Wall Street ended sharply higher on Thursday after a strong quarterly report from Meta Platforms lifted battered technology and growth stocks and offset concerns about the US economy contracting in the first quarter.
Parent Facebook jumped 17.6% after the social network reported a bigger-than-expected profit and rebounded after a drop in user numbers.
Communication services and technology were among the strongest of the 11 S&P 500 sector indices, jumping 4.04% and 3.89%, respectively.
Apple Inc, the world’s most valuable company, and e-commerce giant Amazon.com Inc both rose more than 4% ahead of their quarterly reports later in the day.
In extended trade, Amazon fell about 10% after the company forecast current-quarter sales below Wall Street estimates.
Investors have been shedding high-growth stocks for weeks amid worries about inflation, rising interest rates and a potential economic slowdown. Even with Thursday’s strong gain, the tech-heavy Nasdaq was down nearly 10% in the month of April, on track for its biggest one-month decline since March 2020.
The S&P 500 has gained or lost 2% or more in one day about 32 times so far in 2022, compared to 24 such days in 2021.
“When interest rates, the path of inflation and what the Fed is going to do are so volatile, it just means that pricing all the other assets is that much more difficult,” said Zach Hill, head of in portfolio strategy at Horizon Investments in Charlotte, North. Caroline.
“We’ve been doing a lot of earnings data over the past two days and weeks and overall, aside from a few outliers, the underlying fundamentals for US companies have been relatively strong,” Hill said.
The U.S. economy contracted unexpectedly in the first quarter as COVID-19 cases rose again and government money for pandemic relief dwindled.
The first decline in gross domestic product since the short, sharp pandemic recession nearly two years ago, reported by the Commerce Department, was mainly due to a wider trade deficit as imports rose and a slowdown the rate of inventory accumulation.
Unofficially, the S&P 500 climbed 2.47% to end the session at 4,287.50 points.
The Nasdaq gained 3.06% to 12,871.53 points, while the Dow Jones Industrial Average rose 1.85% to 33,916.39 points.
The war in Ukraine, COVID lockdowns in China and soaring inflation have weighed on the outlook for the global economy, sparking volatility ahead of the Federal Reserve’s May meeting next week. Fed watchers expect a rate hike of 50 basis points.
Overall, first-quarter earnings have been better than expected, with 81% of the 237 S&P 500 companies reporting results so far above Wall Street expectations. Typically, only 66% of companies exceed estimates, according to data from Refinitiv.
Qualcomm Inc jumped 9.7% after the chipmaker forecast third-quarter revenue to beat analysts’ expectations.
The Philadelphia semiconductor index jumped 5.6%, its biggest one-day gain in more than a year.
Caterpillar Inc fell 0.7% after warning that current quarter profit margins were likely to come under pressure due to soaring costs.
Among other movers, Amgen Inc fell 4.3% after the drugmaker said the US Internal Revenue Service was seeking additional back taxes of $5.1 billion.
Volume on U.S. exchanges was 12.3 billion shares, compared to an average of 11.8 billion over the past 20 trading days.
Across the US stock market as a whole, rising stocks outnumbered falling stocks by a ratio of 2.6 to one.
The S&P 500 posted five new 52-week highs and 44 new lows; the Nasdaq Composite recorded 25 new highs and 672 new lows.
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