Meta stock falls in third quarter report

Tech futures jump to meta-top after ‘encouraging’ Fed rally; Apple, Amazon, Google Revenue Next | Investor’s Business Daily

Dow Jones futures were down slightly early Thursday, while S&P 500 futures and particularly Nasdaq futures with the Facebook parent rose meta platforms (META) soars in its earnings report. A big day for the stock market rally followed as investors welcomed comments from Fed Chair Jerome Powell.


Parents of Apple, Amazon and Google alphabet (GOOGL) are available.

Major indices rallied on Wednesday, rising after the much-anticipated Fed meeting and particularly Fed Chair Powell. The Federal Reserve hiked interest rates by a quarter point and said it still sees “ongoing hikes” ahead of it. Powell confirmed this, but said it was a “good thing” and “encouraging” that inflation was falling even without a weakening of labor markets.

The market rally surmounted other key levels on Wednesday, while a large number of stocks broke out or flashed other buy signals, including the Chinese search and AI giant baidu (BIDU), chip gear manufacturer Lam Research (LRCX), maker of network monitoring software Dynatrace (DT), Delta Airlines (DAL) and more.

key income

Meta-platform revenue fell short of expectations, but revenue, sales forecasts and Facebook users exceeded views. It also announced a $40 billion share buyback. The parent company of Facebook and Instagram lowered its spending guidance, including capital expenditures. META stock was up 19% after the close of business. Shares rose 2.8% to 153.12 on Wednesday, hitting the 200-day moving average for the first time in more than a year and shaking off weak sales forecasts snap (SNAP).

Korvo (QRVO) exceeded results for the fiscal third quarter. But like many other chip stocks, Qorvo is down significantly for the current quarter. QRVO stock fell 3% in extended trading. Shares in the 5G and Apple iPhone chipmaker rose 4.5% to 113.53 on Wednesday.

ELF beauty (ELF) has reduced earnings prospects and significantly exceeded sales. Earnings per share doubled and growth accelerated for the third straight quarter. Revenue rose 49%, accelerating for the fourth straight quarter. The cosmetics maker also led up. ELF stock rose 16% on the night to a record high. Shares rose 1.8% to 58.58 on Wednesday, just below the record high set on Jan. 6.

early thursday, note (MRK) slightly beat Q4 views but resulted in low earnings per share for 2023. Eli Lilli (LLY) beat earnings forecasts but missed sales but forecast slightly higher for 2023 EPS. Bristol Myers Squibb (BMY) beat. MRK stock fell solidly. LLY stock declined slightly. BMY increased slightly.

Big pharma, which fared well in the 2022 bear market, has so far lagged a growth-driven market rally in 2023. LLY stock, Merck and Bristol Myers are all below their 50-day moving averages.

late thursday, Apple (AAPL), (AMZN) and Google report. All recover in 2023, but below their 200-day moving average. GOOGL shares and Amazon surged more than 4% overnight in sympathy with Meta.

Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live

Dow Jones futures today

Dow Jones futures fell 0.4% from fair value, with MRK shares and Honeywell (HON) act as a tugboat. S&P 500 futures were up 0.4%. Nasdaq 100 futures were up 1.2%, with META shares leading the way along with Google and AMZN shares. Tesla (TSLA) also helped and rose when Blackstone disclosed a large TSLA stake.

Meanwhile, the Bank of England hiked interest rates by 50 basis points on Thursday morning. The European Central Bank is expected to do the same before US markets open.

Keep in mind that overnight action in Dow futures and elsewhere doesn’t necessarily translate to actual trading in the next regular trading session.

Fed rate hikes “ongoing”

As expected, the Fed hiked rates by a quarter point on Wednesday, raising interest rates to between 4.5% and 4.75%. This follows a half-point hike by the Fed in December and four consecutive moves of 75 basis points before that.

The Fed’s policy statement goes on to say that policymakers expect “continued hikes” in interest rates, a clear signal that the Fed’s rate hikes are ongoing.

Fed Chair Powell’s “good cause”.

Fed Chair Jerome Powell confirmed this, saying there was “more work to do” and later clarified that “we are talking about a few more rate hikes”. He added that labor markets remain “extremely tight”.

However, Powell also said that the “disinflation process has begun.” Noting that inflation is falling even without a significant relaxation of working conditions, he said it was a “good thing” and “gratifying”. He also said policymakers “have no incentive to tighten too severely”.

That statement seemed to spark a rally in the afternoon.

On Wednesday morning, the Labor Department reported that job vacancies rose to 11.01 million, well above calls. The job report for January is available on Friday. But Powell’s comments suggest that markets don’t need to be quite as fixated on jobs data as they used to be.

The market is overwhelmingly expecting another quarter point Fed rate hike at the end of March, with rates rising slightly to 86% on Wednesday.

