Stocks surge on solid earnings
NEW YORK — Strong results from major companies including Microsoft and Visa helped U.S. stocks bust out of another losing streak Thursday. The rally wiped out part of the market’s plunge from the day before, but stocks are still down sharply over the past three weeks.
Technology companies soared as Microsoft, Visa and Xilinx rallied after their quarterly reports, while Twitter and Comcast led the way for internet and media companies. Ford’s results helped consumer-focused stocks.
Some encouraging economic news helped stabilize markets. The Commerce Department said orders to U.S. factories for major manufactured goods grew in September, and the increase was larger than analysts expected.
In Europe, European Central Bank President Mario Draghi said the region’s economy is still growing at a solid clip even though there are signs it has weakened somewhat recently. But Asian markets took big losses, as the U.S. market did the day earlier.
The S&P 500 index jumped 49.47 points, or 1.9 percent, to 2,705.57. The Dow Jones Industrial Average rose 401.13 points, or 1.6 percent, to 24,984.55 after rising as much as 520 points during the day. The Nasdaq surged 209.93 points, or 3 percent, to 7,318.34 after its biggest drop in seven years.
The S&P 500 had index plunged 9.2 percent since Oct. 3 as investors worried about climbing interest rates and the effects of the U.S-China trade dispute. The Nasdaq plummeted 11.4 percent through Wednesday.
Investors are worried that rising interest rates and disputes with trading partners could hurt the economy. They will get more insight into how the U.S. is doing early Friday when the government reports on economic growth during the third quarter. Experts think the country’s gross domestic product grew 3.3 percent from July to September, according to FactSet.
Microsoft surpassed analysts’ forecasts in the first quarter as it mined new revenue sources in online subscriptions, gaming and its LinkedIn professional networking service. Shares of the tech giant jumped 5.8 percent to $108.30.
“It’s certainly reassuring to see stocks bounce back today on stronger earnings, but I would expect that we continue to see a lot of day to day volatility,” said Kate Warne, an investment strategist for Edward Jones.
Twitter soared 15.5 percent to $31.80 and electric car maker Tesla jumped 9.1 percent to $314.86 after their quarterly reports, while video game maker Take-Two vaulted 8.8 percent to $120.70 after strong reviews for its latest game, “Red Dead
Redemption 2.”
The S&P 500 suffered two separate six-day losing streaks this month and had fallen for 13 out of the past 15 days. That stretch also included a couple of big rallies, but the losses erased the benchmark index’s gains from earlier in the year. After Thursday’s gains, the Dow and S&P 500 are each up about 1 percent for the year.
Warne, of Edward Jones, said investors have been dumping shares of companies that reported weak results, while companies that surpassed expectations haven’t been rewarded much. She expects that to change when the dust settles.
“When we get beyond earnings season and investors are wondering what now can drive the market higher or lower, knowing that we had a strong earnings season and companies did not lower their guidance very much will provide some
support for stocks,” she said.
Earnings for S&P 500 companies grew about 20 percent in the first and second quarters, and experts expect similar results for the third quarter.
On Thursday the stock market looked the way it has looked for most of this year: high-tech and consumer-focused companies lead the way while steadier, defensive stocks that pay big dividends weren’t doing much, or lost ground. But huge companies like Microsoft, Alphabet and Amazon.
While all three rallied Thursday following Microsoft’s earnings, investors didn’t like what they heard from Amazon and Alphabet, which reported earnings after the close of trading. The internet retailer dropped 4.8 percent in aftermarket trading while Google’s parent company lost 3.2 percent.