February 26, 2024

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S&P 500 rises to new high while earnings drag on Dow Jones

S&P 500 rises to new high while earnings drag on Dow Jones

The S&P 500 (^GSPC) extended its record surge as focus turned to today's earnings stream for insights into the health of US companies and the economy.

The S&P 500 rose nearly 0.3% to a new closing high of 4,864.61. The Nasdaq Composite (^IXIC) was also higher on Tuesday, rising 0.4% while the Dow Jones Industrial Average (^DJI) fell about 0.2% after the blue-chip index surpassed 38,000 for the first time on Monday.

After the technology-driven rally pushed the market to new highs, earnings in other sectors served as the main market mover on Tuesday.

Earnings disappointment weighed on the Dow Jones as 3M (MMM) fell more than 10% on Tuesday after the company's 2024 earnings forecast fell short of Wall Street expectations.

Consumer goods (XLP) and communications services (XLC) were the biggest gainers in the S&P 500, with commodities rising more than 1% as investors digested quarterly results from Procter & Gamble (PG) and Verizon (VZ), among others.

Read more: What a pause on federal interest rate hikes means for bank accounts, CDs, loans and credit cards

Elsewhere on the earnings front, an upbeat 2024 earnings outlook from United Airlines (UAL) helped lift its shares 5% on Tuesday. Other airline stocks, including Delta (DAL) and American Airlines (AAL), rose on the forecast, which came even as United warned of damage from the grounding of its Boeing 737 MAX 9 planes.

Netflix (NFLX) is also in focus, as the streaming giant reports earnings after the bell. Company on Tuesday Announce a deal With TKO Group's WWE (TKO) bringing WWE's flagship show, Raw, to the streaming service, starting in January 2025. TKO shares rose nearly 15% on the news.

He lives9 updates

  • The S&P 500 hits a new high

    The S&P 500 (^GSPC) extended its record surge as focus turned to today's earnings stream for insights into the health of US companies and the economy.

    The S&P 500 rose nearly 0.3% to a new closing high of 4,864.61. The Nasdaq Composite (^IXIC) was also higher on Tuesday, rising 0.4% while the Dow Jones Industrial Average (^DJI) fell about 0.2% after the blue-chip index surpassed 38,000 for the first time on Monday.

  • Can you smell…what's the plate cooking?

    News early Tuesday that Netflix (NFLX) and TKO Group (TKO), which owns WWE, would team up to bring Raw to the streaming service, attracted the most headlines and sent TKO shares soaring more than 16%.

    But another release this morning saw TKO change its board of directors and add one of the biggest stars of the era to its managerial ranks.

    Dwayne “The Rock” Johnson has been added to TKO’s board of directors, effective today, in a deal that will also see Johnson take ownership of the “The Rock” brand.

    “I am very excited to help continue expanding our TKO, WWE and UFC businesses globally as global leaders in sports and entertainment, while proudly representing the many outstanding athletes and performers who emerge every day,” Johnson said in a statement. “Today they are putting the hard work into their hands to realize their dreams and present them to our audience. I was there, I am still there, and this is for them.”

    in SEC filingTKO also revealed that as part of the licensing deal with Johnson, The Rock will be given $30 million worth of company stock.

    TKO too Announce Brad Kewell, co-founder of Groupon, will join its board of directors.

  • Not all stocks are expensive, with stocks at market highs

    Major stock market indexes have reached market highs, and many Wall Street strategists have pointed out that the S&P 500 (^GSPC) trading at more than 21 times forward earnings is a historically high stock market valuation.

    But new analysis by the UBS team on Tuesday shows that not everything is so expensive right now.

    Strategist Patrick Palfrey highlighted that 77% of companies listed on the S&P 500 index are trading at a discount to their levels in January 2022 (the previous market high). Of these companies, 55% currently have a lower price-to-earnings ratio than they did at the previous market peak.

    Now, while one could see this as a buying opportunity in stocks that do not return to 2021 levels, it does come with an important caveat. Analysis by Bespoke Investment Group last Friday showed that 75% of the S&P 500's gains this year were driven by Microsoft (MSFT) and Nvidia (NVDA).

    Both of these stocks are trading near all-time highs at higher valuations than in January 2021.

  • Staples, communications services drive market movement

    After the rise in technology pushed the market to new highs, profits in other sectors became the main market driver on Tuesday.

    Consumer goods (XLP) and communications services (XLC) were the biggest gainers in the S&P 500 (^GSPC), rising more than 0.5%, in afternoon trading as investors digested quarterly results from Proctor & Gamble (PG) and Verizon (VZ). , among other things.

    Overall, the Dow Jones Industrial Average (^DJI) fell about 0.5% after the blue-chip index surpassed 38,000 for the first time on Monday. Both the S&P 500 and the tech-heavy Nasdaq Composite (^IXIC) fell just below the flat line.

  • Dr. Horton is weighing on homebuilder stocks amid jitters over rising interest rates and stimulus

    Homebuilder stocks have been one of the brightest spots in the market's rise, but Tuesday's news shows the sector remains sensitive to interest rates and their impact on the housing market.

    DR Horton (DHI) shares fell 9% at midday Tuesday after the homebuilder reported weaker-than-expected quarterly orders and reported first-quarter earnings per share that beat analysts' estimates. Investor reaction also sent the SPDR S&P Homebuilders ETF (XHB) down as much as 3%.

