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Stocks close higher Friday, Nasdaq notches third straight week of wins

Pro Picks: Watch all of Friday's big stock calls on CNBC
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Pro Picks: Watch all of Friday's big stock calls on CNBC

Stocks rallied on Friday to finish the week strong after briefly losing the momentum of the January rally.

The Dow Jones Industrial Average added 330.93 points, or 1%, to close at 33,375.49, while the S&P 500 advanced 1.89% to 3,972.61. Both indexes snapped a three-day losing streak. Meanwhile, the Nasdaq Composite rose 2.66%, with help from Netflix and Alphabet, to end the day at 11,140.43.

The Nasdaq was also the outperformer for the week, posting a 0.55% gain and its third positive week in a row. The Dow finished the week lower by 2.70%, and the S&P posted a 0.66% loss, both breaking two-week win streaks.

All of the major averages are still in positive territory for the year.

S&P 500

"We're having a more emotional reaction that expected," said Jeff Kilburg, founder and CEO of KKM Financial. "A lot of people got so pessimistic and we saw parabolic moves to kick off the year. Now, as expected, the markets aren't going in a straight line."

"We are finding a way to continue to move and have higher lows," he added. "The higher lows put a little bit of confidence in the bulls. However, the technicals are still favoring the bears and selling rallies."

Investors continued to monitor earnings reports and mega cap tech shares led the market higher. Netflix gained about 8.5% after posting more subscribers than expected even though its quarterly earnings missed analysts' estimates. Alphabet rose more than 5% after the company announced it will lay off 12,000 employees.

"You're seeing more weight go into some of the beat-up technology and because people are becoming a little bit more thoughtful of opportunity in the absolute tech wreck we saw in 2022," Kilburg said.

Lea la cobertura del mercado de hoy en español aquí.

Stocks rally to finish the week strong

All of the major averages finished higher on Friday.

The Dow Jones Industrial Average added 329.81 points, or 1%, the S&P 500 advanced 1.89% and the Nasdaq Composite rose 2.66%.

For the week, the Dow finished lower by 2.7% and the S&P posted a 0.66% loss. The Nasdaq gained 0.55%.

— Tanaya Macheel

JPMorgan says the market can’t keep rising on bad news

Bad news has recently been good news for the stock market, but that won't be the case much longer, according to Dubravko Lakos-Bujas, chief U.S. equity strategist at JPMorgan.

"Lately, equities have been shrugging off bad economic news and rising on weaker [economic] data and lower yields,"  Lakos-Bujas said in a note. "However, we don't see this relationship persisting and expect weaker guidance to put downward pressure on equities," he said, referring to companies' own forecasts.

The strategist said stocks could be headed lower as corporations are expected to lower their guidance as inflation and the slowing economy chisel away at profits.

— Yun Li

Bitcoin has climbed more than 10% this week, outperforming stocks

Cryptocurrencies rose this week even as U.S. equities briefly retreated from their new year rally.

Bitcoin was last higher by about 12% for the week, according to Coin Metrics, while ether has risen 14%. shortened for the Martin Luther King holiday.

"While equities digested this latest test of resistance Wednesday and yesterday, the divergence of bitcoin to the upside, along with healthy action on semis, suggests to me that risk appetites are percolating beneath the surface," said Wolfe Research's Rob Ginsburg. "I have always found bitcoin to be a sign of investor appetite for risk, so this bullish divergence was definitely noteworthy."

— Tanaya Macheel

Fed's Waller says mild recession would be 'not too bad'

Federal Reserve Governor Christopher Waller said Friday that he would tolerate a soft recession if it meant bringing inflation down.

"If we can bring inflation down and the worst that happens is we have a mild, short recession, that's not too bad," the central bank official said during an appearance at the Council on Foreign Relations in New York.

Earlier in the speech, Waller said he thinks the Fed can bring down inflation and still achieve a "soft landing" for the economy.

—Jeff Cox

Cowen downgrades Salesforce, cites slowing growth

Salesforce's stock dipped 1% after Cowen downgraded the software company to market perform from an outperform rating, and said it needs to adjust to a new era after years of rampant growth.

