S&P 500, Nasdaq hit all-time highs after blowout tech earnings, Fed meeting, GDP

What are major benchmarks doing?

• The Dow Jones Industrial Average
  DJIA,
  +0.17%
  rose 121.37 points, or 0.4%, to 33,941.75.
• The S&P 500
  SPX,
  +0.44%
  advanced 29.55 points, or 0.7%, to 4,212.73, after trading at an intraday record of 4,218.78.
• The Nasdaq Composite
  COMP,
  +0.22%
  rose 121.91 points, or 0.9%, to trade at 14,172.94, after hitting an all-time high at 14,211.57.

On Wednesday, stocks ended with small losses following the Fed meeting, after the S&P 500 notched an intraday record. The Dow fell 164. 55 points, or 0.5%, while the S&P 500 ended 0.1% lower and the Nasdaq Composite lost 0.3%.

What’s driving the market?

Corporate earnings remain strong, with Apple Inc.
AAPL,
+0.36%
and Facebook Inc.
FB,
+5.44%
delivering much stronger-than-expected results late Wednesday. Some analysts said the results could offer a test for a market that’s struggled to breakout of a sideways trading range.

Thursday is the busiest day of the quarterly earnings reporting season, with roughly 11% of the S&P 500 index due to publish updates. Caterpillar, McDonald’s, Comcast and Merck reported before the market opened. Amazon and Twitter will post results after the market closes.

Currently about 86% of the S&P 500 companies that have reported beaten estimates, with earnings coming in 22.7% above expectations, according to data from Refinitiv. For revenue, 77% of companies have exceeded expectations.

“This week’s steady but notable rise in Treasury yields could be weighing on U.S. equities and if Apple’s earnings beat is unable to set Wall Street alight, it doesn’t bode well for the rest of the earnings season,” said Raffi Boyadjian, senior investment analyst at XM, in a note.

Treasury yields slipped Wednesday afternoon after the Federal Reserve and Powell struck a dovish tone, but edged higher again Thursday morning. The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
rose 2.7 basis points to 1.65%.

Rising yields can be a headwind, particularly for growth oriented stocks. A rise in yields in March was credited with adding fuel to a rotation away from tech stocks and other highfliers into more cyclical stocks poised to benefit from the reopening of the economy.

Stocks edged higher during Powell’s news conference, with the S&P 500 hitting an all-time high, but ended the day slightly lower.

Read: Fed’s Powell ‘doesn’t blink,’ and 5 other things we learned from his press conference

“With no meaningful change to monetary policy or communication, this meeting was simply a message to market participants to sit back and observe as the economic recovery continues to unfold,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.

“For now, the Fed is maintaining a tight grip on the bond market, but it appears like a discussion on tapering bond purchases is right around the corner,” he said, in emailed comments.

Late Wednesday Biden, in an address to a joint session of Congress, called for bigger government investment in the economy, including a $1.8 trillion proposal for additional spending on child care, education and paid leave partly offset by higher taxes on wealthy Americans.

Capitol Report: The word ‘jobs’ appeared more than 40 times in Biden’s first speech to Congress

In U.S. economic data, first-time jobless benefit claims fell to 553,000 last week from a revised 566,000 a week earlier, the Labor Department said Thursday. With revisions, the reading was the lowest level of claims since the pandemic struck last year.

Gross domestic product, the official scorecard for the U.S. economy, rose at a 6.4% annual pace in the first quarter, the government said Thursday.

“America’s economy came out swinging at the start of 2021,” Ulas Akincilar, Head of Trading at the online trading provider, INFINOX, said. ““The surge in GDP is the product of a boom in consumer spending, in turn fired by a combination of fiscal stimulus and the easing of lockdown restrictions,” he added. ““With 98 million Americans now fully vaccinated against Covid-19, and US businesses unlocking steadily, the recovery is hitting its stride nicely.”

A March pending home sales index is scheduled for release at 10 a.m.

Which companies are in focus?

• Shares of Apple were up 1.6% after the iPhone maker posted better-than-expected revenue across all of its product categories for the March quarter, boosted its buyback program by $90 billion and raised its dividend by 7%.
• Facebook shares rose 6.5% after the social-media giant reported better-than-expected earnings.
• Ford Motor Co.
  F,
  -9.18%
  late Wednesday said it had one of its best quarters on record as it swung to a profit and consumers welcomed new vehicles, but also warned that a global chip shortage could lead to a $2.5 billion hit to the auto maker’s bottom line this year. Shares were down 7%.
• Shares of Ebay Inc.
  EBAY,
  -11.01%
  were down nearly 10% after the online auction site reported better-than-expected first-quarter earnings, aided by growth in core categories, namely sneakers and watches.
• Share of Qualcomm Inc.
  QCOM,
  +4.05%
  were up 4.8% after the chip maker delivered results and an outlook late Wednesday that topped Wall Street estimates following recent downgrades to the stock.
• Caterpillar Inc.
  CAT,
  -2.19%
  shares fell 0.9% after the construction-equipment maker delivered results that blew past estimates.
• Merck & Co. Inc.
  MRK,
  -4.33%
  shares fell 2.8% after the drug giant reported first-quarter profit and revenue that missed expectations, as the COVID-19 pandemic and loss of market exclusivity weighed on pharmaceutical sales.
• The Wall Street Journal reported that Verizon Communications Inc.
  VZ,
  +0.80%
  is exploring a sale of assets including Yahoo and AOL. Verizon shares rose 0.5%.
• McDonald’s Corp. 
  MCD,
  +0.66%
  reported first-quarter net income of $1.54 billion, or $2.05 per share, up from $1.01 billion, or $1.47 per share, last year. Shares rose 0.8%.

What are other markets doing?

• The ICE U.S. Dollar Index
  DXY,
  +0.15%,
  a measure of the currency against a basket of six major rivals, was up 0.1%.
• Oil futures jumped, with the U.S. benchmark
  CL00,
  +1.60%
  up 2.2% at $65.26 a barrel on the New York Mercantile Exchange. Gold traded lower, with the June contract
  GC00,
  -0.77%
  down 0.5% at $1,765.70 an ounce on Comex.
• The Stoxx Europe 600 index
  SXXP,
  -0.05%
  rose 0.3%, while London’s FTSE 100
  UKX,
  +0.25%
  advanced 0.6%. The Shanghai Composite
  SHCOMP,
  +0.52%
  rose 0.5%, while Hong Kong’s Hang Seng Index
  HSI,
  +0.80%
  advanced 0.8%.