By Shreyashi Sanyal and Amruta Khandekar
(Reuters) – Nasdaq futures rose on Friday, after Netflix kicked off the earnings season for the growth sector on a positive note, but worries about a U.S. recession kept a lid on sentiment.
Shares of Netflix Inc jumped 6.6% in premarket trading, after the streaming company added more subscribers than expected in the fourth quarter and said co-founder Reed Hastings was stepping down as chief executive.
Netflix’s quarterly update comes as the technology sector faces gloomy prospects due to rising interest rates and economic worries that have forced companies such as Microsoft Corp and Amazon.com Inc to lay off thousands of employees.
Alphabet Inc was the latest to join the list as it said it was cutting 12,000 jobs on Friday. The company’s shares rose 3.5%.
“While Netflix did really well and that’s very promising, it’s actually going to be one of the toughest earnings season for Big Tech,” said Sylvia Jablonski, chief investment officer of Defiance ETFs.
“And we already have some insight into that because a lot of them have been coming out with massive layoffs.”
Wall Street’s main indexes ended the previous session lower after resilient labor market data renewed concerns the Federal Reserve would continue its aggressive rate-hiking cycle that could tip the economy into a recession.
Recent commentary from Fed officials has pointed to a terminal rate above 5%, while money market participants still bet rates peaking at 4.9% by June and see a 93.7% chance for a 25-basis point rate hike in February.
“We had encouraging data which showed inflationary pressures falling, which suggests the Fed may not have to tighten as far or as aggressively. That is good for equities generally, but if we’re going to get a mild recession, that’s not good for earnings,” said Stuart Cole, Equiti Capital’s head macroeconomist.
At 8:29 a.m. ET, Dow e-minis were down 10 points, or 0.03%, S&P 500 e-minis were up 9 points, or 0.23%, and Nasdaq 100 e-minis were up 77.25 points, or 0.68%.
SLB rose 0.5% after the oilfield services firm beat Wall Street estimates for fourth-quarter profit.
The S&P 500 has lost 2.5% so far in the week and the Nasdaq is down more than 2%. The Dow is down 3.7% and is on track for its worst week since September.
Investors will monitor existing home sales data, which is expected to show a moderation in December. The report is due at 10 a.m. ET.
Also on the radar are comments from Philadelphia Fed President Patrick Harker and Fed Governor Christopher Waller.
(Reporting by Shreyashi Sanyal and Amruta Khandekar; Additional reporting by Shubham Batra in Bengaluru; Editing by Anil D’Silva and Shounak Dasgupta)