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(Reuters) – A strong outlook from Microsoft Corp (NASDAQ:MSFT) and resilient Google ads sales from Alphabet (NASDAQ:GOOGL) sparked a relief rally on Wednesday in heavyweight technology and growth shares that have powered the stock market for the past decade.
Better-than-expected Google ad sales sent Alphabet shares 3.5% higher in premarket trading as the largest online ads seller appeared better positioned to withstand a recession compared to smaller rivals.
Microsoft rose 3.8% after the company said it targets double-digit growth in fiscal revenue, easing worries about the impact of soaring prices and slowing growth, even as it missed estimates for fourth-quarter results.
“Both tech giants (Alphabet and Microsoft) just missed on earnings, but both maintained very upbeat outlooks; that was enough for the FOMO gnomes,” said Jeffrey Halley, analyst at Oanda, explaining the motivation behind the rally.
All eyes will now be on ad revenue at Facebook (NASDAQ:META) owner Meta Platforms due later in the day after disappointing results from Twitter Inc (NYSE:TWTR) and Snapchat’s owner Snap Inc (NYSE:SNAP) last week sparked a selloff in social media and ad tech firms.
“The fact that Google has bucked the trend of lower spending on advertising business – which has impacted the likes of Twitter and Snap – suggests the economic outlook may not be quite so bleak as many are anticipating,” said Stuart Cole, head macroeconomist at Equiti Capital.
Meta shares rose 2.4%, while Apple Inc (NASDAQ:AAPL) and Amazon.com Inc (NASDAQ:AMZN), which are slated to post reports on Thursday, firmed 2.5% and 2%, respectively.
That would conclude results from the largest U.S. firms – Apple, Microsoft, Alphabet and Amazon – which together account for nearly a quarter of the weight in the benchmark S&P 500 index.
An interest rate decision by the Federal Reserve later in the day will be pivotal for rate-sensitive growth stocks. The central bank is expected to raise rate by 75 basis points.
