Premarket action on Friday had the three major U.S. indexes trading mixed. The Dow Jones industrials were down 0.13%, while the S&P 500 was up 0.08% and the Nasdaq 0.44% higher. After a couple of rough days, growth stocks may be set to make a comeback.
Eight of 11 market sectors closed lower Thursday, with industrials (−2.08%) and consumer cyclicals (−1.69%) posting the largest losses. Energy (1.11%) and communications services (0.9%) made the best gains. The Dow closed down 0.76%, the S&P 500 down 0.76% and the Nasdaq down 0.96%.
Thursday’s trading volume was below the five-day average. New York Stock Exchange losers led winners by 1,822 to 1,245, while Nasdaq decliners also led advancers by a margin of 7 to 4. Among S&P 500 stocks, Comerica Inc. (NYSE: CMA) added 5.9% following results that beat both profit and revenue estimates. Enphase Energy Inc. (NASDAQ: ENPH) dropped nearly 11%, leading solar industry stocks in a day of losses all around. Solar Edge Technologies Inc. (NASDAQ: SEDG) and First Solar Inc. (NASDAQ: FSLR) declined 10.3% and 7.1%, respectively.
Claims for unemployment benefits fell to their lowest level since late September, raising concerns that the Federal Reserve would continue hiking rates at its current pace. Housing construction data also came in lower than expected. Treasury Secretary Janet Yellen notified Congress that the federal government had reached its debt limit and that the department had begun taking extraordinary measures to keep the government running.
Microsoft Corp. (NASDAQ: MSFT) announced late Wednesday in a note to employees that it would cut its workforce by about 5%, or roughly 10,000 jobs. Another tech mega-cap, Google parent Alphabet Inc. (NASDAQ: GOOGL), announced Friday morning that it plans to cut 12,000 jobs, about 6% of the company’s global workforce. Both companies cited pandemic-driven growth as a core reason for the reduction. Alphabet CEO Sundar Pichai summed it up this way, “We hired for a different economic reality than the one we face today.”
Microsoft stock dropped by about 1.7% on Thursday and was up about 0.3% in premarket trading Friday. Alphabet gained more than 2% on Thursday and traded up 3.4% early Friday.
Two weeks ago, tech layoff job tracker Layoffs.fyi reported that 23,550 layoffs had been announced in the first two weeks of 2023. Adding in the 22,000 firings from Microsoft and Alphabet, the total just two weeks later has reached nearly 51,000.
Amazon.com Inc. (NASDAQ: AMZN) announced 8,000 layoffs in the first week of this year, and Salesforce Inc. (NYSE: CRM) announced cuts of about 8,000 a few days later (roughly 10% of its workforce). Meta Platforms Inc. (NASDAQ: META) will fire 11,000 workers. Crypto exchange Coinbase Global Inc. (NASDAQ: COIN) also announced cuts totaling 950 positions in the first two weeks of the year. Dow component Cisco Systems Inc. (NASDAQ: CSCO) has announced 4,100 layoffs, while Uber Technologies Inc. (NYSE: UBER) and Twitter have both said they will cut 3,700 jobs.
Thursday’s good news came from an unexpected source. Netflix Inc. (NASDAQ: NFLX) reported earnings after U.S. markets closed, missing the profit estimate while narrowly beating on revenue. The big news was subscriber growth, the metric by which Netflix’s results are always judged. New paid subscribers totaled 7.7 million, well above the consensus estimate for 4.6 million additions and the company’s own guidance for new subscriptions of 4.6 million.
Netflix also shuffled its top managers. Reed Hastings, co-founder and co-CEO, will become executive board chair, and Chief Operating Officer Greg Peters will join Ted Sarandos as co-CEO. The stock traded up more than 6% in Friday’s premarket.
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