The rally in technology shares boosted Wall Street and softened the end of a tough week
Gains from technology-oriented stocks drove a large part of the rise in the S&P 500. Both Google's parent company and Netflix posted strong uploads
A man uses his cell phone outside the New York Stock Exchange. (AP Photo/Mary Altaffer)
A rally in technology shares on Friday applied some balm to a tough week on Wall Street, dominated by concerns about a weakening economy.< /b>
TheS&P 500 rose 1.9% on Friday, but still ended with its first weekly loss in the last three. The Nasdaq added 2.7% and the Dow rose 1 percent
Google's parent company rose after saying it was cutting spending by laying off workers. It is the latest big tech company to admit to having expanded too fast in recent years. Netflix rose after announcing an increase in the number of subscribers. Markets mostly fell this week on fears the economy might not avoid a painful recession.
Not long ago, bad news about the economy used to be wickedly good for Wall Street. This was because investors took them as a sign that the Federal Reserve might ease its rate hikes. But bad news about the economy is increasingly becoming bad news for Wall Street as well, which worries more about the prospects for a severe recession.
To further complicate matters, several Federal Reserve officials insisted throughout the week that they are likely to continue raising rates and hold them there for a while to make sure that the country's high inflation is actually squashed.< b> Although inflation has started to slow, it remains under upward pressure from a still strong US job market and other factors.
Many Wall Street investors came to this week already forecasting a recession modest or brief, but they also hoped that rate cuts by the Federal Reserve later this year could signal a rebound for markets. Dour economic data this week and comments from central bankers threaten such forecasts.
Gains in technology-oriented stocks < /b>powered a large part of the S&P 500's rise on Friday. The parent company of Google said it was cutting costs by laying off 12,000 workers, and Netflix reported an increase in its number of subscribers.
Alphabet gained 4.8% after becoming the latest big tech company to admit it had expanded too much rapidly in recent years amid the boom created by the pandemic. Netflix rose 7.9%.
Cruise companies also posted gains. Carnival rose 4.2%, Norwegian Cruise Lines 5.1% and Royal Caribbean 3.5%.
The stock market could be prone to even wilder swings on Friday than in the past, as $797 billion in stock option contracts come to maturity. It is the largest amount for individual stock options since January 2022 and the fourth largest on record, according to Goldman Sachs.
Yields on Treasury bonds they rose on Friday, recapturing declines earlier in the week fueled by concerns about a weakening economy. The 10-year Treasury yield, which helps set rates on mortgages and other major loans, rose to 3.48% from 3.40% on Thursday.
The The two-year yield, which tends to track more closely the Fed's expectations, rose to 4.20% from 4.13%.
International stock markets posted modest gains.
The Nikkei 225 rose 0.6% after Japan reported that its consumer inflation rate reached 4% in December, its highest level in 41 years. This high figure could increase pressure on the Bank of Japan to change its policy of keeping the official interest rate at an ultra-low level of minus 0.1%. But economists expect price pressures to ease in the coming months as inflation eases elsewhere.
(With information from AP)