S&P 500 ends just shy of 5,000 mark after touching milestone

After a lot of exuberant confidence yesterday, today it was back to a lot of seesaw action as the markets returned to business as usual trying to balance rate cuts vs earnings with both the S&P and Dow spending much of the session in the red as a consequence, the Dow down some 130 points by 11:30.  But then both indexes bounced back and both ended the day modestly in the black. The S&P added to optimism by briefly touching the 5,000 milestone. Once again, solid Q4 earnings reports saved the day, especially with tech as the Nasdaq spent the whole day in the black though with much choppiness but with the semiconductor index jumping 1.6%.  

Lower unemployment claims continue to support labor market strength and more risk-on appetite.  There were also more mixed signals from the Fed with today the Richmond Prez suggesting the strong data may be due to inaccurate seasonal calculations. Q4 reporting is now in its second half with 80.6% beating estimates, considerably above the historical average of 67%, continuing to support the hopes that the currently elevated valuations are more than justified. Volume was 12.1 billion, modestly above the 4-week average. 

S&P 500 ends just shy of 5,000 mark after touching milestone

By Sinéad Carew and Johann M Cherian

Thu February 8, 2024 4:45 PM

DJ: 38,677.36  +156.00        NAS: 15,756.64  +147.65       S&P: 4,995.06  +40.83     2/7

DJ: 38,726.33  +48.97          NAS: 15,793.72  +37.07         S&P: 4,997.91  +2.85       2/8

Feb 8 (Reuters) - The benchmark S&P 500 index managed to eke out a small gain on Thursday after briefly hitting the 5,000-point milestone, as investors reacted to earnings reports, a roughly in-line jobs report and remarks from policymakers on interest rate cuts.  Under the hood, small-cap indexes outperformed large caps and semiconductor stocks also outperformed with shares of chip designer ARM Holdings surging 47.9% after it forecast strong demand for designs related to artificial intelligence.  Shares of Walt Disney (DIS.N), opens new tab rose 11.5% after the media giant's profit beat Wall Street estimates and it announced a $3 billion share repurchase plan, a 50% dividend increase, a gaming investment and plans for an ESPN streaming service in 2025.  Spirit Airlines (SAVE.N), opens new tab shares rose 3.3% after the airline said it expects to operate with a positive cash flow from the second quarter after reporting a narrower-than-expected loss.

More than half of the S&P 500 companies have reported quarterly earnings, with 80.6% surpassing expectations, compared with a long-term average of 67%, according to LSEG data.

On the economic data front, the number of Americans filing new claims for unemployment benefits fell slightly more than expected last week, suggesting underlying labor market strength.  "In what appears to be a sleepy day there are some things under the surface. There's more of a risk-on appetite. Semiconductors continue to show leadership," said Keith Lerner, co-chief investment officer at Truist Advisory Services in Atlanta.

"We've had such outperformance in megacaps, investors are looking for other opportunities, even in technology they're going down the market cap scale," said Lerner, referring to a stronger gain in the S&P 600 tech sector (.SPSMCT), opens new tab than the S&P 500 tech sector (.SPLRCT), opens new tab.  Regarding the 5,000 milestone, which the S&P momentarily breached late in the session, Lerner said: "It may bring some excitement, some positive inflows."

The Dow Jones Industrial Average (.DJI), opens new tab rose 48.97 points, or 0.13%, to 38,726.33, the S&P 500 (.SPX), opens new tab gained 2.85 points, or 0.06%, to 4,997.91 and the Nasdaq Composite (.IXIC), opens new tab gained 37.07 points, or 0.24%, to 15,793.72.

While its gains were muted, the S&P 500 notched a record high for the second day in a row as investors looked past uncertainty on the timing of interest rate cuts and jitters around the stability of some regional banks.  The Russell 2000 small-cap index (.RUT), opens new tab outperformed during the session and closed up 1.5%. The Philadelphia semiconductor index (.SOX), opens new tab ended up 1.6% as the sector is seen as a key beneficiary of AI technology.  Among the S&P 500's 11 major sectors, energy (.SPNY), opens new tab led major-sector gains to finish up 1.1% as crude prices rose.

Keeping some checks on risk appetites, however, investors sent shares of New York Community Bancorp (NYCB.N), opens new tab down 6.5% after it gained ground on Wednesday following the lender's appointment of a new executive chairman; it also said it could cut exposure to the troubled commercial real estate segment.  Meanwhile, Richmond Fed President Thomas Barkin said recent stronger-than-expected data on the U.S. economy may be partly due to the difficulty of making accurate seasonal adjustments around the beginning of the new year.  PayPal (PYPL.O), opens new tab shares sank 11.2% after a forecast of flat growth in adjusted profit for the current year, dragging on the S&P 500 financial sector (.SPSY), opens new tab.  Ralph Lauren (RL.N), opens new tab stock rallied 16.8% following a third-quarter revenue beat, while apparel maker Under Armour (UAA.N), opens new tab closed up 0.1% after raising its annual profit forecast.

Advancing issues outnumbered decliners by a 1.4-to-1 ratio on the NYSE where there were 358 new highs and 69 new lows.  On the Nasdaq, 2,640 issues advanced and 1,622 declined, with advancing issues outnumbering decliners by a 1.6-to-1 ratio.  The S&P 500 posted 56 new 52-week highs and 7 new lows while the Nasdaq recorded 249 new highs and 109 new lows. 

Per the CBOE, volume came in at 12.1 billion, modestly above the 4-week average.