The stock market gained in spite of the fact that U.S. gross domestic product fell 1.4% in the first quarter, the first contraction in the U.S. economy since the Q1-Q2 2020 pandemic slowdown. Still, rising yields and a stronger dollar helped the markets.
Meta Platforms soared on an earnings beat, hoisting the Nasdaq by 0.9%. The S&P 500 rose 1%. The Dow Jones Industrial Average tacked on 0.6%. The small-cap Russell 2000 was down slightly at 0.3%. Indexes started accelerating gains around noon E.T.
The U.S. Commerce Department said gross domestic product fell 1.4% in the first quarter, the first contraction in the U.S. economy since the Q1-Q2 2020 declines during the worst of the pandemic. It also marked a sharp slowdown from the previous quarter's 6.9% burst. Economists had expected a 1.1% increase, according to Econoday.
"Today's shock drop in GDP is a wake-up call that the economy isn't as strong as we all thought," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. "It's possible that GDP gets revised higher next month, as this is just the first release and there will be two revisions, but it is a warning sign."
U.S. Stock Market Today Overview |
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|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 33517.96 | +216.03 | +0.65 |
| S&P 500 | (0S&P5) | 4226.83 | +42.87 | +1.02 |
| Nasdaq | (0NDQC ) | 12600.00 | +111.07 | +0.89 |
| Russell 2000 | 186.38 | -0.58 | -0.31 | |
| IBD 50 | 32.69 | -0.36 | -1.09 | |
Last Update: 12:20 PM ET 4/28/2022 |
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The largest drag on the economy was the large trade deficit, which hurt headline growth by over three percentage points, said Jeffrey Roach, chief economist for LPL Financial, in a commentary. Underlying demand from both consumers and businesses was strong.
Yields, Dollar Gain While GDP Falls
Claims for jobless benefits fell to 180,000 from 185,000 the previous week, basically in line with forecasts.
The yield on the 10-year Treasury note rose two basis points to 2.86%, and a surging dollar is one of the few bright spots for the economy.
PayPal reported first-quarter earnings that met Wall Street targets and lowered 2022 guidance. And yet, shares climbed 3.5% as investors feel the worst may be over for PayPal. PayPal has fallen from its peak of 310 in late July 2021.
After the market close on Wednesday, the e-commerce company said March-quarter earnings came in at 88 cents a share, down 28% from a year earlier. Revenue rose 7% to $6.5 billion, said San Jose, Calif.-based PayPal. Analysts expected PayPal earnings of 88 cents a share on revenue of $6.4 billion.
Twitter offered first-quarter results before the market open Thursday that missed on revenue, in what could be its last earnings report as a public company. Twitter stock wavered as user growth beat views.
Ford, Teladoc, Others Report Earnings
The company said adjusted earnings were 61 cents a share, but it was not comparable to the year-ago period because Twitter included a gain for its sale of MoPub. In the year-ago period, Twitter reported adjusted earnings of 8 cents. Twitter said revenue was $1.2 billion, below estimates of $1.23 billion. Revenue climbed 16% from the year-ago period.
Twitter accepted a $44 billion buyout offer from Tesla CEO Elon Musk. Meanwhile, Tesla shares slid 5% Thursday as other automakers reported weak guidance and mediocre earnings this week.
Ford Motor reaffirmed its 2022 earnings outlook late Wednesday after posting mostly in-line earnings and revenue for the first quarter. Ford stock fell 4% Thursday morning. Ford stock has been stuck below its 50-day moving average for three months. The relative strength line for Ford stock has fallen sharply after a strong rally in the final quarter of 2021.
Late Tuesday, General Motors modestly hiked its 2022 outlook as the supply-chain crunch eased. Nonetheless, GM stock was down 2% Thursday.
Meanwhile, Teladoc Health reported a wider-than-expected loss and a surprise $6.6 billion impairment charge. The telehealth specialist also cut 2022 guidance. TDOC stock crashed more than 40%, on target for a four-year low. TDOC stock had already round-tripped its huge 2020 gains.
McDonald's beat sales and profit expectations as same-store sales jumped 11.8%. Shares rose 2.4%. Caterpillar stock fell 5% even though the heavy-machinery maker defied estimates and posted a small profit increase.
Merck And Meta Shine On Earnings
Merck shares rose 4% following estimate-beating Q1 results. Merck's Covid treatment accounted for $3.2 billion in sales. The stock is getting closer to the 89.58 buy point of a cup with handle.
Meta Platforms, the parent of Facebook, gave the Nasdaq and S&P 500 a boost with a 16% surge at midday. The company' first-quarter revenue and sales forecast for Q2 missed views. But earnings topped expectations and user numbers increased.
In other key earnings report, Northrop Grumman reversed higher as it works on a cup-with-handle base. The defense systems and aircraft maker announced mixed first-quarter results.
Qualcomm jumped more than 6% after the maker of chips for wireless devices late Wednesday beat quarterly expectations and guided higher for the current period.
The Innovator IBD 50 ETF reduced its loss to 0.3%.
Apple, the largest Dow company by market cap, and Intel report results after today's close. Apple climbed 2.5% to regain the 200-day moving average. Intel rose 1.6%.
Follow Michael Molinski on Twitter @IMmolinski
