Stocks on Wall Street managed to hold on to modest gains on Friday, adding another record high to the market and closing out a winning week.
Despite a lackluster day for stocks overall, the market saw a mostly positive week of earnings, with the technology sector once again driving the market’s upward momentum. This sector has been a key force behind the market’s rally since October.
The S&P 500 index edged up by 1.77 points, or less than 0.1%, to reach 5,088.80, setting yet another record high for the benchmark index and marking its sixth winning week in the last seven.
The Dow Jones industrial average gained 62.42 points, or 0.2%, closing at 39,131.53, while the Nasdaq composite slipped 44.80 points, or 0.3%, to 15,996.82.
Some weakness in the technology sector weighed on the market, reversing the trend from Thursday. Apple saw a 1% decline, while Nvidia managed a slight gain of 0.4% after reaching a milestone of a $2-trillion valuation earlier in the day. Nvidia had surged on Thursday after reporting strong demand for its semiconductors, crucial for powering AI applications.
The market was also held back by a pullback in travel-related companies. Booking Holdings experienced a sharp decline of 10.1%, dragging down other companies in the travel sector. While the online travel service beat Wall Street’s sales and profit targets for the fourth quarter, its lukewarm forecast for the future unsettled investors. Competitor Expedia Group also fell, dropping 2%.
“Despite political uncertainty, elevated valuations, and Fed uncertainty, investors remain optimistic, contributing to the market’s momentum,” noted Mark Hackett, Chief of Investment Research at Nationwide.
Earnings continued to drive market sentiment. Live Nation, a ticket seller and concert promoter, saw a 2% increase after surpassing revenue forecasts. Sleep Number, specializing in beds and bedding products, surged 33% following its positive revenue performance, outperforming Wall Street’s expectations.
However, Warner Bros. Discovery faced a setback, dropping 9.9% after reporting a larger-than-expected loss.
Intuitive Machines, known for executing the first U.S. lunar landing in over 50 years, experienced a significant surge of 15.8%, despite not reporting earnings.
Energy stocks faced downward pressure as both oil and natural gas prices declined. U.S. crude oil prices fell by 2.7%, while natural gas prices dropped by 7.4%.
Meanwhile, Treasury yields saw a decline, with the yield on the 10-year Treasury slipping to 4.26% from 4.33% late Thursday.
In Europe and Asia, most markets saw gains, with Tokyo’s markets closed for a holiday following a surge to an all-time high.
Investors are gearing up for another round of significant earnings reports next week, aiming to gauge the direction of the economy. Companies like Lowe’s, Dollar Tree, HP, and Best Buy are scheduled to release their results.
According to analysts surveyed by FactSet, S&P 500 companies are expected to report average earnings growth of just under 4% for the fourth quarter, with approximately 90% of index companies having already reported. Projections for the current quarter indicate earnings growth of 3.6%.
The upcoming economic data releases will provide further insights into consumer sentiment and inflation trends. The Conference Board will publish its consumer confidence survey for February, while the government will offer updates on fourth-quarter gross domestic product (GDP).
Of particular interest is the government’s January report on personal consumption and expenditures, which serves as the Federal Reserve’s preferred measure of inflation. Expectations are for inflation to moderate to 2.4%, down from its peak of 7.1% in June 2022.
Amid efforts by the Fed to bring inflation back to its 2% target, recent data on consumer and wholesale prices came in higher than anticipated, prompting adjustments in expectations for the central bank’s interest rate policy. Traders are now looking towards a potential rate cut in June, shifting from earlier expectations of a March adjustment.