U.S. Stocks Rebound as Investors Focus on Big Tech Earnings After Fed’s Decision
U.S. stocks bounced back on Thursday as investors shifted their attention to high-profile earnings reports, following the Federal Reserve’s recent decision to keep interest rates unchanged. All three major U.S. stock indexes experienced gains, with the tech-heavy Nasdaq leading the way. Investors were eagerly awaiting the quarterly results from Apple, Amazon.com, and Meta Platforms.
During this earnings season, expectations have generally been met, according to Bill Northey, Senior Investment Director at U.S. Bank Wealth Management. However, he noted that guidance for the end of the year is starting to slightly decrease, reflecting a slower economic and corporate earnings environment in the United States. Apple’s iPhone sales are anticipated to have experienced the best growth in five quarters, while Amazon.com’s logistics overhaul and Meta Platforms’ generative AI on its advertising business are among the factors that investors will be closely monitoring.
The Federal Open Markets Committee (FOMC) announced no change in its policy rate as expected, and Fed Chair Jerome Powell stated that a rate cut in March is unlikely. This tempered market expectations of a dovish Fed pivot in the first quarter, resulting in a sell-off. The KBW Regional Banking index dropped 2.1% due to concerns over the health of U.S. regional lenders following New York Community Bancorp’s report on pain in its commercial real estate portfolio.
Meanwhile, the fourth quarter reporting season is in full swing, with 80% of companies in the S&P 500 delivering earnings that beat consensus estimates. As a result, analysts now anticipate a year-on-year earnings growth of 6.4% for the October-December period, an improvement over the 4.7% growth projected at the beginning of the year.
Economic data released on Thursday revealed rising productivity and declining labor costs, indicating a moderately healthy but moderating labor market. The S&P 500 rose 0.94% to close at 4,891.21 points, while the Nasdaq gained 1.04% to reach 15,321.61 points. The Dow Jones Industrial Average also experienced an increase, rising 0.74% to 38,434.29 points.
Among individual stocks, Merck saw a 4.2% increase in its share price following the drug maker’s better-than-expected fourth-quarter results. However, Qualcomm witnessed a 4.6% decline due to concerns over Android sales in China, and Honeywell dropped 3.1% after providing disappointing first-quarter results.
Overall, the S&P 500 demonstrated a positive performance, with advancing issues surpassing the falling ones. The index reached 28 new highs and 5 new lows, while the Nasdaq recorded 61 new highs and 103 new lows.
Stephen Culp reporting; Additional reporting by Ankika Biswas and Johann M Cherian in Bengaluru; Editing by Aurora Ellis
