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Buying momentum continued in Asia and European stock markets today, and S&P futures were priced up at 1.27% this morning prior to the opening in New York. The advances come after the S&P 500 rose 0.15% yesterday, marking a seventh straight day of gains which were capped by robust Q1 earnings calls from Meta and Microsoft. Retail investors are buying the dip, analysts say.
It was a confusing day in the markets yesterday as the U.S. reported a seemingly disastrous set of Q1 GDP numbers. Economic growth contracted by 0.3%, according to the topline figure, which horrified investors. Stocks initially dropped 2% on the news.
But then they spent the rest of the day slowly climbing back into positive territory as investors came to realize that the negative GDP number was a function of a rare statistical quirk.
Many companies advanced their import orders to beat the incoming trade tariffs, and imports are discounted from the total GDP number (they are counted later after those imports are sold on the domestic market). Underlying economic activity was, in fact, pretty robust.
After the closing bell, Microsoft and Meta reported good results, setting the tone for Asia and Europe this morning. Several countries are observing a Labor Day holiday, but among those trading, the buyers are lifting equities globally.
Here’s a snapshot of this morning’s action:
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The S&P 500 rose 0.15% yesterday (the index is still down 5.31% year-to-date).
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S&P futures were up 1.20% this morning, premarket.
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Japan’s Nikkei 225 was up 1.13%.
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Australia’s ASX 200 rose 0.24%.
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The Stoxx Europe 600 rose 0.5% in early trading.
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Labor Day closures: Hong Kong, Taiwan, mainland China, and South Korea are closed for the national holiday. India is closed for Maharashtra Day.
Among yesterday’s losers was Snap, which dropped 17% on Wednesday after warning that the incoming tariff regime would negatively affect its advertisers. The tech-heavy Nasdaq Composite closed down marginally, although several tech companies' shares rose with the broader market.
Earnings calls from Meta and Microsoft had a cheering effect on analysts.
“The raised full-year outlook from Meta, the reiterated fiscal 2H outlook from Microsoft, and the reiterated full-year outlook from Google implies that the solid investment momentum is continuing through the year, with strong double-digit year-over-year growth expected at least through the Jun-Q,” JPMorgan Chase’s Samik Chatterjee and team told clients in a note seen by Fortune.
Cathie Wood of Ark Invest also sent her followers a bullish note this morning: “While many economists are forecasting a recession that could extend into 2026, we believe that the 'stealth recession' in place for the past three years will end soon and will be followed not only by a productivity-led economic boom but also a healthy, broader-based bull market. Now in deep value territory, technologically enabled innovation should be one of the prime beneficiaries,” she wrote.