U.S. stocks rallied Thursday as investors digested the release of gross domestic product data and another round of corporate earnings.
The S&P 500 (^GSPC) increased by 1.1%, while the Dow Jones Industrial Average (^DJI) added by 0.6%. The technology-heavy Nasdaq Composite (^IXIC) rose by roughly 1.8%, led by a more than 10% jump from Tesla (TSLA).
The yield on the benchmark 10-year U.S. Treasury note ticked up to 3.497% from 3.461% on Wednesday. The dollar index rose nearly 0.2% to $101.82.
U.S. GDP grew 2.9% annual rate in the final quarter of 2022, above expectations, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE), compromised two-thirds of domestic activity, added 2.1%, a slowdown from the prior quarter of 2.3%.
Meanwhile, initial jobless claims fell again to 187,000, the lowest level since April 2022. Together, the data represented more signs of resilience for the U.S. economy amid worries over a potential recession.
Sales of new homes rose 2.3% last month to a seasonally adjusted annual rate of 616,000, according to a report Thursday from the Census Bureau, while mortgage rates slipped to 6.13%, per Freddie Mac.
Market moves Thursday came after stocks climbed back from session lows Wednesday, ending the session nearly flat as 12 of the 24 industry groups hit positive territory for the day.
Shares of Bed Bath and Beyond (BBBY) sank on Thursday after the company said in an SEC filing that it doesn’t have enough cash to pay down its debts and has defaulted on its credit line with JP Morgan.
Tesla (TSLA) also took center stage on the corporate front as shares increased more than 10% after the company reported strong earnings. Its results showed the electric vehicle maker had better-than-expected profits in the latest quarter, earning $3.7 billion in net income on $24.3 billion in revenue. Tesla announced it would deliver about 1.8 million vehicles this year, which would represent a 37% jump in production.
International Business Machines Corp. (IBM) joined the wave of company layoffs, saying it will cut about 3,900 workers. The cuts will come from Kyndryl Holdings, the IT services business IBM spun off last year. As a result, the company said it will take a $300 million hit in the first quarter to pay for employee severance costs.
The hybrid cloud and infrastructure company also reported fourth-quarter earnings that came in slightly above analysts expectations with revenue of $16.69 billion. Adjusted earnings per share came in at $3.60, in line with analyst forecasts. Shares were down 4% on Thursday.
Facebook parent Meta (META) shares moved higher following the news that the company decided to restore former President Donald Trump’s Instagram and Facebook accounts. The end of the ban stemming from the Jan. 6, 2021, insurrection comes at the start of the 2024 presidential campaign season.
Elsewhere in stock moves, American Airlines (AAL) shares rallied Thursday after the company said it expects profit for this year to exceed forecasts as the industry remains in recovery mode.
Southwest Airlines (LUV) shares traded down after the carrier announced a $220 million loss in the fourth quarter due to its holiday meltdown last month that led to thousands of flight cancellations. Southwest slashed revenue projections for this year to $350 million as the company deals with ongoing cancellations and reduced bookings.
Shares of Comcast (CMCSA) were flat after the media company reported fourth-quarter earnings that beat expectations with revenue of $30.55 billion. Comcast said it lost 26,000 total broadband customers due to Hurricane Ian, which struck the Southeast coast in September. However, the company was able to turn around, in part by increasing its share in ad spending on its networks during the World Cup soccer tournament and the U.S. elections in November.
BuzzFeed (BZFD) shares surged after the company said it will use AI tools provided by ChatGPT creator OpenAI to “enhance” and “personalize” its content.
Finally, the head of Toyota Akio Toyoda announced on Thursday he would be stepping down as CEO on April 1 to be replaced by current Chief Branding Officer Koji Sato. Toyoda will become the new chairman of the board.
Investors will continue to digest earnings season, with reports from names including Visa (V) and Intel (INTC) in the queue for Thursday.
Chevron (CVX) is set to report on Friday morning, but announced ahead of time that it will be buying back stock up to $75 billion of its shares in the future.
While earnings season is in full swing this week, 173 companies have reported as of Wednesday. Among those, six stocks have reported an earnings triple play, according to Bespoke Investments. A triple play occurs when a company posts earnings that beat the top and bottom line, while also raising guidance forecasts.
Looking ahead to the Federal Reserve’s decision next week, investors and economists got a decision from the Bank of Canada on Wednesday. The central bank hiked its benchmark by 25 basis points to 4.5% on Wednesday, the highest level in 15 years. It was an anticipated move that came with a clear signal the bank is prepared to press pause on its aggressive tightening cycle.
Bank of Canada Governor Tiff Macklem made it clear that “this a conditional pause,” but it does suggest that officials are convinced the current policy rate is restrictive enough to restore price stability.
Meanwhile, back at home, Fed officials are in their blackout period ahead of their next monetary policy meeting, which starts Jan. 31.
However, the Washington Post reported Wednesday that Federal Reserve Vice Chair Lael Brainard is considered as a top candidate to head the National Economic Council at the White House. As it stands, Brainard’s position as both a Governor and Vice Chair currently holds until 2026.
