US close: Dow falls but S&P 500 hits another record

dl wall street wall st new york city new york stock exchange nyse dow jones nasdaq street sign nyc united states usa america pb — Sharecast / Alessandro D Andrea via Pixabay

Stocks finished mixed on Wednesday with the Dow slipping into the red by the close, but the S&P 500 notching its fourth straight record close, helped by strong earnings from Netflix and Freeport-McMoRan, along with improving service-sector data.

After starting out strongly, the Dow fell 0.26% by the closing bell, pulling back for the second consecutive session after hitting an all-time high earlier in the week. However, the S&P 500 edged 0.8% higher to another all-time high of 4,868.55, the Nasdaq gained 0.36%, with the Nasdaq 100 setting a fresh record.

"US markets have continued their positive momentum, opening at new record highs for both the Nasdaq 100 and S&P 500, fuelled by optimism over the latest earnings numbers after Netflix comfortably beat expectations on its Q4 earnings numbers," said analyst Michael Hewson from CMC Markets.

Sentiment on Wall Street was also helped by a much stronger-than-forecast reading from the S&P Global US services PMI which grew to its highest level in seven months. The PMI rose to 52.9 in January from 51.4 in December, beating the 51.0 consensus estimate.

Elsewhere markets across Asia and Europe were broadly higher on Wednesday after China's central bank said it would cut the amount of cash lenders must hold in the latest move designed to bolster the country’s ailing economy. That followed Tuesday's news that Beijing is considering a £220bn rescue package for Chinese stock markets, which have struggled compared to other benchmarks worldwide.

In other news, the Bank of Canada kept interest rates at 5%, as largely expected, and reiterated expectations of a soft landing and for inflation to come back down to its 2% target by late 2025.

Netflix tops the risers

Netflix, which published its quarterly results after the bell on Tuesday, was up 11% as the streaming giant reported that subscriber numbers increased by 13.1m in the fourth quarter to 260.3m, as revenue growth of 12.5% year-on-year beat analysts' forecasts.

Miner Freeport-McMoRan jumped 4% after the fourth-quarter year-on-year decline in earnings wasn’t as bad as feared: EPS fell to 27 cents from 48 cents a year earlier, better than the 23 cents forecast. Sales were up 2.6% at $5.91bn, also higher than expected, due to rising copper demand and higher gold prices.

Telecoms group AT&T fell 3% despite beating forecasts with its full-year results, as it guided to weaker-than-expected earnings for 2024 due to higher depreciation charges. Abbott Laboratories also failed to impress the market with shares slipping 3% after issuing underwhelming guidance.

Microsoft rose 1% with its market cap briefly surpassing the $3trn mark for the first time in history.

Meanwhile, Tesla, IBM and Lam Research were all in focus with their earnings scheduled after the closing bell. Tesla is the first to report from the so-called Magnificent Seven tech stocks, "which carry a huge amount of weight on their backs and the excitement around the future profitability of AI advances have helped them deliver many an expectation beating earnings update", said Danni Hewson, head of financial analysis at AJ Bell.

Dow Jones - Risers

Chevron Corp. (CVX) $144.92 1.99%
Boeing Co. (BA) $214.16 1.26%
Microsoft Corp. (MSFT) $402.70 0.95%
JP Morgan Chase & Co. (JPM) $170.52 0.91%
Caterpillar Inc. (CAT) $290.58 0.61%
Intel Corp. (INTC) $49.09 0.41%
American Express Co. (AXP) $185.82 0.19%
Visa Inc. (V) $271.63 0.13%
McDonald's Corp. (MCD) $300.42 0.12%
International Business Machines Corporation (CDI) (IBM) $173.98 0.02%