Today’s Stock Market: Meta rise powers Wall Street higher.

NEW YORK (Reuters) – Thursday, Wall Street rose as Meta Platforms became the latest Big Tech firm to outperform earnings forecasts, while data portrayed a mixed picture of the US economy.

In early trade, the Sample 500 was 0.7% higher, on track for its first gain in three days. As of 9:50 a.m. Eastern time, the Dow Jones Industrial Average was up 181 points, or 0.5%, at 33,483, while the Nasdaq composite led the market with a 1% gain.

Facebook’s parent business was doing most of the heavy lifting, rising 15.1%. Meta not only outperformed analysts’ profit forecasts for the first three months of the year but also provided a sales forecast above expectations.

So far this reporting season, most corporations have exceeded earnings estimates. Hasbro jumped 9.8%, and eBay increased 2.4% after exceeding Wall Street’s expectations. However, expectations were low heading into this reporting season due to persistently rising inflation, considerably higher interest rates, and a faltering economy.

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A study released on Thursday provided the first hint of how far the US economy is slowing: it is expected to expand at an annual pace of 1.1% in the first three months of 2023, down from 2.6% at the end of last year. Although the decline was worse than projected, the economy may be stronger than it seems.

Underneath the surface, the report demonstrated the economy’s basic strength, rising consumer spending and other sectors. Much of the downturn was due to firms reducing their stockpiles. According to a second study, fewer people claimed unemployment benefits last week, bolstering hopes that the labor market would stay strong even as other regions stall.

In our view, the contradictory data signals to us that we are in the ‘bend, not break’ phase of the cycle,

Said Alexandra Wilson-Elizondo, co-head of portfolio management for multi-asset solutions at Goldman Sachs Asset Management.

Overall, investors interpreted the statistics to imply that the Federal Reserve would regard the economy as robust enough to absorb another rate rise at next week’s next meeting.

Since early last year, the Fed has been increasing rates at a breakneck pace, pushing them from a historic low to the highest level since 2007. It is doing so in the hopes of bringing the country’s high inflation under control, but high rates do so by slowing the overall economy and lowering investment values.

Treasury yields rose soon after the economic figures were released, as speculators raised their estimates for the Fed and interest rates.

The 10-year Treasury yield increased to 3.49% from 3.45% late Wednesday. It aids in the determination of mortgage and other critical lending rates.

The two-year yield, more sensitive to Fed predictions, increased aggressively, rising to 4.03% from 3.95%.

High-interest rates have had an especially negative impact on some sectors of the economy, notably the housing and manufacturing industries. Banks have also come under pressure due to worries that terrified clients would withdraw their savings at once.

The search for weak links has been on, and Wall Street has been especially hard on First Republic Bank. Its stock has more than halved this week after it revealed how much money its clients withdrew after the second-and third-largest bank collapsed in US history last month.

Its stock price increased 6.2% on Thursday.

The broader concern is that the banking industry’s difficulties will reduce financial lending. This, in turn, might tighten the brakes even further, functioning like another interest rate rise.

Many investors are bracing for a probable recession this year, which may lead to additional declines in company earnings. It’s also why investors have been paying as much, if not more, attention to what firms say about their impending results as they have to what they performed in the previous three months.

Caterpillar, a barometer for the global economy, slumped 3.5% after posting more profit and sales for the most recent quarter than projected. Analysts expressed fear that its profitability had peaked. It also benefitted from a larger-than-expected increase in dealer inventory, which may put downward pressure on future sales.

In international markets, stock indices were neutral in Europe and slightly higher in most of Asia.

The Nikkei 225 index in Japan gained 0.2% as the Bank of Japan started a two-day monetary policy meeting led by its new governor, Kazuo Ueda. The country’s ultra-easy monetary policy is unlikely to alter anytime soon.

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