The S&P 500 is inching closer to the 5000-point mark, with investors closely watching major corporate earnings reports, jobs data, and remarks from policymakers regarding interest rate cuts. The US stock indexes remain relatively muted as they assess these factors.
Notably, Walt Disney has seen an 8.5% gain, propelling communication services as one of the top sectors in the S&P 500. The media giant showcased a market-beating profit, a gaming investment, and plans to launch an ESPN streaming service in 2025. In addition, the company announced a $3 billion share repurchase plan and a 50% increase in dividend, further boosting investor confidence.
Spirit Airlines also experienced a jump of 3% after reporting a narrower-than-expected loss. The airline expects to operate with a positive cash flow starting from the second quarter, adding to the positive sentiment in the market.
When it comes to quarterly earnings, over half of the S&P 500 companies have already reported, with an impressive 81.2% surpassing expectations. This figure exceeds the long-term average of 67%, according to LSEG data.
On the economic front, the Labor Department reported that Americans filing for state unemployment benefits dipped to 218,000 during the week ending February 3, compared to economists’ forecast of 220,000. This data, combined with recent employment reports, suggests a relatively tight labor market.
Richmond Fed President Thomas Barkin commented on the stronger-than-expected data on the US economy, attributing it partly to the challenges of making accurate seasonal adjustments at the beginning of a new year.
Despite uncertainty surrounding the timing of interest rate cuts and concerns over regional bank stability, the benchmark S&P 500 reached new record highs on Wednesday, nearing the 5000-point milestone. Additionally, the Nasdaq is only about 2.8% away from breaching its all-time high from November 2021, buoyed by the ongoing rally in technology and tech-adjacent stocks.
In early trading on Thursday, the Dow Jones Industrial Average was down 1.96 points, or 0.01%, at 38,675.40. The S&P 500 was down 4.24 points, or 0.08%, at 4,990.82, and the Nasdaq Composite dropped 8.23 points, or 0.05%, to 15,748.42.
New York Community Bancorp experienced a 7.7% decline after appointing a new executive chairman and discussing potential reductions in exposure to the troubled commercial real estate segment, which impacted investor confidence.
Conversely, Arm, a British tech company, saw significant growth of 38.7% after forecasting quarterly sales and profit above expectations. Arm’s customers are aiming to design new chips for artificial intelligence work, leading to higher royalties.
On the other hand, PayPal faced a 9.4% drop in its stock price as its forecast indicated flat growth in adjusted profit for the current year. This overshadowed the company’s market-beating earnings report and contributed to a 0.7% decline in the S&P 500 financial sector.
Ralph Lauren recorded a 10.9% gain after beating third-quarter revenue expectations, while Under Armour raised its annual profit forecast, resulting in a 1.3% climb in their stock price.
In terms of market performance, declining issues slightly outnumbered advancers, with a ratio of 1.51-to-1 on the NYSE and 1.13-to-1 on the Nasdaq.
The S&P 500 index achieved 33 new 52-week highs and three new lows, while the Nasdaq recorded 62 new highs and 41 new lows, highlighting the dynamic nature of the market.
Overall, the S&P 500 is on the cusp of reaching the 5000-point mark, driven by strong corporate earnings and positive jobs data. However, concerns surrounding interest rate cuts and regional bank stability persist. Investors are keeping a close eye on these developments as they navigate the market landscape.
