Wall Street experienced a late surge in buying on Wednesday, resulting in mostly higher stock prices. The S&P 500 increased by 0.1 percent to reach 4,981.80, and the Dow Jones Industrial Average rose by 0.1 percent to 38,612.24. However, the technology-heavy Nasdaq composite fell by 0.3 percent to 15,580.87.
The focus of Wall Street remained on earnings reports, with chipmaker Nvidia reporting earnings and revenue that exceeded expectations. This led to a significant increase in investor enthusiasm over artificial intelligence and a tripled stock value for Nvidia over the past year.
On the other hand, Palo Alto Networks experienced a significant loss, sinking 28.4 percent, and negatively impacting the tech sector. The network security company provided forecasts for future billings that were well below analysts’ expectations. Rival company Fortinet also slumped by 3.8 percent.
One notable development was Amazon’s announcement that it would be added to the Dow, resulting in a 0.9 percent increase in its stock price. Conversely, Walgreens Boots Alliance, which is leaving the Dow, saw a 2.5 percent decrease in its stock price.
Bond yields saw an increase, with the yield on the 10-year Treasury rising from 4.28 percent to 4.33 percent. The rally in the stock market, particularly driven by technology stocks, has raised concerns about whether the gains were overdone and if the sector’s contributions are sustainable.
Several companies experienced significant movements following the release of their financial results. Keysight Technologies, an electronic measurement technology company, saw a 6.7 percent decrease in its stock price due to a profit forecast that fell short of analysts’ expectations. In contrast, Garmin, a personal navigation devices manufacturer, jumped by 8.8 percent after beating earnings forecasts.
The homebuilding sector also experienced gains, supported by a 3.9 percent increase in Toll Brothers’ stock price following an encouraging financial update and strong demand. Energy companies, such as Exxon Mobil, also gained ground as natural gas prices soared by 12.5 percent.
The Federal Reserve released minutes from its latest meeting, revealing that most officials are concerned about moving too fast to cut their benchmark interest rate. Investors have shifted their expectations for rate cuts from March to June and are eagerly awaiting the government’s monthly report on personal consumption and expenses next week, which will provide updates on inflation.
Analysts anticipate that the report will show inflation cooling to 2.3 percent in January, down from its peak of 7.1 percent in June 2022. The Federal Reserve’s goal is to tame inflation back to 2 percent. As long as the labor market remains strong, the Fed can afford to take a gradual approach to rate cuts.
However, separate measures for consumer and wholesale prices in January indicate that inflation did not cool as much as anticipated, leading to concerns about stubborn inflation causing more strain on consumers and potentially impacting businesses in 2024.
Overall, the late surge in buying on Wall Street pushed stock prices mostly higher. While technology stocks continue to drive the market’s rally, concerns are arising about the sustainability of their contributions. Investors eagerly await updates on inflation and the Fed’s approach to interest rates in the coming months.
