US stocks regained their footing on Friday and ended the day higher after a recent downdraft. Well-received earnings from Netflix (NFLX) lifted the Nasdaq, while relatively benign comments from a couple of Federal Reserve speakers eased. concerns about monetary policy.
The Nasdaq Composite (COMP.IND) closed +2.7%the S&P 500 (SP500) closed +1.9% and the dow (DJI) finished +1.0%.
“Today in each of the indices we saw a counter-trend rally. The S&P, Dow, Nasdaq and Russell are in our house view all headed higher over the medium term; we think the lows 2022 were the lows and the new bull phase is in,” Alex King of Cestrian Capital Research told Seeking Alpha, adding that Friday’s trading was also affected by options expiration.
However, King cautioned that “at this point, the near-term trend has been to the downside, a corrective move following the rally from the 2022 lows.” He added that “none of the indices, except perhaps the Russell, appear to us to have completed their corrective phases”, leading him to “treat today’s rally with caution”.
King concluded: “We expect a move lower before the uptrend resumes, an uptrend that we expect to be the most hated rally since 2020 (which was the most hated rally since 2009).”
As for the Fed speakers, the latest comment was devoid of inflammatory remarks, easing concerns after strong jobless claims data earlier in the week raised some concerns that the central bank would have to stay aggressive for longer. current projected time.
Comments from Federal Reserve Governor Christopher Waller and Philadelphia Fed President Patrick Harker signaled 25 basis point hikes in interest rates at the next Fed meeting, which will take place in less than two weeks. This result is already widely expected by financial markets, with a 99% probability of a 25 basis point increase now discounted.
Both Fed speakers also suggested that more gradual increases may be needed to control inflation. However, there were also signs of moderation. For example, Waller added that the Fed’s current policy is “pretty close” to being tight enough.
Friday marked the last day for Fed members to get their message out before the February meeting, as the central bank lockup period is set to begin.
Turning to the bond market, yields rose, further reversing some of the declines seen earlier in the week. The 10-year Treasury yield (US10Y) rose 9 basis points to 3.49% and the 2-year yield (US2Y) rose 5 basis points to 4.17%.
Among the active stocks, Netflix (NFLX) garnered much of the attention. The video streaming giant saw its shares rise 8% following the release of its quarterly results, helped by strong subscriber growth.
