S&P 500, NASDAQ Composite Jump on Netflix, Alphabet Gains, Oversold Conditions

Wall Street jumped on Friday on the back of strong gains in Netflix and Alphabet shares, nonetheless, the Dow and S&P 500 still posted losses for the week, along with other equity indexes. For much of the week, the price action was weak and volatile.

Ahead of Friday’s rally, the major indexes were down three days. So Friday’s rebound rally may have been fueled by oversold technical conditions, which prompted some bargain hunting by investors.

On Friday, the blue chip Dow Jones Industrial Average settled at 33375.49, up 330.93 or +1.00%. The benchmark S&P 500 Index finished at 3972.61, up 73.76 or +1.89% and the tech-weighted NASDAQ Composite closed at 11140.43, up 288.17 or +2.66%.

Netflix, Google Carry S&P 500, NASDAQ Composite Higher

The S&P 500 Index and NASDAQ Composite were up sharply on Friday, boosted by stellar performances by Netflix Inc and Google parent Alphabet.

Netflix was up 8.5%, but not because of good earnings figures. It surprised investors by saying it had picked up more subscribers than expected at the end of last year.

Additionally, the company announced its co-founder Reed Hastings stepped down as chief executive. The whispers are saying he moved on after the company started advertising on its streaming service, something he did not support.

Meanwhile, Google parent Alphabet climbed 5.4% after joining Amazon and Microsoft in announcing 12,000 layoffs.

Goldman Sachs, Salesforce Weigh on Dow

Gains in the Dow were capped by a 2.54% drop in shares of Goldman Sachs Group Inc after the Wall Street Journal reported the Fed was probing the company’s consumer business.

A drop in shares of Salesforce also helped limit the Dow’s gains. Stock in the software firm fell 1% after Cowen downgraded the company to market perform from an outperform rating, and said it needs to adjust to a new era after years of rampant growth.

Short-Term Outlook

Despite Friday’s rally, the major indexes are facing more headwinds with the market and the Fed still in disagreement about how long the Fed will continue to raise rates and at what interest rate level policymakers will stop.

Some Fed speakers earlier in the week said they see the Fed’s terminal rate moving above 5.0%, while the market thinks the central bank will stop below that level.

Furthermore, there was some chatter on Friday suggesting the Fed will raise rates 25 basis points two times this year then go on a long pause.