By Johann M Cherian and Ankika Biswas
(Reuters) – The benchmark S&P 500 and the tech-laden Nasdaq touched near two-week highs on Wednesday, as lower Treasury yields boosted megacaps, while investors keenly awaited inflation reports and earnings from major lenders later in the week.
Microsoft, Alphabet, Amazon.com and Meta Platforms rose between 0.6% and 2.6%, as U.S. Treasury yields ticked lower, with those on the benchmark 10-year note slipping to 3.98%. [US/]
Nvidia also gained 1.1% after TSMC, the world’s largest contract chipmaker, beat fourth-quarter revenue expectations.
Communication services stocks rose 0.7%, hitting a near two-year high and leading sectoral gains.
Equities have remained range-bound since the turn of the year, as investors reassess their expectations of the timing and the pace of monetary policy easing following contrasting economic data and mixed signals from Federal Reserve officials.
All eyes are now on the December consumer and producer inflation reports, due on Thursday and Friday, respectively, which could help determine the monetary policy trajectory for the central bank.
“Unless you see inflation come in higher than expected, which is unlikely, there is going to be an inclination to move sooner rather than later (on rate cuts),” said Thomas Hayes, chairman at Great Hill Capital.
Market participants have scaled back expectations for at least a 25-basis-point rate cut in March, and currently see a near 66% chance, down from around 86% in the final week of 2023, as per the CME FedWatch Tool.
Investors will closely monitor comments by New York Fed President John Williams – considered a neutral voice on policy by analysts – scheduled to speak later in the day.
On Friday, banking giants JPMorgan Chase, Bank of America, Citigroup and Wells Fargo are expected to report lower fourth-quarter profits, as they set money aside to cover souring loans and paid more to depositors.
The lenders slipped between 0.6% and 0.8% on Wednesday, pushing the S&P 500 bank index to a one-week low.
“The secret to happiness is low expectations, and that’s exactly what we have going into earning seasons,” Hayes added.
At 9:45 a.m. ET, the Dow Jones Industrial Average was up 115.94 points, or 0.31%, at 37,641.10, the S&P 500 was up 12.16 points, or 0.26%, at 4,768.66, and the Nasdaq Composite was up 39.30 points, or 0.26%, at 14,897.01.
Crypto stocks including Coinbase, Bitfarms and Riot Platforms shed over 4% each, as prices of the world’s most valued cryptocurrency, Bitcoin, dipped after the U.S. securities regulator said a fake social media message was posted on its account regarding the eagerly awaited approval of exchange traded funds.
Boeing rose 1.7%, recovering from a 9.3% tumble in the last two sessions. CEO Dave Calhoun acknowledged errors by the U.S. planemaker as more than 170 jets remained grounded for a fourth day.
DocGo dropped 27.8% after Fuzzy Panda Research revealed short position on the health services company’s stock.
Advancing issues outnumbered decliners by a 1.29-to-1 ratio on the NYSE and a 1.01-to-1 ratio on the Nasdaq.
The S&P index recorded 20 new 52-week highs and no new lows, while the Nasdaq recorded 37 new highs and 24 new lows.
(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Shinjini Ganguli)
