U.S. stock indexes were hovering near session highs in the final hour of trading on Thursday, on the heels of Wall Street’s worst two-day decline since October, as investors awaited earnings reports from three megacap technology companies after the closing bell: Apple Inc., Amazon.com and Meta Platforms.
How are stocks trading
-
The S&P 500
SPX
was rising 57 points, or 1.2%, to 4,903. -
The Dow Jones Industrial Average
DJIA
was adding 340 points, or 0.9%, to 38,487. -
The Nasdaq Composite
COMP
was gaining 200 points, or 1.3%, to 15,364.
The S&P 500 fell 1.7% over the last two trading days. That was the biggest two-day percentage point decline since Oct. 27, according to Dow Jones Market Data.
What’s driving markets
U.S. stocks Thursday were shrugging off weakness from earlier this week as investors continued to react to comments made by Fed Chair Jerome Powell during Wednesday’s press conference and awaited more Big Tech earnings due out after the market closes.
Both factors are likely to continue driving sentiment for the rest of the week, along with economic data on the labor market.
Investors expressed disappointment after Powell said on Wednesday that a rate cut in March was “not the most likely case or the base case,” but traders in the federal-funds-futures market still foresaw as many as six quarter-point rate cuts by December, according to the CME FedWatch Tool.
“The market is front-running the Fed,” said Dave Daglio, chief investment officer of TwinFocus. “While the Fed’s comments appear hawkish, the market’s reaction longer-term is dovish,” Daglio told MarketWatch via phone, adding that the market saw Powell’s comments further increasing the probability of rate cuts, although policy makers are unlikely to start easing monetary policy at their March meeting.
Traders were also keeping a wary eye on the regional-banking sector after shares in New York Community Bancorp
NYCB,
continued to plunge as the lender highlighted difficulties in commercial real estate. The SPDR S&P Regional Banking exchange-traded fund
KRE
was slumping 2.7% on Thursday, bringing its year-to-date decline to nearly 8%, according to FactSet data.
Richard Farr, chief market strategist at Merion Capital Group, said these incidents could be a sign that issues with regional banks are re-emerging after the Fed announced the end of the bank term funding program that it put in place following the collapse of Silicon Valley Bank and two other U.S. lenders last spring.
“For basically a year, the Fed has been masking problems at the banks. Meanwhile, deposits at small commercial banks are still down, so it brings about the question of how healthy is the banking system, particularly smaller banks,” Farr said during an interview with MarketWatch.
Soon, investors will digest earnings from three more of the Big Tech stocks that have driven most of the S&P 500’s advance over the past year. Apple
AAPL,
Meta
META,
and Amazon.com
AMZN,
will announce their results after Thursday’s close.
Apple earnings: Don’t focus on iPhone sales. Instead, watch this metric.
In U.S. economic data, jobless-claims data showed the number of Americans who applied for unemployment at the end of January rose to a nearly three-month high of 224,000, possibly a sign of some softening in what’s been an incredibly strong labor market.
Investors also received the the final reading of the S&P manufacturing PMI survey for January, which came in at 50.7, up from 47.9 in December and higher than previously estimated. It marked the strongest improvement in the sector’s performance since September 2022.
Meanwhile, a closely watched index that measures U.S. manufacturing activity rose to 49.1% in January from 47.1% in the prior month, according to the Institute for Supply Management on Thursday. That is the highest level since October.
See: Jobs report forecast to show 185,000 workers hired. But beware the January effect.
On Friday, investors will receive the Labor Department’s nonfarm-payrolls report for January, seen as a marquee economic report.
Companies in focus
-
Peloton Interactive Inc. shares
PTON,
-23.92%
fell 23.3% on Thursday after the company’s outlook implied more challenges ahead for the one-time pandemic darling. -
Honeywell International Inc. shares
HON,
-2.80%
were off 2.8% despite the company reporting earnings in line with Wall Street’s expectations. -
Merck & Co.
MRK,
+4.40%
saw its shares climb 4.2% after reporting strong earnings, powered by growth in its cancer and vaccine products. -
Plug Power Inc. shares
PLUG,
+5.73%
jumped 4.7% Thursday after the company said it reached a milestone at its recently opened plant.
Jamie Chisholm contributed.
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