Tech Earnings Hold Up Nasdaq While GDP Plunge Drags Dow Lower

By Glenn Dyer | More Articles by Glenn Dyer

Wall Street looks like rebounding from Thursday’s slide on Friday after Apple, Amazon, and Facebook produced better than expected quarterly results after the session.

The S&P 500 and Dow closed lower on Thursday but Nasdaq ended in the green in anticipation of good reports from the tech giants.

Apple in particular wowed the market with a four for 1 stock split (it had a seven for one a few years ago).

Apple shares were up 5% in after-hours trading, Facebook shares jumped nearly 7%, Amazon shares were up 4.9% and Alphabet shares struggled back into the green to be up 0.6% after sliding in the wake of the result.

The solid reports – especially from Apple and Amazon – will go along way to settling fears that the megatechs lost earnings momentum in the June quarter as did so many other companies.

The Dow closed 225.92 points, or 0.9%, at 26,313.65, while the S&P 500 lost 12.20 points, or 0.4%, to close at 3,246.24. The Dow though had been down by as many as 550 points at the session’s nadir.

The Nasdaq meanwhile added 44.87 points, or 0.4%, to end at 10,587.81 after hitting an intraday low at 10,412.09.

All three benchmarks closed well off their worst levels of Thursday trade and investors reacted negatively to the record collapse in US GDP in the June quarter and the second weekly rise in new unemployment benefit claims in a row.

The ASX looks like starting down 38 points when trading starts this morning, but the very solid reports from the tech giants will cause local traders to rethink the day.

Google parent Alphabet was the only negative among the big four with a second quarterly fall in ad revenue and a $US2.5 billion for the 12 months to June 30 overall. The shares rose 2 in after-hours trading, then sank 1%.

Apple shares beat forecasts so far as earnings and revenues were concerned. They topped $US11 billion and $US60 billion for the quarter respectively.

Amazon also did very well, almost doubling profits on a year ago.

Apple shares hit a new all-time high in after-hours trading of $US404.97, up more than 5%

Oil futures were sharply lower on Thursday, with US prices settling below $40 a barrel for the first time in three weeks, pressured by worries a resurgence in coronavirus cases around the world will cause demand to falter as major oil producers begin relaxing output curbs, such as Iraq.

As well the stunning slump in the US economy in the June quarter and rise in new job claims for a second week in a row, saw traders fret about supply and demand – too much of the former and too little of the latter as the virus continues to curtail activity.

That saw West Texas Intermediate crude for September delivery drop $US1.35, or 3.3%, to settle at $US39.92 a barrel. That was the first settlement below $40 and the lowest front-month contract finish since July 9. prices later rose back over $US40 a barrel in electronic trading.

In Europe, September Brent crude which expires at the end of Friday’s session, fell 81 cents, or nearly 1.9%, at $US42.94 a barrel.

Global COVID-19 cases rose above 17 million on Thursday, according to data aggregated by Johns Hopkins University, and the death toll rose to 667,688.

US case numbers climbed to 4.43 million and the death toll rose to 151,716, after crossing 150,000 late Wednesday. California and Florida posted single-day record death numbers on Wednesday and California added more than 12,300 cases,

Meanwhile gold sold off for the first time in 10 sessions in the wake of the stunning collapse in the US economy in the June quarter and the growing realisation the rebound is in trouble.

Normally you’d expect gold and silver to be boosted by bad economic news, but they both fell Thursday.

Comex August gold fell by $US11.10, or 0.6%, to settle at $US1,942.30 an ounce, after Wednesday’s record.

December gold which is now the most-active contract, settled at $US1,966.80 an ounce Thursday, down $US9.90, or 0.5%.

Comex September silver tumbled 96 cents, or 3.9%, to settle at $US23.362 an ounce, following a less than 0.1% gain on Wednesday.

Prices for silver settled Monday at the highest since 2013.

Comex copper also weakened, down 0.2% to $US2.914 a pound for the September contract.

Meanwhile, iron ore prices were steady on Thursday with the index for 62% Fe fines delivered to northern china up one cent to $US110.58 a tonne.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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