[New York Stock Market] Rise on Strong Corporate Earnings... S&P Approaches 5000 'All-Time High'

Big Tech Drives Gains
Ford and Walt Disney Also Surprise with Earnings

The three major indices of the U.S. New York stock market all closed higher on the 7th (local time), supported by strong corporate earnings. As the Federal Reserve's (Fed) rate cut outlook timeline has been pushed back, investors are focusing on the profit growth of technology stocks, with the S&P 500 index rising to an all-time high and approaching the 5000 mark.

[Image source=Yonhap News]

On this day at the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average rose 156 points (0.4%) from the previous session to close at 38,677.36, marking a record high. The large-cap-focused S&P 500 index gained 40.83 points (0.82%) to 4,995.06, setting a new all-time high. The tech-heavy Nasdaq index closed up 147.65 points (0.95%) at 15,756.64.

Big tech companies led the gains. Nvidia, a leader in artificial intelligence (AI) semiconductors, rose 2.75%. Microsoft (MS) increased by 2.11%. Meta Platforms climbed 3.27%, while Alphabet and Amazon shares rose 0.87% and 0.82%, respectively.

In the solar-related manufacturing sector, Inphase Energy surged 16.91% on news that its inventory had bottomed out. U.S. automaker Ford jumped 6.05% after its fourth-quarter results and full-year outlook exceeded market expectations. Chipotle also rose 7.21% following a solid earnings report. After U.S. Treasury Secretary Janet Yellen expressed concerns about commercial real estate, New York Community Bancorp (NYCB), which had plunged more than 20% the previous day, rebounded 6.67%. Despite Moody’s global credit rating agency downgrading NYCB’s credit rating to junk (non-investment grade), the bank appointed a new CEO and reported increased deposits since the end of last year, indicating sufficient liquidity.

Walt Disney announced after market close that its adjusted earnings per share (EPS) for October to December last year were $1.22, with revenue of $23.5 billion. Although revenue fell short of market expectations ($23.7 billion), the adjusted EPS exceeded estimates ($0.99). Disney shares are currently up more than 7% in after-hours trading.

Kim Forrest, Chief Investment Officer (CIO) at Bokeh Capital, said, "Stock prices are rising based on earnings, but funds are also flowing into companies that have yet to report results. Investors do not want to be left behind as they were last year."

Although the Fed’s rate cut outlook timeline has been pushed back, optimistic earnings forecasts have acted as a catalyst driving the stock market higher.

Fed officials continued to emphasize a cautious approach regarding rate cuts. Fed Governor Adriana Kugler stated, "We are seeing signs of inflation slowing, but we are not yet ready to lower rates." Minneapolis Fed President Neel Kashkari said in an interview with CNBC, "At this point, two to three rate cuts this year seem appropriate," warning against too rapid a reduction. Boston Fed President Susan Collins also expressed a cautious stance, saying, "We need to see more evidence before adjusting policy stance."

Chris Hirsch, Managing Director at Goldman Sachs, analyzed in an investment memo that the market rise on this day "may signal that investors are becoming increasingly comfortable with a later-than-expected rate cut."

U.S. Treasury yields are slightly rising amid the Treasury’s 10-year bond auction. The 10-year U.S. Treasury yield is hovering around 4.11%, slightly up after adjustment from the previous day. The 2-year Treasury yield also rose, standing near 4.43%.

Matt Maley, Chief Market Strategist at Miller Tabak, said, "Given strong economic data and the Fed’s less dovish comments, some investors are concerned whether demand for Treasuries is strong enough to meet the massive supply."

International oil prices are rising on news that U.S. oil production growth this year is expected to fall short of forecasts. West Texas Intermediate (WTI) crude rose $0.55 to $73.86 per barrel. Brent crude traded up $0.62 at $79.21 per barrel.