Dow trims loss, S&P 500 briefly flips positive to trade within striking distance of 5,000 milestone

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U.S. stocks traded mostly lower on Thursday as the S&P 500 lingered within striking distance of crossing the 5,000 level for the first time ever.

How are stocks trading

  • The S&P 500
    was off by 6 points, or 0.1%, at 4,989.

  • The Dow Jones Industrial Average
    shed 115 points, or 0.3%, at 38,558.

  • The Nasdaq Composite
    was up by 35 points, or 0.2%, at 15,793.

On Wednesday, the Dow Jones Industrial Average rose 156 points, or 0.4%, to 38,677; the S&P 500 increased 41 points, or 0.82%, to 4,995; and the Nasdaq Composite gained 148 points, or 0.95%, to 15,757. U.S. stocks are on track to climb for the 14th week out of the past 15, putting them on track to match the best 15-week stretches in history.

What’s driving markets

A major milestone looms for Wall Street’s main stock barometer after the S&P 500 finished Wednesday’s session a whisker shy of topping 5,000 for the first time.

After touching an intra-day high of 4,999.89 on Wednesday and closing at a record 4,995.06, Thursday was shaping up to be a relatively placid session. Few catalysts were available to drive the market, other than a handful of earnings reports, said Mike O’Rourke, chief market technician at JonesTrading.

O’Rourke noted that the market remains top-heavy, with the most-valuable companies continuing to drive the S&P 500 and Nasdaq higher. However, a rotation has taken place as Tesla Inc.
and Apple. Inc.
two members of the Magnificent Seven group of megacap technology names, have lagged the market in the new year.

This has created space for companies like Eli Lilly & Co.
which recently saw its market capitalization surpass Tesla’s to join the top eight most valuable U.S. companies, according to FactSet data.

“You’re still seeing the market leaders continue to push the market higher, but it’s not the same seven names,” O’Rourke told MarketWatch.

See: Stock-market investors fear a megacap meltdown. Here’s what history says.

The S&P 500 has continued to climb in 2024, pushed to record highs due to optimism over corporate earnings — particularly from big technology companies — alongside a solid U.S. economic backdrop and investors’ acceptance that interest rates won’t start falling until later this year.

But on Thursday, investors were focused on earnings, as results from Walt Disney
released after Wednesday’s closing bell, helped support sentiment on Wall Street, although that positivity may be somewhat counteracted by a disappointing earnings update from PayPal

Perhaps more important for the S&P 500, and indeed the tech-rich Nasdaq Composite, is the 20% pop in shares of Arm Holdings
after the chip designer delivered upbeat guidance and said it saw “increasing demand for new technology driven by all things AI.”

Much of the S&P 500’s 30% surge since Jan. 1, 2023, has been powered by the expectation that large technology companies such as Microsoft
and Nvidia
can deliver an AI-related boosts to earnings.

After a rocky start to the quarterly reporting season, the outlook for U.S. earnings has improved as more companies outside the financial sector have shared their results, said Kathleen Brooks, research director at XTB.

“At the start of earnings season, a spate of poor reports from U.S. banks had weighed on earnings growth, however, now that the 10 other sectors have mostly reported earnings, the picture has brightened.”

To be sure, companies reporting on Thursday included a mixed bag, with oil exploration company ConocoPhillips
shares rising after it beat expectations for profit and sales, while shares of uranium producer Cameco
and confectionary giant Hershey Co.
slumped after reporting their results and guidance.

After the bell, investors will receive results from Affirm
and Expedia

One of the few major events on the calendar for Thursday is a Treasury auction of $25 billion of 30-year bonds at 1 p.m. Treasury yields were a touch higher early Thursday ahead of the auction, with the yield on the 10-year note
up 3 basis points at 4.140%.

U.S. economic data published on Thursday included a weekly report on initial jobless claims, which showed that the number of Americans applying for unemployment benefits during the first week of February fell by 9,000 to 218,000. The data indicated that layoffs remain extremely low, despite a flurry of headlines about layoffs at technology and media companies, among others.

Meanwhile, wholesale inventories in the U.S. rose by 0.4% in December.

Richmond Fed President Tom Barkin appeared on Bloomberg Television at 8:30 a.m. and will also speak in New York at 12:05 p.m. Barkin told MarketWatch that it makes sense to be ‘patient’ before making rate cuts.

Looking ahead, analysts are focused on the annual revisions to the CPI Index, a closely watched inflation gauge, which are due Friday.

“I think the market will certainly react to this if those improvements we saw in CPI deceleration hold up,” O’Rourke said.

Companies in focus

  • Under Armour Inc.
    shares rose after the apparel company reported fiscal third-quarter profit that surpassed analysts’ estimates.

  • New York Community Bancorp Inc.
    shares were falling again on Thursday after an analyst downgraded the stock on concerns that depositors might start to flee.

  • Spirit Airlines Inc.
    shares rose on Thursday after the company posted a slimmer loss than expected for the latest quarter, while calling out encouraging booking trends and expressing confidence in its ability to return to profitability.

  • Wynn Resorts Ltd.
    shares surged after the company posted fourth-quarter adjusted earnings that beat analysts’ expectations.

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