Meta Powered Tech Rally Broadens On Wall Street

Barry Adams
02 Feb, 2023
New York City

Rally mood persisted on Wall Street and Meta Platforms earnings and stock buyback plan pushed benchmark above 1% for the second day in a row. 

Investors focused on corporate earnings after another batch of 130 companies released results and the familiar theme played out. 

Weakening construction activities in December, looking recession worries, sharp fall in advertising and strong dollar impacted companies across all sectors. 

Investors focused on not-so-weak economic growth in the U.S. and Europe and surmised that despite the elevated energy prices and four-decade high inflation, consumer spending is still resilient.  

Tech stocks took the lead on the leaderboard across the Atlantic and powered market rallies in the U.S., Germany, France and the UK. 

 

U.S. Indexes In Review

The S&P 500 index increased 1.4% to 4,179.16 and the Nasdaq Composite index soared 3.1% to 12,186.98. 

Crude oil traded up 24 cents to $76.65 a barrel and natural gas futures increased 7 cents to $2.64 a thermal unit. 

 

Treasury Yields Fall to 4-month Lows 

U.S. Treasury yield traded lower after Fed Chairman Jerome Powell directed his comments to labor market conditions and acknowledged cooling inflation. 

Optimist investors prolonged the hopes of either Fed pausing or lowering its aggressive rate hike stance and demanded lower yields on the U.S. government bond obligations. 

The yield on 2-year Treasury notes decreased to 4.09%, 10-year Treasury notes to 3.37% and 30-year Treasury bonds to 3.53% 

 

U.S. Movers 

Meta Platforms, Inc soared 18.8% to $181.86 after the social media sites operator reported higher-than-expected quarterly results.

Advertising impressions delivered across all sites increased 23% and the average price per ad decreased 22% from the previous year.

For  the full-year 2022, ad impressions increased 18% and the average price per advertising impression fell 16% from the previous year.  

Meta Platforms said revenue in the December quarter declined 4% to $32.2 billion and net income fell 55% to $4.6 billion from $10.3 billion and diluted EPS dropped to $1.76 from $3.67 a year ago.

The company estimated first quarter 2023 revenue in the range of $26 billion and $28.5 billion and revised lower its full-year 2023 expenses estimate to between $89 billion and $95 billion from $94 billion to $100 billion.

The company announced a $40 billion stock repurchase plan after completing a $28 billion stock buyback plan in 2022. 

Estee Lauder Companies Inc declined 1% to $276.96 after the cosmetic company said travel restrictions in Asia and mainland China impacted its business. 

Estee Lauder said the fourth quarter revenue declined 17% to $4.6 billion and net income fell 64% to $397 million and diluted EPS declined to $1.09 from $2.97 a year ago.

The company guided full-year fiscal 2023 sales to decline between 5% and 7% and GAAP diluted earnings per share between $4.25 and $4.44. 

Humana Inc fell 3.9% to $492.50 after the health insurance company reported higher quarterly loss.  

 

European Markets Jump Between 1% and 2% 

European markets soared after the European Central Bank and the Bank of England lifted key lending rates as advertised and investors welcomed dovish comments from Fed Chairman. 

The European Central Bank revised its benchmark rate higher by 50 basis points to 3.0%, the level last seen in 2008 and confirmed its plan to increase by the same at the next policy meeting in March.

The Bank of England decided to increase its benchmark rate in a 7-to-2 vote by 50 basis points to 4.0%, the highest level since 2008 as policymakers battle to control forty-year high inflation.

The DAX index soared 2.2% to 15,509.19, the CAC-40 index increased 1.2% to 7,166.27 and the FTSE 100 index added 0.8% to 7,820.16. 

The euro advanced to $1.09, the British pound inched higher to $1.22 and the Swiss franc edged up to 91.25 U.S. cents. 

Brent crude oil decreased 24 cents to $82.60 a barrel and Dutch TTF spot price fell 6.3% to 55.61 per MWh. 

 

Asian Markets Edged Higher 

Asian markets advanced after rate anxieties eased and investors shifted focus to local economic data and corporate earnings. 

Stocks in Tokyo advanced despite the worries of stronger yen weighed on market sentiment. 

The Nikkei 225 index increased 0.2% to 27,402.05 and the yen strengthened to 127.05 against the U.S. dollar.  

Benchmark indexes in China held steady ahead of a slew of corporate earnings next week. 

The Shanghai Composite index increased 0.75 points to 3,285.67 and the Hang Seng Index fell 0.5% or 113.82 points to 21,958.36. 

At least 89 e-commerce startups in China closed down in 2022, according to a report published by Linkshop.com. 

Weak consumer spending, rising online fraud and poor customer service were the leading three reasons for corporate failures. 

Last week, the Ministry of Commerce in China said e-commerce grew by 4% to 13.79 trillion yuan or $2.04 trillion. 

Adani Group stocks accelerated decline for the second week in a row on the worries of regulatory hurdles and closer scrutiny to slow down company's efforts in raising capital. 

The Sensex index increased 0.4% or 224.16 points to 59,932.24 and the Nifty index edged down 0.03% or 5.90 points to 17,610.40. 

The Indian rupee edged lower to 82.15 against the U.S. dollar.