Stocks Extend Rally On Wall Street, Amazon Reports a Loss, Apple Net Falls 11%

Barry Adams
28 Jul, 2022
New York City

Stocks on Wall Street closed higher for the second day in a row and the U.S. economy shrank for the second quarter in a row. 

Seasonally adjusted GDP declined at a slower pace of 0.9% in the second quarter following the 1.6% fall in the first quarter, the Bureau of Economic Analysis reported Thursday. 

Weak private investments and lower investment in inventories and falling government spending drove the pace of the decline. 

Higher exports helped but the falling real personal expenditure also dragged the economic activities in the quarter. 

On Wall Street most investors regard two consecutive quarterly economic growth declines as the start of the recession.

Officially, the National Bureau of Economic Research's view on the economy is widely accepted as the final assessment of the health of the economy but it may take months before the determination.  

Initial jobless claims totaled 256,000 for the week ended July 23, a fall of 5,000 from the upwardly revised data for the previous week, according to the report released by the Labor Department. 

The S&P 500 index rose 1.2% to 4,072.43 and the Nasdaq Composite index increased 1.1% to 11,162.59. 

Futures of crude oil price decreased 17 cents to $97.09 a barrel and natural gas fell 33 cents to $8.22 a thermal unit. 

The yield on 10-year Treasury notes declined to 2.66% on the hopes that the Fed will limit the future rate hike and avoid dipping the economy into a full blown recession. 

Stocks dipped briefly in the morning after the release of weaker than expected GDP data. and failed to build on the 2% advance in the previous session following the 0.75 percentage point rate hike by the Federal Reserve. 

Benchmark indexes turned around by 11:00 a.m. ET and continued to climb higher supported by the sentiment that the weak economy may nudge the Fed in increasing rates at a slower pace of 50 basis points. 

Latest earnings results also supported the positive sentiment and tech stocks led the charge again. 

Spirit Airlines rose 5.6% to $25.66 after the discount carrier canceled its merger plan with Frontier Group and agreed to be acquired by JetBlue after protracted negotiations. 

The proposed $3.8 billion merger, which still requires a clearance by the U.S. Department of Justice, will create the fifth-largest U.S. airline after a fierce battle between Frontier and JetBlue. 

Frontier Group soared 20.5% to $13.58 and JetBlue declined 0.4% to $8.37. 

Southwest Airlines declined 6.4% to $38.15 after the discount carrier guided a challenging business environment and predicted higher operating costs. 

The company also reported total operating revenues increased 67.8% to $6.7 billion and net income soared 118% to $760 million from a year ago. 

Diluted earnings per share rose to $1.20 from 57 cents a year ago. 

Stanley Black & Decker, Inc plunged 16.1% to $98.58 after the toolmaker lowered its full-year outlook and said the demand softened towards the end of the quarter. 

Metal Platforms, Inc declined 5.2% to $160.72 after the parent of Facebook and Instagram said June quarter revenues declined 1% to $28.8 billion on digital advertising slowdown. 

Net income in the period fell 36% to $6.7 billion from $10.4 billion a year ago. 

Diluted earnings per share fell 32% to $2.46 from $3.61 a year ago.  

Teladoc Health Inc plunged 17.6% to $35.60 after the online healthcare platform provider said June quarter revenues rose 18% to $592 million. 

Net income plunged to $3.1 billion from $133.8 million a year ago after the company took a one-time goodwill charge of $3 billion and increased total charge in the six-month period to $9.6 billion.  

Average revenue per U.S. paid member increased to $2.60 in the second quarter from $2.31 a year ago. 

After the close, Amazon surged 12% to $137 after the online retailer reported a loss but guided higher-than-expected third quarter revenues. 

Revenues in the second quarter rose 7% to $121.23 billion. 

In the second quarter, Amazon reported net loss of $2.0 billion or 20 cents a diluted share compared to $7.8 billion or 76 cents a diluted share a year ago.  

Second quarter 2022 net loss includes a pre-tax valuation loss of $3.9 billion from its investment in Rivian Automotive, Inc.

The online retailer guided third quarter revenues between $125 billion and $130 billion, an increase between 13% and 17% from a year ago. 

 Apple Inc jumped 3.2% to $162.34 in trading after the regular trading hours after the company reported June quarter revenues increased 2% to $83 billion. 

Net income in the fiscal 2022 third quarter declined to $19.4 billion or $1.20 a diluted share from $21.7 billion or $1.331 a diluted share a year ago.