US stocks finished sharply higher Thursday as investors piled into technology stocks following results from Facebook parent Meta Platforms that weren’t as bad as feared.
Investors also brushed off data that showed the US economy contracted unexpectedly in the first quarter.
The Dow Jones Industrial Average DJIA
rose 614.46 points, or 1.9%, ending at 33,916.39.
The S&P 500 SPX
gained 103.54 points, or 2.5%, finishing at 4,287.50.
The Nasdaq Composite COMP
advanced 382.59 points, or 3.1%, closing at 12,871.53, after also briefly trading in negative territory.
Dow and S&P 500 mark best daily percentage climb since March 9, while Nasdaq sweeps to best day since March 16, according to Dow Jones Market Data
On Wednesday, the Dow rose 62 points, or 0.2%, while the S&P 500 gained 0.2% and the Nasdaq Composite failed to hold a bounce, ending the day with a loss of less than 0.1%.
However, the S&P 500 is down 5.4% so far in April, the Nasdaq Composite has lost about 9.5% and the Dow has shed 2.2% for the same stretch.
What drove markets
Major indexes recorded significant gains Thursday on optimism about earnings after results from Meta Platforms FB.
Though they weren’t well ahead of the consensus, as revenue actually came in weaker than forecast, expectations were low given the 48% decline this year in the stock. Shares jumped 17.6%.
Meta’s better-than-forecast subscriber numbers sets the stage for two other megacap tech stock results due after the close Thursday, Amazon.com AMZN
and Apple AAPL.
Though the stock-market decline for Amazon hasn’t been as severe as Meta’s.
“We are seeing a market that’s beginning to perhaps show some fundamental strength, in the sense that earnings are now coming into play,” said Peter Cardillo, chief market economist at Spartan Capital Securities, by phone.
“Yesterday, we had a very weak recovery, but with the S&P 500 now comfortably above the 4,200 level, this rally is likely to continue for a bit longer,” he said, adding that the upswing could mean slightly less carnage in April for stocks. despite ongoing uncertainties.
Earlier this week, the S&P 500 was flirting with its worst April performance since 1970 when it dropped more than 6%, according to Dow Jones Market Data. At last check, it was down 5.4% on the month.
Investors were also weighing a first look at first-quarter economic growth, with gross domestic product showing a 1.4% annualized contraction after a 6.9% expansion in the final quarter of 2021. Economists surveyed by The Wall Street Journal had forecast 1% growth, but some had warned of the potential for a negative number.
As economists had warned, the decline was mostly due to a record international trade deficit, lower government spending and declining inventories, but robust consumer spending and businesses investment signals the economy was still expanding at a steady pace.
“Earnings are coming out and they are really strong, even though companies are facing tough comps,” said Max Wasserman, founder and senior portfolio manager at Miramar Capital, near Chicago.
“The problem is on the macro side,” Wasserman said by phone, while pointing to supply-chain bottlenecks, high inflation, uncertainty about whether the Federal Reserve can tighten financial conditions without unleashing a recession and Russia’s war in Ukraine.
Given the tougher backdrop, he expects choppy markets for at least the next three months as the Fed looks to get inflation under control. He also sees the potential for another 5% to 10% drawdown for the S&P 500 over that stretch, as markets adjust to likely higher interest rates.
See: Fed’s half-percentage-point interest rate hike next week seen baked in the cake
The yen USDJPY
meanwhile slumped to a fresh 20-decade low after the Bank of Japan didn’t alter its easy monetary policy stance.
See: Dollar domination continues, as yen slumps to two-decade low
Which companies were in focus?
Shares of Teladoc Health Inc. TDOC
tumbled 40.2% after the telemedicine company cut its full-year outlook.
McDonald’s Corp. MCD
shares rose 2.9% after beating expectations on earnings and revenue.
shares gained 4.9% after the drug company topped estimates for the first quarter, buoyed by more than $ 3 billion in sales of its COVID-19 antiviral.
Shares of Southwest Airlines LUV
climbed 2.1% after the air carrier reported a wider-than-expected first-quarter loss but revenue that beat expectations, amid a “sharp rebound” in March.
fell 0.7% after the maker of construction and mining equipment blew past estimates for the first quarter.
The yield on the 10-year Treasury note BX: TMUBMUSD10Y
rose 4.5 basis points to 2.862%. Yields and debt prices move opposite each other.
Oil futures pushed higher, with the US benchmark CL
up 3.3% to close at $ 105.36 a barrel. Gold futures GC00
edged 0.1% higher to close at $ 1,891.30 an ounce.
rose 2.3% to trade near $ 40,000.
The Stoxx Europe 600 XX: SXXP
rose 0.6%, while London’s FTSE 100 UK: UKX
The Shanghai Composite CN: SHCOMP
rose 0.6%, while the Hang Seng Index HK: HSI
in Hong Kong rose 1.7% and Japan’s Nikkei 225 JP: NIK
–Steve Goldstein contributed reporting