"After a long cycle of high growth through both organic & inorganic efforts, Salesforce has reached greater market penetration and is entering a more mature growth phase," said analyst Derrick Wood.

CNBC Pro subscribers can read more on the call from Cowen here.

— Samantha Subin

Delay on Lilly's Alzheimer's drug a positive for Biogen, William Blair says

Eli Lilly shares are trading down 1.4% Friday after the Food and Drug Administration denied the company's request for speedier approval of its Alzheimer's disease treatment, donanemab.

The agency said it wanted data from at least 100 patients who took the drug for a year. Lilly said that some patients enrolled in the trial stopped treatment sooner because there was a reduction in brain plaque in as little as six months. Lilly still plans to seek full approval of the therapy.

William Blair analyst Myles Minter said the headline is positive for shares of Eisai and Biogen, the makers of competing treatment Leqembi. He expects this will delay Lilly's treatment from entering the market, pushing it back to possibly next year.

Minter has an outperform rating on Biogen shares based on the potential for Leqembi. The stock is up 1.6%.

-Christina Cheddar Berk

Fed Governor Waller advocates a quarter-point rate hike

Federal Reserve Governor Christopher Waller on Friday said he backs a quarter percentage point interest rate increase at the central bank's next meeting.

Speaking in New York, the central bank official noted that there is still a "considerable way to go" before inflation is brought fully under control, but he expects the Fed can ease back on the size of its rate hikes.

The Fed next meets Jan. 31-Feb. 1. If it follows through on the 0.25 percentage point move that Waller advocated, that would take the Fed's benchmark rate to a target range of 4.5%-4.75%.

—Jeff Cox

Stocks making the biggest midday moves

Here are some of the companies making the biggest midday moves:

  • SVB Financial — Shares surged 16%, a day after Wells Fargo said SVB Financial seems like the "deal of the century" and said the bank "remains the trusted partner of the innovation economy."
  • Netflix — Shares of the streaming giant jumped more than 6% after Netflix added 7.66 million net subscribers in the fourth quarter, above the 4.57 million expected, according to StreetAccount. Founder Reed Hastings also announced that he is stepping away from his CEO role.
  • Eli Lilly — Shares of the pharmaceutical company fell more than 2% after the U.S. Food and Drug Administration rejected the drugmaker's experimental Alzheimer's disease treatment as it had not provided enough trial data.

For more big movers, check out our full list here.

— Hakyung Kim

JPMorgan upgrades Regeneron, cites upside from eye drug

JPMorgan upgraded pharmaceutical stock Regeneron to overweight from a neutral rating, saying that approval of its eye drug could lift shares nearly 20%.

"While we expect Eylea trends to be in focus given this qtr's volatility as well as the Vabysmo launch in 2022, we see these concerns as short-term in nature as we expect the launch of high-dose Eylea to represent a far more important driver for REGN shares," said analyst Chris Schott.

CNBC Pro subscribers can read more on the call here.

— Samantha Subin

Barclays upgrades Ralph Lauren

Ralph Lauren shares gained nearly 2% following an upgrade to overweight from equal weight rating by analysts at Barclays.

"RL in our view should be able to retain higher pricing by driving traffic through compelling product as well as elevated publicity with relevant brand partners," wrote analyst Paul Kearney, who assumed coverage of the stock.

Read more on Ralph Lauren and the other apparel stocks the firm upgraded here.

— Samantha Subin

Despite solid subscriber growth, it may be 'too early' to buy Netflix

Netflix on Thursday shared blowout subscriber growth that shocked analysts and made up for a big earnings miss. But some analysts still say it's too early to buy the streaming stock.

"From a valuation point of view, we worry that NFLX's multiple is too high as its growth principally relies on price increases," wrote Needham analyst Laura Martin in a Friday note. "That is, sub ads have been decelerating every quarter for the past 6 quarters, reaching 4% y/y growth in 4Q22."

Shares of Netflix surged more than 6%.

