Dow ends lower, S&P 500 squeaks by with fourth straight record close
The Dow Jones Industrial Average closed lower, while the S&P 500 managed to squeak by with its fourth straight record close. Despite a batch of positive earnings reports, the S&P 500 only gained a mere 0.1%, while the Dow fell by 0.3%. The Nasdaq Composite, on the other hand, ended up with a 0.4% gain, reaching its highest level since January 2022. The mixed performance of the stock indexes can be attributed to fluctuating sentiment driven by strong U.S. economic data and the anticipation of interest-rate cuts by the Federal Reserve. Earnings reports from technology heavyweights such as Netflix and Nvidia also influenced market movements. Furthermore, a boost in risk appetite was seen as China’s central bank cut reserve requirements for banks, injecting more capital into the market.
Market Snapshot
The trading day ended on a mixed note as the Dow closed lower while the S&P 500 managed to eke out a fourth straight record close. Meanwhile, the Nasdaq Composite finished higher. Here is a closer look at how the stock indexes performed.
Dow ends lower
The Dow Jones Industrial Average (DJIA) closed down by 99.06 points, or 0.3%, at 37,806.39. Despite starting the day with slight gains, the Dow experienced a decline throughout the trading session. Earlier in the day, it had been up by as much as 158.77 points.
S&P 500 squeaks by with fourth straight record close
The S&P 500 (SPX) barely managed to eke out a fourth consecutive all-time high, finishing up only 3.95 points, or less than 0.1%, at 4,868.55. Despite a batch of well-received earnings reports, the S&P 500 had a relatively modest gain.
Nasdaq Composite ends higher
The Nasdaq Composite (COMP) ended the day up by 55.97 points, or 0.4%, at 15,481.92. This level is the highest it has been since January 4, 2022. Technology stocks led the way in the market, which contributed to the Nasdaq’s gain.
Tech Stocks Lead the Way
Tech stocks had a notable performance during the trading day. Here are some highlights:
Netflix posts strong results
Streaming giant Netflix (NFLX) saw its stock price rise by 10.7% after announcing strong results. This strong performance from Netflix started the technology-sector earnings season on a positive note.
Nvidia reaches all-time high
Nvidia Corp. (NVDA) reached another all-time high during the trading day, with its stock price rising by 2.5% to $613.62 per share. Nvidia’s performance contributed to the overall strength in the technology sector.
Earnings Reports in Focus
Earnings reports from various companies were under scrutiny during the trading day. Here are some key highlights:
Tesla and Lam Research report results
Tech heavyweight Tesla (TSLA) and semiconductor equipment manufacturer Lam Research (LRCX) reported their earnings after the closing bell. These reports were closely watched by investors as they provided insights into the performance of these companies.
AT&T and Abbott Laboratories stocks move lower
AT&T Inc. (T) saw its stock price decline by 3% despite reporting $16.8 billion in free cash flow for the previous year. On the other hand, healthcare-products company Abbott Laboratories (ABT) saw its stock price close down by 2.8% as its COVID-test sales continued to plunge.
U.S. Economic Data Impacts Sentiment
The release of strong U.S. economic data during the trading day had an impact on investor sentiment. Here are the key details:
Strong U.S. services and manufacturing PMI
The S&P flash U.S. services PMI reached a seven-month high of 52.9 in January, up from 51.4 in the previous month. Additionally, the flash U.S. manufacturing PMI jumped to a 15-month high of 50.3 this month, compared to 48.2 in December. These positive economic indicators contributed to the market’s realization that rate cuts may not come as soon as expected.
Rate cuts expectations change
The strong U.S. economic data released earlier in the day caused a shift in investors’ expectations for multiple interest-rate cuts by the Federal Reserve throughout the year. As a result, sentiment wavered during the afternoon trading session. Analysts suggested that the market is realizing that rate cuts may not be as imminent as previously anticipated.
Risk Appetite Boosted by Chinese Stimulus
China’s central bank made a move that had a positive impact on market sentiment. Here are the details:
China’s central bank cuts reserve requirements
China’s central bank announced a cut in the amount of liquidity that banks are required to hold as reserves. This move is expected to provide approximately $139 billion in long-term capital to the market. The stimulus boost from the central bank had a positive effect on investor confidence.
Gains for Shanghai Composite Index
The Shanghai Composite Index (SHCOMP) experienced sharp gains for the second day, bouncing back from its worst daily drop since April 2022. The Chinese stimulus measures, including the reserve requirement cut, contributed to the gains in the Shanghai Composite Index.
Companies in Focus
Several companies made headlines during the trading day. Here are some important developments:
AT&T reports higher free cash flow
Despite AT&T Inc.’s (T) stock price ending 3% lower, the telecom giant reported $16.8 billion in free cash flow for the previous year. This exceeded its prior forecast of approximately $16.5 billion. However, investors reacted negatively to other factors, leading to the decline in the stock price.
Abbott Laboratories’ COVID-test sales plunge
Abbott Laboratories (ABT) saw its stock price close down by 2.8% as its sales of COVID-tests continued to decline. However, the healthcare-products company reported fourth-quarter sales that surpassed expectations.
DuPont de Nemours issues profit warning
DuPont de Nemours Inc. (DD) issued a profit warning as weaker demand at the end of 2023 is expected to continue. The materials-science company experienced a significant decline in its stock price by 14%.
In conclusion, the stock indexes had a mixed performance during the trading day, with the Dow closing lower and the S&P 500 managing to reach a fourth consecutive record close. Tech stocks, particularly Netflix and Nvidia, led the way with strong performances. Earnings reports from Tesla, Lam Research, AT&T, and Abbott Laboratories were also in focus. The release of strong U.S. economic data impacted investor sentiment, while Chinese stimulus measures boosted risk appetite. Companies like AT&T, Abbott Laboratories, and DuPont de Nemours made headlines with their financial developments. Overall, it was an eventful day in the market with various factors influencing the performance of stock indexes and individual companies.