Surge in Facebook ‘likes’ pushes Wall Street higher

Wall Street climbed on Thursday as a blockbuster quarterly report from Facebook drove tech shares higher.

business Updated: Jan 29, 2016 09:23 IST
Facebook,Wall Street,Tech shares
Wall Street climbed on Thursday as a blockbuster quarterly report from Facebook drove tech shares higher.(AP File Photo)

Wall Street climbed on Thursday as a blockbuster quarterly report from Facebook drove tech shares higher and a bounce in oil prices propped up the beleaguered energy sector.

Facebook surged 15.5% in its biggest one-day leap since 2013 after the digital advertising behemoth smashed expectations with a 52% jump in fourth-quarter revenue.

Helped also by a 4.28% gain in Alphabet, the S&P tech sector surged 1.48%.

The S&P energy sector rallied 3.15%, buoyed by a rise of almost 3% in oil prices due to speculation that Saudi Arabia and other Opec countries would cut output to boost prices.

Optimism sparked by earnings from Facebook and a handful of other companies, as well as the bounce in oil prices, was behind most of the day’s improved sentiment, investors said.

But they also warned the gains could be short-lived and that a steep sell off this year caused by weak oil and worries about China’s economy may not be exhausted. The S&P remains down 7% for 2016.

“You had marquee names with pretty good earnings,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. “I’d love to say we’re onward and upward from here but I don’t think things work that way.”

The Dow Jones transport average, which Carlson said was a good indicator of the economy’s health, fell 0.8%.

Others remained cautious after comments by the US Federal Reserve’s Open Market Committee on Wednesday did not more strongly signal it could scale back the pace of future interest rate hikes in the wake of recent turmoil in global markets.

“The FOMC’s statement was less dovish than anticipated and very likely may have marked a top in the recent rebound we have seen,” warned Mohannad Aama, managing director, Beam Capital Management LLC in New York.

The Nasdaq biotech index lost 3.5% and was on track for its biggest monthly fall in 16 years.

Abbott Labs was the biggest drag on the health care sector, with a 9.3% drop.

The Dow Jones industrial average gained 0.79% to end at 16,069.64 points while the S&P 500 added 0.55% to 1,893.36. The Nasdaq Composite rose 0.86% to 4,506.68.

After the bell, Microsoft jumped 4.5% after its quarterly results beat expectations thanks to aggressive cost cutting. But Amazon slumped 11% after its quarterly report let down investors. Ahead of the report, it had risen 8.9%.

During the session, PayPal surged 8.39% and Under Armour jumped 22.59%. Revenue at both companies beat estimates.

Among the losers, eBay sank 12.45% after it forecast weaker-than-expected quarterly revenue and profit.

Advancing issues outnumbered decliners on the NYSE by 2,054 to 1,032. On the Nasdaq, 1,470 issues rose and 1,312 fell.

The S&P 500 index showed eight new 52-week highs and 24 new lows, while the Nasdaq recorded 13 new highs and 166 new lows.

About 8.8 billion shares changed hands on US exchanges, above the 8.6 billion daily average for the past 20 trading days, according to Thomson Reuters data.

First Published: Jan 29, 2016 09:23 IST