Read the full story here.

— Samantha Subin

Existing home sales fall to lowest level since 2010

Sales of previously owned homes fell for the 11th consecutive month in December, according to the National Association of Realtors.

Existing homes fell to an annualized pace of 4.02 million units in December, down 1.5% month over month and 34% year over year.

The last time the pace of buying was this slow was in November 2010.

— Jesse Pound, Diana Olick

Tech layoffs are setting the stage for a rebound in tech, says Wedbush's Ives

The layoffs at Google come two days after Amazon began a fresh wave of job cuts affecting over 18,000 people and Microsoft announced plans to lay off 10,000 workers.

More tech layoffs will be a theme during earnings season but will also set the stage for a rebound in tech stocks, according to Wedbush Securities' Dan Ives.

"Our approach into 2023 is a much more opportunistic one for the tech sector as this near-term macro climate uncertainty will lead to the next growth cycle over the coming years that begin now in our opinion," he said. "The headcount cuts for the tech sector are the first major step towards stabilizing these stocks in our opinion."

— Tanaya Macheel

S&P and Nasdaq open higher in final trading day of the week

The S&P 500 and Nasdaq Composite opened higher on Friday and were on pace to post a positive week.

The broad market index advanced 0.26%, while the tech-focused stock index rose 0.67%.

The Dow Jones Industrial Average fell 28.9 points, or 0.08%.

— Tanaya Macheel

Massive options expiration day could impact trading

A large batch of expiring options could make for some strange trading patterns on Friday, according to Vishal Vivek, vice president of derivatives research at Goldman Sachs.

"$797bn of single stock options will expire today (20-Jan), the largest since Jan-2022 and the fourth largest on record. From an index perspective, $1.3trn of options will roll today, the largest non-quarterly expiry on record. This is consistent with the increase in index options trading activity over the past year;" Vivek said in a note to clients.

The impact of the options will be seen in the stocks and funds that are trading near strike prices used by many of the expiring contracts.

"In situations where there is a significant amount of expiring open interest in at-the-money strikes (strike prices at or very near the current stock price), delta-hedging activity can impact the underlying stock's trading that day," the note said.

Two ways that options trading can impact underlying assets is by a "pin" that sees trading stay in a tight range around a popular strike price, or by exacerbating moves for stocks and funds that have large net short positions as traders and firms try to cover their positions, according to Goldman.

— Jesse Pound

Stocks making the biggest moves premarket

Check out the companies making headlines before the bell:

  • Netflix — The streaming stock jumped more than 6% after Netflix reported its latest quarterly results. While Netflix missed earnings expectations, it added more subscribers than analysts were forecasting. The firm also announced that co-CEO Reed Hastings would step down from the role.
  • Alphabet — The Google parent saw shares rose 3.6% after CEO Sundar Pichai announced the company will lay off 12,000 employees, explaining that the company "hired for a different economic reality than the one we face today."
  • Eli Lilly — Shares of the pharmaceutical company slumped more than 1% in premarket after the U.S. Food and Drug Administration rejected the drugmaker's experimental Alzheimer's disease treatment as it had not provided enough trial data.

Read the full list here.

— Sarah Min

Google to lay off 12,000 employees

Google will lay off about 12,000 employees, CEO Sundar Pichai said in a memo to employees Friday.

"Over the past two years we've seen periods of dramatic growth," Pichai said in the note. "To match and fuel that growth, we hired for a different economic reality than the one we face today."

Shares of its parent company Alphabet rose 3.6% in early morning trading.

The move comes after CNBC reported Wednesday that the firm was deferring a portion of employees' year-end bonus checks until March or April instead of January.

— Ryan Browne, Tanaya Macheel

Global economic outlook improving slightly, but still not good, IMF chief says

International Monetary Fund managing director Kristalina Georgieva said that while the global economic outlook has improved slightly, there's still a ways to go.

"We have to be cautious," Georgieva said at closing panel at the World Economic Forum in Davos moderated by CNBC.

