S&P 500 (SPY) Report – 02/08/24

Good morning, traders!

The S&P 500 ($SPY) is trading above yesterday’s close. Let’s get into it…

US stocks experienced a notable rise on Wednesday, buoyed by the influx of quarterly earnings reports and ongoing discussions regarding the timing of interest rate cuts. The Dow Jones Industrial Average increased by 0.4%, while the S&P 500 and Nasdaq Composite saw gains of over 0.8% and nearly 1%, respectively. The S&P 500 reached a new record high, closing at 4,995 and approaching the 5,000 milestone for the first time. This surge reflects investor optimism as approximately two-thirds of S&P 500 companies have reported earnings that, on average, surpassed Wall Street expectations, despite some areas showing weakness.

Significant movements were observed in individual stocks following their earnings announcements. Alibaba’s shares dropped over 5% after reporting revenue that fell short of expectations, although it plans to increase its share buybacks by $25 billion. Snap’s shares plummeted more than 34% due to a disappointing profit forecast for the current quarter. In contrast, Disney’s shares climbed more than 6% in after-hours trading following an announcement of a 50% dividend increase and better-than-expected fiscal first-quarter earnings, alongside reduced streaming losses.

On the monetary policy front, Federal Reserve officials emphasized that interest rate cuts are unlikely in March. Boston Fed President Susan Collins suggested that rate reductions could occur later in the year, contingent upon further evidence of inflation easing. Concurrently, the financial stability of regional banks and the real estate sector drew attention, with Moody’s downgrading New York Community Bancorp’s credit rating to junk amid governance risk concerns, despite the bank’s shares recovering slightly on Wednesday.

Looking forward, stock futures indicated a mixed opening for Thursday, with the S&P 500 near the significant 5,000 level. Disney and Arm Holdings stood out with pre-market gains following their positive earnings reports. Meanwhile, the broader market remains influenced by expectations of disinflation, a dovish shift in monetary policy, and resilient earnings. Economic indicators such as a slight decrease in unemployment claims further underscore the market’s strength, highlighting ongoing employer reluctance to reduce their workforce amidst a robust economy.

Thursday Economic Events:
Jobless Claims 8:30am ET – High Volatility Expected
Wholesale Inventories 10:00am ET
EIA Natural Gas Report 10:30am ET
30-Yr Bond Auction 1:00pm ET

Fed Speaker Scheduled:
Thomas Barkin 11:30am ET

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