[New York Stock Market] Big Tech Earnings Digest and Rise Together... Meta and Tesla Up

US Q4 Growth Rate at 2.3%
Recovery Driven by Solid Consumer Spending Despite Missing Expectations
Apple's Quarterly Earnings Beat Forecasts
Alphabet and Amazon to Announce Earnings Next Week

The three major indices of the U.S. New York Stock Exchange all rose on the 30th (local time). After the market fell the previous day due to the Federal Reserve's (Fed) temporary pause in monetary easing, it showed a gradual upward trend as it absorbed the earnings of big tech companies.

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On that day in the New York stock market, the Dow Jones Industrial Average (Dow) focused on blue-chip stocks closed at 44,882.13, up 168.61 points (0.38%) from the previous trading day. The S&P 500, centered on large-cap stocks, rose 31.86 points (0.53%) to 6,071.17, and the Nasdaq, focused on technology stocks, increased by 49.43 points (0.25%) to close at 19,681.75.

By individual stocks, Meta, the parent company of Facebook, rose 1.55% after announcing revenue and profits that exceeded expectations after the previous day's market close. Tesla rose 2.87% despite earnings below market expectations, on news of the launch of a robo (driverless) taxi using fully autonomous driving software FSD in June. Microsoft (MS) plunged 6.18% as its quarterly revenue fell short of expert forecasts.

Apple, which announced earnings after the market close that day, fell 0.74% during regular trading hours. Apple reported first-quarter fiscal year 2025 revenue of $124.3 billion and earnings per share (EPS) of $2.40, exceeding market expectations ($124.1 billion and $2.35, respectively). However, sales in China were down 11.1%. In after-hours trading, as of 4:50 p.m. that day, Apple was down 0.38%.

Art Hogan, chief market strategist at B. Riley Wealth Management, analyzed, "Three major large tech companies announced earnings the previous day, and most had no major issues," adding, "Many companies that reported earnings exceeded expectations in both revenue and profit, which is positive."

The market gave up some of its gains due to U.S. President Donald Trump's tariff remarks. President Trump said in a meeting with reporters at the White House that the planned 25% tariffs on Mexico and Canada, scheduled for the 1st of next month, "We may or may not do it," and "We will probably decide tonight." The uncertainty over tariff policy weighed somewhat on the stock market.

Although the U.S. economic growth rate slowed somewhat in the fourth quarter of last year, it showed a steady recovery. The U.S. Department of Commerce announced that the preliminary estimate of real gross domestic product (GDP) for the fourth quarter of last year grew at an annualized rate of 2.3% compared to the previous quarter. This was below the third quarter growth rate (3.1%) and market expectations (2.7%) but exceeded the U.S. potential growth rate, estimated to be in the high 1% range. The annual growth rate for last year was 2.8%, down 0.1 percentage points from 2.9% in 2023. Consumption, which accounts for two-thirds of the U.S. economy, increased by 4.2% in the fourth quarter of last year, driving a solid recovery. The core personal consumption expenditures (PCE) price index, the inflation indicator most closely watched by the Fed, rose 2.5%. This was higher than the third quarter of last year (2.2%) and in line with market expectations (2.5%).

Employment was also confirmed to be stable. According to the U.S. Department of Labor, new unemployment claims for the week of January 19-25 totaled 207,000, down 16,000 from the revised figure of 223,000 the previous week. This was 17,000 below expert expectations (224,000).

Josh Jamner, investment strategy analyst at ClearBridge Investments, forecasted, "Overall, the economy is building a solid foundation heading into 2025," adding, "Given the strong correlation between economic growth and corporate profits, this will support risk assets."

The Fed, which temporarily paused its monetary easing cycle the previous day, is monitoring U.S. economic growth, employment, and inflation conditions. Despite pressure from President Trump to cut interest rates, the Fed kept the benchmark interest rate unchanged at 4.25-4.5% per annum. After starting rate cuts in September last year, the Fed lowered rates three times by a total of 1 percentage point from a peak of 5.25-5.5%, and this was the first pause. Amid concerns about "Trumplation" (inflation caused by Trump's policies), the Fed reaffirmed its intention to proceed cautiously with monetary easing while assessing the impact of Trump's second-term policies and inflation conditions.

Investors are awaiting the upcoming big tech earnings announcements next week. Alphabet, Google's parent company, and Amazon will release earnings on the 4th and 6th of next month, respectively, and Nvidia will disclose earnings on the 26th.

Bond yields are weak. The yield on the 10-year U.S. Treasury note, a global bond yield benchmark, fell 3 basis points (1 bp = 0.01 percentage points) from the previous day to 4.51%, while the yield on the 2-year U.S. Treasury note, sensitive to monetary policy, moved down 1 basis point to 4.21%.