    Both XHB and DR Horton closed at record levels on Monday.

    Specifically, D.R. Horton said in his call with analysts that he would be cautious in making changes to his franchise strategy — which consists of subprime rate buyouts that hurt margins but make homes more affordable for buyers — if mortgage rates stop falling. .

    “The use of these price buys is not new to us over the past 12 months,” CEO Paul Romanowski said on Tuesday. “We've been using this incentive for over 24 months. So I think that on a going forward basis, we'll still be able to compete not only in the new local market, but particularly in the resale market for us, being able to get a lower monthly return,” he said. The cost of the house is beneficial. “So we have no near-term plan to stop using it even if we see prices fall.”

    This comment differs from the one made by KB Home (KBH) earlier this month, which hinted at a decline in incentives for the first quarter of this year.

    Mortgage rates fell to a seven-month low last week of 6.6%, down from 6.66% a year earlier and 7% in September.

    But long-term interest rates, which fuel mortgage rates, have risen recently as investors become less optimistic about the Federal Reserve's interest rate cuts starting in March.

    Despite the weaker reading from DR Horton, new construction was a major source of housing inventory boost as supply in the resale market fell to its worst level in decades last year. In response, homebuilders across the country have launched attractive incentives to generate interest from buyers and cushion the shock from rising interest rates and home prices.

  • Oil futures fluctuate as Libya resumes production, and cold temperatures affect US production

    Oil futures fluctuated on Tuesday after Libya resumed production at its largest oil field while low temperatures in North Dakota continued to impact production.

    WTI (CL=F) fell as much as 1% before recovering, trading near $75 per barrel by midday. Brent crude futures also fell but pared losses to more than $80 a barrel after rising about 2% in the previous session.

    Libya's oil production has returned to 1.2 million barrels per day after a three-week hiatus due to protests.

    Meanwhile, a recent cold snap that hit the United States shut down production of nearly 200,000 barrels of crude oil per day in North Dakota.

    “However, unless we see an escalation in tensions in the Red Sea that actually limits oil sales, the upside for crude oil prices appears limited,” Dennis Kessler, senior vice president at Korea Bank Financial, said on Tuesday.

    Read more here.

  • Netflix hosts WWE's Raw in live sports entertainment

    Netflix (NFLX) and TKO Group Holdings WWE (TKO) Announced a new partnership Early Tuesday, WWE's flagship show will bring Raw to the streaming service, starting in January 2025.

    The 10-year deal marks Netflix's first major venture into the world of live sports entertainment while Raw will leave linear television for the first time since its inception 31 years ago. The show currently airs on NBCUniversal's USA Network and attracts 17.5 million unique viewers annually, according to the companies.

    The financial terms of the deal were not disclosed. Multiple reports He said that the value of the agreement exceeds $5 billion.

    Shares of TKO, which also serves as the parent company of the UFC, rose more than 20% in early market trading. Netflix shares were trading flat at the open after jumping nearly 2% in pre-market trading.

    Steve Cahall, an analyst at Wells Fargo, called the move “the next logical step” in a reaction note to clients.

    “It adds to NFLX's ability to continue to look for growth beyond paid engagement as new content = more ads and/or more subscriptions,” he said. “We believe NFLX's No. 1 focus is increasing ad volume because they need the reach and frequency to reserve a seat at the top table with U.S. ad buyers.”

    However, the analyst noted that WWE is not quite the same as major sports rights given the financial gap between the two entities, which is approximately $500 million annually. “The inevitable question is when will NFLX get into live sports? But we believe that is still years away,” he said.

    The news comes in the name of TKO Also announced Dwayne “The Rock” Johnson to its board of directors. Meanwhile, Netflix is ​​scheduled to report its quarterly earnings after the bell on Tuesday.

    Read more here.

  • Stocks move after earnings

    Earnings led the market action on Tuesday morning, as results from several companies disappointed Wall Street analysts and sent the Dow Jones Industrial Average (^DJI) lower.

    3M (3M) fell nearly 10% on Tuesday as the company's 2024 earnings forecast fell short of Wall Street expectations.

    General Electric (GE) beat earnings expectations for the previous quarter, but its shares fell about 2% in morning trading after its earnings expectations for the current quarter came in lower than analysts expected.

    Shares of Johnson & Johnson (JNJ) fell more than 2% as the company indicated it is in “progress” to reaching a settlement with 43 state attorneys general to resolve claims related to Johnson & Johnson's marketing of its talc product. The Wall Street Journal reported that Johnson & Johnson will pay $700 million to settle the investigation.

    Verizon (VZ) had a different earnings story as shares rose nearly 5% in morning trading. The wireless carrier added 449,000 additions to its postpaid phone network, well above Wall Street estimates of 232,000 additions.

  • Mixed open stocks

    US stocks paused amid a record rally as focus turned to today's earnings stream for insight into the health of US companies and the economy.

    The Dow Jones Industrial Average (^DJI) fell about 0.1% after the leading index surpassed 38,000 for the first time on Monday. The S&P 500 (^GSPC) rose 0.1% to settle near a record closing high, while the tech-heavy Nasdaq Composite (^IXIC) also rose.

    Major Dow Jones components 3M and Johnson & Johnson weighed on the major average as stocks fell after quarterly earnings reports.

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