Another bumpy ride ended on Friday with the Nasdaq recovering much of the ground it lost in the previous session, as Amazon’s positive earnings capped a week of mixed big-tech numbers.
Amazon.com Inc jumped after reporting robust earnings in the holiday quarter. Results from megacap growth stocks have dictated market moves this week, as investors seek out tangible data to support sky-high valuations.
Facebook-owner Meta Platforms Inc’s historic plunge after disappointing results shook markets on Thursday, sending the Nasdaq nearly 4% lower.
“These are eye-watering, stomach churning moves normally associated with penny stocks, and yet they are happening in companies with billion-dollar market caps,” said Michael Hewson, chief market analyst at CMC Markets UK.
Following losses on Thursday, social media companies such as Snap Inc surged after reporting better-than-expected fourth-quarter user growth and outlook.
Pinterest Inc rose after its quarterly revenue beat estimates as retailers splurged on advertising during the holiday quarter, while Twitter Inc also gained. It is expected to report results on Feb. 10.
According to preliminary data, the S&P 500 gained 23.12 points, or 0.50%, to end at 4,499.81 points, while the Nasdaq Composite gained 215.22 points, or 1.56%, to 14,095.37. The Dow Jones Industrial Average fell 23.85 points, or 0.07%, to 35,087.31.
Among the major S&P 500 sectors which advanced, energy stocks hit their highest since 2018 as crude prices touched a seven-year peak.
Hess Corp was the largest gainer in the sector, jumping to its highest level since October 2014. Occidental Petroleum Corp gained, with its shares closing at levels last seen in February 2020.
Consumer discretionary was the leading sector though, bolstered by Amazon’s performance. The tech behemoth’s gains helped alleviate the drag of Ford Motor Co, which slumped after the automaker posted disappointing quarterly numbers.
Of the 278 S&P 500 companies that have reported results so far during this earnings season, 78.4% of them have beaten analysts’ earnings estimates, compared with an average of 84% over the past four quarters, according to Refinitiv data.
The Labor Department’s closely watched employment report showed nonfarm payrolls increased by 467,000 jobs last month, compared with the 150,000 jobs addition forecast by economists polled by Reuters.
The data for December was revised higher to show 510,000 jobs created, instead of the previously reported 199,000.
Fears of faster-than-expected rate hikes to curb a surge in inflation have haunted markets since the beginning of the year, with growth stocks such as technology feeling the brunt of that as investors pivot towards current cash flow from betting on future expectations.
“A lot of the high-valuation stuff is going to continue to have trouble and it’s already gotten smacked down a lot,” said Louis Ricci, head of trading at Emles Advisors.
“To us, this jobs report was affirmation that, yes, stocks are going to be jittery and there’s going to be a lot of volatility.”
However, the rate hike prospect has boosted U.S. Treasuries, with yields on the 10-year benchmark hitting their highest levels since December 2019, in the wake of the payrolls data. This is regarded as positive for financials, with Bank of America Corp, Morgan Stanley and Wells Fargo & Co all gaining on Friday.
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