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Stock Market News for Feb 16, 2024

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U.S. stocks ended sharply higher on Thursday, with the S&P 500 hitting a new record high, after weaker-than-expected retail sales data bolstered hopes among investors that the Federal Reserve would soon start cutting interest rates. All three major indexes ended in positive territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) jumped 0.9% or 348.85 points to finish at 38,773.12 points.

The S&P 500 rose 0.6% or 29.11 points, to close at 5,029.73 points, hitting a new record closing high. Energy, real estate, materials and consumer discretionary stocks were the biggest gainers.

The Energy Select Sector SPDR (XLE) gained 2.8%, while the Consumer Discretionary Select Sector SPDR (XLY) rose 1.2%. The Real Estate Select Sector SPDR (XLRE) advanced 2.4%, while the Materials Select Sector SPDR (XLB) gained 1.9%. Ten of the 11 sectors of the benchmark index ended in positive territory.

The tech-heavy Nasdaq climbed 0.3% or 47.03 points to end at 15,906.17 points.

The fear-gauge CBOE Volatility Index (VIX) was down 2.57% to 14.01. Advancers outnumbered decliners on the NYSE by a 5.3-to-1 ratio. On Nasdaq, a 2.4-to-1 ratio favored advancing issues. A total of 12.24 billion shares were traded on Thursday, higher than the last 20-session average of 11.7 billion.

Weak Retail Sales Data Renew Rate Cut Hopes

Stocks took a beating earlier this week after hotter-than-expected inflation data dented investors’ sentiment as hopes of a rate cut by the Federal Reserve in the near term dimmed. However, a weaker-than-expected retail sales report once again raised hopes among investors.

The Commerce Department said that retail sales declined 0.8% in January, a lot lower than the consensus estimate of a 0.3% drop. Although it raised some concerns over the strength of the U.S. consumer who is succumbing to inflationary pressures, it also raised hopes that the Federal Reserve would soon start cutting interest rates.

Following the release of the retail sales data, bets for a quarter percentage point rate cut in May jumped 40%, according to CME Group’s FedWatch tool.

Treasury yields also fell, with the 10-year Treasury yield declining 2.7% to ed at 4.239% on Thursday. The 2-year Treasury note fell 1.1 basis points to end at 4565%.

The renewed optimism sent stocks on a rally, with shares of Tesla, Inc ((TSLA - Free Report) ) and Meta Platforms, Inc. ((META - Free Report) ) gaining the most. Shares of Tesla and Meta Platforms jumped 6.2% and 2.3%, respectively. Meta Platforms has a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Investors Watch Quarterly Results

Investors also closely watch a fresh batch of earnings reports from a spate of companies. Shares of Tripadvisor, Inc. ((TRIP - Free Report) ) surged 9.2% after the company reported solid quarterly results. Tripadvisor reported fourth-quarter 2023 earnings of $0.38 per share, beating the Zacks Consensus Estimate of $0.22 per share.

Cisco Systems, Inc. ((CSCO - Free Report) ) also reported an earnings beat. The company reported second-quarter fiscal 2024 earnings of $0.87 per share, beating the Zacks Consensus Estimate of $0.84 per share. However, Cisco’s shares ended 2.4% lower after the company announced layoffs and issued weak sales guidance.

Economic Data

The Labor Department reported that jobless claims totaled 212,000 for the week ending Feb 10, decreasing 8,000 from the previous week’s revised level of 220,000. The four-week moving average was 218,500, an increase of 5,750 from the previous week’s revised average of 212,750.

Continuing claims came in at 1,895,000, an increase of 30,000 from the previous week’s revised level of 1,865,000. The 4-week moving average was 1,870,500 an increase of 22,250 from the previous week's revised average of 1,848,250.

U.S. industrial production declined 0.1% in January, after remaining flat in December. Manufacturing output decreased 0.5%. Capacity utilization declined 0.2% in January to 78.5.

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