4:07pm: Big Tech earnings continue to impress
The Dow closed Thursday up 525 points, 1.6%, at 33,827, the Nasdaq Composite added 288 points, 2.4%, to 12,142 and the S&P 500 improved 79 points, 2%, to 4,135. The small-cap Russell 2000 index gained 19 points, 1.1%, to 1,750.
For the Dow, it was the best trading day since January 6.
Leading the way was Meta, shares of which rocketed 14% higher after the company reported earnings. Overall, Big Tech earnings have been a major driver this week. Those reporting after the bell today include Amazon, Intel and Snap.
However, there is still no shortage of pessimistic investors, according to the latest weekly survey from the American Association of Individual Investors
Individual investor pessimism rose to 38.5% from 35.1%, marking the tenth consecutive week that the bearishness figure has been above its historical average of 31%. Bullishness declined to 24.1% from 27.2% last week, and neutral opinion lowered to 37.4% from 37.7%.
That could be a good sign, though, according to AAII. The theory is that if investors say they are more pessimistic, that means they’re closer to being done selling off stock, and thus have more cash to invest.
12.05pm: Meta Platforms stock pops 14% on upbeat forecast
US stocks were higher in noon trading as tech stocks turned up following better-than-expected financial results and forecast from Meta Platforms, Inc.
At midday, the Dow rose 306 points to 33,608, while the S&P 500 added 48 points at 4,104 and the tech-heavy Nasdaq gained 202 points to 12,057.
“The market was waiting with bated breath for Big Tech,” LPL Financial chief global strategist Quincy Krosby said.
“Across the board, it hasn’t disappointed, and the market needed that,” he added.
Notable movers included shares of Caterpillar Inc, which slipped 3% after the heavy machinery maker’s 1Q results beat expectations but the company’s flat order backlog suggested demand may have peaked.
9:40am: US economy losing momentum
US stocks were buoyed at the open by strong earnings reports from tech heavyweights as investors also weighed up new economic data, including the first quarter gross domestic product (GDP) reading and initial jobless claims for last week.
1Q GDP rose at a slower pace than expected, growing 1.1% during the quarter, below the forecast 1.9% and a significant drop from the previous two quarters at 2.9% and 3.2% respectively.
“Today’s figure is evidence that the US economy is losing momentum,” commented BRI Wealth Management portfolio manager Tom Hopkins.
“The Federal Reserve has continued ahead with monetary tightening lifting rates to just under 5% at the fastest pace in decades. The outcome of this is beginning to bear fruit as clearly demand in the economy is dampening,” Hopkins said.
Meanwhile, initial jobless claims for the week ended April 22 came in below expectations at 230,000, compared to the previous week’s revised figure of 246,000. Analysts had been expecting 248,000 claims.
Pantheon Macroeconomics chief economist Ian Shepherdson said that this dip looked more like noise than a signal.
“The trend is rising, lagging the surge in layoff announcements,” he said. “We expect a rebound next week.”
Just after the opening bell in New York, the Nasdaq had added 111 points or 0.9% at 11,964 points, the S&P 500 was up 27 points or 0.7% at 4,083 points, and the Dow Jones was up 138 points or 0.4% at 33,440 points.
7:50am: More positive tech earnings
The Nasdaq is likely to lead the gains when Thursday trading gets underway after shares in Facebook owner Meta Platforms spiked after the close on Wednesday on the back of its first-quarter results, while investors will also be eyeing a US GDP report.
Contracts for the Nasdaq-100 rose 0.9% in pre-market trading, supported by a 12% gain in Meta Platforms' shares, while futures for the Dow Jones Industrial Average added 0.4% and those for the broader S&P 500 index rose 0.5%.
The main US benchmarks ended mixed on Wednesday after better-than-expected earnings from large tech companies pushed the Nasdaq 0.5% higher to 11.854. But the DJIA still shed 0.7% to 33,302. while the S&P 500 fell 0.4% to 4,056 as negative sentiment caused by First Republic Bank (NYSE:FRC) led to a broader selloff.
“After Wall Street endured another difficult session linked to concerns about the stability of US regional banks, Meta Platforms delivered better-than-expected results and this lifted sentiment,” commented AJ Bell investment director Russ Mould.
"The owner of Facebook, Instagram and WhatsApp saw signs of recovery in its advertising business, helping to dispel concerns about the continued relevance of these platforms,” he said. “First Republic shares continued to crater, laying bare the crisis of confidence in this part of the US banking universe.”
Ahead of the Federal Reserve’s next Federal Open Market Committee (FOMC) from May 2 to 3, another big focus for traders today will be the release of advance quarterly GDP data in the US, said TickMill Group market analyst James Harte.
“Estimates peg the initial GDP reading for Q1 at 2%, down from 2.6% the prior quarter, which was itself a decline on the prior quarter’s 3.2% reading,” he added. “If confirmed at 2%, the impact will likely be a weaker US dollar as traders eye a less hawkish outlook from the Fed at next week’s FOMC meeting.”
Companies reporting quarterly earnings today include Amazon, MasterCard, Intel, Caterpillar and Snap, among others.
Contact the author at stephen.gunnion@proactiveinvestors.com