The S&P 500 scored a fresh intra-day record on Thursday, helping to drive stock ETFs higher, after blowout earnings from Apple and Facebook. After the initial move upward, the benchmark index has since plummeted lower in morning trading.
Major stock ETFs are mixed on Thursday, following the earnings reports. The SPDR Dow Jones Industrial Average ETF (DIA) and SPDR S&P 500 ETF Trust (SPY) are both hovering near breakeven, although index futures and ETFs are still selling off, while the Invesco QQQ Trust (QQQ) is trading in the green just after noon EST.
Stocks tumbled from their initial gains about 45 minutes into the session as traders took profits and reevaluated whether the earnings results had already been baked into the price of stocks, given the lofty levels of index stocks and ETFs recently.
The tech-laden Nasdaq Composite started Thursday on a high note, up 1%, but has been falling since then, quickly headed for lows from last week. The Vanguard Information Technology ETF (VGT) and Technology Select Sector SPDR Fund (XLK) are both over 1% lower as of this writing.
Apple and Facebook Still Thriving
At the open, investors were invigorated by strong earnings results from both Apple and Facebook, with the iPhone-maker claiming that sales rocketed 54% during the quarter, with each product category seeing double-digit growth. The company also said it would boost its dividend by 7%, and authorized $90 billion in share buybacks. The moves helped Apple gain almost half a percent in early trading.
Meanwhile, social media giant Facebook’s revenue popped 48%, aided by more expensive ads, which helped lift the company’s shares by as much as 6.5%, to reach a record high.
“The primary market trend remains positive,” said Keith Lerner, chief market strategist at Truist. “But we expect a choppier environment as tensions are set to persist between better economic growth and earnings prospects versus the potential for higher taxes and rising interest rates as the economy normalizes,” he added.
Other news may be weighing on stocks and index ETFs too. On Wednesday evening, President Biden made his first address to a joint session of Congress, where he discussed his $2 trillion infrastructure plan as well as a new $1.8 trillion plan for families, children, and students.
Thursday is far from over, however, with almost 11% of the S&P 500 scheduled to provide quarterly updates.
Caterpillar, which also reported on Thursday, fell 2.6% while Merck declined 5.1% amid lackluster results. Investors are still awaiting results from Amazon, Gilead Sciences, Twitter, U.S. Steel, and Western Digital after the market closes.
Meanwhile, the Federal Reserve announced Wednesday that it would continue to maintain interest rates near zero. The S&P dropped after Federal Reserve Chairman Jerome Powell noted during a press conference following the Federal Open Market Committee’s decision that stocks could be too lofty and due for a pullback.
“Rates remain unchanged for now and, despite improving economic data, taper talk remained off the table at today’s Federal Reserve meeting,” said Bethany Payne, portfolio manager at Janus Henderson.
“As vaccination rates accelerate, employment strengthens, and expansive fiscal policy adds further support to household and business incomes, investors are now looking for signs of whether the central bank safety net could be withdrawn sooner than expected,” she added.
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