Wall Street Surges As Meta Platforms Lifts Techs, Growth Stocks

Wall Street rallied on Thursday as a strong quarterly report from Meta Platforms lifted beaten down technology and growth stocks and offset worries about the U.S. economy's contraction in the first quarter.

The Facebook parent rose about 18% after the social network reported a larger-than-expected profit and rebounded from a drop in users.

All of the 11 S&P 500 sector indexes rose, led by Communication Services, up 4.08%, followed by a 4.01% gain in Information Technology.

Apple Inc, the world's most valuable company, and e-commerce giant Amazon.com Inc both rose more than 4% ahead of their quarterly reports later in the day.

Investors have been dumping high growth stocks for weeks, due to worries about inflation, rising interest rates and a potential economic slowdown. Even with Thursday's gain, the tech-heavy Nasdaq was down 10% in the month of April, on track for its deepest one-month decline since March 2020.

"When interest rates, the inflation path and what the Fed is going to do are so volatile, it just means that pricing every other asset is that much more difficult," said Zach Hill, head of Portfolio Strategy at Horizon Investments in Charlotte, North Carolina.

"We've done a lot of earnings data over the last couple days and weeks and by and large, outside of a few particular cases, corporate America's underlying fundamentals have been relatively strong," Hill said.

The U.S. economy unexpectedly contracted in the first quarter as COVID-19 cases surged again, and government pandemic relief money dropped.

The first decrease in gross domestic product since the short and sharp pandemic recession nearly two years ago, reported by the Commerce Department, was mostly driven by a wider trade deficit as imports surged, and a slowdown in the pace of inventory accumulation.

In afternoon trading, S&P 500 was up 2.38% at 4,283.62 points.

The Nasdaq gained 2.93% to 12,854.99 points, while Dow Jones Industrial Average was up 1.75% at 33,885.92 points.

GRAPHIC: S&P 500's busiest trades

The Ukraine war, China's COVID lockdowns and surging inflation have weighed on the outlook for the global economy, sparking volatility ahead of the Federal Reserve's May meeting next week. Fed watchers expect a 50-basis-point rate hike.

Overall, first-quarter earnings have been better than expected, with 81% of the 237 companies in the S&P 500 that have reported results so far beating Wall Street expectations. Typically, only 66% of companies beat estimates, according to Refinitiv data.

Qualcomm Inc surged 8% after the chipmaker forecast third-quarter revenue above analyst expectations, while Caterpillar Inc fell 1.8% as it indicated profit margins in the current quarter were likely to be pressured from surging costs.

Among other movers, Amgen Inc fell 4.8% after the drugmaker said the U.S. Internal Revenue Service is seeking additional back taxes of $5.1 billion.

Advancing issues outnumbered declining ones within the S&P 500 by a 6.1-to-one ratio.