Strong fourth quarter initial GDP numbers and Facebook's
earnings results helped benchmarks return to their winning ways.
In fact, the S&P 500 scored its biggest jump in more than a
month and that has put the index on course to post weekly gains.
Facebook's gains also helped push the technology sector higher
and it emerged as one of the top performing sectors yesterday.
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Ahead of Wall Street
The Dow Jones Industrial Average (DJI) jumped almost 110 points
or 0.7% to close at 15,848.61. The Standard & Poor 500 gained
significantly, by 1.1% to finish Thursday's session at 1,794.19.
The tech-laden Nasdaq Composite Index added 1.8% to move up to
4,123.13. The fear-gauge CBOE Volatility Index (VIX) dropped 0.4%
to settle at 17.29. Total volume on the New York Stock Exchange
was 3.5 billion. Advancers dominated decliners on the NYSE; as
for 74% stocks that gained, 23% stocks closed lower.
Markets were finally able to score big after trending lower for
most of the last two weeks. Till Wednesday, S&P 500 had
suffered four losses in five trading sessions and the blue-chip
index had closed in the red six times of seven trading sessions.
Markets' negative mood has almost been a dominant factor all this
month, with selling pressure intensifying over the last couple of
However, benchmarks were able to post a rare win yesterday. The
gains secured the S&P 500 its best percentage jump since Dec
18. The tech-laden Nasdaq too joined the rally and had its best
percentage jump since Oct 10.
The Bureau of Economic Analysis reported that real gross domestic
product improved at a 3.2% annual rate in fourth quarter. This
was a tad higher than consensus estimate of 3.1%. Strength in
personal consumption expenditures (PCE), exports, nonresidential
fixed investment, private inventory investment negated weakness
in federal government spending and residential fixed investment.
Real personal consumption expenditures were up by 3.3% in Q4,
sharply higher compared with third quarter's 2% growth.
Shares of Facebook, Inc. (NASDAQ:
) jumped 14.1% after reporting a strong fourth quarter
performance. The social networking giant's revenues jumped 63.2%
year on year, boosted by a 76.5% year-on-year surge in
Facebook also noted that its messenger was among the top
most-downloaded applications on Apple Inc.'s (NASDAQ:
) iOS and Google Inc.'s (NASDAQ:
) Android in Dec 2013. Messenger users jumped 70.0% in the fourth
quarter. Separately, it was reported that Google had struck a
deal to sell its Motorola business to China's Lenovo. Google's
shares were up 2.6%.
Facebook's strength was also reflected in other key technology
stocks. The technology sector was among the top performers for
the day and Technology Select Sector SPDR (XLK) gained 1.2%. Key
stocks such as Oracle Corporation (NYSE:
), Cisco Systems, Inc. (NASDAQ:
), Adobe Systems Inc. (NASDAQ:
), Red Hat, Inc. (NYSE:
) and International Business Machines Corporation (NYSE:
) gained 1.2%, 1.5%, 1.6%, 2.8% and 0.5%, respectively.
Coming back to economic data, initial claims were reported to
have increased 19,000 from a week prior to 348,000 in the week
ending Jan 25. This was higher than consensus estimate of a
reading of 330, 000.
The gains were a much-needed relief for the markets. Declines
over the last few days were largely due to the contraction in
China's manufacturing sector and concerns emanating from
political and economic issues in the emerging markets. Last week,
emerging-market currencies suffered their worst selloff in five
In addition, benchmarks were dealt a severe blow after the
central bank's decided to cut another $10 billion from its
original $85 billion third quantitative easing plan. The decision
came during what was Fed chairman Ben Bernanke's last-policy
setting meeting. Interest rates will continue to be low, but the
central bank may continue with its tapering every month.