Big Tech's 'staggering' earnings live up to market hype - CNN

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A version of this story first appeared in CNN Business' Before the Bell newsletter. Not a subscriber? You can sign up right here.

What's happening: One day after the CEOs of Amazon, Facebook, Apple and Google were grilled by Congress about whether their companies are too powerful, the businesses posted earnings that showed they're only getting more dominant, my CNN Business colleagues Clare Duffy, Kaya Yurieff, Brian Fung and Rishi Iyengar report.

"This is another sign that the strong have only gotten stronger," said Ryan Detrick, chief investment strategist at LPL Financial.

The results drove Nasdaq futures 0.8% higher. Amazon's stock rose 5% in premarket trading, while Apple and Facebook shares increased 6%.

Breaking it down: Facebook (FB) said Thursday that it had more than 3 billion monthly active users in the June quarter across its apps, including Instagram and WhatsApp. The company said that number reflected "increased engagement as people around the world sheltered in place."

Amazon (AMZN) posted quarterly revenue of $88.9 billion, a 40% increase from the prior year and a staggering $8 billion more than Wall Street expected as the online retail giant benefited from surging demand.

Apple (AAPL), which has dealt with flat or even declining revenue in recent years, reported an 11% increase in sales for the quarter, with growth across its various hardware products and digital services. Apple CEO Tim Cook called the results a "testament to the important role our products play in our customers' lives" even "in uncertain times."

Google's parent company, Alphabet (GOOGL), was the lone exception, posting the first year-over-year revenue decline in its history as the pandemic and economic downturn hit its core advertising business. But even it beat expectations.

Why it matters: Together with Microsoft, these companies now account for more than a fifth of the S&P 500 and have driven the Nasdaq to a string of recent highs. Thursday's results justify recent gains, and give tech enthusiasts good reason to maintain the momentum.

"It's a bright green light for the bulls this morning to buy tech stocks, as the results were staggering across the board," Wedbush Securities analyst Daniel Ives told clients. He thinks Apple's market value could hit the $2 trillion mark by the end of the year.

Europe's economy suffers record slump in GDP

Europe's economy shrank by 11.9% in the second quarter as the coronavirus pandemic plunged the region into a deep recession, per data released Friday.

The quarter-on-quarter slump in EU GDP is the worst on record, and follows a fall of 3.2% in the first three months of the year.

Compared with the same period a year ago, the drop in output in the April-to-June quarter was 14.4%. That's worse than the 9.5% slump recorded Thursday by the United States.

Across the Atlantic: The US economy contracted at a 32.9% annual rate from April through June, also its worst drop on record.

Recent surveys of business activity suggest Europe's economy is now in recovery mode. But the specter of another wave of coronavirus cases looms.

Germany's center for disease control, the Robert Koch Institute, said this week that a recent spike in cases was "very disturbing." In France, new daily cases have crept back to the same level as when its lockdown lifted in early May. Spain and Italy have also recorded increases.

Germany, Europe's biggest economy, suffered less than other big EU countries in the second quarter, reporting a 10.1% hit to GDP. France, Italy and Spain, which were hit harder by the pandemic, recorded falls of 13.8%, 12.4%, and 18.5%, respectively.

Watch this space: The United Kingdom recently reimposed quarantine measures for travelers arriving from Spain, a move that will slow the recovery in its vital tourism industry.

The country is already looking significantly weaker than its neighbors.

"The difference is larger than expected and with reopening measures being locally reversed for [the third quarter], Spain looks set for a prolonged slump," said Bert Colijn, senior economist at ING.

Twitter's hack was the result of a phishing attack

Twitter (TWTR) now knows how hackers infiltrated dozens of high-profile accounts earlier this month.

This just in: The company said Thursday that the breach was the result of a phishing attack targeting the phones of a "small number of employees," my CNN Business colleague Brian Fung reports.

"This attack relied on a significant and concerted attempt to mislead certain employees and exploit human vulnerabilities to gain access to our internal systems," Twitter said, adding that it had "significantly limited" access to its internal tools since then.

Remember: The July 15 security incident led to the takeover of accounts belonging to Barack Obama, Joe Biden, Jeff Bezos and many others. The compromised accounts were then used to promote a bitcoin scam.

While the scope of the incident was huge in its own right, it could be just the tip of the iceberg. Cybersecurity experts and policymakers now worry that the bitcoin scam may mask a much more troubling data breach.

Investor insight: Twitter shares have managed to climb 3% since the incident. The company posted strong user growth last quarter and is exploring a subscription option to offset a sharp drop in its core advertising business.

Caterpillar (CAT), Chevron (CVX), ExxonMobil (XOM), Colgate-Palmolive (CL), Fiat Chrysler (FCAU), Merck (MKGAF), Newell Brands (NWL), Pinterest (PINS) and Under Armour report results before US markets open.

Also today:

• US personal income and spending data for June posts at 8:30 a.m. ET.
• The Chicago Purchasing Managers Index for July arrives at 9:45 a.m. ET.

Coming next week: Can Congress agree on a stimulus deal before their August recess?

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Big Tech's 'staggering' earnings live up to market hype - CNN
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