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Tech Rally Contributes To Substantial Rebound On Wall Street

wallstreet oct01 20jan23 lt

Stocks moved sharply higher over the course of the trading session on Friday, regaining ground after posting steep losses for two straight days. Tech stocks helped lead the rebound, resulting in a particularly strong gain by the tech-heavy Nasdaq.

The major averages saw further upside going into the close, ending the session at their best levels of the day. While the Nasdaq spiked 288.17 points or 2.7 percent to 11,140.43, the S&P 500 surged 73.76 points or 1.9 percent to 3,972.61 and the Dow jumped 330.93 points or 1.0 percent to 33,375.49.

For the holiday-shortened week, the major averages turned in a mixed performance. The Nasdaq climbed by 0.6 percent, but the S&P 500 slid by 0.7 percent and the Dow tumbled by 2.7 percent.

The rebound on Wall Street came as traders looked to pick up stocks at relatively reduced levels following recent weakness, which reflected ongoing concerns about the outlook for the economy and interest rates.

The rally by tech stocks partly reflected a positive reaction to quarterly results from streaming giant Netflix (NFLX).

Shares of Netflix soared by 8.5 percent after the company reported fourth quarter earnings that missed analyst estimates but stronger than expected subscriber growth.

Netflix also announced Reed Hastings is stepping down as co-CEO, with COO Greg Peters assuming the post of co-CEO alongside Ted Sarandos.

Google parent Alphabet (GOOGL) also shot up by 5.3 percent after announcing plans to cut about 12,000 jobs or 6 percent of its workforce.

In U.S. economic news, the National Association of Realtors released a report showing a continued decline in U.S. existing home sales in the month of December, although the decrease was much smaller than economists had expected.

NAR said existing home sales slumped by 1.5 percent to an annual rate of 4.02 million in December after plunging by 7.9 percent to a revised rate of 4.08 million in November.

Economists had expected existing home sales to tumble by 3.4 percent to an annual rate of 3.95 million from the 4.09 million originally reported for the previous month.

Sector News

Software stocks turned in some of the market's best performances on the day, resulting in a 3.6 percent spike by the Dow Jones U.S. Software Index. The index ended the session at its best closing level in over a month.

Substantial strength was also visible among banking stocks, as reflected by the 3.1 percent surge by the KBW Bank Index.

Semiconductor stocks also showed a significant move to the upside, driving the Philadelphia Semiconductor Index up by 3.1 percent.

Retail, chemical and housing stocks also saw considerable strength on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index climbed by 0.6 percent, while Hong Kong's Hang Seng Index surged by 1.8 percent.

The major European markets also moved to the upside on the day. While the German DAX Index advanced by 0.8 percent, the French CAC 40 Index rose by 0.6 percent and the U.K.'s FTSE 100 Index edged up by 0.3 percent.

In the bond market, treasuries moved sharply lower, extending the pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 8.7 basis points to 3.484 percent.

Looking Ahead

Earnings season kicks into high gear next week, with a slew of big-name companies scheduled to report their quarterly results.

General Electric (GE), Johnson & Johnson (JNJ), Verizon (VZ), Microsoft (MSFT), AT&T (T), Boeing (BA), IBM Corp. (IBM), Tesla (TSLA), Intel (INTC) and American Express (AXP) are just some of the companies due to report their results next week.

Traders are also likely to keep an eye on the latest U.S. economic data, including reports on durable goods orders, fourth quarter GDP, new home sales and personal income and spending.

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