U.S. tech stocks led gains on Thursday, with better-than-expected earnings from some of the big tech stocks boosting shares.
The Nasdaq Composite surged 1.9%, the S&P 500 gained 1.4% and the Dow Jones Industrial Average rose 0.6%. In the bond market, the yield on the 10-year Treasury note rose to 2.881% from 2.817%.
Shares of social media company Twitter rose 1 percent after it reported revenue growth and withdrew financial guidance ahead of Elon Musk’s acquisition of the company. Shares of Southwest Airlines rose 3.4% on expectations the company will be profitable for the rest of the year.
The recent volatility in stock market prices has also underscored the uncertainty facing investors as the Federal Reserve is set to take a series of rate hikes to tame inflation. The market’s gains today stand in stark contrast to the slump in tech stocks after Netflix earnings disappointed investors in early April. Markets have been thinly traded and prone to two-way tug-of-war, as it remains unclear how the Fed rate hike will affect the broader economy, fund managers said.
“I think this is still a period of particularly high fundamental uncertainty,” said John Roe, head of multi-asset funds at Legal & General Investment Management. Roe said stock markets have been volatile since the 2008 financial crisis. It has never sustained such high levels, except at the beginning of the outbreak. He added that bond market volatility was the highest since the financial crisis.
On Thursday, however, a slew of corporate earnings reports boosted sentiment. Shares of Meta surged more than 13% after earnings beat estimates, suggesting investors may be seeing signs of relief in the battered tech sector. Shares of the company fell 48% in the year leading up to the results.
“It’s been a pretty good earnings season and it’s been supportive for stocks,” said Victoria Fernandez, chief market strategist at Crossmark Global Investments.
Meanwhile, Qualcomm shares rose more than 5% in premarket trading on the back of strong earnings, while PayPal shares rose about 3% despite its poor second-quarter guidance. McDonald’s, Merck & Co, Eli Lilly and Company and Southwest Airlines were all higher in early trade after reporting better-than-expected quarterly earnings. The market is poised for a rebound tonight from the tech-led sell-off in April.
The move comes after the Nasdaq Composite suffered a volatile session on Wednesday, falling to its lowest level in 2022 amid concerns over slowing global growth, rising inflation and the Federal Reserve’s monetary tightening Stocks have struggled this month on policy concerns.
U.S. gross domestic product (GDP) unexpectedly fell 1.4% in the first quarter from a year earlier, while economists had expected a 1% rise. But some investors dismissed the economic contraction, citing rising prices and a trade deficit as the biggest contributors to the decline.
The S&P 500 fell 7.7% in April through Wednesday, its biggest monthly drop since March 2020. The Nasdaq Composite has fallen more than 12% since the beginning of April, on track for its worst monthly performance since October 2008. The Dow has fared relatively well, down about 4% this month.
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