S&P 500 ekes out another record high as Netflix and chipmakers leap

The day started out great with all the indexes up substantially, the Dow over 150 points. Then at 1 pm, the whole market started a decline that ended with all the indexes closing at a mere shadow of their intraday highs. The Dow closed down 99 but the Nasdaq and S&P managed to stay ever so modestly in the black. But even with its very modest gain, the S&P notched its fourth consecutive record close and the Nasdaq now stands just 4% below its record from November 2021.  

Business activity has picked up in January and inflation appears abating, both showing 2024 off to a strong start. Yesterday’s pessimism seems to have been brought down a notch with the odds of a rate cut now shifted from June to May and at 85.5% odds. Volume was brisk at 11.6 billion. 

S&P 500 ekes out another record high as Netflix and chipmakers leap

By Noel Randewich and Johann M Cherian

Wed January 24, 2024 4:16 PM

DJ: 37,905.45  -96.36         NAS: 15,425.94  +65.66        S&P: 4,864.60  +14.17     1/23

DJ: 37,806.39  -99.06         NAS: 15,481.92  +55.97        S&P: 4,868.55  +3.95       1/24

Jan 24 (Reuters) - The S&P 500 climbed to its fourth straight record high close on Wednesday, as Netflix surged following blowout quarterly results and a strong report from ASML fueled gains in chipmakers.  Riding optimism about Wall Street's most valuable companies, Microsoft (MSFT.O), opens new tab hit an all-time high, lifting its market value above $3 trillion for the first time.  The Nasdaq (.IXIC), opens new tab touched its highest since January 2022 and is now less than 4% below its record high close in November 2021.  Netflix (NFLX.O), opens new tab jumped 10.7% to a two-year high after strong subscriber growth cemented investor confidence the firm has won the streaming wars with its password-sharing crackdown and a strong content slate.  The S&P 500 communication services index (.SPLRCL), opens new tab, which includes Netflix, rose 1.2% and also hit a two-year high.

Alphabet (GOOGL.O), opens new tab and Meta Platforms (META.O), opens new tab, part of the so-called Magnificent Seven group of heavyweights that drove much of 2023's recovery in the S&P 500, each gained over 1%.  "Technology-enabled companies - the Magnificent Seven in particular and the AI theme - last year put up some ridiculous earnings and guidance. We will see over the next 10 days how that plays out, but early indications are certainly pretty positive," said Mike Dickson, head of research at Horizon Investments.

The S&P 500 climbed 0.08% to end the session at 4,868.55 points.  Even as the S&P 500 rose, declining stocks outnumbered rising ones within the index (.AD.SPX), opens new tab by a 2.5-to-one ratio.  The Nasdaq gained 0.36% to 15,481.92 points, while Dow Jones Industrial Average declined 0.26% to 37,806.39 points.

Volume on U.S. exchanges was relatively heavy, with 11.6 billion shares traded, compared to an average of 11.4 billion shares over the previous 20 sessions.

Tesla (TSLA.O), opens new tab dipped 0.6% and weighed on the S&P 500. The car maker was scheduled to report December-quarter results after the closing bell.  The Philadelphia SE semiconductor index (.SOX), opens new tab rose 1.54% to a record high after upbeat results from manufacturing equipment maker ASML Holding (ASML.AS), opens new tab pointed to a recovery in global chip demand.  Nvidia (NVDA.O), opens new tab and Broadcom (AVGO.O), opens new tab both jumped more than 2% and hit record highs. Traders exchanged over $34 billion worth of Nvidia shares, more than any other stock on Wall Street, according to LSEG data.  AT&T (T.N), opens new tab dropped 3% after forecasting annual profit below expectations, while DuPont De Nemours (DD.N), opens new tab slumped 14% after forecasting a fourth-quarter loss.

On the data front, a survey showed business activity picked up in January and inflation appeared to abate, suggesting that the economy kicked off 2024 on a strong note.  A resilient U.S. economy and uncertainty over the timing of interest rate cuts have led investors to reassess their bets on how quickly the Federal Reserve will cut rates this year.  Traders now see an 85.5% chance of a rate cut in May, according to CME Group's FedWatch Tool. Traders previously expected a rate cut in as early as March.