Dow jumps on earnings boost, Meta drags Nasdaq lower

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The Dow jumped on Thursday after a slew of upbeat earnings reports and data showing a rebound in economic growth eased some nerves about a recession, while the Nasdaq was pressured by a slump in Meta shares.

Gains in McDonald’s and Caterpillar lifted the price-weighted Dow Jones Industrial Average, in which the share value of a stock is proportional to its influence on the index as opposed to the market capitalization-weighted S&P 500 .

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Caterpillar Inc jumped 8.2% on posting a rise in third-quarter profit, while McDonald’s Corp added 3.1% on beating quarterly comparable sales estimates.

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Merck & Co Inc rose 2.1% and Honeywell International Inc climbed 4.4% as both the companies reported better-than-expected quarterly earnings.

Facebook-parent Meta Platforms Inc slumped 22.1%, putting it on course to lose about $77 billion in market value, as it reported a drop in third-quarter profit and forecast a weak holiday quarter.

The S&P 500 communication services sector tumbled 3.1% and was the biggest loser on the index.

The U.S. Commerce Department’s advance third-quarter gross domestic product report showed GDP increased at a 2.6% annualized rate last quarter, ending two straight quarterly decreases in output.

The GDP report followed a string of recent data showing shrinking business activity and a fall in consumer sentiment, that had boosted hopes that the Federal Reserve’s aggressive rate hikes were beginning to slow the economy and the central bank could soon tone down its hawkish stance.

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“For every kind of (report) you put in the column and say the Fed has more room to raise rates, there’s enough on the other side to show that the Fed probably needs to slow down,” said Ken Mahoney, chief executive officer of Mahoney Asset Management in Montvale, New Jersey.

“The 2.6% headline number today was a relief to a lot of investors to say, maybe there is a chance of a soft landing.”

The Fed is set to increase interest rates by 75 basis points in an upcoming meeting next week, with traders betting on a 50 basis point raise in December.

Data scheduled for Friday is expected show the Fed’s preferred measure of inflation continued to run at roughly three times the U.S. central bank’s annual target last month.

Shares of Amazon.com Inc were down 4.0%, while Apple Inc fell 2.8% ahead of results later on Thursday.

At 12:55 p.m. ET, the Dow Jones Industrial Average was up 322.17 points, or 1.01%, at 32,161.28, the S&P 500 was down 7.91 points, or 0.21%, at 3,822.69, and the Nasdaq Composite was down 124.88 points, or 1.14%, at 10,846.11.

Advancing issues outnumbered decliners for a 1.99-to-1 ratio on the NYSE and a 1.42-to-1 ratio on the Nasdaq.

The S&P index recorded 23 new 52-week highs and six new lows, while the Nasdaq recorded 62 new highs and 76 new lows. (Reporting by Amruta Khandekar and Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta)

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