Recent tech earnings, ex-Meta, are inspiring the broader market’s risk perception
US Stocks rose for the second consecutive session on Thursday as investors shrugged off another quarter of negative growth in favor of an optimistic reading of Wednesday’s three quarter point rate hike and recent comments from some significant tech firms’ earnings about their outlook.
Q2 2022 hedge fund letters, conferences and more
The S&P 500 rose 1.2%, The Dow Jones Industrial Average added 1% or 329 points, and Nasdaq Composite Index added 1.1% on Thursday.
The U.S. economy contracted 0.9% last quarter, marking a second straight quarterly decline in the gross domestic product, the Commerce Department said Thursday.
Transportation Sector Rises
Frontier Airlines (NASDAQ:ULCC) shares rose more than 13% on Thursday, a day after it dropped its hostile bid for Spirit Airlines agreed to drop its bid for the low cost carrier. Investors are relieved that the company won't get dragged into a bidding war. The move gives Spirit (NYSE:SAVE) a clear flight path to agree to sell to JetBlue (NASDAQ:JBLU), another suitor with a higher offer.
Fellow transportation sector favorite, motorcycle manufacturer Harley Davidson (NYSE:HOG) shares accelerated 7.7% after it said its customers are still spending. Chief Executive Officer Jochen Zeitz told conference call listeners on Thursday, "We do not see a softening among our core consumers."
However, he said sales fell in the quarter, and he cited the pandemic and supply chain issues, as well as having shut down production for a bit in the quarter.
Investors have waited for results from major blue-chip and technology companies for further guidance about the state of the real economy.
Apple And Amazon's Earnings
Gains continued after hours as earnings arrived from Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN), lifting both firms' shares further into the green.
Apple shares added 2.8% in late trading after it reported that its iPhone sales remain strong and that it has not cut hiring, contrary to some market perception.
Apple revealed its best June quarter for revenue, selling $83 billion worth of goods and services, up two percent from a year ago. The company earned $1.20 a share in the quarter.
Said Tim Cook, Apple's CEO, "Our June quarter results continued to demonstrate our ability to manage our business effectively despite the challenging operating environment. During the quarter, we generated nearly $23 billion in operating cash flow, returned over $28 billion to our shareholders, and continued to invest in our long-term growth plans."
Intel (NASDAQ:INTC), the iconic chipmaker, reported an unexpected loss after the bell, which sunk its shares by almost nine percent. Rival Qualcomm also reported a surprise loss, and its shares dropped 5.2%.
The Silicon Valley pioneer posted 29 cents a share second quarter adjusted earnings, nowhere near Wall Street analysts' consensus estimate of 69 cents a share. Revenue tanked, falling to $15.3 billion, well below analysts' expectations of $17.94 billion.
Intel executives estimate the company will post similar revenues in the present quarter and put the range at $15 to $16 billion, against current analysts' $18.72 billion revenue estimate.
Facebook parent Meta Platforms (NASDAQ:META) fell $8.86, or 5.2%, to $160.72 after reporting its first-ever decline in quarterly revenue on Wednesday.
After the bell, Amazon reported posting a 20 cents a share loss on about $121 billion of revenue.
Its shares rose in after hours trading by 12%, bolstered by the company's outlook, which called for break-even to $3.5 billion third quarter profit and $125 billion to $130 billion revenue.
"Despite continued inflationary pressures in fuel, energy, and transportation costs, we're making progress on the more controllable costs we referenced last quarter, particularly improving the productivity of our fulfillment network," company CEO Andy Jassy said Thursday.
Article by Greg Morcroft, Fintel
