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Stocks ended sharply higher, reversing from steep losses earlier this week, led by a jump in technology stocks following the positive reaction to Meta Platform’s (FB) earnings report yesterday. The heart of earnings season continues, with Apple (AAPL) and Amazon (AMZN) set to report after the bell, closing out a week that saw Alphabet (GOOG), Microsoft (MSFT), and Meta (FB) all report earnings. 

In other news, investors digested fresh data that showed the US economy unexpectedly contracted this quarter for the first time in two years as lingering supply-chain disruptions, war in Europe, and decades-high inflation weigh on growth prospects. First-quarter US gross domestic product (GDP) fell -1.4% year-over-year, widely missing estimates of +1% growth and a sharp deceleration from the 6.9% last quarter. Here are the numbers: 

  • GDP annualized, quarter-over-quarter: -1.4% vs. 1.0% expected, 6.9% in Q4
  • Personal Consumption: 2.7% vs. 3.5% expected, 2.5% in Q4
  • Core Personal Consumption Expenditures, quarter-over-quarter: 5.2% vs. 5.5% expected, 5.0% in Q4

While April is historically one of the strongest months in the stock market, with just three trading days left, the typically-bullish month is on pace to close the month roughly -8% lower, the largest drop in April since 1970. Ryan Detrick, Chief Market Strategist at LPL Financial, said “The usual suspects of a slowing economy, a hawkish Federal Reserve Bank, supply chain worries, war in Europe, and now another China shutdown have all combined to make this one of the worst starts to a year ever for both stocks and bonds.” 

Shares of Meta Platforms were up roughly 17% in early trading Thursday after the company reported first-quarter daily active users that beat expectations after Wednesday’s market close. Last quarter, Facebook lost $230 billion in market value, marking the worst single-day wipeout in history for any U.S. company after the social media giant reported a profit decline attributed in part to a drop-off of U.S. users on its flagship platform and competition from TikTok. Analysts at Bank of America attributed the rise to the intense negativity baked into Meta going into earnings.

Shares of eCommerce giant Amazon (AMZN) plummeted over -10% after the company reported a $3.8 billion loss in the most recent quarter. This time last year, in the first quarter of 2021, Amazon recorded net income of $8.1 billion, or $15.79 per diluted share. Key among the reasons for the underperformance was a -$7.6 billion investment in EV-startup Rivian (RIVN). Here are the numbers: 

  • Earnings: $7.38 per share, adjusted, vs. $8.36 expected
  • Revenue: $116.44 billion vs. $116.3 billion expected
  • Amazon Web Services: $ 18.44 billion vs. $18.27 billion expected, according to StreetAccount
  • Advertising: $7.88 billion vs. $8.17 billion expected, according to StreetAccount
  • Guidance: $116 billion to $121 billion vs $125.5 billion estimate

Elsewhere, shares of Apple (AAPL), the most valuable company in the world, fell -4% despite reporting record revenues despite the difficult economic environment after the company warned of a potential $4 billion to $8 billion loss from supply-chain constraints due to lockdowns in China and Russia’s war in Ukraine. Here are the numbers: 

  • EPS: $1.52 vs. $1.43 estimated 
  • Revenue: $97.28 billion vs. $93.89 billion estimated, up 8.59% year-over-year 
  • iPhone revenue: $50.57 billion vs. $47.88 billion estimated, up 5.5% year-over-year 
  • Services revenue: $19.82 billion vs. $19.72 billion estimated, up 17.28% year-over-year 
  • Other Products revenue: $8.81 billion vs. $9.05 billion estimated, up 12.37% year-over-year 
  • Mac revenue: $10.44 billion vs. $9.25 billion estimated, up 14.73% year-over-year 
  • iPad revenue: $7.65 billion vs. $7.14 billion estimated, down 1.92% year-over-year 

Gross margin: 43.7% vs. 43.1% estimated

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