Microsoft and Google Earnings Power Big Tech Rally

Barry Adams
26 Apr, 2024
New York City

Stocks on Wall Street advanced after positive earnings from Google and Microsoft lifted market sentiment, and the S&P 500 index and the Nasdaq Composite gained 1%. 

Investors also reviewed the latest update on the personal  consumption expenditure index, an alternative measure of inflation, which indicated stubborn inflationary pressure despite multiple rate hikes over the last two years. 

The personal consumption expenditure index rose 0.3% from the previous month in March, matching the rate in the previous month, the U.S. Bureau of Economic Analysis reported Friday. 

On an annual basis, the PCE index increased 2.7% after rising at a 2.5% annual pace in the previous two consecutive months. 

The core personal consumption expenditure index, excluding food and energy, rose 2.8%, matching the rate in the previous month, and stayed above the Fed's target rate of 2%. 

Personal spending rose by 0.8% from the previous month in March and maintained the rate in the previous month after spending on goods rose, driven by higher expenditures on gasoline and other energy goods. 

Tech stocks rallied after Microsoft reported fiscal third-quarter revenue and earnings that exceeded the market's expectations. Google's parent company, Alphabet, announced a stock repurchase program of $70 billion and announced its first-ever dividend. 

 

U.S. indexes and yields

The S&P 500 index increased 0.95% to 5,095.48, and the Nasdaq Composite surged 1.8% to 15,891,41. 

The yield on 2-year Treasury notes edged higher to 4.98%, 10-year Treasury notes inched higher to 4.66%, and 30-year Treasury bonds edged lower to 4.77%.

WTI crude oil decreased $0.18 to $83.92 a barrel, and natural gas prices decreased 4 cents to $1.93 a thermal unit.

Gold decreased by $9.60 to $2,340.08 an ounce, and silver rose 10 cents to $27.45. 

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 105.85.

 

U.S. Stock Movers

Snap Inc. jumped 24.7% to $14.20 after the social media network operator reported stronger-than-expected sales in the first quarter. 

DexCom dropped 6.5% to $129.0 despite the glucose monitoring system maker's reported sales and earnings that exceeded market expectations. 

Intel declined 7.7% to $32.39 after the advanced chipmaker reported weaker-than-expected sales in the first quarter and estimated a weak outlook for the current quarter. 

Microsoft jumped 4.3% to $416.25 after the software company reported better-than-expected revenue and earnings. 

Revenue in the fiscal third quarter increased 17% to $61.86 billion, net income jumped to $21.94 billion from $18.30 billion, and diluted earnings per share advanced to $2.94 from $2.45 a year ago. 

Microsoft guided fiscal fourth quarter revenue of $64 billion, driven by strong growth of 31% in its Azure and other cloud service businesses. 

Alphabet jumped 11% to $176.0 after the parent company of the search engine, Google, reported stronger-than-expected quarterly results. 

Revenue in the first quarter increased by 15% to $80.5 billion. $69.8 billion, net income soared to $23.7 billion from $15.0 billion, and diluted earnings per share rose to $1.89 from $1.17 a year ago. 

Google search revenue jumped to $46.2 billion from $40.3 billion, YouTube ad revenue advanced to $8.0 billion from $6.7 billion, and Google cloud revenue increased to $9.5 billion from $7.5 billion a year ago. 

Hertz Global increased 0.9% to $4.72 after the company reported mixed quarterly results. 

Revenue in the first quarter increased 2% to $2.08 billion from $2.04 billion; the company swung to a net loss of $186 million from a profit of $196 million; and diluted earnings per share were a loss of 61 cents compared to a profit of 61 cents a year ago. 

Nasdaq decreased 0.2% to $60.20 after the company reported a decline in earnings in the first quarter. 

Revenue in the first quarter increased to $1.7 billion from $1.5 billion, net income fell to $233 million from $301 million, and diluted earnings per share decreased to 40 cents from 61 cents a year ago.