Stocks Up Sharply, Markets Turn Higher For The Week  Image: Bigstock Stocks soared yesterday with all of the major indexes closing sharply higher. The Nasdaq led the way with a gain of 3.06%. The Dow, S&P, and Nasdaq are now up for the week with one more trading day to go. Facebook's gain of more than 17% yesterday, after posting a positive EPS surprise and gain in user growth the day before, helped set the tone for the market. After the close yesterday, Amazon and Apple reported earnings. Apple posted a 6.29% positive EPS surprise, and a 3.53% positive sales surprise. Revenue was up 8.59% y/y. Amazon, on the other hand, posted a loss on earnings (in part to their Rivian investment which lost -$7.6 billion), and a narrow miss on sales. For perspective, revenue was up 7% y/y. But analysts were quick to note they saw a 44% revenue increase last year at this time, and that this was the slowest growth rate in over 20 years. Apple was down by roughly -3% in after-hours trade, while AMZN was down more than -12%. Q1 GDP came out before the open yesterday and posted a surprise decline of -1.4% vs. the consensus for a gain of 1.1%. But stocks rallied anyway. For one, stocks were so oversold, you saw lots of aggressive bargain hunting at these lower levels lift stocks higher. Two, GDP wasn't that bad when you look past the headline number. Consumer spending was up 2.7% q/q, which was a faster growth rate than the previous quarter's 2.5%. Business investment was up 9.2%, with equipment leading the way with a 15.3% gain. Residential investment was up 2.1%. And final sales to private domestic purchasers were up 3.7% vs. last quarter's 2.6%. It was lower government spending, lower exports, and lower inventories that weighed on the numbers. Traders who dug into the details of the report saw that the economy is actually pretty healthy. Hence the rally. Adding to the rally was a better than expected Weekly Jobless Claims report which showed -5,000 fewer claims at 180K vs. the consensus for 181K. Today we'll get Personal Income and Outlays, the Employment Cost Index, the Chicago PMI, and Consumer Sentiment. And, of course, more earnings. It won't take much to keep all of the major indexes in the green for the week. But if the market can build on yesterday's rally, that should invite even more buying. And put the market in a stronger position ahead of next week's Fed meeting (May 4th), where they are expected to raise rates by 50 basis points to tamp down inflation. Best,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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