Facebook friendless after making changes to its news feed algorithms
Dow Jones up 228 at 25,803; S&P 500 up 19 at 2,786
GameStop clobbered after revealing it will take massive impairment charges
US inflation rate eased to 2.1% in December from 2.2% in November
Ahead of the market holiday on Monday, US stocks staged a rousing finish to the week.
The Dow Jones average rose 228 points to 25,803 while the S&P 500 index was up 19 at 2,786.
The Dow was up more than 2% on the week, while the S&P 500 advanced 1.6%.
Across the border, the S&P TSX Composite climbed 21 points to 16,308.
The fourth quarter results season kicked off today but will immediately pause on Monday with the US stock market closed for Martin Luther King day.
Mid-session: Stocks extend early gains
US stocks extended early gains throughout most of the morning session, though have traded sideways over the lunchtime period.
The Dow Jones 30-share index was up 184 at 25,759 while the S&P 500 was up 15 at 2,782.
The demise of computer game shops may be less imminent than previously thought, judging by the GameStop Corp's (NYSE:GME) 10.6% year-on-year increase in sales over the festive period, although the stock still took a hammering as it said it would write down the value of its technology brands business by between US$350mln and US$400mln.
The stock fell 11.3% to US$17.72, making it the worst performer on the New York Stock Exchange.
The second biggest faller was insurance firm Aflac Incorporated (NYSE:AFL), which was down 8.3% after it responded to what it called false allegations from a “very small group of independent contractors”.
Open: Stocks get off to a strong start
The Nasdaq Composite was up 4 points, or just 0.1%, compared to the 8 point (0.3%) rise on the S&P 500, at 2,776.
The Dow Jones was sitting pretty with a triple-digit gain at 25,739, up 163.
Facebook was down 4.6% at US$179.13 after a negative reaction to changes to its news feed (see below).
Investors were poring over the latest consumer price data, which showed a 0.1% rise in the consumer price index in December, in line with market expectations.
The annual inflation rate fell to 2.1% from 2.2% in November, largely because of gasoline prices.
“The rise in the core rate to 1.8% YoY [year-on-year] from 1.7% was led mainly by a stronger out-turn from the housing and medical care components,” observed James Knightley, the chief international economist of Dutch finance house ING.
“If inflation rises as we suspect then this will only heighten market expectations that the risk is skewed towards a more aggressive series of Federal Reserve rate hikes,” he added.
The shares were down 5.4% in electronic trading after it said it would change its news feed algorithm to generate “more meaningful social interactions”.
Facebook plans major changes to news feed! Expect to see your posts organically reach even fewer people in the coming weeks. Unless you're content is sparking conversations it's now very unlikely that your content will get seen unless there is budget behind it. #London #SmallBiz pic.twitter.com/iUJivHQ2GV— Carpe Media (@CarpeMediaLDN) January 12, 2018
If investors were not happy, neither were some publishers …
Investment bank JP Morgan Chase & Co (NYSE:JPM) found the market hard to please after topping estimates with third fourth quarter results.
Net income fell 32% to US$2.3bn from a year earlier, while banking revenue rose 10% to US$3.1bn, led by the 10% hike in investment banking revenue.
Earnings per share (EPS) of US$1.76 were ahead of the market consensus forecast of US$1.69, but shares retreated on the announcement in pre-market trade to US110.61, after closing at US$110.84 overnight.
Asset management leviathan Blackrock Inc (NYSE:BLK) edged 1.2% higher to US$544.31 after releasing its fourth quarter earnings.
Adjusted EPS of US$6.24 was 16 cents ahead of the median forecast among analysts who cover the stock.
Previously the solar power products maker had indicated full-year revenue would fall somewhere between US$4.05bn and US$4.09bn, but lowered this range to US$3.33bn – US$3.37bn.
The fourth quarter revenue guidance range was lowered from US$1.77bn-US$1.81bn to US$1.04bn-US$1.08bn, well below the consensus forecast of US$1.76bn.
The company had entered into definitive agreements with two buyers to sell a portfolio of six solar power projects in California, and had hoped to close the transactions in the fourth quarter of 2017 or the first quarter of 2018, depending on the timing of receipt of the required governmental approvals, but the transactions were not completed in 2017 and have not yet received the required government approvals.