Tech shares and a soft domestic growth number gave U.S. markets the best day they've had in months.
The Dow Jones Industrial Average climbed 1.57%, the S&P 500 rose 1.96% and the Nasdaq Composite rallied 2.43%. The Dow and S&P 500 had their best day since January, and the Nasdaq, since March.
Big Tech largely led the way: Amazon, Alphabet, Apple and Microsoft all rose between 2.8% to 4.6%, while Meta surged almost 14% on the back of a strong earnings report Wednesday.
The first-quarter GDP report wasn't as positive as the figures Big Tech's posting. The 1.1% annualized growth in first-quarter GDP is more than half of last quarter's 2.6% expansion, and suggests the economy is slowing.
The weaker-than-expected economic growth helped markets rally, writes CNBC's Jeff Cox. Investors seemed to interpret the GDP figure as a signal that the Federal Reserve could soon stop its rate-hiking regime.
"The data are setting the Fed up nicely for next week's meeting," said LPL Chief Economist Jeffrey Roach. "As growth and inflation slow, the Fed can legitimately transition to a pause and then perhaps an outright cut in rates by the end of the year if the economy deteriorates."
Another sign that investors are looking at future prospects rather than past performance: Amazon shares fell in extended trading despite increasing profit and revenue, while Intel shares rose even as the company posted its largest-ever quarterly loss.
That's because Amazon warned revenue from its cloud unit might slow this year, while Intel was optimistic its margins would grow as it continues cutting costs.
Investors' focus on the longer-term is prudent. Despite the appearance of a strong earnings season — 79% of the 235 S&P 500 companies that have reported earnings so far beat expectations, according to FactSet data — Virtus Investment Partners' Joseph Terranova thinks there are storm clouds in the distance.
"We are going to see the most intense economic contraction and potentially the deepest earnings contraction of what will be a sequential three-quarter decline," said Terranova. Better to prepare for the storm coming, than celebrate yesterday's sunshine.
