U.S. stock indexes were edging higher on Wednesday, with investors eyeing more corporate-earnings reports, New York Community Bancorp shares and another slate of Federal Reserve speakers.
How stock indexes are trading
-
The S&P 500
was rising 42 points, or 0.8%, to 4,996. -
The Dow Jones Industrial Average
was adding 206 points, or 0.5%, to 38,728. -
The Nasdaq Composite
was climbing 143 points, or 0.9%, to 15,752.
On Tuesday, the Dow Jones rose 0.4% to 38,521.36, the S&P 500 increased 0.2% to 4,954.23, and the Nasdaq gained less than 0.1% to 15,609.
What’s driving markets
U.S. stocks were rising on Wednesday, as traders gradually come to terms with the likely prospect of having to wait until May for an interest-rate cut by the Federal Reserve. Wall Street was refocusing attention on corporate prospects as the earnings season trundles on, with investors waiting to see if profits can support a market that’s sitting near record highs.
On Wednesday, Uber Technologies Inc.
UBER
cleared Wall Street’s bar for the company’s earnings by reporting fourth-quarter revenue that rose to $9.9 billion, from $8.6 billion. CVS Health Corp.
CVS
beat fourth-quarter profit expectations by a wide margin, but lowered its full-year outlook. PayPal Holdings Inc.
PYPL,
Walt Disney Co.
DIS
and Arm Holdings Plc
ARM
are set to report after the close.
Indications that the U.S. economy has managed to thrive during a period of sharply rising interest rates, thus supporting corporate-earnings growth, has been a primary driver of the latest equity rally, said Stephen Innes, managing partner at SPI Asset Management.
“S&P 500 operating earnings growth of around 5% year on year fosters bullish sentiment among investors,” Innes wrote in a Wednesday note. “Higher rates don’t appear to burden consumers or corporations significantly, enabling the Fed to wait longer to ensure inflation control without disrupting the stock market’s momentum amid robust U.S. growth dynamics.”
Investors continued to scrutinize the exposure of regional banks to the commercial real-estate sector, with New York Community Bancorp Inc.’s
NYCB
stock in free fall since reporting a surprise loss last week. Moody’s Investors Service downgraded the regional bank’s credit rating by two notches late Tuesday, lowering it into speculative-grade or “junk” status.
See: New York Community Bancorp’s stock closes at lowest level in 27 years as Yellen says she’s ‘concerned’ about commercial real estate risks
The bank’s shares fell further into the red on Wednesday, down 2.5% even as it tried to reassure investors by naming an executive chair and saying total deposits have increased in the last several weeks. The SPDR S&P Regional Banking ETF
was down for much of the morning before moving slightly higher during the afternoon.
Dec Mullarkey, managing director at SLC Management, said the markets are “less alarmed” by the NYCB jitters, as the rest of the regional banks have already reported “sensible numbers” and their earnings reports don’t reflect accelerating weakness in the commercial real-estate sector.
As interest rates likely start to come down later this year to give some breathing room to the regional banks, the fact that they’re not all under pressure at the same time makes it a manageable issue, Mullarkey told MarketWatch via phone.
Treasury’s record $42 billion sale of 10-year notes was met with solid demand Wednesday afternoon, leaving the 10-year Treasury yield
around 4.1%.
In U.S. economic updates, the trade deficit widened slightly in December, to $62.2 billion.
Meanwhile, Federal Reserve officials made another round of appearances. Fed Governor Adriana Kugler, in her first speech as a senior central banker, said it would be “appropriate” to lower U.S. interest rates if inflation continues to slow, and that it is “critical” that inflation returns to the central bank’s target of 2%. Richmond Fed President Tom Barkin told MarketWatch that it’s a good idea for the Fed to take its time with rate cuts.
Companies in focus
-
Class A shares of Snap Inc.
SNAP
plunged 36% on Wednesday, a day after the social-media company reported a revenue miss and offered a disappointing outlook. -
Ford Motor Co.
F
rose 4.5% after the carmaker reported quarterly revenue above Wall Street’s expectations and announced a next-generation, smaller EV to rival Tesla Inc.’s upcoming “Model 2.” -
Shares of Chipotle Mexican Grill Inc.
CMG
were up 8.1% after the Mexican fast-casual chain delivered well-received fourth-quarter results. -
Shares of Roblox Corp.
RBLX
soared 10.3% after the videogame platform easily beat quarterly bookings estimates. -
Enphase Energy Inc. shares
ENPH
jumped 20% on Wednesday after the alternative-energy company presented investors with a mixed quarter that nonetheless soothed more-immediate concerns about the ailing sector.
Jamie Chisholm contributed.
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