U.S. stocks traded solidly higher during Thursday’s session in the wake of some upbeat earnings reports and mostly better-than-expected reads from the economic calendar, ahead of tomorrow’s advance read on Q1 GDP. Treasury yields dipped on the longer end of the curve, giving back some of a recent run, while the U.S. dollar continued to grind higher, crude oil prices advanced and gold traded lower. In central bank action, the European Central Bank maintained its policy stance as expected and tomorrow the Bank of Japan will deliver its monetary policy decision.

The Dow Jones Industrial Average (DJIA) rallied 239 points (1.0%) to 24,322, the S&P 500 Index jumped 28 points (1.0%) to 2,667, and the NASDAQ Composite surged 115 points (1.6%) to 7,119. In moderate volume, 832 million shares were traded on the NYSE and 2.1 billion shares changed hands on the NASDAQ. WTI crude oil increased $0.14 to $68.19 per barrel and wholesale gasoline was $0.01 higher at $2.10 per gallon. Elsewhere, the Bloomberg gold spot price dipped $5.65 to $1,317.48 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was up 0.5% at 91.59.

Facebook Inc. (FB $174) reported Q1 earnings-per-share (EPS) of $1.85, or $1.69 ex-items, well above the $1.35 Fact Set estimate, as revenues rose 49% year-over-year (y/y) to $12.0 billion, eclipsing the $11.4 billion projection. Daily active users were 1.45 billion, in line with analysts’ forecasts. In a conference call with analysts, CEO Mark Zuckerberg said the company is investing heavily in security and safety for its users. Shares were solidly higher.

Chipotle Mexican Grill Inc. (CMG $423) posted Q1 profits of $2.13 per share, far exceeding the $1.57 projected by analysts, on a 7.4% y/y increase in sales to $1.2 billion, matching forecasts. Same-store sales for the burrito maker were up 2.2% for the quarter, above expectations for a 1.3% rise. CMG rallied.

eBay Inc. (EBAY $39) announced Q1 EPS of $0.40, or $0.53 ex-items, matching estimates, on revenues of $2.58 billion, roughly in line with expectations. However, shares are lower after the e-commerce company provided disappointing guidance, saying that it expects sales in Q2 to be between $2.64 billion and $2.68 billion, compared to the Street’s $2.68 billion projection.

Ford Motor Company (F $11) reported Q1 EPS of $0.43, two pennies above the Fact Set estimate, on a 7% y/y increase in revenues to $42.0 billion, versus the $37.2 billion forecast. The automaker said it was looking to accelerate its cost-cutting initiative, and with declining demand for the next-generation models of sedans, it will pare its investment in such models over the next few years to focus on trucks and SUVs. Meanwhile, General Motors Company (GM $38) also reported Q1 results, saying it had a profit of $1.43 per share, versus the $1.24 Fact Set estimate, on revenues of $36.1 billion, compared to the $34.7 billion forecast, as it saw record sales in China. Shares of F and GM gained ground.

Dow member PepsiCo Inc. (PEP $103) reported Q1 profits of $0.94 per share, or $0.96 ex-items, versus the $0.93 Fact Set estimate, as revenues rose 4.3% y/y to $12.6 billion, north of the expected $12.4 billion. The company said results from its Frito-Lay North America unit continued to grow, and it is seeing “improved sales performance and trajectories” in its initiative to turn around its popular Gatorade brand. PEP finished higher.

Dow component Visa Inc. (V $127) achieved Q2 profits of $1.11 per share, topping analysts’ forecasts for $1.02, with revenues increasing 13.0% y/y to $5.1 billion, above the projected $4.8 billion. The credit card company raised its full-year earnings guidance, citing higher use of credit cards to purchase items from gasoline to online merchandise. V traded nicely higher.

March preliminary durable goods orders increased 2.6% month-over-month (m/m), compared to the Bloomberg estimate of a 1.6% gain, and February’s 3.0% increase was revised to a 3.5% rise. Ex-transportation, orders were flat m/m, below forecasts of a 0.5% rise and compared to February’s downwardly revised 0.9% increase. Orders for non-defense capital goods excluding aircraft, considered a proxy for business spending, fell 0.1%, versus projections of a 0.2% increase, and following the downwardly revised 0.9% advance posted in the month prior.

Weekly initial jobless claims declined by 24,000 to 209,000, versus the Bloomberg expectation calling for a slight decline to 230,000, with the prior week’s figure upwardly revised at 233,000. The four-week moving average decreased by 2,250 to 229,250, while continuing claims declined by 29,000 to 1,837,000, south of estimates of 1,850,000.

Treasuries finished higher, as the yield on the 2-year note was nearly unchanged at 2.48%, while the yields on the 10-year note and the 30-year bond declined 4 basis points (bps) to 2.99% and 3.17%, respectively.

Treasury yields cooled a bit from a recent rally that took the 10-year rate above 3.00% and the 2-year to the 2.50% mark for the first time since 2014 and 2008, respectively, causing some uneasiness and fueling a skid for the stock market that came after nudging briefly into positive territory for the year last week. The U.S. dollar resumed its latest upward trend and the markets continue to wrestle with concerns about tighter financial conditions and resurfacing inflation expectations, along with a solid start to earnings season and a continued strong economic backdrop.

Schwab Center for Financial Research – Market Analysis Group

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