Stock market today: Big Tech carries Wall Street on its back

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Technology and tech stocks were the vanguard of a wild (and broad) stock market rally on Thursday that largely ignored an unexpected contraction in US economic activity.

This morning, the Commerce Department reported that US gross domestic product shrank at an annualized rate of 1.4% during the first quarter of 2022, well below the 1% gain that economists on average had expected. However, several experts noted that it wasn’t all bad news; a 2.7% increase in consumer spending and other measures made the report more noise than omen.

“Huge miss on GDP this morning, but just look at the headline [number] is misleading; we would rate the report broadly neutral,” says Cliff Hodge, chief investment officer of registered investment advisory firm Cornerstone Wealth, who believes the report was broadly net slightly bullish for risky assets. “Trade, inventories and government spending all lagged, but consumption held up and business investment was strong.

“The failed headline also gives the Fed some breathing room,” he adds.

Investors and traders seemed busier with the earnings calendar. Parent Facebook Meta-networks (FB, +17.6%) soared despite missing revenue expectations; the bulls instead celebrated a broad beat in revenue ($2.72 vs. $2.56 est.) and a return to user growth. Specifically, the number of daily active users of the Facebook app increased by 4%, to 1.96 billion, after a slight drop of one million in the fourth quarter of 2021.

Semiconductor company Qualcomm (QCOM, +9.7%) also had a monstrous quarter. Growth in the four major chip markets pushed revenue and earnings per share up 41% and 69% year-over-year, respectively, to easy-to-beat estimates. This news shook the entire semiconductor industry, with rivals such as Nvidia (NVDA, +7.4%) and Advanced micro-systems (AMD, +5.6%) up sharply.

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Apple (AAPL, +4.5%) and Amazon.co.uk (AMZN, +4.7%) were also bid higher ahead of their quarterly reports, which are due out after Thursday’s close. The latter plunged 10% in early trading after announcing a $2 billion loss in the first quarter and issuing a weak second-quarter revenue forecast. The former had yet to report as of this writing.

Strength in the Technology (+4.0%) and Communication Services (+4.0%) sectors picked up on the recently battered trend Nasdaq Compound 3.1% to 12,871. The S&P500 closed up 2.5% at 4,287, while Dow Jones Industrial Average gained 1.8% to 33,916.

Other news on the stock market today:

  • Small cap Russell 2000 climbed 1.8% to 1,917.
  • Reports that Germany is open to a Russian oil embargo sent U.S. crude oil futures up 3.3% to $105.36 a barrel.
  • Gold Futures Contracts edged up 0.1% to settle at $1,891.30 an ounce.
  • Bitcoin continued its recent rally, gaining 2.9% to hit $39,969.33. (Bitcoin trades 24 hours a day; prices shown here are as of 4 p.m.)
  • McDonald’s (MCD) improved 2.9% after the fast food giant reported earnings. While MCD’s decision to suspend operations in Russia cost it $127 million, or 13 cents per share, in the first quarter, the company still posted adjusted earnings of $2.28 per share, more than the $2.17 per share that analysts were expecting on average. Revenue of $5.7 billion also beat expectations, as did same-store sales growth of 3.5% in the United States.
  • PayPal Credits (PYPL, +11.5%) reported first-quarter adjusted earnings of 88 cents per share, in line with the consensus estimate, on higher-than-expected revenue of $6.5 billion. PYPL also lowered its full-year forecast – now calling for revenue growth of 11% to 13% from its previous forecast of 15% to 17% – amid “more consumer e-commerce spending”. normalized,” CEO Dan Schulman said in the company’s earnings statement. call. “Despite the weak outlook, we expect PayPal to continue to show steady long-term growth in payment volumes as it adds merchants, signs additional partnerships, increases transactions per customer and benefits from the shift to digital payments,” says Argus. Research Analyst Stephen Biggar (Buy).
  • Teladoc Health (TDOC) fell 40.2% after the telemedicine company posted a net loss of $6.7 billion, or $41.58 per share, in the first quarter – largely due to a charge impairment of $6.6 billion – on revenue of $565.4 million, below the $569 million expected by analysts. TDOC also lowered its revenue and adjusted EBITDA (earnings before interest, tax, depreciation and amortization) outlook for the full year amid higher costs and longer business sales cycles. Still, Oppenheimer analyst Michael Wiederhorn maintained an outperform (buy) rating on TDOC stock. “Overall, although the market has become fiercely competitive around customer acquisition, we still believe TDOC is positioned to survive the irrational behavior of its smaller competitors,” the analyst wrote in a note to clients. .

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Kyle Woodley has long been AMZN, AMD, FB, NVDA, and PYPL as of this writing.

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