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Meta adds ~14% touts AI might as digital ads boost outlook
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Eli Lilly up on annual profit forecast raise
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Amazon.com adds to session gains after late earnings
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Indexes up: Dow 1.57%, S&P 1.96%, Nasdaq 2.43%
(Adds official closing prices, volume and other details)
By Sinéad Carew, Sruthi Shankar and Ankika Biswas
April 27 (Reuters) - The tech-heavy Nasdaq led a Wall
Street rally on Thursday as a strong quarterly report from
Facebook parent Meta Platforms Inc overshadowed concerns over
slowing U.S. economic growth.
Shares in Meta closed up 13.9% after touching their
highest level in more than a year after the company forecast
quarterly revenue above estimates, and CEO Mark Zuckerberg said
AI was increasing traffic to its services and boosting ad sales.
As a result the S&P 500 communication services index ended up 5.5% for its biggest one-day percentage gain
since February 2022. Along with Meta, it got a boost from
Alphabet Inc , which reported upbeat results earlier
this week, while Comcast rose 10.3% after its
financial results impressed on Thursday.
“Facebook earnings last night and more broadly largecap
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 programs.”
After ending the regular session up 4.6% Amazon.com Inc were up another 7.6% in after-hours trading when it reported quarterly revenue ahead of estimates after the close. 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.
Of the S&P 500's 11 major sectors the biggest gainer was
communications services followed by consumer discretionary , up 2.8% while smallest gainer was energy ,
which advanced just 0.5%.
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 U.S. 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. Its 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.
Even as slower GDP growth reflected a drag from weak inventory investment, the Federal Reserve still is expected to raise interest rates by another 25 basis points next week. “Generally the economy looks like its decelerating. We think as the Fed continues with maybe one more rate hike next week we’ll start to see some more deceleration. Our base case is for a mild economic downturn in the second half,” said Edward Jones' Mahajan.
Eli Lilly and Co advanced 3.7% after raising its full-year profit forecast, while Comcast rose soared as it beat estimates for quarterly profit, thanks to broadband services demand and higher theme park attendance. EBay Inc climbed 5.1% after the e-commerce company forecast current-quarter revenue above projections. AbbVie Inc fell about 8% after the drugmaker missed quarterly revenue estimates for its newer treatments, while heavy machinery maker Caterpillar Inc dipped as a flat order backlog signaled demand may have peaked. Advancing issues outnumbered declining ones on the NYSE by a 3.26-to-1 ratio; on Nasdaq, a 1.89-to-1 ratio favored advancers. The S&P 500 posted 19 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 41 new highs and 200 new lows.
On U.S. exchanges 10.77 billion shares changed hands
compared with the 10.41 billion average for the last 20
sessions.
(Reporting by Sinéad Carew, Caroline Valetkevitch and Stephen
Culp in New York, Sruthi Shankar and Ankika Biswas in Bengaluru
Editing by Vinay Dwivedi and David Gregorio)
