US close: Both Dow and S&P 500 reach new highs as earnings impress

dl wall street wall st new york city nyc ney york stock exchange nyse nasdaq dow jones industrial average djia trading us usa united states of america 2023120702241 — Sharecast graphic / Josh White

Both the Dow and S&P 500 finished at all-time closing highs on Wednesday on the back of a batch of strong corporate earnings.

The Dow finished 0.4% higher at a new closing record of 38,677.36, while the S&P 500 jumped 0.8% to a new peak of 4,995.06. The Nasdaq meanwhile rose nearly 1% to 15,756.44 as it continues to inch closer to its all-time closing high of 16,057.44 reached in November 2021.

So far this year, Wall Street's three main equity indices have risen 2.55%, 5.32% and 6.71%, respectively, as earnings season has been broadly well-received by the market.

"Even as US yields backed up a touch, notably, the S&P 500 approached the 5,000 mark for the first time, hinting at mega-cap tech's de-coupling from bond yields but supported by an upbeat macro story, where the economy continues to operate at an above-trend pace with no material signs of falling below trend in the near-term," said Stephen Innes, managing partner at SPI Asset Management.

"Indeed, higher rates don't appear to burden consumers or corporations significantly, enabling the Fed to wait longer to ensure inflation control without disrupting the stock market's momentum amid robust US growth dynamics."

Nevertheless, investors continued to digest incoming comments from members of the Federal Reserve on Wednesday as the central bank grapples with questions surrounding the outlook for monetary policy – specifically around the timing of the first interest-rate cut.

Fed governor Adriana Kugler said she is optimistic that inflation will continue to fall and that it would be "appropriate" to cut rates if inflation returns to the bank's 2% target, but noted that stronger consumer spending on the back of a tight labour market could hinder these plans.

Meanwhile, Richmond Fed president Tom Barkin reiterated what many Fed members have said in recent days that policymakers should not rush into an early rate-cut decision, saying he's "very supportive" of a patient approach. “In all honesty, my forecast is uncertain," he said.

On the macro front, US mortgage applications rose by 3.7% in the week ended 2 February, according to the Mortgage Bankers Association of America, trimming the 7.2% slump seen in the previous week and the fourth increase in the first five weeks of the year. Applications to refinance a home soared by 12.6%, while applications to purchase a new home slipped 0.6%.

CVS, Ford and Emerson Electric rise

CVS Health delivered fourth-quarter results that comfortable beat analysts' projections, causing shares to rise over 3%. The healthcare and pharmacy store group however did cut its full-year profit guidance due to higher medical costs.

Emerson Electric was in demand after guiding to 2024 profits ahead of market estimates after first-quarter revenues jumped 22%, causing shares in the industrial manufacturer up 10%.

Automaker Ford finished with decent gains beat consensus forecasts comfortably with its quarterly sales, and announced plans to launch a new, smaller electric car to rival Tesla's Model 2.

Ride-hailing and food delivery behemoth Uber Technologies edged higher after reporting a 15% improvement in fourth-quarter revenue to $9.9bn, beating market expectations for revenue of $9.8bn. Gross bookings were also up 22% on the year, coming in at $37.6bn, beating the expectations reported by FactSet for a figure of $37.1bn.

Vans and North Face owner VF Corp was the notable faller of the day, dropping 9% after missing profit forecasts for its third quarter and revealing a "strategic review" regarding a possible divestment from its portfolio.

Dow Jones - Risers

Home Depot Inc. (HD) $363.03 1.90%
Microsoft Corp. (MSFT) $413.05 1.86%
Boeing Co. (BA) $212.30 1.78%
Unitedhealth Group Inc. (UNH) $518.20 1.47%
American Express Co. (AXP) $208.66 1.46%
Salesforce.Com Inc. (CRM) $289.33 1.22%
Nike Inc. (NKE) $103.84 1.20%
McDonald's Corp. (MCD) $287.17 0.89%
Visa Inc. (V) $279.04 0.82%
Caterpillar Inc. (CAT) $325.08 0.73%