S&P 500 ekes out another record high as Netflix and chipmakers leap

Jan 24 – The S&P 500 climbed to its fourth straight record high close on Wednesday, as Netflix surged following blowout quarterly results and a strong report from ASML fueled gains in chipmakers.

Riding optimism about Wall Street’s most valuable companies, Microsoft hit an all-time high, lifting its market value above USD 3 trillion for the first time.

The Nasdaq touched its highest since January 2022 and is now less than 4% below its record-high close in November 2021.

Netflix jumped 10.7% to a two-year high after strong subscriber growth cemented investor confidence the firm has won the streaming wars with its password-sharing crackdown and a strong content slate.

The S&P 500 communication services index, which includes Netflix, rose 1.2% and also hit a two-year high.

Alphabet and Meta Platforms, part of the so-called Magnificent Seven group of heavyweights that drove much of 2023’s recovery in the S&P 500, each gained over 1%.

“Technology-enabled companies – the Magnificent Seven in particular and the AI theme – last year put up some ridiculous earnings and guidance. We will see over the next 10 days how that plays out, but early indications are certainly pretty positive,” said Mike Dickson, head of research at Horizon Investments.

The S&P 500 climbed 0.08% to end the session at 4,868.55 points.

Even as the S&P 500 rose, declining stocks outnumbered rising ones within the index by a 2.5-to-one ratio.

The Nasdaq gained 0.36% to 15,481.92 points, while the Dow Jones Industrial Average declined 0.26% to 37,806.39 points.

Volume on US exchanges was relatively heavy, with 11.6 billion shares traded, compared to an average of 11.4 billion shares over the previous 20 sessions.

Tesla dipped 0.6% and weighed on the S&P 500. The carmaker was scheduled to report December-quarter results after the closing bell.

The Philadelphia SE semiconductor index rose 1.54% to a record high after upbeat results from manufacturing equipment maker ASML Holding pointed to a recovery in global chip demand.

Nvidia and Broadcom both jumped more than 2% and hit record highs. Traders exchanged over USD 34 billion worth of Nvidia shares, more than any other stock on Wall Street, according to LSEG data.

AT&T dropped 3% after forecasting annual profit below expectations, while DuPont De Nemours slumped 14% after forecasting a fourth-quarter loss.

On the data front, a survey showed business activity picked up in January and inflation appeared to abate, suggesting that the economy kicked off 2024 on a strong note.

A resilient US economy and uncertainty over the timing of interest rate cuts have led investors to reassess their bets on how quickly the Federal Reserve will cut rates this year.

Traders now see an 85.5% chance of a rate cut in May, according to CME Group’s FedWatch Tool. Traders previously expected a rate cut in as early as March.

(Reporting by Ankika Biswas and Johann M Cherian in Bengaluru, and by Noel Randewich in Oakland, Calif.; Editing by Anil D’Silva, Devika Syamnath, Maju Samuel, and David Gregorio)