The Week's Top Stories is a guided tour through the biggest market stories of the week, from winning stocks to brutal dips to the facts and forecasts generating buzz on Wall Street.
WINNING WEEK
Stocks got a lift Friday due to a rally in tech and health care stocks that put Wall Street on track for a winning week after days of up-and-down trading. Stocks surged Tuesday but had been in choppy waters ever since, with the tech sector in particular fueling uncertainty. Investors had their eyes trained on the latest corporate earnings, while also continuing to weigh the odds of additional rate hikes from the Federal Reserve. They were also closely watching U.S. Treasury bonds, as the yield on 3-month bonds rose above the yield on 10-year bonds. This phenomenon, known as yield curve inversion, is commonly interpreted as an indicator of recession, because it signals that investors are less confident in the short-term prospects for the economy.
NETFLIX RALLIES
One tech company that gave investors hope this week was Netflix. The embattled streaming company hasn't had the best year on Wall Street, but its latest earnings report started to shift the narrative. Shares rallied 16 percent on Wednesday, following the release of revenue and profit forecasts that beat Wall Street estimates. Specifically, the company added 2.4 million subscribers globally, against a previous forecast of 1 million. The gains signaled that Netflix is still a major combatant in the streaming wars, despite increasingly fierce competition. The company also raised its forecast for the coming quarter, as it rolls out its new ad-supported option. However, for some perspective, the company's stock is still down more than 50 percent for the year.
SNAP SNAFU
Elsewhere in the tech sector, shares of Snap plunged 28 percent on Friday. The parent company of the Snapchat app once again posted less-than-stellar sales growth, and reported that it was operating under the assumption of zero revenue growth this quarter. It also signaled that a lackluster market for digital advertising would continue to drag on its business, due to the changes around privacy policies that Apple made last year. Ominously for other tech firms, Snap's earnings are usually interpreted as a preview of how the sector overall is performing.
UNITED AIRLINES
Shares of United Airlines were up almost 11 percent this week, after the airline reported higher-than-expected third-quarter earnings. The gains, which were driven by a rebound in travel demand, marked the company's best quarter since before the pandemic, a development that caught Wall Street by surprise. CEO Scott Kirby expressed optimism about the industry, even given the possibility of a recession. "Despite growing concerns about an economic slowdown, the ongoing COVID recovery trends at United continue to prevail and we remain optimistic that we'll continue to deliver strong financial results in the fourth quarter, 2023 and beyond."
KRISPY KREME BOOST
Krispy Kreme had a banner week. Its stock rose around 6 percent following news that the North Carolina-based donut chain was partnering with McDonald's. The fast-food chain will start test-selling three varieties of Krispy Kreme donuts at nine locations. However, McDonald's will not be making the pastries in-house. Krispy Kreme will be delivering them daily, similar to what it's done for other corporate partnerships, such as one with Walgreens.