U.S. markets continued their winning ways on Friday, after the Chinese central bank reduced interest rates and as several tech giants posted stellar earnings, propelling the Nasdaq much higher.
For the 6th time since November 2014, The People’s Bank of China cut its interest rate, this time to 4.35%. China is trying hard to avoid any further economic slowdown.
Despite the good news, traders were still a bit wary about crude oil, which fell to $44.59 per barrel after data from Baker Hughes showed a one U.S. rig count decline to 594. In addition, the Purchasing Managers Index came in at 50, while the street was looking for a reading of 52.8.
The Dow Jones Industrial Average was up 0.9%, while the S&P 500 rose 1.1%. The Nasdaq enjoyed an incredible run, up 2.3%. Technology stocks had a big day, and most sectors were higher, but utilities and energy were weak.
As mentioned, the Nasdaq got a huge boost, as Alphabet Inc (NASDAQ:GOOGL), Microsoft Corporation (NASDAQ:MSFT) and Amazon.com, Inc. (NASDAQ:AMZN) all surprised the street with better than expected earnings, and became three of today’s best stocks. Read on for the full story.
Alphabet Inc (GOOGL)
GOOGL stock vaulted more than 5% higher today, even after the giant search engine company reported earnings of $5.73 per share, coming in below the Zacks Consensus Estimate of $5.88 per share. Revenue of $18.68 billion was above expectations for $18.54 billion.
Also fueling the stock price was the company’s announcement of a share buyback program of $5.1 billion worth of Class C shares. This is the first time that GOOGL has given something back to shareholders rather than just building its business.
Several analysts, such as Goldman Sachs Group Inc (NYSE:GS), SunTrust Robinson Humphrey and others also raised their price targets and reiterated “buy” or “outperform” ratings on GOOGL stock.
Microsoft Corporation (MSFT)
MSFT stock had its best day in 10 years, blasting up 10% after posting first-quarter 2016 numbers that blew the street away. MSFT delivered earnings of 67 cents per share on revenue of $21.66 billion. The street was expecting only 59 cents per share and revenue of $21.03 billion.
One main reason for the revenue beat was Microsoft’s Intelligent Cloud segment, which rose 8% to $5.9 billion. Analysts were praising new CEO, Satya Nadella for moving MSFT away from personal computing and into more lucrative areas.
Despite the better-than-expected results, Microsoft cut 1,000 jobs in a further effort to reduce company costs.
Amazon.com, Inc. (AMZN)
AMZN stock ripped 6% higher today to set an all time high, after the giant online retailer posted third-quarter earnings of 17 cents per share on Thursday after the closing bell. Earnings per share were far better than the loss of 10 cents that the Zacks Consensus Estimate was projecting.
Revenue of $25.4 billion also surpassed the analysts expectations for $24.9 billion.
It was the second consecutive profitable quarter for AMZN, which had previously struggled to turn any kind of profit. Amazon Web Services, which leases computing power to other companies, was one of the catalysts for the improved performance.
Unlike Microsoft, AMZN is seeking to expand its workforce for this Christmas.
As of this writing, Ethan Roberts does not hold a position in any of the aforementioned securities.
