[Summary] After Watching the Fed... Now the New York Stock Market Cries and Laughs Over Earnings

Google, Apple, and Others Close Up 4 Consecutive Trading Days on Earnings Surprise
Facebook Parent Meta Faces 20% Plunge in After-Hours Trading Due to Earnings Shock

[Image source=Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] The US New York stock market, where early tightening concerns have somewhat eased, is now "laughing and crying" over earnings. Technology stocks such as Apple and Google have consecutively recorded earnings surprises, leading the three major indices in the New York market to close higher for the "fourth consecutive trading day" on the 2nd (local time).

However, Meta (Facebook's parent company), which released earnings below market expectations immediately after the market closed, saw its stock price plunge more than 20% in after-hours trading. Following the Meta shock, US stock futures are also on a downward trend.

Nasdaq Index Trend So Far This Year

On this day in the New York stock market, the Dow Jones Industrial Average closed at 35,629.33, up 0.63% from the previous session. The S&P 500 and Nasdaq indices closed at 4,589.38 and 14,417.55, up 0.94% and 0.50%, respectively. The three major indices continued their upward trend for the fourth consecutive trading day, driven by strong corporate earnings and investors' bargain hunting.

By stock, Alphabet, Google's parent company, which announced strong earnings and a stock split plan the previous day, surged 7.5%, leading the overall market. This movement was similar to that of Apple, the "blue-chip" stock that led the market rebound by releasing strong earnings during last week's rollercoaster trading.

During the session, other tech companies such as Nvidia (2.45%) and Microsoft (1.52%) also rose alongside Alphabet's stock price increase. Jeff Kilburg, Chief Investment Officer (CIO) of Sanctuary Wealth, said, "Investors are engaging in bargain hunting for some tech stocks that were hit hardest in January." The Nasdaq index, which is tech-stock focused, has narrowed its year-to-date decline from 14.65% on the 27th of last month to 7.85% on this day.

Just a week ago, the market was engulfed in early tightening fears, closely watching the Federal Reserve (Fed), but now it is focusing on corporate earnings. Fed officials, including James Bullard, President of the Federal Reserve Bank of St. Louis, who is classified as a representative hawk, have drawn a line against the 0.50% rate hike card that the market feared, stating they do not want rate hikes to disrupt financial markets. The US 10-year Treasury yield has returned to the 1.7% range. The 2-year yield, sensitive to monetary policy, also fell to the 1.14% range.

However, some tech stocks that posted below-expectation earnings could not avoid setbacks. Meta, Facebook's parent company, closed up 1.25% during regular trading but plunged more than 20% in after-hours trading immediately after the earnings announcement. Meta's Q4 net profit last year was $10.29 billion (12.44 trillion KRW), down 8% from a year earlier. The growth of video-centric platforms like YouTube and TikTok is interpreted as having damaged Facebook's position as the world's largest social media platform. Spotify, the world's largest music streaming company, also saw a larger drop in its stock price after its earnings announcement. News of a sharp decline in paid subscribers caused its stock to plunge nearly 11% in after-hours trading.

Following Meta's earnings shock, US stock futures are also showing a downward trend. According to CNBC, as of 7:45 PM on this day, Nasdaq 100 futures, which are tech-stock focused, fell 2.11%. S&P 500 futures and Dow futures fell 0.93% and 0.06%, respectively.