Technology stocks rallied higher on Thursday, led by Meta Platforms, as investors cheered the company’s solid earnings report, which showed resilience amid rising inflation.
The 11.72% Facebook FB owner’s stock rose 13% after the company said it added more users in the first quarter than investors had expected. That gain helped push the Nasdaq Composite Index up 0.6% and boosted the S&P 500 technology sector, the best-performing group in the index during morning trade. The next big earnings test comes after the closing bell, when Apple and Amazon. AMZN 2.64% com announce quarterly results.
The S&P 500 was up 0.6% and the Dow Jones Industrial Average was up 0.3%, or 100 points. In the bond market, the 10-year Treasury note yield rose from 2.817% to 2.875%. Yields and bond prices move in opposite directions.
Twitter shares fell 0.7% after the social media company posted higher earnings and withdrew its financial guidance ahead of its acquisition by Elon Musk. Southwest Airlines rose 2.4% on forecasts that the airline will be profitable for the rest of the year.
Caterpillar shares fell 5.1% after the industry leader said margins fell in the first quarter. McDonald’s said earnings were higher than analysts had expected, pushing shares up 1.8%.
On the economic front, data showed the US economy shrank at an annual rate of 1.4% in the first quarter, the first contraction since the pandemic.
An earlier surge in stock futures highlighted the uncertainty investors face when the Federal Reserve launches a series of rate hikes to quell inflation. Thursday’s rally contrasted with the swoon in tech stocks after Netflix earnings disappointed investors in early April. With little transparency on how higher rates will seep through the broader economy, wealth managers say trading has been thin and prone to whiplash in both directions.
“I don’t think people are very convinced,” said John Roe, head of multi-asset funds at Legal & General Investment Management. “It is a time when fundamental uncertainty is particularly high.”
Volatility in stock markets has not been sustained at such high levels since the 2008 financial crisis, with the exception of the onset of the pandemic, Mr Roe said. Bond volatility is the highest since the financial crisis, he added.
Investors will get a glimpse of how decades of inflation — and the Fed’s response — are affecting consumer sentiment when Apple and Amazon report quarterly results after the closing bell.
Overseas markets recovered. The Stoxx Europe 600 rose 0.8%, led by shares in auto companies, technology companies and banks.
Standard Chartered rose 14% after the UK-listed lender said profits rose in the first quarter. Volvo Car said revenue was up, sending shares of the Swedish automaker up 11%.
Traders worked on the floor of the New York Stock Exchange on Wednesday.
Photo: Justin Lane/Shutterstock
Chinese markets regained ground after concerns that lockdowns in major cities would slow growth in the world’s second largest economy. The Shanghai Composite Index edged up 0.6%. Hong Kong’s Hang Seng rose 1.7%.
The Nikkei 225 rose 1.8% after the Bank of Japan reiterated its commitment to keeping interest rates low despite rising inflation. The central bank said it would buy 10-year Japanese government bonds at a yield of 0.25% every business day to ensure the yield does not exceed this level.
The commitment to loose monetary policy contrasted with the Fed’s stance and caused the yen to fall against the dollar. Japan’s currency fell to about 130.65 yen per dollar, its weakest level since 2002. The offshore yuan weakened about 0.9%, with a dollar buying about 6.64 yuan.
The WSJ dollar index rose 0.8% to 95.94, near its highest level since March 2020, when the early spread of Covid-19 stressed global markets.
On the commodities side, European natural gas markets calmed down after prices spiked when Russia halted supplies to two members of the European Union on Wednesday. Gas futures prices fell 7.7% to €99.15, equivalent to $103.96 per megawatt-hour.
Benchmark Brent oil futures fell 0.1% to $104.85 a barrel.
Write to Joe Wallace at [email protected] and Quentin Webb at [email protected]
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