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Stocks Surge Higher; Manufacturing Continues to Show Weakness

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Stocks Surge Higher; Manufacturing Continues to Show Weakness

Stocks began the Thursday trading session nearly unchanged as investors pondered the decline on Wednesday. Facebook (NASDAQ:FB) announced a blockbuster deals to purchase a messaging company for nearly 16 billion dollars. Tesla notched up solid earning and gave strong guidance which drove the stock price higher, while economic data showed that inflation is still tame in the US and below the Fed’s target.

Facebook announced that it is paying 16 billion dollars for the messaging service WhatApp. Although the mobile-messaging application has 450 million monthly active users, the valuation is higher than nearly half of the S&P 500 components. Facebook opened the trading session nearly unchanged which showed how much faith investors have in the social networking giant.

After the closing bell on Wednesday, Tesla announced earnings that were much better than expected. Tesla Motors’ (NASDAQ:TSLA) losses narrowed to $16.3 million in the fourth quarter from $89.9 million a year earlier. Revenue produced by the company increased by 101% to $615.29 million. The figure just barely missed consensus, although earnings per share of $0.33 beat by $0.12. Shares jumped 10% in pre-market trading with the electric car-maker providing an optimistic outlook for production and deliveries, especially overseas.

In economic news Thursday, CPI climbed 0.1% in January and 1.6% year-over-year, right in line with expectations. Core consumer prices, a measure that strips out food and energy, rose 0.1% from the previous month and 1.6% year over year. Low levels of inflation could be a concern to the Federal Reserve as better employment figures will only come with increasing labor costs. February manufacturing rose at its fastest pace in around four years while unemployment claims were down last week.

Initial claims for state unemployment benefits slipped 3,000 to 336,000, according to the Labor Department. The claims data covered the period for February’s nonfarm payrolls count. The Philadelphia Federal Reserve Bank said its business activity index tumbled to -6.3 in February, the lowest in a year, from 9.4 last month. Economists had expected the gauge of factory activity in eastern Pennsylvania, southern New Jersey and Delaware to come in at 8.0. The region has been blanketed by snow storms.

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