Dow trims loss, S&P 500 briefly flips positive to trade within striking distance of 5,000 milestone

U.S. stocks were trimming earlier losses, with the S&P 500 briefly flipping positive in afternoon trade, lingering within striking distance of crossing the 5,000 level for the first time ever.

How are stocks trading

  • The Dow Jones Industrial Average
    shed 39 points, or 0.1%, at 38,637.

  • The S&P 500
    was off by 2 points, or less than 0.1%, at 4,993.

  • The Nasdaq Composite
    was up by 37 points, or 0.2%, at 15,794.

On Wednesday, the Dow Jones Industrial Average rose 0.4%, to 38,677; the S&P 500 increased 0.82, to 4,995; and the Nasdaq Composite gained 1%, to 15,757. U.S. stocks are on track to climb for the 14th week out of the past 15, on pace to match the best 15-week stretches in history.

What’s driving markets

Wall Street’s main stock barometer was on the cusp of a major milestone after the S&P 500 finished Wednesday’s session a whisker shy of topping 5,000 for the first time.

The index set an intra-day high of 4,999.89 on Wednesday and closed at a record 4,995.06. Thursday was shaping up to be a relatively placid session, with few catalysts available to drive the market, other than a handful of earnings reports, said Mike O’Rourke, chief market technician at JonesTrading.

O’Rourke said the market remains top-heavy, with the most-valuable companies continuing to drive the S&P 500 and Nasdaq higher. However, a rotation has taken place as Tesla Inc.
and Apple. Inc.
two members of the “Magnificent Seven” group of megacap technology names, have lagged the market in the new year.

This has created space for companies like Eli Lilly & Co.
which recently saw its market capitalization surpass Tesla’s to join the top eight most valuable U.S. companies, according to FactSet data.

“You’re still seeing the market leaders continue to push the market higher, but it’s not the same seven names,” O’Rourke told MarketWatch.

See: Stock-market investors fear a megacap meltdown. Here’s what history says.

The S&P 500 has continued to climb in 2024, pushed to record highs due to optimism over corporate earnings — particularly from big technology companies — alongside a solid U.S. economic backdrop and investors’ acceptance that interest rates won’t start falling until later this year.

But on Thursday, investors were focused on earnings, as results from Walt Disney
released after Wednesday’s closing bell, helped support sentiment on Wall Street, although that positivity may be somewhat counteracted by a disappointing earnings update from PayPal

Perhaps more important for the S&P 500, and indeed the tech-rich Nasdaq Composite, is the 20% pop in shares of Arm Holdings
after the chip designer delivered upbeat guidance and said it saw “increasing demand for new technology driven by all things AI.”

Much of the S&P 500’s 30% surge since Jan. 1, 2023, has been powered by the expectation that large technology companies such as Microsoft
and Nvidia
can deliver an AI-related boost to earnings.

After a rocky start to the quarterly reporting season, the outlook for U.S. earnings has improved as more companies outside the financial sector have shared their results, said Kathleen Brooks, research director at XTB.

“At the start of earnings season, a spate of poor reports from U.S. banks had weighed on earnings growth, however, now that the 10 other sectors have mostly reported earnings, the picture has brightened.”

To be sure, companies reporting on Thursday included a mixed bag, with oil exploration company ConocoPhillips
shares rising after it beat expectations for profit and sales, while shares of uranium producer Cameco
and confectionary giant Hershey Co.
slumped after reporting their results and guidance.

After the bell, investors will receive results from Affirm
and Expedia

Treasury yields were a touch higher early Thursday ahead of the auction, with the yield on the 10-year note
up 2 basis points at 4.14%.

U.S. economic data published on Thursday included a weekly report on initial jobless claims, which showed that the number of Americans applying for unemployment benefits during the first week of February fell by 9,000 to 218,000. The data indicated that layoffs remain extremely low, despite a flurry of headlines about layoffs at technology and media companies, among others.

Meanwhile, wholesale inventories in the U.S. rose by 0.4% in December.

Companies in focus

  • Under Armour Inc.
    shares rose after the apparel company reported fiscal third-quarter profit that surpassed analysts’ estimates.

  • New York Community Bancorp Inc.
    shares were falling again on Thursday after an analyst downgraded the stock on concerns that depositors might start to flee.

  • Spirit Airlines Inc.
    shares rose on Thursday after the company posted a slimmer loss than expected for the latest quarter, while calling out encouraging booking trends and expressing confidence in its ability to return to profitability.

  • Wynn Resorts Ltd.
    shares gained after the company posted fourth-quarter adjusted earnings that beat analysts’ expectations.

—Jamie Chisholm contributed to this article

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