Nasdaq Gains 3%, Mega-Cap Growth Stocks Jump in Morning Trading

Mega-cap growth stocks soared in morning trading.

Meta surged 24% after reporting afourth-quarter beat on revenueand announcing a$40 billion stock buyback. That helped investors look pastlossesin the business unit overseeing the metaverse.

Other mega-cap tech stocks rose on the back of those results. Tesla, Alphabet, Amazon rose more than 6%; Apple, Microsoft rose about 3%.

The S&P 500 rose to the highest in five months on Thursday as better-than-expected Meta results further improved sentiment around technology shares, which led the market lower last year.

The broader market index jumped 1.5%, while the tech-heavy Nasdaq Composite advanced 3%. The gains come ahead of a trio of Big Tech results after the bell in Apple, Amazon and Alphabet.

Meanwhile, the Dow Jones Industrial Average underperformed, falling 80 points, or about 0.24%. The major index was dragged byMerckshares after the pharmaceutical firm issued a weak outlook in its latest earnings results, despite beating estimates on the top and bottom lines.

Tech stocks have outperformed in 2023, buoyed by recent signals of cooling inflation that investors expect could suggest a pause from the Federal Reserve in its aggressive rate hiking campaign. The S&P 500 information technology sector is up more than 11% this year after a decline of more than 28% last year.

Wall Street is coming off a winning session after the Fed on Wednesday announced a0.25 percentage point interest rate hike. While the central bank gave no indication of an upcoming pause in rate hikes, investors were encouraged by the smaller increase and Chair Jerome Powell's comments recognizing easing inflation.

Traders are awaiting the latest jobs report Friday that will give further insight into the labor market. Any signs of cooling could suggest to investors that further rate hikes are off the table.