Stocks Close Higher on Solid GDP Report; Facebook Surges 14%
Stocks in the US started the trading session on a positive note on the heels of better than expected earnings from Visa and social media giant Facebook. Q4 GDP came in as expected at 3.2%, with consumption coming in near 3.3%. A sharp decline in government spending reduced the overall growth numbers. Jobless claims were also released, but were worse than expected, putting some pressure on stock prices. A three major averages finished the trading session in the black, as implied volatility remain elevated.
Initial claims rose by 19,000 to 348,000 in the seven days ended January 25, 2014 marking the highest level in six weeks. Economists surveyed had expected claims to climb to 330,000. Yet the average of new claims over the past month, a more reliable gauge than the volatile weekly number, barely rose, up 750 to 333,000, according to the Labor Department. Also, the government said continuing claims decreased by 16,000 to 2.99 million in the week ended January 18, 2014.
Facebook (NASDAQ:FB) shares soared as mobile ad revenue jump more than expected. The social network’s Q4 net profit surged to $523 million from $64 million a year earlier as mobile ad revenue jumped fourfold. Results easily beat expectations, with EPS $0.31 and overall sales jumping 63% to $2.58 billion. Facebook shares were up more than 10% early, pushing to new all-time highs.
On Wednesday after the Federal Reserve decided to continue to taper its bond purchase program. The Fed did not mention the current turbulence in the Emerging market space or the weather as reason for a temporary blip in economic performance. Most market participants continue to believe that the Fed will continue to taper when it meets again in March. This will be Janet Yellen’s first meeting at the helm.
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