Stock market today: Facebook’s parent company Meta leads tech higher

NEW YORK (AP) Wall Street had its best day since January after Meta Platforms on Thursday became the latest Big Tech company to beat earnings expectations and reports painted a mixed picture for the US economy.

The S&P 500 rose 2% to wipe out all the losses from the rough week so far. The Dow Jones Industrial Average climbed 524 points, or 1.6%, while the Nasdaq composite led the market with a gain of 2.4%.

The parent company of Facebookdid some of the heaviest lifting, and it jumped 13.9%. Not only did Meta beat analysts’ earnings estimates during the first three months of the year, it also delivered a revenue forecast that beat expectations.

It joinedMicrosoftAndAlphabetwhich reported better-than-expected results earlier in the week, andAmazonfollowed suit after trading closed for the day. They are among the most influential stocks on Wall Street indexes because they are among the largest.

Most companies have beaten forecasts so far this earnings reporting season. Hasbro climbed 14.6% and Comcast rose 10.3% after also beating Wall Street estimates. But expectations were generally low at the start of this reporting season due to still high inflation, much higher interest rates and a slowing economy.

A report on Thursday gave the first indication of how muchthe US economy is slowing: an estimated 1.1% annualized growth during the first three months of 2023, compared to 2.6% at the end of last year. That was worse than expected, but the economy may be in better shape than it seems.

Beneath the surface, the report showed strength in the core of the economy, with growth in consumer spending and other areas accelerating. Much of the weakness was related to corporate destocking. However, the data also includes an inflation measure the Fed likes to use, and it came out hotter than hoped.

A separate report found that fewer workers applied for jobsunemployment benefitslast week, raising hopes that the labor market will remain resilient as other areas slow.

In our view, all things considered, the conflicting data indicates we are in the bend, not the phase, of the cycle for the economy, said Alexandra Wilson-Elizondo, co-lead portfolio manager for multi-asset solutions at Goldman Sachs Wealth Management .

Overall, investors took the data as an indication that the Federal Reserve will see next week that the economy is still strong enough to handle another rate hike at its next meeting.

The Fed has hiked interest rates at a breakneck pace since the beginning of last year, to the highest level since 2007 from its record low. It does this in hopes of controlling the country’s high inflation, but high rates do so by slowing down the entire economy and hurting prices for investments.

Treasury yields rose immediately after the release of the economic reports as traders raised their forecasts for the Fed and interest rates.

The yield on the 10-year Treasury rose from 3.45% at the end of Wednesday to 3.52%. It helps with setupmortgage ratesand other important loans.

Two-year rates, which move more in line with the Fed’s expectations, rose more aggressively. It climbed from 3.95% to 4.08%.

High rates have hit some parts of the economy particularly hard, including housing and manufacturing. Banks have also come under pressure from fears that frightened customers could suddenly claim all of their deposits at once.

Potential weak links have been hunted, and Wall Street’s spotlight has been particularly harshBank of the First Republic. The stock more than halved this week after it gave details of how much deposits its customers raised following the second- and third-largest U.S. bank failures in history last month.

The stock stabilized a bit on Thursday, rising 8.8%.

The bigger concern is that the problems of the banking sector could lead to a decline in lending across the economy. That, in turn, could tighten the brakes even further, almost like another rate hike.

That has prepared many investors for onepossible recessionthis year, which could mean further blows to corporate earnings. It’s also why investors have paid as much, if not more, attention to what companies say about emerging trends than to what they actually did in the past three months.

Caterpillar, considered a benchmark for the global economy, fell 0.9% despite higher-than-expected profit and sales for the last quarter. Analysts pointed to concerns that profitability may be maxed out. It also benefited from a larger-than-expected build-up of dealer inventories.

Crocs plummeted 15.9%, despite stronger-than-expected earnings and sales for the final quarter. The shoe company issued financial forecasts for the current quarter that fell short of some analysts’ expectations.

All told, the S&P 500 rose 79.36 points to 4,135.35. The Dow Jones gained 524.29 to 33,826.16 and the Nasdaq climbed 287.89 to 12,142.24.

In overseas markets, equity indices were mixed in Europe and modestly higher in much of Asia.

Japan’s Nikkei 225 rose 0.1% as the Bank of Japan began a two-day monetary policy meeting under its new governor, Kazuo Ueda. No immediate change is expected in the nation’s super-easy monetary policy.