US stocks reverted early losses, post modest gains on Thursday

Posted At: 2024-02-09 09:00
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  • Wall Street's main indexes struggled to extend gains on Thursday. 
  • S&P 500 flirted with the 5,000 threshold, settled just below the level.
  • Pinterest shares collapse at the close after a worse-than-expected earnings report. 

The S&P 500 (SPX) index was broadly unchanged to close the session at 4,997.91. The Dow Jones (DJIA) climbed 0.13% to end at 38,726.33, while the Nasdaq (IXIC) gained 0.24% to finish at 15,793.72.

Stock market news

  • The Energy Sector was the best-performing S&P 500 major sector on Thursday, rising 1.09% on the day. The Utilities Sector settled in the opposite extreme, shedding 0.83%
  • Ralph Lauren, Monolithic Power Systems and Walt Disney added over 10%, making it to the top gainers 
  • The US Department of Labor reported that there were 218,000 Initial Jobless Claims in the week ending February 3, down from the previous week's revised 227,000.
  • Federal Reserve (Fed) Bank of Richmond President Thomas Barkin told Bloomberg on Thursday that economic data has been remarkable across the board but noted that he is cautious about the accuracy of numbers at the turn of the year.
  • The data from the US showed that the goods and services deficit was $62.2 billion in December, up $0.3 billion from $61.9 billion in November.
  • The Federal Reserve (Fed) reported late Wednesday that consumers added $1.56 billion in additional borrowing, far below the $16 billion forecast and declining steeply from the previous month's $23.75 billion.
  • In an interview with CNBC on Wednesday, Minneapolis Fed President Neel Kashkari argued they can dial back the policy rate quite slowly if the labor market continues to be strong. "At the moment, two to three rate cuts this year seems appropriate," he added. 
  • Federal Reserve Board of Governor member Adriana Kugler noted on Wednesday that she is pleased with the great progress on inflation and added that she is optimistic that the progress will continue. "Some measures of financial conditions have eased but remain relatively tight and are consistent with continued progress on inflation,” Kugler elaborated.
  • “The data point to continued disinflation, to labor markets coming into better balance, and to resilient consumer spending—three elements necessary for us to stick to the soft landing we remain optimistic to achieve,” Philadelphia Fed President Patrick Harker said on Tuesday.

Disney and PayPal reported earnings 

  • Pinterest shares collapsed right after the close, as the company reported a $981 million revenue vs $991 million expected. Revenue rose 12% year-over-year from $877.2 million a year earlier, while net income was $201 million, or 29 cents a share, up from $17.49 million, or 3 cents a share, a year ago. 
  • Walt Disney Co. (DIS) reported a quarterly revenue of $23.5 billion, slightly below the market projection of $23.6 billion, per Reuters. Disney's board of directors authorized a $3 billion share repurchase program for the current fiscal year, and declared a dividend of 45 cents a share. “Our strong performance this past quarter demonstrates we have turned the corner and entered a new era of growth for our company,” Disney CEO Bob Iger said in a statement. 
  • PayPal Holdings Inc. (PYPL) said revenue rose 8.7% to $8.03 billion from a year ago, surpassing the market forecast of $7.87 billion. Quarterly adjusted earnings were $1.48​​ per share for the quarter ended in December, and quarterly net income was $1.4 billion. "We're doing a lot of things to drive change internally and externally,” CEO Alex Chriss said in a post-earnings conference call, according to Reuters. “However, nothing happens overnight. It will take time for some of our initiatives to scale and move the needle," Chriss added.
  • Alibaba Group Holdings Ltd. (BABA) reported Q3 adjusted net income of RMB 47,951 million and Q3 revenue of RMB 260,348 million before the opening bell on Wednesday. In its earnings report, the company said that the board of directors approved an increase of $25 billion to the share repurchase program. “Our top priority is to reignite the growth of our core businesses, e-commerce and cloud computing,” Alibaba said, per Reuters.
  • Uber Technologies Inc. (UBER) announced Q4 net income of $1.4 billion and Q4 gross bookings of $37.6 billion. Net revenue for that period was $9.94 billion. "Uber's platform advantages and disciplined investment in new growth opportunities resulted in record engagement and accelerating Gross Bookings in Q4," Chief Financial Officer Prashanth Mahendra-Rajah said, per Reuters.
  • Motorola Solutions Inc. (MSI), DexCom Inc. (DXCM), Take-Two Interactive Software, Inc. (TTWO) and Pinterest Inc. (PINS) are among the noteworthy companies that will release earnings reports after the closing bell on Thursday.

S&P 500 FAQs

What is the S&P 500?

The S&P 500 is a widely followed stock price index which measures the performance of 500 publicly owned companies, and is seen as a broad measure of the US stock market. Each company’s influence on the computation of the index is weighted based on market capitalization. This is calculated by multiplying the number of publicly traded shares of the company by the share price. The S&P 500 index has achieved impressive returns – $1.00 invested in 1970 would have yielded a return of almost $192.00 in 2022. The average annual return since its inception in 1957 has been 11.9%.

How are companies chosen to be included in the S&P 500?

Companies are selected by committee, unlike some other indexes where they are included based on set rules. Still, they must meet certain eligibility criteria, the most important of which is market capitalization, which must be greater than or equal to $12.7 billion. Other criteria include liquidity, domicile, public float, sector, financial viability, length of time publicly traded, and representation of the industries in the economy of the United States. The nine largest companies in the index account for 27.8% of the market capitalization of the index.

How can I trade the S&P 500?

There are a number of ways to trade the S&P 500. Most retail brokers and spread betting platforms allow traders to use Contracts for Difference (CFD) to place bets on the direction of the price. In addition, that can buy into Index, Mutual and Exchange Traded Funds (ETF) that track the price of the S&P 500. The most liquid of the ETFs is State Street Corporation’s SPY. The Chicago Mercantile Exchange (CME) offers futures contracts in the index and the Chicago Board of Options (CMOE) offers options as well as ETFs, inverse ETFs and leveraged ETFs.

What factors drive the S&P 500?

Many different factors drive the S&P 500 but mainly it is the aggregate performance of the component companies revealed in their quarterly and annual company earnings reports. US and global macroeconomic data also contributes as it impacts on investor sentiment, which if positive drives gains. The level of interest rates, set by the Federal Reserve (Fed), also influences the S&P 500 as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.

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