U.S. stocks are ticking higher Wednesday, led by Netflix as customers keep signing up to watch its streaming service. The S&P 500 was up 0.7% in afternoon trading and on track to set a record for a fourth straight day. The Dow Jones Industrial Average was up 90 points, or 0.2%, and the Nasdaq composite was 1.1% higher.
Quick Read
- U.S. Stock Market Gains: The U.S. stock market is experiencing an uptick, with the S&P 500 up by 0.7%, the Dow Jones Industrial Average increasing by 0.2%, and the Nasdaq composite rising by 1.1%.
- Boost from Netflix and ASML: Netflix’s stock surged 12.4% following a report of higher-than-expected subscriber growth, overshadowing its profit shortfall. ASML, a key player in the semiconductor industry, also saw a 10.8% jump in its U.S.-listed stock after reporting strong profit and revenue.
- Global Market Response to Chinese Economic Measures: Global stocks, including Hong Kong’s Hang Seng index, rallied in response to China’s announcement of measures to stimulate its economy.
- Investor Sentiment on Interest Rates: The recent record gains in stocks are partly driven by expectations that the Federal Reserve might cut interest rates multiple times this year, influenced by cooling inflation.
- Federal Reserve Rate Cut Speculation: Wall Street is speculating on the timing and extent of potential Fed rate cuts, with recent economic reports suggesting less likelihood of aggressive rate cuts.
- Economic Reports Indicating Strength and Slowing Inflation: A preliminary report indicated accelerated business output and a slowdown in the rate of price increases by businesses, hinting at resilient economic growth and diminishing inflation.
- Treasury Yields: The yield on the 10-year Treasury remained steady at 4.14%, while the two-year Treasury yield slightly decreased.
- Upcoming Economic Reports: Reports due later in the week on GDP growth and the Fed’s preferred inflation measure could further influence market expectations.
- Federal Reserve’s Next Moves: The market is not expecting a rate cut at the Fed’s meeting next week, but there’s a significant probability of a cut in March.
- Impact of Earnings Reports: Company earnings reports are causing notable market movements. Elevance Health, Kimberly-Clark, and DuPont reported varying results, influencing their stock prices.
- Chinese Stock Market Reaction: The Chinese stock market responded positively to the government’s stimulus measures but remains down for the year.
- Global Stock Performance: European stocks generally rose, while Tokyo’s stock market experienced a slight dip.
The Associated Press has the story:
Netflix and other tech stocks pull Wall Street higher, Nasdaq up 1.1%
Newslooks- NEW YORK- (AP)
U.S. stocks are ticking higher Wednesday, led by Netflix as customers keep signing up to watch its streaming service. The S&P 500 was up 0.7% in afternoon trading and on track to set a record for a fourth straight day. The Dow Jones Industrial Average was up 90 points, or 0.2%, and the Nasdaq composite was 1.1% higher.
They joined a worldwide lift for stocks after Chinese authorities announced measures to boost what’s been a disappointingly weak recovery for the world’s second-largest economy. Hong Kong’s Hang Seng index jumped 3.6% to trim its loss for the month to date to less than 7%.
On Wall Street, Netflix leaped 12.4% after it said it added many more subscribers during the last three months of 2023 than analysts expected. That took precedence for investors over the company’s profit, which fell short of analysts’ forecasts.
Also helping to bolster tech stocks was ASML, the Dutch company that’s a major supplier to the semiconductor industry. It reported stronger profit and revenue than analysts expected, and its U.S.-listed stock jumped 10.8%.
Stocks have broadly rocketed to records recently on hopes that cooling inflation will convince the Federal Reserve to cut interest rates several times this year. Treasury yields have already come down considerably on such expectations, which can relax the pressure on the economy and financial system.
The only question on Wall Street is when the Fed would begin cutting rates and how deeply it would go. Traders have recently been trimming their bets following stronger-than-expected reports on the economy, which keep worries about a recession at bay but could also add upward pressure on inflation.
The latest signal of economic strength arrived Wednesday morning, when a preliminary report suggested growth in output for businesses accelerated to a seven-month high. Perhaps more importantly for Fed officials, the flash report from S&P Global also said that prices charged by businesses rose at the slowest rate since May 2020.
The report did include some negative signals, such as delays in deliveries of supplies because of bad weather, “but for now the survey send a clear and welcome message of resilient economic growth and sharply waning inflation,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
Treasury yields in the bond market pared earlier losses following the report. The yield on the 10-year Treasury held steady at 4.14% from late Tuesday. The two-year Treasury yield, which moves more on expectations for the Fed, fell to 4.35% from 4.38%.
Economic reports coming later in the week could further sway expectations for rate cuts this year. On Thursday, the government will give its first estimate for how quickly the economy grew during the end of 2023. A day later, it will give the latest monthly update on the measure of inflation that the Federal Reserve prefers to use.
Virtually no one expects the Fed to cut rates at its meeting next week, but traders are still betting on a 41.5% probability that it will move in March, according to data from CME Group.
Until then, earnings reports from companies are causing some of the biggest moves in the market.
Elevance Health climbed 1.3% after it reported profit and revenue for the latest quarter that squeaked past analysts’ expectations. Kimberly-Clark fell 4.7% after the maker of Huggies and Kleenex reported weaker profit and revenue than expected. DuPont tumbled 12.8 after it gave forecasts for upcoming revenue and profit that fell well short of analysts’ estimates. It said it’s continuing to see weak demand form China, among other challenges.
China’s stock market has been one of the world’s worst recently on worries about its economy, which has raised pressure on Chinese authorities to make moves to stimulate the economy. Stocks climbed 1.8% in Shanghai following China’s move to free up cash held by banks. They’re still down 5.2% for the year so far.
Stocks also rose across much of Europe but dipped in Tokyo.
