Rally For Tech Stocks Helps Soften Wall Street's Rough Week

Stan Shaw and Alex Vega. Associated Press

A strong week on Wall Street, marred by fears of a weak economy, ended Friday with a broad rally that gave the market its best day in two weeks.

The S&P 500 rose 1.9 percent. Despite the gains, the benchmark still ended with its third weekly loss. The Dow Jones Industrial Average rose 1 percent and the Nasdaq Composite rose 2.7 percent.

Technology and telecom stocks led most of the gains as investors welcomed Netflix's quarterly increase in subscribers. Comments from the Federal Reserve helped raise hopes among investors that the central bank may decide to cut interest rates next month.

Major indexes started the week in the red on fears that the economy might escape recession. As the Fed's general rate hikes began to slip through the system last year, many economic reports turned out to be weaker than expected.

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To further complicate the situation, several Fed officials continue to signal that they will raise interest rates further this week and keep them there for some time to ensure that the nation's high inflation rate is indeed contained. Although inflation has begun to decline, pressures on the US labor market and other factors remain.

Many investors came to Wall Street this week expecting a mild or short-term recession, but hoping that interest rate cuts by the Federal Reserve this year signal a recovery in markets.

Federal Reserve Chairman Christopher Waller said on Friday he would prefer only a quarter-point hike on February 1 when the central bank presents its next interest rate policy update. Waller said tariffs are too high to slow the economy.

Technology-led gains in stocks were a big part of the S&P 500's rally on Friday. Parent company Google cut costs by cutting 12,000 jobs, while Netflix reported an increase in subscribers.

Infrastructure Capital Advisors CEO Jay Hatfield said Thursday's unexpected Netflix report set the stage for Friday's rally as the market saw off the streaming service's latest disappointing results and worries about lower earnings overall.

Shares in Alphabet rose 5.3% after it became the biggest tech company to admit it had expanded faster in recent years amid the pandemic. Netflix rose 8.5 percent.

Shipping lines also benefited. Carnival rose 3.5%, Norwegian Cruise Line rose 4.5% and Royal Caribbean rose 3.6%.

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