por admin » Mié Oct 31, 2018 2:06 pm
U.S. Stocks Jump as Tough Month Sets to Wrap
A rise in Facebook shares after the company’s earnings report lifts tech sector
By Amrith Ramkumar and David Hodari
Updated Oct. 31, 2018 2:46 p.m. ET
A surge in technology shares following Facebook’s latest earnings lifted U.S. stocks Wednesday, helping major indexes trim some of their October declines following a punishing period for global investors.
The S&P 500 added 1.9% and was on pace to climb in consecutive sessions for the first time since Sept. 20, but still post its largest one-month drop in more than six years. The Dow Jones Industrial Average climbed 406 points, or 1.6%, to 25281, paring its October drop to about 4.5%.
Highflying technology stocks have been among the most sharply sold sectors so far in October, but a rise in Facebook shares after the social-media company’s third-quarter earnings report lifted the group Wednesday. Facebook climbed 4.6%, and Netflix, Alphabet and Amazon.com each added at least 5% to pare some of their October drops.
Investors have been weighing whether the slump in internet stocks that have long powered the market signals broader worries about the global economy or merely a shift by investors in companies that had generated outsize returns.
Facebook shares rose Wednesday after the social-media company reported its quarterly results on Tuesday.
Facebook shares rose Wednesday after the social-media company reported its quarterly results on Tuesday. Photo: eric gaillard/Reuters
Some analysts expect that debate, along with signals regarding global economic growth and central-bank policy, to spur further volatility in November.
“There is a hope that something will save us, whether it’s Facebook, a good economic report” or a positive update on U.S.-China trade policies, said Jordi Visser, chief investment officer of Weiss Multi-Strategy Advisers. “I don’t think one earnings report is going to be enough. We’re just in a volatile period.”
Mr. Visser added that he thinks growth stocks like technology will have a tougher time outperforming moving forward barring progress on trade policies.
Although corporate profits have continued to grow steadily, anxiety about slower revenue growth has jolted some investors. Facebook’s Wednesday climb came even though it posted weaker-than-expected sales and user figures. Some analysts said they were buying into Chief Executive Mark Zuckerberg’s plan to transform the platform.
Chipping Away
Highflying technology shares bounced back fromrecent declines Wednesday following Facebook'sthird-quarter earnings report.
Source: SIX
As of Oct. 31, 3:00 p.m. ET
%
Facebook
Amazon.com
Netflix
Alphabet
Oct. 25
Oct. 26
Oct. 29
Oct. 30
Oct. 31
-15
-10
-5
0
5
10
The rise in Facebook shares could be a boon for the broader technology sector, after Amazon and Alphabet slumped following results last week. The so-called FANG stocks—Facebook, Amazon.com, Netflix and Alphabet, parent of Google—had lost more than $400 billion in market value for the month through Tuesday, on track for their largest monthly total ever going back to Facebook’s 2012 initial public offering, according to Dow Jones Market Data.
General Motors, T-Mobile, Sprint and eBay also surged following their latest results Wednesday, adding to the market’s momentum and easing some worries about slowing sales growth across sectors.
Apple is slated to report results after the market closes Thursday, a bellwether event for some investors given the company’s reliance on global trade. Shares of the iPhone maker are down about 2.5% this month, compared with a 6.2% drop for the S&P 500.
“If there’s one company on the big tech side that probably has benefited the most from the global supply chain and also has a big presence in China, it’s Apple,” Mr. Visser said.
Investors have also been weighing how long stocks can withstand higher interest rates and a stronger dollar, with the Federal Reserve expected to continue gradually boosting short-term rates and the WSJ Dollar Index at its highest level since April 2017.
Although the U.S. economy has surged ahead this year, some analysts expect its growth to moderate, potentially contributing to a drop in earnings increases.
“The market is asking whether the rest of the world will recouple up to U.S. growth or whether the U.S. will recouple downwards to the rest of the world. The narrative has certainly changed,” said Neil Dwane, global strategist at Allianz Global Investors.
The U.S. private sector added 227,000 jobs in October, Wednesday data showed, a larger total than expected. Analysts were looking ahead to Friday’s jobs report for the latest gauge of U.S. growth.
The yield on the benchmark 10-year U.S. Treasury note rose to 3.147%, according to Tradeweb, from 3.111%. Yields rise as prices fall and have dropped from their Oct. 5 multiyear high with investors seeking safety in Treasurys.
The WSJ Dollar Index, which tracks the dollar against a basket of 16 other currencies, rose 0.2%, continuing a recent surge.
Elsewhere, the Stoxx Europe 600 added 1.7% but still recorded its largest monthly decline since January 2016.
Asian stocks climbed to end the month despite weaker-than-expected manufacturing figures from China. Japan’s Nikkei Stock Average rose 2.2%, and Hong Kong’s Hang Seng added 1.6%, though both benchmarks also posted their worst month since 2016.
Write to Amrith Ram