Tech Stocks May Lead Initial Rebound On Wall Street

January 20, 2023
Tech stocks

By Investors Hub Newsdesk

The major US index futures are currently pointing to a modestly higher open on Friday, with stocks poised to regain ground after moving sharply lower over the two previous sessions.

Traders may look 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 Dow has shown a particularly steep drop so far this week, with the blue-chip index turning negative for the New Year.

Tech stocks may help lead a rebound on Wall Street amid a positive reaction to quarterly results from streaming giant Netflix (NFLX).

Shares of Netflix are surging by 6.3 per cent in pre-market trading 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) is also likely to see initial strength after announcing plans to cut about 12,000 jobs or 6 per cent of its workforce.

After ending Wednesday’s session sharply lower, stocks saw further downside during trading on Thursday. The major averages fluctuated after coming under pressure in early trading but remained stuck in the red.

The major averages all finished the day firmly in negative territory. The Dow slid 252.40 points or 0.8 per cent to 33,044.56, the Nasdaq slumped 104.74 points or 1.0 per cent to 10,852.27, and the S&P 500 fell 30.01 points or 0.8 per cent to 3,898.85.

Concerns about the economic outlook continued to weigh on the markets following Wednesday’s disappointing retail sales and industrial production data.

Traders also remain concerned about the outlook for interest rates amid worries the Federal Reserve will continue aggressively raising rates despite signs of a slowdown in inflation.

While the Fed is widely expected to further slow the pace of rate hikes to 25 basis points at its next meeting, traders are expressing some uncertainty about the possibility of further rate hikes.

Adding to the concerns about interest rates, a report released by the Labor Department unexpectedly showed a decrease in first-time claims for US unemployment benefits in the week ended January 14.

The Labor Department said initial jobless claims fell to 190,000, a decrease of 15,000 from the previous week’s unrevised level of 205,000. The dip surprised economists, who had expected jobless claims to rise to 214,000.

“While initial jobless claims continue to be noisy due to seasonal adjustment factors, the unexpected drop in the latest week is a frustrating reminder for the Fed that the labor market remains tight as employers hold onto workers,” said Matthew Martin, US Economist at Oxford Economics.

He added, “Our forecast assumes one more 25bps rate hike at the conclusion of the upcoming FOMC meeting, but we see risks as skewed toward additional rate hikes.”

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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