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U.S. stock markets higher on Tuesday after a sharp fall on Monday. Market participants were assessing strong earnings results and uncertainty regarding Fed rate cut. All three major stock indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) was up 0.4% or 141.24 points to close at 38,521.36. Notably, 22 components of the 30-stock index ended in positive territory and 8 ended in negative zone. The tech-heavy Nasdaq Composite finished at 15,609, rising 0.1% due to good performance by corporate bigwigs.
The S&P 500 gain 0.2% to finish at 4,954.23. Nine out of 11 broad sectors of the broad-market index ended in positive territory while two in negative zone. The Health Care Select Sector SPDR (XLV), the Consumer Discretionary Select Sector SPDR (XLY), the Materials Select Sector SPDR (XLB), the Industrials Select Sector SPDR (XLI) and the Real Estate Select Sector SPDR (XLRE) advanced 1.1%, 0.6%, 21.8%, 0.9% and 1.5%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 4.5% to 13.1. A total of 11.21 billion shares were traded on Tuesday, lower than the last 20-session average of 11.54 billion. Advancers outnumbered decliners on the NYSE by a 2.6-to-1 ratio. On Nasdaq, a 1.8-to-1 ratio favored advancing issues.
Strong Earnings Results
Simon Property Group Inc.’s (SPG - Free Report) fourth-quarter 2023 funds from operations (FFO) per share of $3.69 surpassed the Zacks Consensus Estimate of $3.34. Revenues of $1.53 billion outpaced the Zacks Consensus Estimate of $1.46 billion.
Xylem Inc.’s (XYL - Free Report) fourth-quarter 2023 adjusted earnings of $0.99 per share surpassed the Zacks Consensus Estimate of $0.96. Xylem’s revenues of $2.12 billion outperformed the Zacks Consensus Estimate of $2.06 billion. The top line jumped 41% year over year, driven by strong commercial and operational execution and resilient demand. Organic sales in the quarter rose 9%.
GE HealthCare Technologies Inc. (GEHC - Free Report) reported fourth-quarter 2023 adjusted earnings per share of $1.18, which beat the Zacks Consensus Estimate of $1.07 by 10.3%. The company reported revenues of $5.2 billion. The top line also beat the Zacks Consensus Estimate by 2.2%.
On Jan 31, in his post-FOMC meeting statement, “Based on the meeting today, I would tell you that I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting to identify March as the time to do that (first rate cut). But that’s to be seen.”
On Feb 4, in an interview with the CBS, Powell once again reiterate that the central bank is in no hurry to initiate first cut in interest rate in March. He said the "danger of moving too soon is the job's not quite done" to combat inflation. Powell also hinted that the number of rate cuts may be less than expected this year.
On Feb 5, Cleveland Federal Reserve President Loretta Mester said that she is yet to be convinced to start easing policy until she gains more confidence that inflation is on a stable path towards the Fed’s 2% target level.
According to Mester, “If the economy evolves as expected, I think we will gain that confidence later this year, and then we can begin moving rates down. My base case is that we will do so at a gradual pace so that we can continue to manage the risks to both sides of our mandate.”
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Stock Market News for Feb 7, 2024
U.S. stock markets higher on Tuesday after a sharp fall on Monday. Market participants were assessing strong earnings results and uncertainty regarding Fed rate cut. All three major stock indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) was up 0.4% or 141.24 points to close at 38,521.36. Notably, 22 components of the 30-stock index ended in positive territory and 8 ended in negative zone. The tech-heavy Nasdaq Composite finished at 15,609, rising 0.1% due to good performance by corporate bigwigs.
The S&P 500 gain 0.2% to finish at 4,954.23. Nine out of 11 broad sectors of the broad-market index ended in positive territory while two in negative zone. The Health Care Select Sector SPDR (XLV), the Consumer Discretionary Select Sector SPDR (XLY), the Materials Select Sector SPDR (XLB), the Industrials Select Sector SPDR (XLI) and the Real Estate Select Sector SPDR (XLRE) advanced 1.1%, 0.6%, 21.8%, 0.9% and 1.5%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 4.5% to 13.1. A total of 11.21 billion shares were traded on Tuesday, lower than the last 20-session average of 11.54 billion. Advancers outnumbered decliners on the NYSE by a 2.6-to-1 ratio. On Nasdaq, a 1.8-to-1 ratio favored advancing issues.
Strong Earnings Results
Simon Property Group Inc.’s (SPG - Free Report) fourth-quarter 2023 funds from operations (FFO) per share of $3.69 surpassed the Zacks Consensus Estimate of $3.34. Revenues of $1.53 billion outpaced the Zacks Consensus Estimate of $1.46 billion.
Xylem Inc.’s (XYL - Free Report) fourth-quarter 2023 adjusted earnings of $0.99 per share surpassed the Zacks Consensus Estimate of $0.96. Xylem’s revenues of $2.12 billion outperformed the Zacks Consensus Estimate of $2.06 billion. The top line jumped 41% year over year, driven by strong commercial and operational execution and resilient demand. Organic sales in the quarter rose 9%.
GE HealthCare Technologies Inc. (GEHC - Free Report) reported fourth-quarter 2023 adjusted earnings per share of $1.18, which beat the Zacks Consensus Estimate of $1.07 by 10.3%. The company reported revenues of $5.2 billion. The top line also beat the Zacks Consensus Estimate by 2.2%.
Consequently, stock prices of Simon Property, Xylem, and GE HealthCare rallied 4.8%, 4.8% and 11.7%, respectively. All three stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Uncertainty About Fed Rate Cut
On Jan 31, in his post-FOMC meeting statement, “Based on the meeting today, I would tell you that I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting to identify March as the time to do that (first rate cut). But that’s to be seen.”
On Feb 4, in an interview with the CBS, Powell once again reiterate that the central bank is in no hurry to initiate first cut in interest rate in March. He said the "danger of moving too soon is the job's not quite done" to combat inflation. Powell also hinted that the number of rate cuts may be less than expected this year.
On Feb 5, Cleveland Federal Reserve President Loretta Mester said that she is yet to be convinced to start easing policy until she gains more confidence that inflation is on a stable path towards the Fed’s 2% target level.
According to Mester, “If the economy evolves as expected, I think we will gain that confidence later this year, and then we can begin moving rates down. My base case is that we will do so at a gradual pace so that we can continue to manage the risks to both sides of our mandate.”