Meta Stock (NASDAQ:META)
Despite the release of weaker-than-anticipated economic data, stocks rose on Thursday afternoon as Meta’s (NASDAQ:META) earnings results added to a strong week of tech earnings.
While the Dow Jones Industrial Average (DJI) gained 392 points or 1.16%, the S&P 500 (GSPC) increased by 1.51%. The heavily tech-focused Nasdaq Composite (IXIC) increased by 2.15%.
The U.S. economy expanded at an annual rate of 1.1% in the first quarter, according to the Bureau of Economic Analysis’s advance estimate of first-quarter GDP. Bloomberg surveyed economists who predicted 1.9% growth.
Following the release of the company’s better-than-anticipated first-quarter earnings report after Wednesday’s close, Meta shares increased by as much as 15%. In terms of revenue and earnings per share, Meta exceeded analyst expectations. The company also provided guidance for second-quarter revenue in the range of $29.5 billion to $32 billion. Analysts had projected second-quarter revenue of $29.48 billion.
Earnings Report for Meta
In comparison to the consensus estimate of $3.84, the company’s reported earnings per share (EPS) of $4.32 was significantly higher. The amount of revenue for the quarter was $36.4 billion, an increase of 32% from the same time last year. This impressive performance was largely fueled by rising advertising revenue, which increased 35% from the previous year.
The success of Meta’s more recent initiatives, including its virtual reality platform Oculus and its digital wallet Novi, particularly pleased investors. Oculus and Novi both experienced significant growth during the quarter, with Novi’s revenue increasing by 46% and 39%, respectively.
Implications for the Stock Market
The stock market, particularly in the tech sector, was significantly impacted by Meta’s strong earnings report. On the day of the earnings report, the Nasdaq Composite Index, which is heavily weighted towards tech stocks, increased by 1.5%. The good news coming out of Meta encouraged investors, who saw gains from other tech behemoths like Apple, Amazon, and Google.
This tech sector rally has been a continuation of a pattern that has been evident over the past few months. Investors have been drawn to tech stocks because of their growth potential in a post-pandemic world, which has led to their generally strong performance. This has been especially true for businesses like Meta, which are at the cutting edge of cutting-edge technologies.
Other Motivating Factors for the Rally
There are other factors at work in addition to Meta’s earnings report, which was a significant catalyst for the recent stock market rally. The Federal Reserve’s decision to maintain low-interest rates has been one of the main forces behind the rally. This has made it simpler for businesses to obtain financing and supported economic growth.
The robustness of the American economy has also been a contributing factor in the rally. The economy has been doing well, with strong job growth and strong consumer spending, despite the ongoing pandemic. This has increased investor confidence and contributed to the recent gains in the stock market.
After Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) released reports after the market closed on Tuesday, Meta’s results followed suit.
After the bell on Thursday, Amazon (NASDAQ:AMZN) and Intel (NASDAQ:INTC) are anticipated to release their quarterly results.
After Meta’s earnings announcement, Jefferies analyst Brent Thill said on Yahoo Finance Live, “The common theme here is that tech is stronger than most people think.” Yes, we are fading, but conditions are much better than the bears had anticipated.
As a result of Wednesday’s stock decline of 29.75%, pressure on First Republic is growing in the financial sector. The bank is pursuing “strategic options,” it announced on Monday, after losing more than $100 billion in deposits during the March banking turmoil. First Republic stock gained about 11% intraday on Thursday after losing more than half its market cap over the previous two trading sessions.
Shares of Southwest Airlines fell nearly 4% as the airline reported a first-quarter loss that was wider than anticipated due to a one-time charge owed following a debacle with cancellations in December.
Despite exceeding Wall Street’s estimates for sales and earnings per share, Caterpillar’s (NYSE:CAT) stock fell 1.4%. On earnings, the Crocs (NASDAQ:CROX) stock also decreased. Due to weaker-than-anticipated revenue and profit guidance for the second quarter, shares fell more than 20% at one point during the day.
In midday trading, Lyft shares increased more than 1% as the company confirmed previously reported layoffs. The company is reducing its workforce by 26%.
On Thursday morning, investors are also analyzing additional economic data. According to Bloomberg, the Core Personal Consumption Expenditures Price Index, which excludes food and energy, increased to 4.9%, 0.2% more than analysts had predicted. US weekly jobless claims decreased to 230,000 from the previous week. 248,000 claims were what economists polled by Bloomberg had predicted.
In the United States, existing home purchase agreements decreased for the first time since November 2022. The pending home sales index published by the National Association of Realtors fell 5.2% in March. According to Bloomberg, a gain of 0.8% was anticipated.
The recent stock market rally was significantly fueled by Meta’s strong earnings report. The business is a favorite among investors thanks to its success in advertising and investments in cutting-edge technology. However, there are additional factors at work, such as the Federal Reserve’s low-interest rate policy and the robustness of the American economy. Always be vigilant when making investment decisions and pay close attention to these and other aspects.
Featured Image: Unsplash
Author Shariq Khan 
