The Dow rallied Thursday to notch its biggest one-day gain as Meta led a slew of mostly better-than-expected quarterly earnings from corporates, stoking bullish bets on stocks.
The Dow Jones Industrial Average gained 1.6%, or 524 points, notching its best day since Jan. 6. The S&P 500 rose 1.9% and the Nasdaq added 2.4%.
Meta Platforms Inc (NASDAQ:META) reported quarterly results that beat on both the top and bottom lines, and the social media giant delivered upbeat guidance, sending its shares more than 13% higher.
The quarterly results and guidance signal a transition for the social media giant “from a cost cut to a revenue recovery story,” Credit Suisse said in a note.
Meta’s results continued a trend of better-than-expected quarterly results from megacap tech, improving sentiment on big tech, with Alphabet (NASDAQ:GOOGL), Apple Inc (NASDAQ:AAPL), and Microsoft Corporation (NASDAQ:MSFT) in rally mode.
Amazon (NASDAQ:AMZN) is expected to report quarterly results after markets close on Thursday.
Elsewhere on the earnings front, Caterpillar Inc (NYSE:CAT) pared losses to trade flat after reporting quarterly results that topped estimates, while Honeywell International Inc (NASDAQ:HON) gained 4% amid better-than-expected first-quarter earnings.
Toymakers Hasbro (NASDAQ:HAS) and Mattel Inc (NASDAQ:MAT) were also big movers, up 14% and 6% respectively, after delivering better-than-expected quarterly results.
Mattel’s Q1 beat was driven by “the favourable timing of shipments at quarter-end, which shifted revenue from the second quarter into the first,” Investing.com cited Goldman Sachs saying in a note.
The wobble in First Republic Bank (NYSE:FRC), which slumped 30% a day earlier, steadied despite recent reports that the U.S. government is unwilling to intervene in the rescue of the beleaguered regional bank.
Energy also recovered recent losses as oil prices steadied, though investor focus will likely switch to quarterly results from the oil majors including Exxon Mobil Corp (NYSE:XOM), and Chevron Corp (NYSE:CVX) due Friday.
In other news, Cannabis including Canopy Growth Corp (NASDAQ:CGC), Tilray Inc (NASDAQ:TLRY), and Cronos Group Inc (NASDAQ:CRON) racked up gains after U.S. lawmakers reintroduced the Secure and Fair Enforcement Banking Act that seeks to allow banks to legally offer services to marijuana companies.
The day of gains for the broader market comes just as data showed the economy slowed more than expected in the first quarter.
A deeper dive into the data, however, points to a still strong consumer, Stifel says, that will likely encourage the Federal Reserve to lean toward higher for longer rates.
“For the Fed…the consumer on solid footing coupled with still elevated inflation, there is little if any incentive for the committee to back off against its fight to reinstate price stability with not only a rate hike in May, but also beyond,” Stifel added.
U.S. Economic Reports
Meanwhile, preliminary data released by the Commerce Department on Thursday showed U.S. economic growth slowed by much more than expected in the first three months of 2023, RTTNews cited.
The report said real gross domestic product increased by 1.1 percent in the first quarter after jumping by 2.6 percent in the fourth quarter of 2022. Economists had expected the pace of GDP growth to slow to 2.0 percent.
The Commerce Department said the slowdown in GDP growth primarily reflected a downturn in private inventory investment and a slowdown in non-residential fixed investment.
Meanwhile, an acceleration in consumer spending, an upturn in exports, and a smaller decrease in residential fixed investment helped limit the downside.
A separate report from the Labor Department showed first-time claims for U.S. unemployment benefits unexpectedly declined in the week ended April 22nd.
The report said initial jobless claims dipped to 230,000, a decrease of 16,000 from the previous week’s revised level of 246,000.
Economists had expected jobless claims to inch up to 248,000 from the 245,000 originally reported for the previous week.
At 10 am ET, the National Association of Realtors is due to release its report on pending home sales in the month of March. Pending home sales are expected to increase by 0.5 percent in March after climbing by 0.8 percent in February.
The Treasury Department is scheduled to announce the results of this month’s auction of $35 billion worth of seven-year notes at 1 pm ET.
