US equities were mixed on Thursday, highlighted by a rise in technology stocks following the latest rate hike by the Federal Reserve and ahead of another set of earnings from the tech industry’s biggest players.
The tech-heavy Nasdaq Composite (^IXIC) was up more than 3% during afternoon trading. The S&P 500 (^GSPC) added 1.3%, while the Dow Jones Industrial Average (^DJI) lagged, falling 0.3%.
The yield on the benchmark 10-year US Treasury was up to 3.358% on Thursday morning. The dollar index rose 0.12% to $101.33
Key US stock averages closed higher on Wednesday following the Federal Reserve’s long-anticipated rate hike to 25 basis points, signaling another slowdown in its campaign to fight inflation. Chairman Jerome Powell’s optimistic comments on inflation sent markets up.
The Fed’s decision follows recent economic data showing more signs of declining inflation over the past few months, though Powell stressed that the Fed’s campaign is far from over.
The macro picture was mixed on Wednesday, with ISM’s latest manufacturing PMI falling and consensus expectations missing. Meanwhile, private payrolls added 106,000 jobs in January, up from the 170,000 economists had expected.
The next major macroeconomic event is Friday’s January jobs report, which will be critical for investors to further assess whether there are signs of an easing in the labor market.
The December jobs report showed that the job market remains strong as employers added a hefty 233,000 jobs this month and an average monthly increase of 375,000 over the past year.
The number of Americans filing new jobless claims fell to 183,000 for the week ending Jan. 28, the Labor Department said Thursday, a drop from the 195,000 economists had expected.
On the revenue side, Meta Platforms (META) reported post-bubble fourth-quarter results that beat revenue expectations while delivering $5 billion in cost savings. It also announced a $40 billion share buyback. Shares of the social media giant rose more than 23% during afternoon trading on 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 Thursday trading.
Merck & Co. (MRK) reported better-than-expected fourth-quarter earnings, but forecast lower near-term earnings, leading shares to end lower on Thursday. The company reported adjusted earnings of $1.62 per share, down 10% from the same period last year but up from consensus estimates of $1.54 per share. Merck said sales rose 2% to $13.83 billion, against forecasts of $13.67 billion.
Separately, Eli Lilly (LLY) reported stronger-than-expected fourth-quarter earnings on Thursday and raised its full-year earnings outlook. Eli Lilly said adjusted earnings for the quarter were $2.09 per share, against the consensus forecast of $1.78. Revenue fell 8.75% from last year to $7.3 billion, slightly missing expectations of $7.33 billion.
Overall, the fourth-quarter earnings season appears to be improving, noted Andrew Tyler, US Market Intelligence team at JP Morgan. But he said the question remains: “Will investors chase the soft landing story and the current rally?”
The technical results come as layoffs have been seen in this sector in recent months as companies small and large have cut headcount to account for their slowing growth following record profits during the pandemic. According to a report from Challenger, Gray & Christmas Inc. the total number of cuts in tech jobs last month was 41,829, the highest in any industry.
Elsewhere in the markets, shares of Carvana (CVNA) were up as much as 33% Thursday morning, taking the online used car seller’s gains to more than 280% year-to-date.
Meanwhile, abroad, the Bank of England followed the Fed in the US by raising interest rates by 0.5% to 4%, the highest level in 14 years. The 3.5% increase was highly expected by economists. It is the bank’s tenth consecutive rate hike as it continues to try to contain record high inflation.
The European Central Bank – the central bank of the 20 countries that share the euro – raised interest rates by another half a percentage point to 2.5%, in line with market expectations. The next rate hike would be of the same magnitude, the ECB said.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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