The market continued a broad-based rally on positive earnings reports Tuesday. The Dow Jones Industrial Average (^DJI 0.04%) and the S&P 500 (^GSPC -0.16%) both had substantial gains.

Today's stock market

Index Percentage Change Point Change
Dow 0.68% 172.15
S&P 500 0.47% 12.83

Data source: Yahoo! Finance.

Technology stocks continued to advance; the Invesco NASDAQ Internet ETF (PNQI 0.47%) rose 1.4%. The financial sector was the laggard, with the SPDR S&P Regional Banking ETF (KRE -0.19%) slipping 0.4%. 

As for individual stocks, Alphabet (GOOG 1.44%) (GOOGL 1.89%) reported strong growth and rising expenses, while Gilead Sciences (GILD 3.18%) announced falling sales and profit.

Finger pointing to rising graphs.

Image source: Getty Images.

Alphabet beats growth expectations

Google parent Alphabet reported fourth-quarter results yesterday evening that beat expectations, fueled by growth in mobile search, and Class C shares closed up 1.2%. Revenue increased 21.5% to $39.3 billion, compared with expectations of $38.9 billion, and earnings per share of $12.77 beat Wall Street's forecast of $10.86.

Google sites revenue increased 22% to $27 billion and revenue from advertising on Google Network sites grew 12% to $5.6 billion. "Google other" revenue jumped 31% to $6.5 billion, helped by robust growth in the company's cloud business.

Alphabet stock initially dropped 3% after hours following the earnings release, possibly due to investors' concern over rising costs. Operating margin decreased to 21% from 24% in the period a year ago, and the company increased head count by 23%. The operating loss from "Other Bets" ballooned to $1.3 billion from $748 million last year.

But traffic acquisition costs held steady at 23% of revenue, and investors may have eventually concluded that rising investments in Google's cloud business and future opportunities like autonomous vehicles are good uses of the company's ample resources, with operating cash flow growing 29% in 2018.

Gilead's profit disappoints 

Shares of Gilead Sciences fell 3.4% after the biotech reported that revenue slumped as sales of its hepatitis C virus (HCV) drugs continue to plummet. Revenue declined 2.6% to $5.8 billion and non-GAAP earnings per share dropped 19.1% to $1.44. Analysts were expecting the company to earn $1.71 per share on sales of $5.49 billion. Gilead also announced an 11% increase in its dividend.

HIV sales grew $617 million, or 18%, but that was not enough to make up for a 51% plunge in HCV sales to $738 million. Non-GAAP gross margin fell to 77.9% from 83.5% in the period a year earlier, as the company had to write down excess raw material inventory due to falling demand for HCV drug Harvoni.

Analysts on the conference call probed Gilead officials once again for indications of how the company might use its substantial cash hoard to acquire late-stage assets. With news that it was taking an $820 million write-off for a failed project that was part of Gilead's 2017 Kite acquisition, the pressure for more investment in business development is increasing for the company's incoming CEO.

Check out the latest Alphabet and Gilead earnings call transcripts.