Nasdaq Tracker Jumps After Hours as Tech Earnings Sow Confidence
(Bloomberg) -- A big batch of earnings from the internet and software spaces sent an exchange-traded fund tracking technology stocks higher after hours.
The Invesco QQQ Trust ETF rose as much as 0.6 percent after Nasdaq 100 constituents Microsoft Corp. and Facebook Inc. reported sales that topped analyst forecasts. The index was up 23 percent year-to-date at the 4 p.m. close of U.S. exchanges and the S&P 500’s Information Technology Index is the best performer in the gauge.
“With Facebook, investors had concerns about pressure from U.S. and EU regulators, which hasn’t come to pass, and privacy concerns haven’t slowed growth especially in emerging markets,” said Max Gokhman, the head of asset allocation for Pacific Life Fund Advisors. “With Microsoft, Azure has really been supporting them. The broader takeaway for tech is that so long as business and consumer sentiment holds up there’ll be continual growth for them.”
Facebook rose as much as 8 percent after posting better-than-expected first-quarter revenue, underscoring the strength of its advertising business even in the face of privacy concerns and regulatory threats. The company said it set aside $3 billion in the quarter related to an ongoing privacy investigation by the U.S. Federal Trade Commission.
Microsoft reported profit and sales that topped analyst estimates as the company racked up several new cloud-computing deals and agreements from previous years began to pay off. The company said large brands including Kroger Co., Exxon Mobil Corp., and Walgreens Boots Alliance Inc. signed agreements to use its Azure cloud software. Sales rose 14 percent compared with a year earlier, coming in at $30.6 billion. Analysts projected $29.9 billion.
Both companies “beat relatively low expectations in a market that’s been fairly challenging for tech earnings,” said Kevin Caron, a senior portfolio manager at Washington Crossing Advisors. “Maybe some of that late improvement in the quarter in global growth is helping provide some tailwind for some of these companies in a sector that was expected to see earnings be fairly weak.”
Another index member to report, Tesla Inc., said its first-quarter loss was $2.90 a share, wider than estimates, while revenue also trailed forecasts. The stock was fluctuating in late trading, falling as much as 3.1 percent from its 4 p.m. close and rising as much as 2.8 percent as of 5:29 p.m. in New York.
Next up for the popular FAANG names will be Amazon.com Inc., when the company reports after the bell Thursday. Apple Inc. is set to report next week.
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