Meta Platforms Earnings Power 2% Rally In Nasdaq and S&P 500 Indexes

Barry Adams
27 Apr, 2023
New York City

Stocks accelerated gains after Meta-powered tech rally lifted broader averages. 

Facebook's parent Meta Platforms soared after the advertising driven business reported a a rise in revenue for the first time in about a year. 

The revenue-increase eased market fears of advertising slowdown, harbinger of broader weakening of economic confidence. 

Market enthusiasm may be misplaced, because most businesses supported by advertising revenues are still struggling with falling revenues and advertising agencies are worried about the slowing business spending.  

But on Wall Street, benchmark indexes jumped 2% and tech stocks led the gainers after Metal Platforms reported increase in revenue and daily active users across all sites. 

Despite the market gains for the second day in a row powered by tech rally, increases were in check after U.S. GDP growth slowed sharply in the first quarter, keeping some investors wondering about the health of the broader economy. 

 

Sharp Deceleration In US GDP Growth 

U.S. real gross domestic product increased at an annual rate of 1.1% in the first quarter, slower than the 2.6% rate in the final quarter of 2022, the Bureau of Economic Analysis reported Thursday. 

Increases in consumer spending, exports, federal government spending, state and local government spending, and nonresidential fixed investment were partly offset by decreases in private inventory investment and residential fixed investment. 

Higher imports also weighed negatively on the final growth calculation. 

 

U.S. Indexes & Yields 

The S&P 500 index increased 1.8% to 4,128.46 and the Nasdaq Composite index advanced 2.3% to 12,126.75. 

The yield on 2-year Treasury notes inched lower to 4.09%, 10-year Treasury notes rose to 3.52% and 30-year Treasury bonds held at 3.76%. 

Crude oil rose 59 cents to $74.89 a barrel and natural gas prices eased a fraction to $2.28 a thermal unit. 

 

U.S. Stock Movers 

Meta Platforms Inc soared 13.5% to $209.30 after the parent of Facebook reported better-than-expected revenue. 

Revenue in the March quarter increased 3% to $28.6 billion and net income dropped 24% to $5.7 billion from $7.5 billion and diluted earnings per share fell to $2.20 from $2.72 a year ago. 

Facebook daily active users increased 4% to 2.04 billion and across all sites including Instagram and WhatsApp rose 5% to 3.02 billion. 

In the first quarter, ad impressions delivered across all apps  increased 26% and the average price per ad decreased 17% from a year ago.

Meta Platforms repurchased $9.22 billion of Class A common stock in the first quarter and the company had $41.73 billion available and authorized for repurchases. 

American Airlines Group increased 1.5% to $12.93 after the international airline reported mixed quarterly results. 

Revenue in the first quarter increased 37% to $12.2 billion and the company swung to a net income of $10 million from a loss of $1.6 billion and diluted earnings per share was 2 cents compared to ($2.52) a year ago. 

Southwest Airlines Co declined 4.7% to $29.44 after the regional airlines reported wider loss in the first quarter following a negative revenue impact after the late December scheduling crisis that led to the cancellation of 16,000 flights. 

Revenue in the first quarter increased 21.6% to $5.7 billion from $4.7 billion and net loss shrank to $159 million from $278 million and diluted loss per share shrank to 27 cents from 47 cents a year ago. 

Teladoc Health Inc rose 5% to $27.02 after the telehealth platform operator lifted its revenue and adjusted earnings outlook for the year. 

Revenue in the first quarter increased 11% to $629.2 million and net loss in the quarter dropped to $69 million from $6.7 billion and diluted loss per share fell to 42 cents to $41.58 a year ago.  

In the first quarter of 2022, the company recorded a goodwill impairment charge of $6.6 billion. 

The telemedicine company forecasted second quarter revenue between $635 million and $660 million and between $2.575 billion and $2.675 billion in the full-year 2023. 

The company also estimated adjusted operating earnings between $60 million and $68 million in the second quarter and between $285 million and $325 million in the full-year 2023. 

 

European Markets Trade Lower, Economic Sentiment Improved

The European markets struggled to advance and investors reviewed a slew of corporate earnings amid renewed concerns for the banking sector. 

The latest batch of corporate results showed better-than-expected earnings from STMicroelectronics, BBBVA, Deutsche Bank and Barclays and Unilever. 

Despite the stronger-than-expected corporate performance, investors worried about the rate path and looming economic slowdown in the quarters ahead. 

Moreover, U.S. regional bank worries resurfaced after First Republic Bank sought additional capital from new equity and bond investors.  

Investors also looked ahead to the release of the U.S. GDP data today and the Price Consumption Expenditures Price Index, a wider measure of inflation, on Friday. 

 

Economic Sentiment Index In Euro Area Improved In April 

The economic sentiment indicator in the Euro Area improved to 99.3 in April from 99.2 in March, the European Commission reported Thursday. 

The confidence indicator improved after service providers' confidence index increased to 10.5 from 9.6, consumer confidence index improved to -17.5 from -19.1 and traders to -1.0 from -1.5. 

However, the confidence index among manufacturers declined to -2.6 from -0.5. 

Inflation expectation index declined to 15.0, the lowest level of index since December 2020. 

 

Spain's Jobless Rate Advanced

Spain's jobless rate rose to 13.26% in the first quarter ending in March from 12.87% in the last quarter ending in December, the National Statistics Institute reported Thursday.  

The unemployment rate was 13.65% in the first quarter a year ago. 

The number of unemployed people increased 103,800 to 3.128 million, while the number of employed declined 11,100 to 20.453 million.

The employment market expanded by 368,000 in the last twelve months, improving the participation rate. 

The labor force participation rate was 58.55% in the first quarter compared to 58.52 in the fourth quarter of 2022. 

 

Europe Indexes & Yields 

The DAX index increased 4.72 points to 15,800.45, the CAC-40 index advanced 0.4% to 7,483.84 and the FTSE 100 index fell 21.06 points to 7,831.58.

The yield on 10-year German Bunds eased to 2.41%, French bonds to 2.99%, the UK gilts to 3.73% and Italian bonds to 4.29%.

The euro hovered near a one-year high against the dollar as the U.S. economy faced banking turmoil. 

The euro edged higher to $1.103, the British pound to $1.248 and the Swiss franc to 89.33 cents.

Brent crude rose 49 cents to $78.43 a barrel and the Dutch TTF natural gas decreased 30 cents to €38.25 per MWh.

 

Europe Stock Movers 

Deutsche Bank increased 0.9% to €9.64 after Germany's largest bank reported its highest profit in a decade. 

Barclays PLC advanced 3.8% to 159.72 pence after the U.K. based bank reported first quarter profit jumped 27% to £1.78 billion. 

Unilever PLC gained 1.9% to 4,455.0 pence after the consumer products maker reported higher-than-expected first quarter sales despite the worries of higher prices. 

STMicroelectronics NV declined 4.2% to €40.45 after the Netherlands-based advanced electronics  company announced quarterly results ahead of market expectations. 

Deutz AG increased 3.2% to €5.97 after the German engine maker expressed more confidence about the full-year 2023 results. 

Schneider Electric SE increased 2.4% to €155.60 after the French multinational company reported first quarter results and lifted its 2023 outlook.