US stocks were mixed on Thursday as tech stocks boosted vaults ahead of the Federal Reserve’s latest interest rate hike and another batch of earnings from the tech industry’s biggest players.
The technology-heavy Nasdaq Composite (^IXIC) rose nearly 3% in afternoon trading. The S&P 500 (^GSPC) added 1.3%, while the Dow Jones Industrial Average (^DJI) lagged behind, falling 0.4%.
The yield on the benchmark 10-year US Treasury note dropped as low as 3.358% on Thursday morning. The dollar index rose 0.12% to $101.33
Major US stock averages closed higher on Wednesday after the Federal Reserve’s much-anticipated rate hike of 25 basis points, which represented another slowdown in its anti-inflation campaign. Bullish comments from Chairman Jerome Powell on the inflation situation lifted markets.
The Fed’s decision follows recent economic data that showed more evidence of declining inflation over the past few months, although Powell stressed that the Fed’s campaign is not over yet.
The broader picture was mixed on Wednesday, with the ISM’s latest Manufacturing PMI declining and lacking consensus expectations. Meanwhile, private payrolls added 106,000 jobs in January, well below the 170,000 expected by economists.
The next big event on the macroeconomic front is Friday’s January jobs report, which will be important for investors looking ahead to assess whether there is evidence of an easing labor market.
The December jobs report showed that the labor market remained strong, as employers added 233,000 jobs for the month and an average monthly increase of 375,000 over the past year.
The Labor Department said on Thursday that the number of Americans filing new unemployment claims fell to 183,000 for the week ending Jan. 28, below the 195,000 expected by economists.
On the earnings front, Meta Platforms (META) reported fourth-quarter results after the bell that topped revenue expectations while cutting expenses by $5 billion. It also announced a $40 billion stock buyback. Shares of the social media giant soared more than 23% in midday trading Thursday morning.
The most heavily weighted components of the S&P 500 — Amazon (AMZN), Apple (AAPL), Alphabet (GOOG) — are gearing up to report quarterly results Thursday after the bell. All were up at least 3% in early trading.
Merck & Co (MRK) reported better-than-expected fourth-quarter earnings but forecast softer near-term profits, sending shares lower on Thursday. The company reported adjusted earnings per share at $1.62, down 10% from the same period last year, but above consensus estimates of $1.54 per share. Merck said revenue rose 2% to $13.83 billion, compared with forecasts of $13.67 billion.
Separately, Eli Lilly (LLY) reported stronger-than-expected fourth-quarter earnings on Thursday, and lifted its full-year profit forecast. Eli Lilly said adjusted profit for the quarter came in at $2.09 per share, compared with consensus forecasts of $1.78. Revenue fell 8.75% from last year to $7.3 billion, which slightly missed expectations of $7.33 billion.
Overall, the fourth-quarter earnings season is improving, said Andrew Tyler, US Market Intelligence Team at JP Morgan. But he said the question remains: “Will investors chase the soft landing narrative and the current rally?”
The technical results come as layoffs in the sector have become apparent over the past few months, as firms small and large cut staff to reckon with their slowing growth following record profits during the pandemic. According to a Challenger, Gray & Christmas Inc. report, the total number of tech jobs created within the last month has grown to 41,829, the most across industries.
In other markets, shares of Carvana (CVNA) soared 33% on Thursday morning, boosting the online used car seller’s year-to-date gain of more than 280%.
Meanwhile, overseas, the Bank of England followed the Fed in the US by raising interest rates from 0.5% to 4%, the highest level in 14 years. A rise of 3.5% was highly expected by economists. This is the bank’s 10th consecutive rate hike as it tries to control record high inflation.
The European Central Bank – the central bank for the 20 countries that share the euro – raised interest rates by half a percentage point to 2.5%, in line with market expectations. The ECB said the next rate hike would be of a similar size.
Dani Romero is a reporter for Yahoo Finance. follow him on twitter @daniromerotv
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