The S&P 500 rose to its highest level in five months on Thursday as better-than-expected Meta results further improved sentiment around technology shares, which led the market lower last year.
The broader market index jumped 1.47% to 4,179.76, or its best level since August. Meanwhile, the tech-heavy Nasdaq Composite advanced 3.25% to 12,200.82, or its highest level since September. The gains come ahead of a trio of Big Tech results after the bell in Apple, Amazon and Alphabet.
At the same time, the Dow Jones Industrial Average underperformed, falling 39.02 points, or 0.11%, to 34,053.94. The major index was dragged lower by Merck shares after the pharmaceutical firm issued a weak outlook in its latest earnings results, despite beating analysts’ estimates on the top and bottom lines.
Some momentum came out of the day’s earlier gains as bond yields traded off their lows. The S&P 500 was up 1.85% at one point. January’s jobs report looms Friday.
Meta surged 23% in its best day since 2013 after reporting a fourth-quarter beat on revenue and announcing a $40 billion stock buyback. That helped investors look past losses in the business unit overseeing the metaverse.
Other mega-cap tech stocks rose on the back of those results. Shares of Google-parent Alphabet were up nearly 7.3%, while Amazon jumped about 7.4%. Apple shares gained 3.7%.
Tech stocks have outperformed in 2023, buoyed by recent signals of cooling inflation that investors expect could lead to a pause from the Federal Reserve in its aggressive rate hiking campaign. The S&P 500 information technology sector is up more than 14% this year after a decline of more than 28% last year.
“It’s 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 Keith Buchanan, senior portfolio manager at GLOBALT Investments.
Wall Street is coming off a winning session after the Fed on Wednesday announced a 0.25 percentage point interest rate hike. While the central bank gave no indication of an upcoming pause in rate hikes, investors were encouraged by the smaller increase and Chair Jerome Powell’s comments recognizing easing inflation.
Economists, on average, expect Friday’s payrolls data to show 187,000 jobs were added in January, according to Dow Jones estimates. Though, Thursday afternoon Goldman economists said payrolls could be as high as 300,000, a big number that could mean the Fed has further to go to cool the economy and curb inflation.
