NEW YORK: The tech-heavy Nasdaq led a Wall Street rally on Thursday as a strong update from Meta Platforms outweighed concerns over slowing US economic growth. Meta shares soared 14.4% to touch a more than one-year high after the Facebook owner forecast quarterly revenue above estimate, and as CEO Mark Zuckerberg said AI was increasing traffic to Facebook and Instagram and boosting ad sales.
The S&P 500 communication services index rallied 5.2% to lead sectoral gains, and was set for its biggest single-day percentage gain in two months.
Shares of other megacap companies Microsoft Corp and Alphabet Inc, which reported upbeat results earlier this week, rose while Amazon.com Inc jumped 3.8% ahead of its results after market close.
“When you look at Microsoft and Meta, they really show that the rumors of the Nasdaq’s demise have been greatly exaggerated,” said David Russell, vice president of market intelligence at TradeStation.
“A lot of people wanted to bury technology and say that it was dead forever now there’s a good chance that growth trade will come back.” Expectations for first-quarter earnings have drastically improved, with analysts projecting a 2.4% year-over-year drop for profits at S&P 500 companies versus the 5.1% decline forecast at the start of the earnings season.
Eli Lilly and Co advanced 2.4% on raising its full-year profit forecast, while Comcast Corp rose 7.8% as it beat estimates for quarterly profit, thanks to sustained demand for its broadband services and higher theme park attendance.
Investors appeared to look past data that showed US economic growth slowed more than expected in the first quarter as an acceleration in consumer spending was offset by businesses cutting back on inventory investment.
“If we’re looking to the future, data does seem to be continuing to weaken. The good news is we do think a recession could be mild,” said Brian Klimke, investment director at Cetera Investment Management.
Despite slower growth, which mostly reflected a drag from weak inventory investment, the Federal Reserve is expected to raise interest rates by another 25 basis points next week.
Treasury yields moved higher across the board as investors weighed a showdown over the US debt ceiling with economic data suggesting inflation could remain sticky despite a slowing economy.
The US House of Representatives on Wednesday narrowly passed a bill to raise the government’s $31.4 trillion debt ceiling that includes sweeping spending cuts over the next decade. The bill is expected to get stalled in the Senate.
At 11:32 a.m. ET, the Dow Jones Industrial Average was up 248.12 points, or 0.75%, at 33,549.99, the S&P 500 was up 45.69 points, or 1.13%, at 4,101.68, and the Nasdaq Composite was up 199.09 points, or 1.68%, at 12,053.44.
EBay Inc climbed 4.6% after the e-commerce company forecast current-quarter revenue above projections.
AbbVie Inc fell 8.1% after the drugmaker missed quarterly revenue estimates for its newer treatments, while heavy machinery maker Caterpillar Inc dipped almost 3% as a flat order backlog signaled demand may have peaked.
Advancing issues outnumbered decliners by a 2.07-to-1 ratio on the NYSE and a 1.37-to-1 ratio on the Nasdaq.
The S&P index recorded 11 new 52-week highs and four new lows, while the Nasdaq recorded 25 new highs and 152 new lows.
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