Big Tech Including Meta Reports 'Earnings Surprise'
New Unemployment Claims Decrease
The three major U.S. stock indices in New York, which had plunged the previous day following Federal Reserve (Fed) Chair Jerome Powell's dismissal of March rate cut rumors, closed higher on the 1st (local time) due to a tech stock rally and inflows of rebound buying. Investor sentiment improved as additional signs of a slowing labor market were confirmed. After the market closed that day, earnings reports from Apple, Amazon, and Meta exceeded market expectations.
At the New York Stock Exchange (NYSE) that day, the Dow Jones Industrial Average closed at 38,519.84, up 376.54 points (0.97%) from the previous day. The S&P 500, which is centered on large-cap stocks, rose 60.54 points (1.25%) to 4,906.19, and the tech-heavy Nasdaq index closed at 15,361.64, up 197.63 points (1.3%).
Ahead of earnings announcements after the market close, Apple rose 1.33%. Amazon increased by 2.63%, and Meta, the parent company of Facebook, rose 1.19%. Global pharmaceutical company Merck also jumped 4.64% following earnings that exceeded expectations. On the other hand, Qualcomm fell 4.98%. Despite achieving sales and net income that surpassed market expectations due to strong smartphone chip sales in the first quarter of fiscal year 2024, disappointment over future earnings forecasts was reflected.
On this day, one of the days during the "Earnings Super Week," major big tech companies delivered better-than-expected results. Meta reported fourth-quarter revenue of $40.1 billion and earnings per share (EPS) of $5.53, surpassing analyst estimates of $39.18 billion and $4.96, respectively. It also announced a dividend payment of $0.5 per share for the first time ever. Meta's shares surged more than 14% in after-hours trading. Apple posted first-quarter fiscal year 2024 revenue of $119.58 billion and EPS of $2.18, exceeding market expectations of $117.91 billion and $2.10, respectively. While revenue grew year-over-year, sales in its key market, China, fell by 13%. As a result, Apple shares declined nearly 1% in after-hours trading. Amazon, which recorded a 14% increase in revenue and an earnings surprise, was up nearly 9% in after-hours trading.
On this day, the New York stock market showed signs of shaking off the shock from the sharp decline following the Federal Open Market Committee (FOMC) meeting the previous day. The Fed held the benchmark interest rate steady at 5.25-5.5% for the fourth consecutive time and stated that greater confidence is needed that inflation is slowing to the 2% target. In the subsequent press conference, Fed Chair Jerome Powell ruled out the possibility of an early rate cut in March.
Meanwhile, signals of a slowing labor market were confirmed. According to the U.S. Department of Labor, initial jobless claims last week rose by 9,000 to 224,000, the highest level in over two months since the week of November 5-11 last year (233,000), and 11,000 higher than the expert consensus of 213,000. Continuing claims, which count those filing for unemployment benefits for at least two weeks, increased by 70,000 to 1.898 million in the week of January 14-20 compared to the previous week, and the four-week moving average of jobless claims rose by 5,250 to 207,750.
Fawad Razaqzada, an analyst at City Index and Forex.com, said, "Attention will be focused on U.S. jobs data," adding, "Traders are still holding onto the possibility of a faster-than-expected rate cut, and if the incoming data shows a downward trend, these expectations will grow even stronger."
International oil prices are falling amid progress in ceasefire negotiations between Israel and the Palestinian militant group Hamas. West Texas Intermediate (WTI) and Brent crude are both down more than 2%.
In the New York bond market, the benchmark U.S. 10-year Treasury yield stands at around 3.87%, while the 2-year Treasury yield, which is sensitive to monetary policy, is around 4.2%.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
