- Lower inventories slow US economic growth in the first quarter
- Meta high, promotes AI when digital ads improve prospects
- Eli Lilly raises annual earnings guidance
- Amazon.com, Intel Earnings Due After Market Close
- Indexes up: Dow 0.72%, S&P 0.95%, Nasdaq 1.31%
April 27 (Reuters) – Wall Street’s main indices rose on Thursday, as a series of strong earnings updates from companies including Meta Platforms, Eli Lilly and Comcast outweighed data showing the US economy was performing more-than-expected in the first quarter has slowed down.
Meta Platforms Inc (META.O) rose 15.2% after it forecast quarterly earnings beat estimate, and CEO Mark Zuckerberg said AI is increasing traffic to Facebook and Instagram and boosting ad sales.
The communications services index S&P 500 (.SPLRCL) gained 4.6% to lead sector gains, while shares in social media platforms Snap Inc (SN`.N) and Pinterest Inc (PINS.N) each rose about 2% rose.
Eli Lilly and Co (LLY.N) gained 2.3% after raising its full-year earnings guidance, while Comcast Corp (CMCSA.O) gained 5.8% as it rose on sustained demand for its Broadband Services beat estimates for quarterly sales and earnings and higher amusement park attendance.
Sentiment was hurt by data showing that US economic growth slowed more-than-expected in the first quarter as an acceleration in consumer spending was offset by a reduction in corporate inventory investment.
“January was really the standout month and since then we’ve seen weaknesses in February and March that have really slowly dragged the economy down,” said Brian Klimke, investment director at Cetera Investment Management.
“As we look ahead, the data appears to be weakening further. The good news is that we think a recession could be mild.”
Despite the slowdown, which mainly reflected a drag from weak inventory investment, the US Federal Reserve is expected to hike rates by another 25 basis points next week.
A separate report showed that initial jobless claims fell by 16,000 to a seasonally adjusted 230,000 in the week ended April 22. Economists had expected 248,000 applications.
Treasury yields rose across the board as investors weighed a showdown above the US debt ceiling amid economic data that suggested inflation could remain stubborn despite a weakening economy.
The decline in first-quarter earnings is expected to be smaller than analysts had expected earlier in the month, with a variety of technology companies including Microsoft Corp (MSFT.O) and Alphabet (GOOGL.O) reporting positive results this week.
Analysts expect first-quarter earnings for S&P 500 (.SPX) companies to fall 3.2% year over year, versus a 5.1% decline previously forecast.
Amazon.com Inc (AMZN.O) and Intel (INTC.O) are among the big names set to report after the bell.
The S&P 500 (.SPX) closed near a one-month low on Wednesday as persistent concerns about a sluggish US economy were exacerbated by a renewed slump in First Republic Bank (FRC.N) shares after a report said the US government unwilling to do so was the engineer of his rescue.
As of 10:19 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 240.14 points, or 0.72%, to 33,542.01, the S&P 500 (.SPX) was up 38.34 points, or 0.95% 4,094.33 and the Nasdaq Composite (.IXIC) was up 155.77 points, or 1.31%, to 12,010.12.
The US House of Representatives on Wednesday narrowly passed legislation raising the government’s $31.4 trillion debt ceiling, which includes sweeping spending cuts for the next decade. The bill is expected to stall in the Senate.
EBay Inc (EBAY.O) surged 3.9% after the e-commerce company forecast current-quarter sales above forecast.
Upward issuance outweighed downturns with a 2.67-to-1 ratio on the NYSE and a 1.59-to-1 ratio on the Nasdaq.
The S&P index posted 10 new 52-week highs and three new lows, while the Nasdaq posted 23 new highs and 103 new lows.
Reporting by Sruthi Shankar in Bengaluru Editing by Vinay Dwivedi
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