NEW YORK: Wall Street stocks enjoyed their best session in weeks on Thursday (April 27) following strong results from Facebook parent Meta, while banking shares bounced.
All three major indices finished solidly higher.
The Dow Jones Industrial Average rose 524.29 points, or 1.57%, to 33,826.16, the S&P 500 gained 79.36 points, or 1.96%, to 4,135.35 and the Nasdaq Composite added 287.89 points, or 2.43%, to 12,142.24.
While the S&P and the Dow registered their biggest daily percentage gains since Jan 6, the Nasdaq boasted its biggest single-day advance since March 16.
Meta, owner of Facebook, surged around 14% as it reported a profit of US$5.7 billion in the first quarter – the latest favourable results by a US tech giant – prompting relief in the market following earlier fears that the sector might sputter.
“Facebook earnings last night and more broadly large-cap earnings continue to surprise to the upside,” said Mona Mahajan, senior investment strategist at St Louis-based Edward Jones.
“There were big expectations going into earnings with these sectors already outperforming so there was a little bit of hesitation about whether they would disappoint. In fact, a lot of these business models proved pretty resilient,” she said. “And the other part of the story is that a lot of companies that are cash rich have been issuing buyback programmes.”
Art Hogan, an analyst at B. Riley Financial, said investors were also heartened by US gross domestic product data that showed strong consumer spending, even if the headline figure disappointed.
Further “the worst of the regional bank turmoil is likely in the rear mirror”, he said, noting that most US lenders released earnings that were reassuring.
“It doesn’t feel like the market is expecting some contagion,” Hogan said.
Among individual companies, Caterpillar shares fell 0.9% despite reporting solid earnings, as the market remained unconvinced about the company's outlook amid recession worries.
Shares of Southwest Airlines dropped 3.3% after it announced it would trim 2023 capacity and slow its hiring plan due to delays in new plane deliveries from Boeing, whose stock rose 1.5%.
After ending the regular session up 4.6% Amazon.com Inc was up another 7.6% in after-hours trading when it reported quarterly revenue ahead of estimates after the close.
Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina noted that economic data released on Thursday told a less positive story than earnings reports.
It showed US economic growth slowed more than expected in the first quarter as an acceleration in consumer spending was offset by businesses cutting back on inventory investment.
“All things being equal the macro data this morning were very negative. With the market up this much after that data it shows that investors are looking past macro ... Earnings reports have been very good. It’s definitely not irrational exuberance,” said Zaccarelli.
Expectations for first-quarter earnings have drastically improved, with analysts projecting a 2.4% year-over-year drop for profits at S&P 500 companies versus the 5.1% decline forecast at the start of the earnings season, according to analyst estimates gathered by Refinitiv. – AFP, Reuters
