Premarket action on Friday had the three major U.S. indexes trading lower. The Dow Jones industrials were down 0.38%, the S&P 500 down 0.37% and the Nasdaq 0.26% lower.
All 11 market sectors closed higher on Thursday. Communication services (5.53%) and real estate (2.43%) posted the day’s best gains. Energy (0.44%) and health care (0.51%) had the smallest increases. The Dow closed up 1.57%, the S&P 500 up 1.96% and the Nasdaq up 2.43% on Thursday.
Two-year Treasuries added 17 basis points to end Thursday at 4.07%, and 10-year notes rose by 10 basis points to close at 3.53%. In Friday’s premarket, two-year notes were trading at around 4.04% and 10-year notes at about 3.47%.
Thursday’s trading volume was above the five-day average. New York Stock Exchange winners outpaced losers by 2,342 to 636, while Nasdaq advancers led decliners by nearly 2 to 1.
Before U.S. markets open on Friday, 33 companies are scheduled to report quarterly results.
Thursday’s advance report on first-quarter gross domestic product looked awful when it hit the tape. However, the big miss on growth (forecast at 2.0%, actually up just 1.1%) was due almost entirely to inventory declines. Personal spending rose 3.7%, way above the prior quarter’s 1.0% gain. Excluding the inventory changes, real final sales rose from 1.1% in the fourth quarter of 2022 to 3.4% in the first quarter.
New claims for unemployment benefits declined by 16,000 to 230,000, well below the consensus estimate for 245,000 new claims. Continuing claims dropped by 3,000 to 1.858 million.
Before U.S. markets open on Friday, the Bureau of Labor Statistics will release its report on the employment cost index for the first quarter. Economists are forecasting a sequential rise from 1.0% to 1.1%.
Also Friday morning, the Bureau of Economic Analysis releases its report on personal income and spending for March. Income is forecast to slip by 0.1 percentage points month over month to 0.2%. Spending is forecast to fall by 0.3 percentage points to negative 0.1%. The PCE price index is expected to rise by 0.1%, compared to a rise of 0.3% in February, and the core PCE index, excluding food and energy, is forecast to increase by 0.3%, equal to the February increase.
Thursday’s best performer among S&P 500 companies was toymaker Hasbro Inc. (NYSE: HAS). Shares added 14.63% after reporting a 14% year-over-year jump in revenue to $1 billion and earnings per share of $0.01, where a loss of the same size was forecast.
Align Technology Inc. (NASDAQ: ALGN) dropped 10.38% to lead the S&P 500 losers after reporting mixed results after markets closed on Wednesday. Net income dropped by 21% year over year for the quarter. Earnings and revenue both came in slightly higher than estimates, but the bar had been set pretty low.
Meta Platforms Inc. (NASDAQ: META) added 13.93% to its share price Thursday after reporting better-than-expected results after markets closed Wednesday. The company reported its first quarterly profit increase after three consecutive quarters of declines. On Tuesday, Alphabet Inc. (NASDAQ: GOOGL) and Microsoft Corp. (NASDAQ: MSFT) reported better-than-expected results. Last week, Tesla Inc. (NASDAQ: TSLA) reported results that disappointed investors. The following chart shows the effect of these four reports on the other tech mega-caps.
The response to Meta’s beat pulled Microsoft, Google, Tesla, Amazon.com Inc. (NASDAQ: AMZN) and Apple Inc. (NASDAQ: AAPL) higher on Thursday. Apple does not report quarterly results until next Thursday.
The surge in the Nasdaq Composite on Thursday was directly the result of investors’ reaction to Meta’s earnings report. Meta did the heavy lifting, but the mega-caps carried the Nasdaq to its best one-day gain in a month. Another instance of the tech mega-caps serving as a safe haven for investors.
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