Facebook's 63% profit surge boosts stocks on Wall Street
Strong first quarter earnings have offset the recent rise in interest rates.
Strong first quarter earnings have offset the recent rise in interest rates.
Facebook’s 63% increase in earnings put a rocket under technology stocks on Wall Street, pushing the Dow Jones Industrial up 239.47 points, or 1.00%, to 24,323.37.
Facebook was backed up by a higher-than-expected performance from Advanced Micro Devices and another strong round of first-quarter earnings.
The tech-heavy Nasdaq Composite jumped 1.6% to 7118.68 while the S&P 500 added 1.0%. to 2667.13.
Facebook chief operating officer Sheryl Sandberg said the company hadn’t seen a “meaningful trend” of advertisers leaving after its data-privacy scandal.
The shares jumped 10% – their best day in more than two years – while AMD rose 13%. That helped boost the S&P 500’s technology sector up 2.4% after a six-session losing streak.
“The earnings season in general … it’s really been outstanding,” says Jacob Johnston, vice president at Advisors Asset Management.
A recent lurch higher in 10-year US Treasury yields has spurred stock volatility in recent months but Mr.Johnston says he still thinks yields are far from being a real threat to strong equity returns.
Bond yields fall
The benchmark 10-year bond yield fell to 2.994% from 3.026% on Wednesday. The yield rose above 3% earlier this week for the first time since early 2014.
“Of the 155 S&P 500 companies that have reported thus far, 81% have beaten expectations,” says Fahad Kamal, senior markets strategist Kleinwort Hambros. “Still, rising bond yields keep animal spirits at bay.”
Chipotle Mexican Grill shares rose 24.5% and were the biggest gainers in the S&P 500. This followed a stronger-than-expected profit and sales for the first quarter, on track.
In Europe, the Stoxx Europe 600 edged up 0.9%.
The European Central Bank’s governing council, as expected, left interest rates and its bond-buying programme unchanged.
“The [ECB] governing council may want to wait for more economic data and the June economic projections before taking a clearer stance on the direction of monetary policy going forward,” analysts at ABN Amro said in a research note.
France’s CAC40 rose 0.7%, Germany’s DAX gained 0.6% and the UK’s FTSE 100 advanced 0.6%.