Tech-heavy Nasdaq Composite gained 2.5% on Thursday as investors cheered a better-than-expected Q1 earnings report from Facebook-parent company Meta Platforms Inc, which triggered a rally across the board, despite weaker U.S. GDP data, and fears of slowing economic growth.
Meta jumped nearly 14% higher to $238 a share, helping Nasdaq Composite to post its best trading session since March. Meta reported quarterly results that beat on both the top and bottom lines, and the social media giant delivered upbeat guidance, adding to a series of better-than-expected quarterly results from mega-cap tech such as Apple, Alphabet, and Microsoft.
Meta Platforms share, Daily chart
Dow Jones and S&P 500 indices are on pace for a second positive month in April, managing to recover earlier monthly losses from concerns about the U.S. banking sector, and economic recession.
The prospect of higher interest rates and persistent inflation spurred more concerns over a potential economic slowdown this year, especially ahead of a Federal Reserve meeting next week, where widely expected the Fed to hike rates by 25 basis points to curb inflation.
Another factor that boosted risk sentiment on Thursday was the 8% gains on the shares of beleaguered regional bank First Republic amid a search for a recovery strategy. The stock has plunged over 60% since Monday after the release of its first-quarter results, which showed that deposits shrank by about 40% in the first three months of the year.
First-quarter GDP increases at a 1.1% rate:
All three major equity indices rallied on Thursday despite data showing that the U.S. GDP gross domestic product grew slower than expected last quarter, as investors focused on the above-forecast inflation number and an acceleration in consumer spending.
According to the data, gross domestic product increased at a 1.1% annualized rate last quarter vs a rise of 2% expectation, due to a decline in private inventory investment, while the economy grew at a 2.6% pace in the fourth quarter.
As a result of the stronger-than-expected U.S. inflation and labor market data, it is widely expected that the Federal Reserve to hike rates by 25 basis points at the next FOMC monetary policy meeting of May 02-03.
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