
Tech Stocks Lead Rally on Microsoft, Amazon Earnings
Stocks jumped Friday after shares of tech trio Amazon (AMZN) - Get Report , Alphabet (GOOGL) - Get Report and Microsoft (MSFT) - Get Report rallied on better-than-expected earnings.
The S&P 500 added 1.1%, and turned positive for the year. The Dow Jones Industrial Average rose 0.7% and the Nasdaq gained 2%.
Microsoft climbed nearly 11% after a better-than-expected quarter. The PC maker earned 67 cents a share, above estimates of 58 cents. Revenue fell 7% to $21.7 billion but beat forecasts by $670 million. Its new Windows 10 operating system is running on 110 million devices as of the end of the quarter.
Google parent Alphabet rocketed 9% higher after reporting net income of $5.73 a share in its recent quarter, up from $3.98 a share. Adjusted earnings, excluding one-time charges, came in at $7.35 a share compared to estimates of $7.20 a share. Sales jumped 13% to $18.68 billion, driven by advertising revenue on its Google sites.
Amazon jumped 10% as cloud-computing revenue pushed sales higher. The e-commerce giant reported a surprise profit of 17 cents a share compared to an expected loss of 13 cents. Revenue rose 23% to $25.4 billion, $450 million better than forecasts. Amazon anticipates a 14% to 25% increase in fourth-quarter revenue.
Tech stocks led markets higher. Apple (AAPL) - Get Report , Facebook (FB) - Get Report , Alibaba (BABA) - Get Report , Intel (INTC) - Get Report , Baidu (BIDU) - Get Report , PayPal (PYPL) - Get Report and Yahoo! (YHOO) were all trading higher, while the Technology SPDR ETF (XLK) - Get Report jumped 2.6%.
China cut rates for the sixth time in less than a year. The People's Bank of China cut its one-year benchmark bank lending rate by 25 basis points to 4.35% in the latest move to reinvigorate flagging growth. The world's second-largest economy saw its GDP fall below 7%, the government's target rate, in the most recent quarter.
China joined the eurozone to signal that it will do what it takes to turn its economy around. European Central Bank President Mario Draghi said Thursday that the central bank was willing to extend stimulus programs past September 2016 if weakness persisted. Draghi said the ECB will review its current stimulus measures at its December meeting.
European shares extended their rally into a second session as hopes of further monetary stimulus boosted investor sentiment. Germany's DAX jumped 3%, France's CAC 40 added 2.6% and the FTSE 100 in London gained 1.4%.
Manufacturing activity in the U.S. showed a surprise bounce to a five-month high in October, according to the Markit flash PMI manufacturing index. The measure climbed to 54, up from 53 in September, demonstrating an improvement even as weaker global demand and a stronger U.S. dollar continued to weigh on the sector.
American Airlines (AAL) - Get Report fell 3% despite a better-than-expected quarter as earnings benefited from lower fuel costs. The airliner earned $2.77 a share in its third quarter, a nickel higher than estimates. The company also announced that it would buy back another $2 billion in stock.
AT&T (T) - Get Report added 2% after earnings bested estimates and revenue saw a double-digit percentage increase thanks to the completion of its DirecTV acquisition. Excluding merger costs, earnings of 74 cents a share topped forecasts by 6 cents. The telecom expects full-year earnings between $2.68 and $2.74 a share, above analysts' estimates of $2.61.
Pandora Media (P) tumbled more than 35% after the largest Internet radio provider said revenue growth had been weakened because of the launch of Apple Music, the streaming service that the iPhone maker introduced in June. The streaming company reported a loss of 40 cents a share in its third quarter compared to a loss of a penny in the same quarter a year earlier. Excluding one-time charges, the company saw a profit of a dime a share.
Separately, Pandora agreed to pay $90 million for its use of recordings made before 1972. Until now, federal copyright protection had only applied to sound recordings produced after 1972.
VFC Corp. (VFC) - Get Report , owner of brands Wrangler and North Face, slumped 11% after softer sales in its third quarter. The clothing company blamed a slowdown in the oil sector which dampened demand for workwear. Sales were up 8% after stripping out the effects of a stronger U.S. dollar.
Procter & Gamble (PG) - Get Report reported a disappointing quarter Friday after a number of divestments and a stronger U.S. dollar hit the top-line. The personal goods manufacturer said organic sales fell 1% during the fiscal first quarter, while overall revenue slumped 12%. Sales in its grooming and baby segments were the worst performers.








