S&P, Nasdaq boosted by tech stocks. Netflix soars following results
S&P 500, Nasdaq and other technology stocks all gained on Friday. This was due to a surge in Netflix stock shares fueled by earnings and wider gains amongst technology stocks.
The Dow Jones Industrial Average, which had just posted a record-breaking closing high the day before, was largely unchanged.
Netflix shares jumped by 10.5%, reaching a new record high. The streaming giant exceeded Wall Street's estimates of subscriber growth and stated that it expects to continue growing through the end the year.
All seven of the "Magnificent Seven" stocks that have been driving Wall Street's rally in this year rose.
Apple rose 1.5% following data showing a sharp rise in iPhone sales in China. Meanwhile, chip giant Nvidia gained 1% as BofA Global Research raised its price target for the stock.
Netflix's growth boosted the communication services sector by 1% and made it the biggest gainer of the 11 S&P sectors. Information technology rose by 0.5%.
Dustin Thackeray is the chief investment officer of Crewe Advisors. He said, "We saw good earnings from Netflix this morning. We also had some good housing data. The sentiment has been very positive in general."
The Nasdaq Composite rose 126.02 or 0.69% to 18,499.63 points at 2:06 pm Eastern time. The Dow Jones Industrial Average rose 18.77 points or 0.04% to 43,257.82.
American Express was the biggest drag on the Dow, losing 3% as its quarterly revenue fell short of expectations.
The earnings season for financial companies has been positive so far. S&P Banks was flat after five sessions of gains.
The three major indexes have been steadily climbing in recent days due to the positive economic data and upbeat earnings from financial companies.
Stocks could be vulnerable to a drop due to stretched valuations (the S&P 500 trades at 22 times expected earnings), high expectations of corporate results, and volatility surrounding the November U.S. Presidential election.
"Now, it's a matter of waiting to see what happens with the upcoming U.S. elections and the Fed meeting that follows a few days later to see if the meetings will be paused for the rest of the year," said Thackeray of Crewe Advisors.
Small-cap stocks are attracting investor interest in recent days. Both the Russell 2000 (small cap) and S&P Small Cap 600 (small cap) will outperform the major indices this week. The Russell 2000 and S&P Small Cap 600 both fell marginally on Friday.
SLB's earnings were below expectations, and the lower oil price weighed on SLB. Its 3.9% drop was the only weakness in this S&P sector. Baker Hughes and Halliburton, who also provide oilfield services, were affected by this. They fell 1.4% and 2.2% respectively.
CVS Health's stock dropped 6.1% when it replaced Karen Lynch as CEO with David Joyner, a company veteran. It also retracted its profit forecast for 2024. The S&P 500's biggest faller was CVS Health.
Cigna, Elevance Health and Humana all saw their stock prices drop between 1.1% to 3.2%.
In the meantime, U.S. listed Chinese companies have moved higher since China's central banks launched funding schemes to boost the equity market. Alibaba rose by 2.3%, and JD.com grew by 2.9%.
According to economic data, the number of single-family homes started in September increased by 2.7%. The rate was 1.027 millions units on a seasonal adjusted basis.
(source: Reuters)
