US: Nasdaq, S&P 500 end at records after strong tech earnings

[NEW YORK] The Nasdaq and S&P 500 powered to fresh records Friday following blowout earnings from Amazon and other tech giants and a bullish update from Apple on its latest smartphone.

The tech-rich Nasdaq Composite Index jumped 2.2 per cent to 6,701.26.

The broad-based S&P 500 rose 0.8 per cent to 2,581.07, also a finishing record, while the Dow Jones Industrial Average gained 0.1 per cent to 23,434.19.

Amazon alone surged 13.2 per cent, adding nearly US$62 billion in market capitalization in a single day after reporting only a modest rise in third-quarter profit but a 34 per cent jump in revenues to US$43.7 billion.

"The headline tech names did not disappoint," said Quincy Krosby, chief market strategist at Prudential, who said the market was also boosted by hopes that Washington will enact President Donald Trump's tax cut and by a solid economy.

Government data Friday estimated US growth at a better-than-expected 3.0 per cent as the US economy absorbed the shocks of Hurricanes Harvey, Irma and Maria.

"At these valuations, you must see underlying strength in the economy," Mr Krosby said. "You cannot maintain these valuations without economic growth."

Amazon was not the only big tech name to vault higher after strong earnings. Intel jumped 7.4 per cent, Microsoft 6.4 per cent and Google parent Alphabet 4.8 per cent.

Apple, which reports quarterly results next week, gained 3.6 per cent after reporting that consumer interest in its new iPhone is "off the charts." The new gadget hits retail stores on November 3.

An exception among tech companies was Expedia, which plummeted 16 per cent as the online travel company lowered some of its financial targets due to the hit from hurricanes.

Other losers included Dow members Chevron, which lost 4.1 per cent on an earnings miss, and Merck, which tumbled 6.1 per cent after reporting a quarterly loss of $56 million, due in part to costs from a cybersecurity attack.

Mattel dove 8.9 per cent after it suspended its dividend and announced US$650 million in cost cuts after reporting a third-quarter loss of US$603.3 million.

Pharmacy chains fell sharply on worries Amazon would soon enter the drug distribution business. CVS Health lost 5.9 per cent, Walgreens Boots Alliance 3.9 per cent and Rite Aid 5.7 per cent.

Aetna, which is reportedly in talks with CVS Health to be acquired, dropped 3.9 per cent.

AFP