STORY: U.S. stocks rallied on Friday, as quarterly earnings helped lift Netflix and Google-parent Alphabet rose after announcing the latest round of tech layoffs.
The Dow climbed 1%, the S&P gained nearly 2% while the Nasdaq soared almost two and two thirds of a percent.
Alphabet said it was slashing 12,000 jobs, sending its shares up more than 5%. It follows other layoff announcements from tech peers Microsoft and Amazon.
David Spika is Chief Investment Officer at GuideStone Capital Management.
“I don’t think the job losses are as dire as they might seem. If you’re talking about the tech sector, the financial services sector - because a lot of companies over hired coming out of the pandemic. And I think what you’re seeing now is some right-sizing with regard to that. However, some of those are layoffs in anticipation of slower economic times. And that’s something that we’re going to have to see. The Fed has to reduce the job market, has to reduce wage growth, in order to hit consumer spending and bring inflation down to their preferred level. And so we’re gonna continue to see layoffs and that’s something the Fed is looking for.”
Comments from Federal Reserve officials have largely said they expect interest rates to climb to at least 5% this year as the central bank continues to try to tamp down high inflation. The Fed is largely expected to raise rates by 25 basis points at its Feb. 1 policy announcement.
Shares of Netflix jumped nearly 8.5% 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.
Gains on the Dow were curbed, however, by a fall in shares of Goldman Sachs after the Wall Street Journal reported the Fed is probing the bank's consumer business.