By Yasin Ebrahim
Investing.com – The Dow climbed Thursday, as a rally in Meta following better-than-feared quarterly results put tech stocks back on investor shopping lists.
The Dow Jones Industrial Average gained 1.9%, or 614 points, the S&P 500 rose 2.5%, and the Nasdaq jumped 3.1%.
Meta, the parent of Facebook (NASDAQ:FB), reported mixed quarterly results as revenue fell short of estimates and guidance was softer than expected. But the results weren’t as bad as many had feared, and the social media company saw a return to sequential user growth, helping the stock surge about 18%.
“While the outlook [from Meta] was below expectations it was clearly a relief for investors and better than the worst-case scenario that seemed to be baked into shares headed into the print,” Wedbush said in a note.
Amazon.com (NASDAQ:AMZN) and Apple (NASDAQ:AAPL), closed the curtain on big tech earnings after the closing bell, were both up more than 4%. In afterhours trading, Amazon (NASDAQ:AMZN) fell about 10% after reporting a first quarter loss for the first time since 2015 and guidance fell short of estimates.
Apple was up 2% in afterhours trading after its second-quarter results topped Wall Street estimates following record revenue in its services revenue and strong iPhone demand.
Chip stocks also added momentum to the broader tech sector, underpinned by a more than 9% rise in Qualcomm (NASDAQ:QCOM) after the chipmaker reported better-than-expected fiscal second-quarter results and third-quarter guidance.
The chipmaker’s results drew widespread optimism on Wall Street. “[W]e believe the setup for continued growth for the 2H22 remains strong as all the drivers for F2Q/F3Q are joined by typical seasonality and incremental supply,” Deutsche Bank said in a note.
PayPal (NASDAQ:PYPL) soared more than 11% after its first-quarter results beat analysts’ estimates, supported by strong payments volume growth and net new active accounts.
McDonald’s (NYSE:MCD) also delivered better-than-expected results as price hikes helped offset the impact of rising costs and the Ukraine war. Its shares were up more than 3%.
Teladoc (NYSE:TDOC) fell more than 40% after the cutting its full-year outlook following quarterly results that weighed down by on softer demand.
The wave of mostly positive quarterly results from corporates helped offset an unexpected decline in U.S. economic growth.
But economists, pointing to a strength of the consumer, were quick to downplay the report.
“We remain constructive on nominal demand which continues to be supported by pent-up savings and strong wage gains,” Jefferies said.
The surprise decline in the U.S. growth isn’t expected to factor into the Fed’s thinking as above-trend inflation will continue to drive policy.
“I think the Fed will follow through for part of this journey, with two or three aggressive increases, and they'll start to shrink the balance sheet,” said John Ragard, senior portfolio manager, small cap equity at Spouting Rock Asset Management told Investing.com in an interview on Thursday.
Energy continued its melt-up as oil prices were boosted by fresh supply fears as Germany reportedly is warming up to the idea for life without Russian oil.
German representatives to EU institutions are reportedly ready to agree to ban on Russia oil imports should Berlin be given enough time to find alternative suppliers, the Wall Street Journal reported, citing unnamed sourced.
Despite the rally on Wall Street, the market likely faces a rocky road ahead paved with uncertainty that is likely to keep investors on the side lines.
“I think until we get these uncertainties lifted on inflation, on the war, on supply chains, on Chinese lockdowns … all of these clouds that are out there have to clear a bit before I think people are willing to be more risk on again,” Ragard added.