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S&P 500 reaches highest point since August as Meta leads tech resurgence

4:11 pm: Dow underperforms Nasdaq, S&P

The Dow closed Thursday 39 points lower, 0.1%, at 34,054, the Nasdaq Composite jumped 385 points, 3.3%, to 12,201 and the S&P 500 added 61 points, 1.5%, to 4,178. The S&P 500 hit its highest point since August.

Leading a tech rally is Meta Platforms Inc, shares of which rocketed 23% higher to $188.77 after the company announced a $40 billion share buyback along with its quarterly results after the Wednesday bell.

Tomorrow, investors will be watching for January jobs data. Experts project on average that 187,000 jobs were added last month, according to Dow Jones estimates. Analysts at Goldman, though, revealed Thursday that they believe payrolls could be as high as 300,000.

12:05 pm: Nasdaq climbs nearly 3%

US stocks were mixed in noon trading as better-than-expected financial results from Meta Platforms sent tech stocks surging while the S&P 500 hit a five-month high.

At midday, the Dow fell 156 points to 33,937, while the S&P 500 added 52 points at 4,171 and the tech-heavy Nasdaq jumped 334 points to 12,151.

“It’s (tech stocks) showing that growth is outperforming value as it unwinds some of the pressures that hawkish rhetoric brought to risk markets over the course of 2022,” said GLOBALT Investments senior portfolio manager Keith Buchanan said.

Notable movers included shares of Meta Platforms Inc, which soared more than 23% after the tech giant reported a 4Q revenue beat and announced a $40 billion stock buyback.

9:35 am: Meta’s results send tech stocks higher

US stocks largely continued to make gains on Thursday as the Fed’s latest interest rate hike decision boosted sentiment amid rate hikes from the Bank of England and European Central Bank and ahead of corporate earnings from tech heavyweights this afternoon including Amazon, Alphabet, and Apple.

The Nasdaq Composite led the gains when the market opened, up 238 points or 2% at 12,065 points, with the S&P 500 adding 36 points or 0.9% at 4,156 points.

The Dow Jones Industrial Average, on the other hand, had fallen 65 points or 0.2% at 34,029 points.

Swissquote Bank senior analyst Ipek Ozkardeskaya said the Fed meeting was a boon for risk investors.

“Note that, at the wake of the meeting, activity on Fed funds futures gives around 83% chance for the next FOMC meeting to deliver another 25bp hike, which would take the rates to the 5% mark, as promised by Fed members,” Ozkardeskaya said.

“But for equities, there is no reason to think that the bullish sentiment would reverse anytime soon. The S&P 500 will certainly make an attempt on its 100-week moving average which stands a couple of points above the 4200 mark, and the 20% rally in Meta shares in the after-hours trading could keep the rally going today.”

Meanwhile, a new report from the Labor Department has shown US labor productivity increased more than expected during the fourth quarter.

Labor productivity increased 3% in 4Q, far higher than the upwardly revised 1.4% recorded in 3Q, and ahead of the 2.4% expected by economists.

Pantheon Macroeconomics chief economist Ian Shepherdson said productivity was better than expected in 4Q because hours worked rose only 0.5%, despite the reported 1.3% increase in aggregate hours in the payroll report and the 2.2% increase in self-employment, in the household survey.

“If these data stand, they will support our view that productivity is returning to the rising trend in place before Covid,” he said.

“A sustained return to anything close to 2% would be great news for the Fed because stronger productivity growth holds down medium-term inflation.”

6:30 am: Apple, Amazon and Alphabet report today

Wall Street is expected to open mixed but mostly higher after the US Federal Reserve turned less hawkish on interest rates and as Facebook and Instagram owner Meta delivered quarterly revenue that beat expectations and announced measures aimed at boosting shareholder value.

While futures for the Dow Jones Industrial Average (DJIA) declined 0.1% in Thursday pre-market trading, those for the broader S&P 500 index rose 0.5%, and contracts for the Nasdaq-100 jumped 1.4%.

US stocks rallied towards the close on Wednesday after the Fed hiked rates by 25 basis points as expected and chair Jerome Powell told a press conference that “the disinflation process has started” and that it is “certainly possible” the Fed funds rate will remain below the 5% mark.

The DJIA ended 7 points higher at 34,093, reversing a 300-point loss earlier in the session, while the Nasdaq jumped 2% to 11,816 and the S&P 500 rose 1.1% to 4,119. The Russell 2000, which tracks small-cap stocks, gained 1.8% to 1,967.

“While Powell was determined not to overplay the shift in the Fed’s views on inflation and interest rates, certain comments were well received by the markets,” commented Craig Erlam, senior market analyst at OANDA.

“All things considered, I think there was enough there to conclude we’re almost at an end on tightening and market expectations of one more 25 basis point hike and maybe a couple of cuts later in the year look reasonable,” he added. “Of course, there’s plenty of data to come before the next meeting in March so a lot could change in that time.”

While earnings season has been tough so far this quarter, Erlam noted that Meta managed to put a smile on investors’ faces, announcing slightly better revenues than expected, a plan to reduce costs and make the company more efficient this year, and a $40 billion share buyback.

“That has seen the share price rise almost 20% in premarkets, and Nasdaq futures to rise more than 1%,” he said. “The question now is can Apple, Amazon, Alphabet and others deliver similar results today.”

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