US close: Dow adds more than 600 points despite GDP fall

dl nyse new york stock exchange wall st street city finance dow jones nasdaq sp finance dollar dollars us usa united states of america — New York Stock ExchangeSharecast photo / Josh White

Wall Street stocks were firmly in the green by the close on Thursday, as corporate earnings continued to stream in and investors digested an unexpected decline in first-quarter gross domestic product.

At the close, the Dow Jones Industrial Average was up 1.85% at 33,916.39, as the S&P 500 added 3.47% to 4,287.50 and the Nasdaq Composite was 3.06% higher at 12,871.53.

The Dow closed 614.46 points higher on Thursday, extending gains recorded in the previous session.

“The Nasdaq has seesawed its way through earnings season, ultimately ending 10% down in the last month,” said Hargreaves Lansdown lead equity analyst Sophie Lund-Yates.

“Huge insecurities around the long-term attractions of growth stocks in a high inflationary environment have sent jitters through global markets.

“Long seen as the untouchables of the investing universe, big tech has had a rude awakening - there have been times in recent weeks when some big tech names have come within a whisker of being considered truly valuable.”

Lund-Yates said belt-tightening had caused the investment cases of some huge names to be called into question, with “sticky” subscription-based revenues not proving as reliable as once thought.

“The spate of volatility is unlikely over for growth names, but for those with a long-term investing horizon there are some diamonds among this rough.

“With Apple and Amazon the latest in the spotlight, it has been a very big finish for the end of earnings season, and for very different reasons”

On the data front, US gross domestic product declined at a 1.4% clip in the first quarter, according to the Commerce Department, missing estimates for a 1% increase.

The negative growth marked an abrupt reversal for the US economy that was coming off its best showing in 38 years.

Looking at bonds, the yield on the benchmark 10-year Treasury note was trading slightly higher at 2.852% following the GDP reading.

In other macro news, the US personal consumption expenditure price index increased 6.4% year-on-year in February, according to the Bureau of Economic Analysis, accelerating from a downwardly revised 6.0% increase in the previous month for the steepest rise since February 1982.

Gains were seen in prices of goods, up 9.6%, while services rose at the same 4.6% pace as in January.

Finally, US initial jobless claims dropped 180,000 in the week ended 23 April, according to the Labor Department, bang in line with analysts' expectations and down from an upwardly revised print of 185,000 a week earlier.

In the corporate space, shares in Facebook parent Meta Platforms rocketed 17.59% after the social media giant reported better than expected quarterly earnings overnight despite posting some disappointing earnings.

Chip behemoth Qualcomm was ahead 9.69%, meanwhile, on the back of some strong quarterly earnings, while PayPal advanced 11.48% despite issuing weak second-quarter guidance.

As far as Thursday's earnings were concerned, Eli Lilly jumped 4.27% after reporting a quarterly earnings beat after Covid-19 antibodies revenue surged 81%, while Merck added 4.94% after its first quarter worldwide sales came in at $15.9bn- an increase of 50% year-on-year.

Fast-food giant McDonald's gained 2.85% after it beat Wall Street expectations with first quarter revenues of $5.67bn, and adjusted earnings per share of $2.28 each.

Mastercard rose 4.77% after its earnings came in ahead of expectations thanks to a heightened level of travel spending, and Twitter, in possibly its last full quarter as a public company, was up 0.97% after it reported declining revenues despite a jump in users.

On the downside, Stanley Black & Decker lost 8.63% after it cut full-year earnings guidance to $9.50 per share, despite posting a 20% jump in first quarter revenues, while Caterpillar slipped 0.71% after earnings topped estimates.

Comcast tumbled 6.19% even after its first quarter figures beat across the board, boosted by both media and theme park revenues.

Dow Jones - Risers

Salesforce.Com Inc. (CRM) $185.74 6.33%
Merck & Co. Inc. (MRK) $88.58 4.94%
Nike Inc. (NKE) $127.05 4.79%
Apple Inc. (AAPL) $163.64 4.52%
Intel Corp. (INTC) $46.84 3.58%
Chevron Corp. (CVX) $161.79 3.55%
Home Depot Inc. (HD) $311.76 3.37%
Visa Inc. (V) $220.66 3.06%
McDonald's Corp. (MCD) $254.19 2.85%
Cisco Systems Inc. (CSCO) $50.63 2.68%