US Stocks: The S&P 500 surged to record highs on strong performance and strong data.
The rally capped a tumultuous week filled with high-profile earnings, the Federal Reserve’s interest rate decision and renewed anxiety about weakness in local banks.
Solid quarterly results from Meta Platforms and Amazon.com helped lift the S&P 500 and Nasdaq Composite Index more than 1%, while the blue-chip Dow Jones Industrial Average’s gains were weaker.
All three major U.S. stock indices recorded gains for four consecutive weeks.
“We were optimistic this week as earnings for most companies were strong and the Fed meeting appropriately set expectations for a rate cut in May or June,” said Jay Hatfield, portfolio manager at InfraCap.
The U.S. added 353,000 jobs in January, well above past analysts’ estimates, and wage growth was unexpectedly hot, the Labor Department reported. Additional signs of economic vitality make it more likely the U.S. central bank will delay cutting interest rates until much later than many had expected. Federal Reserve Chairman Jerome Powell on Wednesday opposed the concept of cutting interest rates in March. According to CME’s FedWatch tool, financial markets have a 20.5% chance of a 25 basis point rate cut at the March Fed meeting, down from 69.6% the previous month.
“Looking ahead to the next few days, investors are focusing on upcoming earnings and economic reports for greater consistency in data to gauge the size and timing of the Fed’s interest rate cuts,” said Greg Bassuk, CEO of AXS Investments. York.
Fourth quarter earnings season is in full swing, with 230 companies in the S&P 500 reporting earnings. Of those, 80% exceeded Wall Street expectations, according to LSEG.
Overall, analysts expect year-over-year earnings growth for the S&P 500 to reach 7.8% from October to December, a significant improvement over the 4.7% estimate as of Jan. 1.
Metaplatform soared 20.3% to an all-time high after announcing its first dividend date ahead of the 20th anniversary of the founding of Facebook’s division.
Amazon.com rose 7.9% after fourth-quarter sales rose during the holiday season as its cloud and new generative artificial intelligence capabilities in its e-commerce business fueled strong growth.
Shares of community banks have stabilized after falling sharply for two days in a row due to disappointing earnings from New York Community Bancorp. Bank shares rebounded on Friday, rising 5.0%, while the KBW Regional Banks Index rose 0.2%.
The S&P 500 index closed at 4,958.61 points, up 1.07%. The NASDAQ closed at 15,628.95 points, up 1.74%, and the Dow Jones Industrial Average closed at 38,654.42 points, up 0.35%.
Among the 11 S&P 500 sector indices, 6 rose, mainly communication services, up 4.69%, and the Consumer Discretionary Index rose 2.49%.
Cigna rose 5.4% after the health insurance company raised its full-year profit forecast.
Microchip Technology fell 1.6% on the chipmaker’s disappointing sales outlook.
Shoe manufacturer Skechers USA also issued a pessimistic outlook, with its stock price falling 10.3%.
Oil major Chevron Corp rose 2.9% after beating analyst estimates.
Within the S&P 500, declining stocks outnumbered advancing stocks by a ratio of 1.2 to 1. The S&P 500 recorded 68 new highs and 4 new lows. The Nasdaq recorded 75 new highs and 144 new lows.
Volume on U.S. exchanges was relatively light, with 11.2 billion shares traded compared to an average of 11.6 billion over the previous 20 sessions.
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