Wall Street ends higher; earnings, jobs report in focus
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[February 02, 2024] By
Stephen Culp
(Reuters) -U.S. stocks rebounded on Thursday as investors looked to a
spate of high-profile earnings and the Friday's employment report a day
after the Federal Reserve quashed lingering bets that interest rate cuts
could begin as early as March.
While a broad rally sent all three major U.S. stock indexes sharply
higher, the tech-laden Nasdaq advanced the most.
"There’s further digestion of the Fed," said Thomas Martin, Senior
Portfolio Manager at GLOBALT in Atlanta. "It’s still a growth market and
yesterday's sell-off was an overreaction. So today we’re getting a
rally."
Shares of Meta Platforms rose in extended trading after reporting better
than expected revenue and declaring its first-ever dividend.
Amazon.com also gained in post market trading following its earnings
release.
Apple Inc dipped in extended trading after profit, revenue beat analyst
estimates but China sales missed targets.
On Wednesday, the Federal Open Markets Committee (FOMC) left its policy
rate unchanged as expected. At his press conference, Fed Chair Jerome
Powell called a March rate cut "unlikely," resetting market expectations
of a dovish Fed pivot in the first quarter, and prompting a steep
sell-off.
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The KBW Regional Banking index fell 2.3%, weighed down by the 11.1% drop
in New York Community Bancorp's shares after the company reported pain
in its commercial real estate portfolio, sparking renewed fears over the
health of U.S. regional lenders.
The broader S&P Banking index fared better, ending the day off 1.4%.
Fourth quarter reporting season is going full-bore, with 208 of the
companies in the S&P 500 having reported. Of those, 80% have delivered
consensus-beating earnings, according to LSEG.
Analysts now expect aggregate S&P 500 earnings growth of 6.4%
year-on-year for the October-December period, an improvement over the
4.7% growth seen on Jan. 1, per LSEG.
A raft of economic data showed rising productivity helping to cap labor
costs, while an increase in announced layoffs and weekly jobless claims
provided further evidence of softening in the labor market, which is
viewed by the Fed as a precondition to assuring a sustainable downward
path for inflation.
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Traders work on the floor at the New York Stock Exchange (NYSE) in
New York City, U.S., January 31, 2024. REUTERS/Brendan McDermid/File
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"We see these data, on the eve of the labor report tomorrow, as
consistent with a healthy but moderating labor market," said Bill
Northey, senior investment director at U.S. Bank Wealth Management
in Billings, Montana. "(These reports) are consistent with our view
of the economic path for 2024; that it will continue to grow, but at
a slower pace."
The S&P 500 climbed 1.25% to end the session at 4,906.19 points. The
Nasdaq gained 1.30% to 15,361.64 points, while Dow Jones Industrial
Average rose 0.97% to 38,519.84 points.
Of the 11 S&P 500 sector indexes, 10 rose, led by consumer
discretionary, up 1.98%, followed by a 1.97% gain in consumer
staples.
Merck advanced 4.6% after the drug maker's upbeat fourth-quarter
results.
Qualcomm fell 5.0% on concerns over Android sales in China.
Honeywell was off 2.4% after the diversified industrial conglomerate
provided disappointing first-quarter guidance.
Across the U.S. stock market, advancing stocks outnumbered falling
ones by a 3.0-to-one ratio.
Volume on U.S. exchanges was relatively heavy, with 12.0 billion
shares traded, compared to an average of 11.6 billion shares over
the previous 20 sessions.
(Reporting by Stephen Culp; Additional reporting by Ankika Biswas
and Johann M Cherian in Bengaluru; Editing by Aurora Ellis)
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