report of probe
- Indexes up: Dow 0.34%, S&P 0.86%, Nasdaq 1.44%
Jan 20 (Reuters) – 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.
Shares of Netflix Inc (NFLX.O) jumped 6.8% 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 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.
Alphabet Inc (GOOGL.O) was the latest to join the list as it said it was cutting 12,000 jobs on Friday. The company’s shares rose 4.1%.
The gains made communication services stocks (.SPLRCL) the top gainer among major S&P 500 sectors, climbing 2.7% with information technology (.SPLRCT) in tow, helped by a 2.9% rise in Microsoft.
“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.
Weighing on the Dow, shares of Goldman Sachs Group Inc (GS.N) dropped 2.2% after the Wall Street Journal reported the Federal Reserve is probing the company’s consumer business.
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.
Reporting by Shreyashi Sanyal and Amruta Khandekar; Additional reporting by Shubham Batra in Bengaluru; Editing by Anil D’Silva, Shounak Dasgupta and Maju Samuel
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