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Nasdaq futures jump nearly 2% on Meta surge, Fed relief

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Traders work on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., January 27, 2023. REUTERS/Andrew Kelly/File Photo

Nasdaq futures jumped on Thursday as Meta Platforms surged on rigorous cost controls, while a dovish message from Federal Reserve Chair Jerome Powell boosted bets of a softer landing for the U.S. economy.

Meta Platforms Inc (META.O) jumped 19.1% in premarket trading, after the Facebook-parent announced a new $40 billion share buyback and said it would cut costs in 2023 by $5 billion to between $89 billion and $95 billion.

Shares of other growth companies including Apple Inc (AAPL.O), Alphabet Inc (GOOGL.O) and Inc (AMZN.O) rose between 1.5% and 4.9%. The three companies are slated to report quarterly results after market close.

“It certainly seems that markets are up because earnings for Meta were surprisingly positive,” said Sam Stovall, chief investment strategist at CFRA Research in New York.

“Investors are also encouraged by the fact that the Fed is sort of tempting that it’s done or close to being done with its rate tightening program.”

Wall Street’s main indexes got a boost in the previous session as Powell acknowledged that inflation was starting to ease after the U.S. central bank raised rates by 25 basis points.

Powell’s comments relieved investors that a U.S. recession, which has been widely priced in, will likely be mild.

Data showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, highlighting that the labor market’s resilience, ahead of nonfarm payroll numbers on Friday.

After a bruising 2022, U.S. stock markets have made a strong start to the year, with megacap companies gaining on hopes that the Fed will ease its hawkish monetary policy stance, which in turn could alleviate some pressure off their valuations.

At 8:44 a.m. ET, Dow e-minis were down 28 points, or 0.08%, S&P 500 e-minis were up 29.25 points, or 0.71%, and Nasdaq 100 e-minis were up 211 points, or 1.7%.

Dow S&P 500 futures were weighed down by Honeywell International Inc (HON.O) that fell 3.3% on posting a 28.6% fall in quarterly profit, hurt by supply chain constraints.

Drugmaker and fellow Dow component Merck & Co’s (MRK.N), slid 1.2% on a lower-than-expected annual forecast, while Eli Lilly & Co (LLY.N) fell 2.4% on missing quarterly revenue estimates.

Align Technology Inc (ALGN.O) surged 18.2% on its first quarterly results beat in a year, driven by demand for its orthodontic treatments.

As many as 70% of the 200 companies in the S&P 500 that had reported fourth-quarter earnings as of Wednesday have topped Wall Street expectations. Analysts now see earnings of S&P 500 firms declining 2.4% for the quarter, according to Refinitiv estimates.

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