Updated at 10:01 am EST
U.S. stocks traded mixed Friday, following three consecutive session declines, as investors continue to track comments from Fed officials while gearing-up for series of big tech earnings later next week.
Big tech, in fact, seized the headlines once again Friday after media and advertising giant Google GOOLG unveiled plans to cut 12,000 jobs from its global workforce, adding to the sector’s big headcount cull following similar moves from Microsoft (MSFT) – Get Free Report, Amazon (AMZN) – Get Free Report, Meta Platforms (META) – Get Free Report and Salesforce (CRM) – Get Free Report.
Broader market sentiment, however, remains tied to central bank rate projections, with Federal Reserve vice chair Lael Brainard told an event in Chicago late Thursday that while the central bank is still “probing” for the correct level of interest rates that will both tame inflation and ensure the economy avoids recession.
She added, however, that borrowing costs are likely to remain elevated “for some time”, even if she favors smaller hikes going forward.
That view, echoed in part by Boston Fed President Susan Collins in a speech last night, suggests again the the Fed Funds rate is likely to rise past 5% by the spring and stay there for several months after. Market forecasts, however, suggest rates topping out at 4.75%, with the possibility of a rate cut late in the year still holding firm.
With respect to the Fed’s next policy meeting, which begins on January 31, the CME Group’s FedWatch is indicating a 94.3% chance of a 25 basis point rate hike, up from around 76.7% this time last week.
Benchmark 10-year Treasury note yields were marked modestly higher in overnight trading, as well, following some hawkish comments on rate hikes from a key European Central Bank policymaker and were last seen changing hands at 3.455%. Meanwhile, 2-year notes were pegged at 4.162% and the U.S. dollar index gained 0.36% against its global peers to trade at 102.427.
With big tech earnings in the window for next week, including updates from Microsoft, IBM (IBM) – Get Free Report and Intel (INTC) – Get Free Report, as well as Boeing (BA) – Get Free Report, Tesla (TSLA) – Get Free Report and General Electric GE, investors are likely to be looking past a muted Friday open despite the expected boost for the Nasdaq from last night’s stronger-than-expected fourth quarter earnings from Netflix (NFLX) – Get Free Report.
“With 4Q tech earnings season underway on a positive note with Netflix earnings kicking off the fireworks last night, the drumroll now begins for a big few weeks ahead as tech stalwarts are set to report earnings and importantly give 2023 guidance,” said Wedbush analyst Dan Ives.
“We also expect a major theme will be tech layoffs as Silicon Valley after a decade of hyper growth now comes to the reality of cost cutting mode to get through this economic storm with Alphabet the latest to announce cuts this morning as the Cinderella ride has ended (for now),” he added.
Heading into the opening hour of the trading day on Wall Street, the S&P 500 was marked 8 points higher the Dow Jones Industrial Average retreated 66 points. The tech-focused Nasdaq gained 75 point gain.
The bulk of that advance is linked to a 4.4% gain for Google, which unveiled plans to cut around 12,000 jobs as the tech and media giant follows rivals in reducing headcount amid growing economic uncertainty.
Netflix shares were also firmly higher, rising 7.24% after the streaming entertainment group posted better-than-expected subscriber gains that offset a big earnings miss and the departure of founder and co-CEO Reed Hastings.
Eli Lilly (LLY) – Get Free Report shares slipped 1.2% after the drugmaker said its request for an accelerated review of its developing Alzheimer’s treatment was rejected by the U.S. Food & Drug Administration.
In overseas markets, the the region-wide MSCI ex-Japan index gained 0.8% into the close of trading as investors rallied ahead of the coming Lunar New Year holiday that will keep major markets around the region closed for much of the week. Tokyo’s Nikkei 225 gained 0.56% following data showing headline and core inflation hit 4% last month, the fastest in 41 years.
Europe’s Stoxx 600 was marked 0.329% higher in mid-day Frankfurt dealing, while London’s FTSE 100 gained 0.16%.