MARKET SNAPSHOT: Facebook Stock Ignites Tech Sector Rally, Leads The Market Higher

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04/26/2018 | 05:38 pm

By Anora M. Gaudiano and Sara Sjolin, MarketWatch

Facebook shares jump after strong results

U.S. stock-market indexes rallied on Thursday, led by a surge in shares of Facebook Inc., following better-than-expected earnings, which helped boost the broader technology sector.

What are markets doing?

The Nasdaq Composite Index rose 93 points, or 1.3%, to 7,111, outperforming other benchmarks in early trade. Solid earnings from technology companies helped lift the index.

The S&P 500 added 19 points, or 0.8%, to 2,658=9, with the technology sector up 2.3%. Telecommunications shares were down more than 3%, while industrials slipped 0.3%.

The Dow Jones Industrial Average was up 189 points, or 0.8%, to 24,272, with gains in the shares of Visa Inc. and Home Depot Inc., leading the way higher for blue chips.

What is driving the market?

Traders focused on the latest run of earnings from major tech companies, which managed to instill some confidence in the earnings season. So far this season, more than 80% S&P 500 companies have beaten forecasts, but the better-than-expected results have often failed to lift the companies' share prices.

Meanwhile, investors appeared to push aside concerns over rapidly rising U.S. interest rates, as the yield on 10-year Treasury notes retreated from the psychologically important 3% level .

Which stocks are in focus?

Shares of Facebook surged by 9% after the social-media giant late Wednesday posted earnings that easily beat forecasts .

Advanced Micro Devices jumped 15% after the chip maker late Wednesday offered an upbeat revenue outlook and delivered higher profit than expected.

Shares of Chipotle Mexican Grill soared 24% after analysts at several investment banks raised their price targets following earnings reports on Wednesday.

Ford Motor Co.'s stock(F)climbed 2% after profit and sales topped Wall Street expectations .

O'Reilly Automotive shares surged 12% after the company reported earnings above expectation on Wednesday.

On a downbeat note, eBay fell 7% after the online marketplace provided a downbeat outlook in its earnings out late Wednesday . Payments processor PayPal Holdings(PYPL)rose 4% after its results .

AT&T Inc. shares(T) fell 6.2% after missing profit and sales forecasts .

Shares of General Motors slid by 2% after the auto maker posted a 60% drop in net income on restructuring costs .

ConocoPhillips profit topped estimates and shares are up 2.2%.

After the market closes, Intel, Microsoft, Amazon and Starbucks are slated to report.

See earnings previews from:Intel , Amazon , Microsoft and Starbucks .

What are strategists saying?

"This is an environment when not every stock gets a participation trophy, but only the ones that can show solid revenue growth and positive guidance," said Karyn Cavanaugh, senior market strategist at Voya Financial.

"People are concerned about inflation, but I don't even know what "overheating" means. There is still slack in the labor market, so I would not worry about runaway inflation and higher bonds yields right now reflect continuing growth," Cavanaugh said.

What's on the economic calendar?

The weekly initial jobless claims dropped 24,000 to 209,000, the lowest level since December 1969.

U.S. durable goods orders climbed 2.6% in March, largely thanks to a 44.5% surge in commercial plane orders. Separately, U.S. trade deficit in goods narrowed 10.3% to $68 billion last month.

Meanwhile, rates for home loans approached a five-year high as strong economic data and rising commodity prices drove a selloff in bonds.

The 30-year fixed-rate mortgage averaged 4.58% , according to Freddie Mac's weekly survey, out Thursday. That marked an 11 basis point gain during the previous week, and the highest since August 2013.

The trade deficit in goods narrowed 10.3% to $68 billion, according to the government's advanced report released Thursday.

In Europe, the European Central Bank made no changes to its statement on Thursday, leaving interest rates unchanged and repeating its promise to keep buying bonds until the end of September, or beyond, if necessary.

Read a recap of the ECB conference:Draghi to deal with weaker economic data

Check out:Here's why the euro looks cheap ahead of Thursday's ECB meeting

What are other markets doing?

Asia markets closed mixed, while European stocks traded higher .

Oil prices advanced as the White House mulled the possibility of reimposing sanctions on Iran. June West Texas Intermediate crude rose 0.4%, to $68.30 a barrel.

Meanwhile gold futures slipped 0.3% to $1,319.30 an ounce.

The dollar strengthened against major rivals with the ICE U.S. Dollar Index up 0.4% to 91.510.

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