S&P 500 Hits New High as Earnings Drive Market Action
The stock market continues to soar as the S&P 500 reached a new closing high of 4,864.61, extending its record-setting rally. Investors are closely watching the stream of earnings reports to gain insights into the health of corporate America and the economy. While the Dow Jones Industrial Average fell slightly after breaking above 38,000 for the first time on Monday, the Nasdaq Composite saw a 0.4% increase.
Earnings in various sectors have been the key market movers on Tuesday. 3M, a Dow component, experienced a significant drop of more than 10% after its 2024 profit outlook fell short of Wall Street’s expectations. On the other hand, Consumer Staples and Communications Services were the biggest gainers in the S&P 500, with staples rising more than 1% as investors analyzed quarterly results from Procter & Gamble and Verizon.
United Airlines also made headlines with an upbeat 2024 profit forecast, leading to a 5% increase in its shares. This positive outlook also had a ripple effect on other airlines, including Delta and American Airlines, whose shares rose as well.
Netflix, a streaming giant, announced a deal with TKO Group’s WWE that will bring WWE’s flagship program, Raw, to the streaming service starting in January 2025. This partnership caused TKO shares to rise nearly 15%.
While the stock market is reaching new highs, not all stocks are expensive. According to UBS analysis, 77% of S&P 500 companies currently trade at a discount to their January 2022 levels. Additionally, 55% of these companies have a lower price-to-earnings ratio compared to the previous market top. However, it’s important to note that a significant portion of the S&P 500’s gains this year can be attributed to Microsoft and Nvidia, which are trading near all-time highs.
In the housing market, homebuilder stocks took a hit after D.R. Horton reported weaker-than-expected quarterly orders and missed analyst estimates for earnings per share. This news caused shares of D.R. Horton to drop by 9% and dragged down the SPDR S&P Homebuilders ETF by as much as 3%. Despite this setback, new construction has been crucial in boosting housing inventory as supply on the resale market reached historically low levels last year.
Oil futures experienced some fluctuations due to various factors. Libya restarted production at its largest oil field after a three-week interruption, leading to a drop in oil prices. However, freezing temperatures in North Dakota impacted oil output, causing prices to recover. West Texas Intermediate dropped as much as 1% before recovering, while Brent futures fell but eventually climbed above $80 per barrel.
In a surprising move, Netflix announced a partnership with TKO Group’s WWE to bring WWE’s Raw program to the streaming service starting in 2025. This 10-year deal marks Netflix’s first foray into live sports entertainment and is valued at over $5 billion. TKO shares soared more than 20% following this announcement.
Earnings reports continue to drive market action, with companies like 3M, General Electric, Johnson & Johnson, and Verizon making headlines. While some companies fell short of expectations, others exceeded them, leading to fluctuations in stock prices.
Overall, the stock market remains strong, with the S&P 500 hitting new highs. Investors are closely monitoring earnings reports to gauge the health of corporate America and the economy. As various sectors experience gains and losses, it’s clear that earnings play a crucial role in driving market action.