Dow makes up losses, S&P 500 trades within striking distance of 5,000 milestone

Last Updated: Feb. 8, 2024 at 2:23 p.m. ETFirst Published: Feb. 8, 2024 at 4:41 a.m. ET By Joy Wiltermuth and Joseph Adinolfi

What’s driving markets

Wall Street’s main stock barometer was on the cusp of a major milestone after the S&P 500 finished Wednesday’s session a whisker shy of topping 5,000 for the first time.

“It looks like investors are determined to pass this 5,000 level, in spite of the fact of higher yields since this morning,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “It’s the consistency of good earnings that are pushing the market higher.”

S&P 500 trades near 5,000S&P 500 IndexSource: FactSet

2022’2435003750400042504500475050005250

The benchmark 10-year Treasury yield BX:TMUBMUSD10Y was up 3 basis points to 4.15% on Thursday, almost 30 basis points above its early-February low, according to Dow Jones Market Data.

The S&P 500 on Wednesday set an intraday high of 4,999.89 on Wednesday and closed at a record 4,995.06. Thursday was shaping up to be a more placid session, with few catalysts available to drive the market other than a handful of earnings reports, said Mike O’Rourke, chief market technician at JonesTrading.

O’Rourke said the market remains top-heavy, with the most valuable companies continuing to drive the S&P 500 and Nasdaq higher. However, a rotation has taken place as Tesla Inc. TSLA, 0.93% and Apple Inc. AAPL, -0.70%, two members of the “Magnificent Seven” group of megacap technology names, have lagged the market in the new year.

This has created space for companies like Eli Lilly & Co. LLY, 1.09%, which recently saw its market capitalization surpass Tesla’s to join the top-eight most valuable U.S. companies, according to FactSet data.

“You’re still seeing the market leaders continue to push the market higher, but it’s not the same seven names,” O’Rourke told MarketWatch.

The S&P 500 has continued to climb in 2024, pushed to record highs on optimism over corporate earnings, a solid U.S. economic backdrop and acceptance that interest rates aren’t likely to fall until later this year.

“Of course, as we head into the last innings of the earning season, the market is probably heading for some sort of a pullback,” Spartan Capital’s Cardillo said.

“March also is always a murky month for the stock market,” he said, adding that commercial real estate and regional banks also look like a looming problem — nearly a year after the collapse of three regional lenders, including Silicon Valley Bank, last March.

Investors on Thursday were focused on earnings results from Walt Disney Co. DIS, 11.75%, released after Wednesday’s closing bell, which added to positivity, while there was a disappointing earnings update from PayPal Holdings Inc. PYPL, -10.90% There also was a 20% pop in shares of Arm Holdings Plc ARM, 50.64% after the chip designer delivered upbeat guidance and pointed to “increasing demand for new technology driven by all things AI.”

Much of the S&P 500’s 30% surge since Jan. 1, 2023, has been powered by the expectation that large tech companies such as Microsoft Corp. MSFT, -0.23% and Nvidia Corp. NVDA, -0.15% can deliver an AI-related boost to earnings.

Thursday’s earnings have been a mixed bag, with oil-exploration company ConocoPhillips’s COP, 1.45% shares rising after it beat expectations for profits and sales, while shares of uranium producer Cameco Corp. CCJ, -4.85% and confectionary giant Hershey Co. HSY, 6.06% slumped after they reported their results and guidance.

After the bell, investors will receive results from Affirm Holdings Inc. AFRM, 10.40%, Cloudflare Inc. NET, 7.08% and Expedia Group Inc. EXPE, 3.12%

U.S. economic data published on Thursday included a weekly report on initial jobless claims, which showed that the number of Americans applying for unemployment benefits during the first week of February fell by 9,000, to 218,000. The data indicated that layoffs remain extremely low, despite a flurry of headlines about job cuts at tech and media companies, among others. Wholesale inventories in the U.S. rose by 0.4% in December.

Companies in focus

• Under Armour Inc. UAA, 1.04% shares rose after the apparel company reported fiscal third-quarter profits that surpassed analysts’ estimates.
• New York Community Bancorp Inc. NYCB, -6.58% shares were falling again on Thursday after an analyst downgraded the stock on concerns that depositors might start to flee.
• Spirit Airlines Inc. SAVE, -0.65% shares rose on Thursday after the company posted a slimmer loss than expected in the latest quarter, while calling out encouraging booking trends and expressing confidence in its ability to return to profitability.
• Wynn Resorts Ltd. WYNN, 7.23% shares gained after the company p