Another bumpy ride on Wall Street ended on Friday, as Amazon.com Inc’s positive earnings capped a run of mixed big-tech numbers, with the NASDAQ recovering much of its losses from the previous session and all three benchmarks ending the week in positive territory.
Results from megacap growth stocks have dictated market moves this week, as investors seek out tangible data to support sky-high valuations.
Amazon jumped 13.5 percent after reporting robust earnings in the holiday quarter. The gain expanded its market capitalization by about US$190 billion, the largest ever single-day increase in value of a US company.
This came a day after Facebook owner Meta Platforms Inc’s disappointing results shook markets and wiped more than US$200 billion off its valuation, the worst loss of stock market value in history by a US company.
“These are eye-watering, stomach churning moves normally associated with penny stocks, and yet they are happening in companies with billion-dollar market caps,” CMC Markets UK chief market analyst Michael Hewson said.
Despite the earnings-driven whiplash in technology stocks, all three major stock indices ended their first week of the month higher, with the Dow gaining 1.05 percent, the S&P 500 rising 1.55 percent and the NASDAQ increasing 2.38 percent. The indices posted their second week of gains in a row.
Photo: AP
While Meta lost another 0.3 percent on Friday, other social media companies which had been dragged down with the Facebook owner rebounded strongly as they posted estimate-beating earnings of their own.
Among them was Snap Inc, surging 58.8 percent after reporting better-than-expected fourth-quarter user growth and outlook.
On Friday, the Dow Jones Industrial Average fell 21.42 points, or 0.06 percent, to 35,089.74, the S&P 500 gained 23.09 points, or 0.52 percent, to 4,500.53 and the NASDAQ Composite added 219.19 points, or 1.58 percent, to 14,098.01.
Among the major S&P 500 sectors that advanced, energy stocks hit their highest since 2018 as crude prices touched a seven-year peak.
Hess Corp was the largest gainer in the sector, jumping 4 percent to its highest close since September 2014, while Occidental Petroleum Corp gained 2 percent, with its shares ending at levels last seen in February 2020.
Consumer discretionary was the leading sector, up 3.7 percent as it was bolstered by Amazon’s performance. The tech behemoth’s gains helped alleviate the drag of Ford Motor Co, which slumped 9.7 percent after the automaker posted disappointing quarterly figures.
The US Department of Labor’s closely watched employment report showed that nonfarm payrolls increased by 467,000 jobs last month, compared with the addition of 150,000 jobs forecast by economists polled by Reuters.
The data for December last year was revised higher to show that 510,000 jobs were created, instead of the previously reported 199,000.
Fears of faster-than-expected rate hikes to curb a surge in inflation have haunted markets since the beginning of the year, with growth stocks such as technology feeling the brunt of that, as investors pivot toward current cash flow from betting on future expectations.
“A lot of the high-valuation stuff is going to continue to have trouble and it’s already gotten smacked down a lot,” said Louis Ricci, head of trading at Emles Advisors. “To us, this jobs report was affirmation that, yes, stocks are going to be jittery and there’s going to be a lot of volatility.”
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