Tech Stocks Pull Wall Street Higher 02/02 09:59
Wall Street is rising further Thursday, led by excitement around tech stocks
following the earnings report of Facebook's parent company.
NEW YORK (AP) -- Wall Street is rising further Thursday, led by excitement
around tech stocks following the earnings report of Facebook's parent company.
The S&P 500 was 0.9% higher in early trading a day after hitting its highest
level since the summer. The Nasdaq composite was 2.4% higher, as of 9:47 a.m.
Eastern time, while the Dow Jones Industrial Average was lagging because it has
less of an emphasis on tech. It was down 194 points, or 0.6%, at 33,898.
Meta was helping to lead the way with a 19.6% leap after it reported better
revenue for the latest quarter than analysts expected and said it expects to
spend less this year than earlier forecast. While its latest profit fell short
of expectations, Facebook's parent also announced a program to buy back $40
billion of its stock, which puts cash directly in the pockets of shareholders.
Other Big Tech companies are set to report their results after trading
closes for the day, including Apple, Amazon and Google's parent company,
Alphabet. Each rose more than 2%.
Stocks had already been on the upswing through the start of the year on
hopes that the Federal Reserve may be set to pause soon on its hikes to
interest rates. Such increases help stamp out inflation but also hurt the
economy and investment prices.
A day earlier, stocks and bonds took off after Fed Chair Jerome Powell said
the central bank is finally starting to see progress in its battle against
inflation. Markets took that as a cue that a pause may indeed be imminent, and
investors even raised bets for a cut to interest rates late this year. Rate
cuts act like steroids for markets, juicing prices and providing support for
Treasury yields dipped further Thursday, an indication of expectations for
an easier Fed. The yield on the 10-year Treasury, which helps set rates for
mortgages and other important loans, fell to 3.37% from 3.42% late Wednesday.
The two-year yield, which moves more on expectations for the Fed, fell to 4.08%
That's despite Powell saying on Wednesday that a couple more rate hikes will
likely be appropriate to get inflation down to the Fed's target. He also said
he did not foresee any rate cuts in 2023 and again pledged to "stay the course
until the job is done" on beating inflation.
The disconnect between the Fed and investors could be setting markets up for
disappointment and losses if the central bank sticks to what it's been saying.
"This leaves room for a rude shock down the road," said Venkateswaran
Lavanya of Mizuho Bank in a report.
Across the Atlantic, central banks for Europe and the United Kingdom also
raised rates in their efforts to squelch inflation.
The European Central Bank raised its key rate by 0.50 percentage points and
said another would arrive next month. The Bank of England also raised its key
rate by half a percentage point.
European stocks were mostly higher, with the German DAX returning 1.7%. The
FTSE 100 in London was up 0.8%.
Moves in Asia were more modest, with Hong Kong's Hang Seng down 0.5% and
Japan's Nikkei 225 up 0.2%.
The next big event for Wall Street will be the Big Tech earnings coming
after the market's close. Because these stocks are the biggest by value, their
movements carry more sway on the S&P 500 and other indexes.
After those will be Friday's jobs report, where economists expect to see a
slowdown in hiring. The job market has largely remained resilient even in the
face of swift rate hikes by the Fed over the last year.
Big tech companies have announced high-profile layoffs recently, but a
report on Thursday suggested job cuts are not that widespread. Fewer workers
applied for unemployment benefits last week than expected, and the number
dropped to its lowest level since April.