NEW YORK – The S&P 500 closed slightly higher on Feb 6, as investors scrutinised a mixed bag of earnings at big US companies and digested comments from Federal Reserve policy makers for clues about its first planned interest-rate cut.
Minneapolis Fed President Neel Kashkari said the central bank is “not done yet” with inflation although he noted it had come down quickly with three-month and six-month inflation data “basically” at the Fed’s 2 per cent goal.
Also, Cleveland Fed President Loretta Mester said that if the US economy performs as she expects this could open the door to rate cuts. But Mester said she was not ready yet to suggest timing for easier policy due to inflation uncertainty.
On Sunday, Fed Chair Jerome Powell dashed any remaining hopes for a March rate cut. He had said the Fed can be “prudent” in deciding when to cut with a strong economy allowing time to build confidence that inflation is under control.
“The big macro news today is a couple of Fed governors confirming what Powell said over the weekend. It’s putting a little damper on markets today. It’s a little follow through from yesterday,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.
According to preliminary data, the S&P 500 gained 11.33 points, or 0.23 per cent, to end at 4,954.14 points, while the Nasdaq Composite gained 12.16 points, or 0.07 per cent, to 15,609.49. The Dow Jones Industrial Average rose 138.20 points, or 0.36 per cent, to 38,520.70.
John Praveen, Managing Director & Co-CIO at Paleo Leon suggested the Fed should not wait too long to ease policy as troubles at regional Bank NY Community Bancorp are spotlighting weakness in the rate-sensitive commercial real estate sector.
Powell also referred to the sector on Sunday. On Tuesday, US Treasury Secretary Janet Yellen said she was concerned about commercial real estate stresses on banks and property owners, yet she believes the situation is manageable with assistance from bank regulators.
Praveen saw the comments adding to investor jitters.
The KBW Regional Banking index fell again after losing around 11 per cent in the previous five sessions and New York Community Bancorp shares stretched a selloff since the lender’s surprise quarterly loss last week.
Airlines helped advance the Dow Jones Transport Average with some signs of strong demand. Frontier Group Holdings’ rallied after it surprised investors with a break-even financial report.
With over half of S&P 500 companies now having reported earnings, 81.2 per cent surpassed expectations, according to LSEG data. Overall S&P 500 earnings are expected to have risen 8.1 per cent in the fourth quarter from the year-ago quarter.
GE HealthCare Technologies rose sharply after the medtech firm posted better-than-expected fourth-quarter earnings, driving the S&P 500 healthcare sector to an all-time high.
The materials index gained ground with shares in chemicals firm DuPont de Nemours jumping after it beat fourth-quarter profit estimates, announcing a US$1 billion (S$1.34 billion) share-repurchase programme and hiking its dividend.
Palantir Technologies shares also soared after forecasting upbeat annual profit.
However, Eli Lilly reversed earlier gains even after forecasting 2024 profit above estimates.
Chip stocks pressured the tech-heavy Nasdaq. The Philadelphia SE Semiconductor index underperformed during the session. Rambus Inc led declines in the sector as its shares plunged after its quarterly report. REUTERS