4:05pm: Stocks zip ahead at the close
US markets gained ground on Friday afternoon to end the day on a much sweeter note than it began.
The Nasdaq notched its third straight week of wins. As of 4pm, the tech-dominated index had added 2.7% to finish at 11,140 points. The S&P 500 was up 1.9% at 3,973 and the Dow had risen 1% to close at 33,375.
12:16pm: Markets walk “tricky tightrope” between cost-cutting and consumer confidence
At midday, the Dow was up 95 points, 0.3%, to 33,140, the Nasdaq Composite added 162 points, 1.5%, to 11,014 and the S&P 500 improved 34 points, 0.9%, to 3,932.
Investors have reacted in part to waves of layoffs, particularly in the US tech sector. Google announced plans Friday morning to cut 12,000 jobs, while Amazon and Microsoft announced similar cuts earlier this week. Wayfair also said it will cut 1,750 jobs.
“Pre-earnings redundancies seem to be the fashion in the US right now, and have been received in positive fashion by markets keen to see signs of cost-cutting among companies,” said Chris Beauchamp, chief market analyst at online trading platform IG. “But it is a tricky tightrope to walk – a wave (or waves) of layoffs will hurt consumer confidence and spending, coming at a time when inflation and higher rates have already hit consumers’ wallets and boosting the chance of a more severe recession.”
9.35am: Bumpy ride ahead, analyst predicts
US stocks opened mixed on Friday as investors weighed up a slew of economic data released over the course of the week and corporate earnings from the likes of streaming giant Netflix.
Just after the market opened, the Dow Jones Industrial Average had shed 22 points or 0.1% at 33,022 points, while the S&P 500 was up 9 points or 0.2% at 3,908 points and the Nasdaq Composite had gained 60 points or 0.6% at 10,913 points.
OANDA senior market analyst Craig Erlam noted it had been an eventful week and one that serves as a reminder that while there may be more sources of optimism this year, compared with last, it’s going to be a bumpy ride.
“There’s no doubt that there’s been plenty more cause for optimism so far this year, especially compared with what we became accustomed to in 2022,” he said.
“The US could achieve the soft landing that many have doubted is possible, China could bounce back strongly from the dropping of Covid restrictions and the euro area may avoid a recession.”
But he noted, just as quickly as expectations turned more favorable, they could switch again.
“Economic data from the US this week has been far less promising,” Erlam said. “Rather than focus on disinflation and the labour market, it’s been other economic indicators and earnings that have taken the spotlight and it hasn’t been great.”
He also pointed to more regular warnings of imminent layoffs, with the latest coming from Alphabet which plans to cut 12,000 staff globally.
“For so long companies have been reluctant to lay staff off following the post-pandemic re-hiring struggles but the tide appears to be turning and it could accelerate from here, at which point the economic data may become much more downbeat,” Erlam said.
6.30am: Recessionary rumbles haven’t gone away
Wall Street is expected to open flat to modestly higher, ending two days of heavy loss following mixed economic data and even more mixed corporate earnings that have added to market uncertainty.
Futures for the Dow Jones Industrial Average fell less than 0.1% in Friday pre-market trading, while those for the broader S&P 500 index rose 0.1% and contracts for the Nasdaq-100 gained 0.4%.
Markets declined again on Thursday as traders shrugged off a decline in initial jobless claims to their lowest level since September, focusing instead on disappointing housing market data that added to the worries that the US economy has tipped into recession.
At the close the Dow Jones was down 0.8% to 33,045, the S&P 500 was also 0.8% lower at 3,899, and the Nasdaq Composite fell 1% to 10,852.
Netflix fell 3% before surging more than 7% in Friday pre-market trading after the streaming giant announced subscription growth that topped expectations and said co-CEO Reed Hastings was stepping down. Proctor & Gamble lost 2% after it reported a 6% decline in sales volumes for the December quarter.
“A generally tepid start to the quarterly reporting season has added to investor concerns, with earnings being subject to some downgrades, particularly in the months to come,” commented Richard Hunter, head of markets at interactive investor. “The major concern is that earnings valuations have not yet been adjusted to reflect the impact of a possible recession, which would be highly negative for equities on any number of fronts.”
Hunter noted that the ongoing fight against inflation at the risk of central bank overtightening remains centre stage.
“Recent comments from certain Federal Reserve members seem to accept that progress is being made in taming inflation, while at the same time reiterating that a terminal rate of around 5% and higher rates for longer seem the most likely outcome,” he added. “The recessionary rumbles which have loudened over recent days have also resulted in a blow to what was a promising start to the year.”