But even though Powell supports “a few more” hikes, investors are still leaning towards the March Fed rate hike as the highlight. That would leave the Fed’s interest rate range at 4.75% to 5%, below the Fed’s 5% to 5.25% forecast.

SPECIAL REPORT: Best Online Brokers 2023

Stock market rally Wednesday

The stock market rally was slightly bearish ahead of the Fed news but accelerated as Fed Chair Powell spoke.

The Dow Jones Industrial Average rose a fraction in trading on Wednesday after falling more than 1% on the day ahead of the Fed’s announcement. The S&P 500 index rose just over 1%. The Nasdaq Composite rose 2%. Small-cap Russell 2000 is up 1.5%.

US crude prices slipped 3.1% to $76.41 a barrel as domestic crude inventories rose for a sixth straight week. Natural gas prices plunged 8%, continuing their epic collapse. Copper futures were down 2.8% as prices settled ahead of the Fed’s rate hike announcement.

The 10-year government bond yield slipped 13 basis points to 3.4%. The two-year Treasury yield, which is more closely linked to Fed policy, fell 10 basis points to 4.11%. That is well below the current key interest rate range.

The US dollar fell to an eight-month low.


Among growth ETFs, innovator IBD 50 ETF (FFTY) is up 1.5%. The iShares Expanded Tech-Software Sector ETF (IGV) is up 2.85%. The VanEck Vectors Semiconductor ETF (SMH) is up 4.7%. Lam Research and AMAT stock are big SMH holdings, with QRVO stock also being a component.

Mirroring more speculative story stocks, ARK Innovation ETF (ARKK) sprinted 4.4% and ARK Genomics ETF (ARKG) gained 2.4%.

SPDR S&P Metals & Mining ETF (XME) 1.8% and the Global X US Infrastructure Development ETF (PAVE) 1.5%. The US Global Jets ETF (JETS) was up 1% with DAL stock a top component. The SPDR S&P Homebuilders ETF (XHB) is up 2%. The Energy Select SPDR ETF (XLE) was down 2% and the Financial Select SPDR ETF (XLF) was flat. The Health Care Select Sector SPDR Fund (XLV) edged up 0.5%.

The five best Chinese stocks to watch right now

Analysis of the market rally

Major indices continued to gain momentum, with major improvements after Fed Chair Powell began speaking.

The Nasdaq appears to be well above its 200-day moving average and highs from late 2022. The Russell 2000 clearly surpassed that level.

The S&P 500 also seems to have passed its 200-day moving average. The benchmark index also moved off its December highs.

The Dow Jones, now the laggard index, tested its 200-day moving average before recovering with a slight gain.

Keep in mind that the market often reacts to Fed meetings on the second day.

In the meantime, the rest of the week remains packed with news. Huge Thursday night earnings are due from Apple, Amazon, Google, Qualcomm (QCOM), Ford engine (F) and more, with the January job report on Friday.

The S&P 500’s biggest daily gainers and losers over the past few weeks have been dominated by gain drivers.

DT bearing, OI glass (OI), Strings (SYK) and Atkore (ATKR) left the bases on Wednesday.

But there were many good moves without a result on Wednesday, particularly following testimony from Fed Chair Powell.

LRCX stock and equipment giant Applied Materials (AMAT) broke out of the bottom formation while DAL stock and JB Hunt Transport Services (JBHT) and performance food group (PFGC) cleared traditional buy points. BIDU stock also broke out.

Arista Networks (A NET), Pure storage (PSTG) and Global Foundries (GFS) all deleted early entries Wednesday. However, Meta Platforms’ lower investment plans could hit Arista and Pure Storage. ANET stock fell slightly after hours.

Time the market with IBD’s ETF market strategy

What now

The stock market rally continues with the Nasdaq, Russell 2000 and leading stocks leading the way. The Fed meeting is out of the way as there is increasing clarity on the central bank’s endgame.

There is increasing evidence that the current market rally will be a sustained uptrend.

So investors could have added new positions on Wednesday and benefited from a fresh crop of buying opportunities. It is still advisable to do this gradually and not buy for too long or focus. If this market rally has legs, steadily increasing exposure can quickly take you fully invested or beyond. If this market rally falters, even for a short time, you won’t get caught. With profits looming for Apple and Google and the Nasdaq ramping up so quickly in 2023, a pullback wouldn’t come as a surprise.

Before you buy stocks, you need to find and study them. Prepare your watch lists and game plan.

Read The Big Picture every day to keep up to date with market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.


Why this IBD tool makes finding top stocks easy

Catch the next big winner stock with MarketSmith

Want to make quick profits and avoid big losses? Try SwingTrader

IBD Digital: Unlock IBD’s premium stock lists, tools and analysis today

Tesla vs. BYD: EV giants vie for the crown, but which is the better buy?