The S&P 500 rose Wednesday and edged closer to the 5,000 level, notching a closing high as investors parsed through another slate of quarterly results that signaled a flourishing economy.
The broad-based index, which first breached the 4,000 level in April 2021, added 0.82% to finish at 4,995.06. At session highs, the S&P hit 4,999.89.
“It’s earnings driven, but it’s bleeding over into other companies that may not have announced,” said Kim Forrest, Bokeh Capital’s chief investment officer, of Wednesday’s moves. “They’re getting swept on the coattails. Some of what we’re experiencing this year is people don’t want to be left behind like they were last year.”
S&P 500 nears 5,000 level
Stocks rallied as investors weighed a fresh batch of strong corporate profits and major technology behemoths continued their march higher. Nvidia and Microsoft climbed about 2% to trade at fresh highs, while Meta Platforms surged 3.3%. Alphabet and Amazon rose about 1% each.
Enphase Energy popped about 17% after the solar company said its inventory glut may be nearing a bottom, boosting other solar stocks in sympathy. Ford gained 6% after beating Wall Street’s fourth-quarter estimates and issuing higher-than-expected guidance, while Chipotle Mexican Grill climbed 7% on strong earnings and traffic.
A better-than-expected earnings season, coupled with upbeat guidance, has been a source of strength for the market in recent weeks, illustrating that consumer spending is healthy and that the economy remains resilient in the face of high interest rates.
“The good news has come in, and the U.S. economy is continuing to show incredible robustness,” said Nancy Curtin, chief investment officer at AlTi Tiedemann Global. “At the same time, we still see signs of disinflation” and “sticky growth” which is a “positive backdrop for the Fed at some point to cut interest rates this year.”
The advance comes despite a recent retreat in 2024 rate expectations following cautious commentary from the central bank. Fed Chair Jerome Powell signaled last week that investors will have to wait longer than previously thought for a pivot, while Minneapolis Federal Reserve President Neel Kashkari said Wednesday that he anticipates only two to three rate cuts this year.
Wednesday’s price action may be a sign that investors are “growing more comfortable” with this notion of later-than-expected rate cuts, said Chris Hussey, managing director at Goldman Sachs, in a note to clients.
In other news, New York Community Bancorp shares finished up 6.7% following another volatile session after Moody’s downgraded its credit rating to junk. Shares have fallen about 31% in February alone after the bank posted a surprise fourth quarter loss and slashed its dividend amid rising commercial real estate losses.