Why Facebook, Sprint, and Berkshire Hathaway Jumped Today

Learn why the Oracle of Omaha had reason to celebrate.

Dan Caplinger
Dan Caplinger
Aug 6, 2018 at 4:29PM
Technology and Telecom

The stock market got off to a good start on Monday, as major benchmarks continued to move toward record highs. Corporate earnings remained the focal point for many investors, and the strength of the U.S. economy has proven resilient even as interest rates have steadily risen. Some of the largest companies in the market posted gains that helped to buoy overall sentiment. Facebook (NASDAQ:FB), Sprint (NYSE:S), and Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) were among the best performers on the day. Here's why they did so well.

Facebook gets kudos

Shares of Facebook rose more than 4% in the wake of positive comments from stock analysts. Prominent research company Stifel added the social media giant to its select list of picks, arguing that the combination of Instagram, WhatsApp, and its core namesake business gives Facebook plenty of room for further growth. The move comes even amid reports that Facebook is asking large banking institutions for financial information on their joint clients in an effort to broaden user engagement, which could once again raise concerns about whether the social media giant is overreaching beyond the appropriate limits of privacy in its efforts to grow. Despite that news, investors seem to think that Facebook's recent pullback offers a potential bargain.

White facebook logo against a blue background.

Image source: Facebook.

Sprint keeps moving forward

Sprint stock jumped 10% after reports surfaced that regulators looking at potential antitrust issues in its proposed acquisition by T-Mobile US have begun a more complete review but haven't yet made any firm decisions. For some investors, no news from regulators has been perceived as good news, especially given the extent to which government officials talked about the issues surrounding deals involving other players in the telecom industry. But others are growing impatient, and that's likely the reason why reports of any progress at all in the review of the Sprint/T-Mobile merger was enough to push the target company higher.

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Berkshire makes some money

Finally, Class B shares of Berkshire Hathaway rose 3%. The insurance and financial conglomerate run by Warren Buffett reported second-quarter financial results that included a 67% rise in operating earnings compared to year-ago levels. Extremely strong performance from Berkshire's core insurance unit contributed a huge portion of the company's overall profits, with both the GEICO personal lines business and the namesake Berkshire Hathaway commercial insurance and reinsurance units contributing strongly to underwriting gains. Berkshire also said that it now has a whopping $111 billion in cash on its balance sheet, and some investors believe that recent changes to policies regarding stock buybacks could eventually provide yet more support for Berkshire shares above and beyond what its fundamental business prospects give.