What happened
Shares of Twilio Inc. (TWLO -2.44%), a cloud-based communications software company, jumped on seemingly no company-specific news today. Instead, the company's stock was likely rising as some investors grew more optimistic about the market following recent quarterly results from banks.
The tech stock was up by 3.2% as of 1:16 p.m. ET.
So what
Investors have been looking for any sign that the U.S. economy may be in better shape than they had feared, and when Bank of America, Bank of New York Mellon, and Goldman Sachs recently reported better-than-expected quarterly results, investors found what they were looking for.
Image source: Getty Images.
Each of the banks outpaced analysts' consensus estimates in their most recent quarter, and that's helped send market indices higher over the past two days.
Twilio investors are likely hoping that the banks' solid earnings indicate the U.S. economy is still strong despite rising inflation and aggressive interest rate increases from the Federal Reserve.
Tech stocks have fallen especially hard over the past year, and Twilio investors are trying to regain their market optimism after the stock has plunged 80% in 12 months.
Now what
Unfortunately, the market gains over the past two days may not last for long. The Fed will likely hike the federal funds rate again at its November and December meetings to curb inflation -- which is still at a nearly 40-year high.
Making matters worse is the fact that Bloomberg economists released a report yesterday saying there's a 100% probability of a U.S. recession in the next 12 months.
Of course, no one knows for sure if that will occur, but Twilio investors should anticipate more share-price swings as investors try to determine if a recession is coming and how severe it might be.
Shareholders will get a clearer picture of how the company is doing financially when Twilio reports its third-quarter results on Nov. 3.
