The US markets experienced their best day in months due to a strong performance in technology shares and a slight growth number in the domestic market.
-On Thursday 27th April, the U.S. markets experienced a surge as Meta's quarterly results and lower-than-anticipated U.S. GDP figures bolstered indexes, leading some investors to speculate that the Federal Reserve could end its tightening efforts soon.
– Meta's stock price surged 14% on Thursday, following the release of its better-than-expected Q1 revenue results after the market closed on Wednesday. Meta's shares have climbed to $238 per share, marking a 170% increase since November, when the company hit a low of $89.
– The US GDP grew at an annual rate of 1.1% in the first quarter, which was lower than the predicted 2% by economists. The headline number was pulled down by a 2.26 percentage point decrease in private inventory investment.
– The Stoxx 600 index in Europe increased slightly by 0.18% with the support of a 2.67% increase in Deutsche Bank and a 5.32% increase in Barclays.
– Amazon's revenue for the first quarter of the year exceeded expectations, with a 9% year-on-year increase to $127.4 billion. However, the company cautioned that the growth in its cloud division might decelerate in 2023. This warning led to a 2.3% drop in Amazon's shares during extended trading.
– Investors reacted positively to Intel's cost-cutting measures, causing its shares to rise 4.52% in after-hours trading.
– After a week of positive earnings reports from major technology companies, analysts are becoming more optimistic about the outlook for some companies that are set to report their earnings next week.
CNBC Pro has reviewed FactSet data and identified five compaanies that are receiving positive recommendations from Wall Street analysts.
The Dow Jones Industrial Average experienced a 1.57% increase, while the S&P 500 saw a rise of 1.96%, and the Nasdaq Composite rallied by 2.43%. This marked the best performance for the Dow and S&P 500 since January, and for the Nasdaq since March.
The prominent technology companies took the lead in driving the market forward, as Amazon, Alphabet, Apple, and Microsoft all experienced gains ranging from 2.8% to 4.6%. Additionally, Meta (formerly known as Facebook) saw a significant surge of nearly 14% following a robust earnings report released on Wednesday.
The GDP report for the first quarter didn't match the positive performance seen from Big Tech. The annualized growth rate of 1.1% in the first quarter represents a decline of more than half compared to the previous quarter's expansion of 2.6%. This indicates a slowdown in the economy.
According to CNBC's Jeff Cox, the markets experienced a rally due to the lower-than-anticipated economic growth. Investors appeared to interpret the GDP figure as a potential indication that the Federal Reserve might soon halt its regime of increasing interest rates.
Investors' focus on future prospects rather than past performance is further exemplified by recent market trends. In after-hours trading, Amazon's shares declined despite reporting higher profits and revenue. Conversely, Intel's shares rose despite the company posting its largest-ever quarterly loss.
The reason behind this divergence is that Amazon provided a cautionary note about potential slowing revenue from its cloud division for the current year. On the other hand, Intel expressed optimism regarding the growth of its profit margins through ongoing cost-cutting measures.
Investors' emphasis on long-term prospects is sensible. Despite the perception of a robust earnings season, with 79% of the 235 S&P 500 companies that have reported earnings so far surpassing expectations, as per FactSet data, Joseph Terranova from Virtus Investment Partners believes that there are potential challenges looming ahead.
