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Tech Earnings Deliver on the Promise That Excited Nasdaq’s Bulls

Jeran Wittenstein
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Tech Earnings Deliver on the Promise That Excited Nasdaq’s Bulls

(Bloomberg) -- Results rolling in from the world’s biggest technology companies are providing vindication for stock market bulls who’ve been bidding their shares up furiously for five weeks.

Index futures surged in post-market trading after strong results from Facebook Inc., Microsoft Corp. and others, putting the Nasdaq Composite on track to erase losses for the year. After settling 2.6% higher Wednesday, June futures on the S&P 500 were up another 0.4% to 2,954 as of 6:02 p.m. in New York. Nasdaq 100 contracts added 0.6% after climbing 3.6% in the previous session.

The gains extended a rally that has restored trillions of dollars in share value since March. Combined with rock-solid balance sheets, the tech giants’ online focus has kept their businesses intact in the work-from-home age, repudiating skeptics who said high valuations would leave them vulnerable when the bull market ended.

Products sold by the loosely defined Fang block have stood up and in many cases thrived amid the lockdown. Facebook is now seeing “signs of stability” after an initial steep decrease in March advertising revenue, while remote workers have been a boon for Microsoft’s cloud services. While Google ad sales slowed, its parent company Alphabet benefited from revenue growth at YouTube and a strong performance in the cloud division.

Tesla Inc., also a member of the Nasdaq 100 Index, added to investors’ exuberance. The stock jumped 9% after earning its first-ever profit in the first quarter of a year. Chipmaker Qualcomm Inc. and cloud-software company ServiceNow Inc. were among other technology companies whose stocks gained after reporting earnings on Wednesday afternoon.

“You’re going to see improvements coming out of June, if China is any model,” Qualcomm Chief Executive Officer Steve Mollenkopf said in an interview. The company said demand is close to returning to normal levels in China, which is the biggest market for smartphones.

The tech-heavy Nasdaq Composite Index rose 3.6% on Wednesday and is less than a 1% gain away from recouping its losses this year.

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