Stocks surged on Wednesday, with the S&P 500 (SPX) hitting a fresh record and closing on the brink of a historic 5,000 mark. The large-cap tech index Nasdaq 100 (NDX) also climbed to a record high.
A renewed surge in technology stocks fueled gains, but the rally was broad-based with 9 out of 11 SPX sectors finishing the session with gains. The markets scored notable gains despite the comments from four Federal Reserve officials, who confirmed that the policymakers are in no rush to cut rates. Thus, Minneapolis Fed President Neel Kashkari said that he sees “compelling arguments” suggesting that the central bank could leave rates higher for longer. Governor Adriana Kugler said that the Fed needs more assurance that inflation is on its way to below 2% before lowering rates.
Market sentiment was supported by strong earnings from Chipotle Mexican Grill (CMG) and Roblox (RBLX), among others posting strong results. Ford’s (F) earnings beat also helped propel the markets higher, as it lifted dividends and said it would cut loss-making EV investments.
With two-thirds of the S&P 500 companies having reported, Q4 2023 earnings growth has turned positive year-on-year, and companies have posted EPS results that surpass analysts’ estimates by a higher margin than their long-term average. According to analysts, the better quarterly performance has been led by cost-cutting efforts improving margins, not revenue growth. However, sales are expected to grow this year, leading to a strong further rebound in earnings.