She noted that inflation was easing and that China's reopening was expected to boost global growth but also pointed to ongoing risks, including higher oil and gas prices and the Ukraine-Russia war.

"So, [in] conclusion, be careful not to get on the other side of the spectrum from being too pessimistic to too optimistic. Stay in the middle of realism that seems to serve the world well," Georgieva said.

— Fred Imbert, Jenni Reid

European markets flat as economic uncertainty lingers

European markets were flat on Friday morning as stocks failed to rebound from Thursday's selloff, with the outlook for monetary policy still firmly in focus.

The pan-European Stoxx 600 index was little changed in early trade. Insurance stocks added 0.5% while autos fell 0.5%.

- Elliot Smith

Fed's Williams emphasizes there is 'more work to do' on inflation

Federal Reserve Bank of New York President John Williams emphasized there is more to be done in terms of monetary policy to bring inflation down to the central bank's target.

Speaking at an event hosted by the Fixed Income Analysts Society, Williams was quoted as saying, "It is clear that monetary policy still has more work to do to bring inflation down to our 2% goal on a sustained basis," according to Reuters.

"Restoring price stability is essential to achieving maximum employment and stable prices over the longer term, and it is critical that we stay the course until the job is done," he was quoted as saying.

The Federal Reserve's two-day meeting concludes on Feb. 1, with markets having priced in a 97.2% chance of a 25-basis point hike, according to CME Group data, bringing the interest rate to a targeted range of 4.5%-4.75%.

— Jihye Lee

Bitcoin falls as Genesis files for Chapter 11 bankruptcy in New York

Bitcoin fell roughly 0.5% after Crypto firm Genesis filed for Chapter 11 bankruptcy in New York.

The company listed 50-99 creditors in a "mega" bankruptcy filing, with aggregate liabilities ranging from $1.2 to $11 billion dollars, according to bankruptcy documents.

Genesis is in negotiations with creditors represented by law firms Kirkland & Ellis and Proskauer Rose, sources familiar with the matter told CNBC. The bankruptcy puts Genesis alongside other fallen crypto exchanges including BlockFi, FTX, Celsius, and Voyager.

The cryptocurrency last traded at $21,054.

— Rohan Goswami, MacKenzie Sigalos, Jihye Lee

Cathie Wood is more bullish on Tesla than ever

Cathie Wood is not giving up on Tesla shares. In fact, she's more bullish on the electric vehicle-maker than ever, she said in an investor webinar Thursday.

Even though the stock has struggled in the last year, she's kept buying the stock and thinks it could surge in the medium-term.

"Just from electric vehicles there could be... it is almost a fivefold increase in this stock during the next five years," Wood said. "And if you believe autonomous at all, it's closer to 13 times during the next five years. So we are as bullish about Tesla as we have ever been."

Tesla shares rose nearly 0.8% in after hours trading.

Pro subscribers can read more here.

—Carmen Reinicke, Yun Li

Retail stocks are moving in after hours trading

A group of retail stocks are moving in after hours trading Thursday.

Nordstrom – Nordstrom shares fell 6.5% after the company cut its annual profit forecast for its fiscal year following weak holiday sales. The retailer reported that net sales for the holiday period slipped 3.5%, and that it now expects annual revenue growth at the lower end of the 5% to 7% range it previously gave.

Retail stocks – Following Nordstrom's weak holiday earnings report and year-end forecast, other retailers slumped. Macy'sKohl's and Dillard's fell 2.5%, 4% and 1.3% respectively.

Read more here.

—Carmen Reinicke

Stock futures are higher after Dow slips into negative territory for the year

Stock futures rose Thursday evening as investors looked to hold onto the January rally after another losing day for markets.

Futures tied to the Dow Jones Industrial Average rose 40 points, or 0.13%. S&P 500 and Nasdaq 100 futures gained 0.22% and 0.41%, respectively.

Nordstrom slipped more than 6% in after hours trading after reporting weak holiday sales and cutting its year-end forecast. Netflix jumped 7% after reporting more subscribers than expected even though its quarterly earnings missed analysts' estimates.

—Carmen Reinicke