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U.S. Stocks Move Sharply Higher On Upbeat Earnings News

wallstreet oct30 28apr22 lt

After another rollercoaster ride early in the session, stocks moved sharply higher over the course of the trading day on Thursday. The tech-heavy Nasdaq led the rally after ending Wednesday's trading at its lowest closing level in over a year.

The major averages pulled back off their highs going into the close but held on to strong gains. The Dow jumped 614.46 points or 1.9 percent to 33,916.39, the Nasdaq spiked 382.59 points or 3.1 percent to 12,871.53 and the S&P 500 surged 103.54 points or 2.5 percent to 4,287.50.

The rally that emerged on Wall Street came as another batch of upbeat earnings news overshadowed a disappointing report on the U.S. economy.

Shares of Meta (FB) skyrocketed by 18.6 percent on the day after the Facebook parent reported better than expected quarterly earnings.

Chipmaker Qualcomm (QCOM) also moved sharply higher after reporting quarterly results that beat expectations on both the top and bottom lines.

McDonald's (MCD), Merck (MRK), and Eli Lilly (LLY) also posted strong gains after reporting better than expected quarterly earnings.

Meanwhile, traders seemed to shrug off a report from the Commerce Department showing U.S. economic activity unexpectedly contracted in the first quarter of 2022.

The report said real gross domestic product declined by 1.4 percent in the first quarter after spiking by 6.9 percent in the fourth quarter of 2021. The pullback surprised economists, who had expected GDP to increase by 1.1 percent.

The Commerce Department said the unexpected drop in GDP reflected decreases in private inventory investment, exports, and government spending along with an increase in imports, which are a subtraction in the calculation of GDP

On the other hand, the report showed increases in consumer spending, non-residential fixed investment and residential fixed investment.

Some traders may have interpreted the data as a sign the Federal Reserve will not raise interest rates as aggressively as currently expected.

A separate report from the Labor Department showed first-time claims for U.S. unemployment benefits edged slightly lower in the week ended April 23rd.

Sector News

With Qualcomm helping to lead the way higher, semiconductor stocks showed a substantial move to the upside on the day.

The Philadelphia Semiconductor Index soared by 5.6 percent after ending the previous session at its lowest closing level in almost a year.

Significant strength also emerged among energy stocks, as the price of crude for June delivery surged $3.34 to $105.36 a barrel amid concerns about supply.

Reflecting the strength in the energy sector, the NYSE Arca Oil Index spiked by 3.4 percent, while the Philadelphia Oil Service Index jumped by 2.5 percent.

Housing, networking, retail and transportation stocks also saw considerable strength on the day, moving notably higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index jumped by 1.8 percent, while China's Shanghai Composite Index climbed by 0.6 percent.

The major European markets also showed strong moves to the upside on the day. While the German DAX Index surged by 1.4 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index shot up by 1.1 percent and 1 percent, respectively.

In the bond market, treasuries extended the pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.5 basis points to 2.863 percent.

Looking Ahead

Earnings news is likely to remain in focus on Friday, with Amazon (AMZN), Apple (AAPL) and Intel (INTC) among the companies releasing their quarterly results after the close of today's trading.

Chevron (CVX), Exxon Mobil (XOM) and Honeywell (HON) are also among the companies due to report their quarterly results before the start of trading on Friday.

Traders are also likely to keep an eye on reports on personal income and spending and consumer sentiment.

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