By Vicky Ge Huang
The Dow Jones Industrial Average rose Wednesday, extending its longest winning streak of the year.
The blue-chip index gained 0.4%, or 172 points, logging a sixth straight day of gains. The tech-heavy Nasdaq fell 0.2%. The S&P 500 fell by just three-hundredths of a point, its smallest move since 2018. All three indexes remain higher to start May after dropping in April.
The slight decline for the benchmark S&P 500 broke a four-day winning streak. Stocks had edged higher in recent days, helped by a batch of solid corporate earnings reports and hopes that the Federal Reserve may cut interest rates.
Investors on Wednesday digested the latest results from companies including Uber, Shopify and Reddit. With the first-quarter earnings season nearing its end, S&P 500 companies are growing earnings by 5.3%, according to a FactSet blend of actual results and analysts' forecasts. That would mark the highest rate since the second quarter of 2022.
Some investors are in a wait-and-see mode ahead of reports on consumer and producer inflation next week. Expectations for rate cuts this year had dimmed after a string of stickier-than-expected inflation reports. April's jobs report, however, showed a slowdown in hiring, lifting optimism for lower rates.
"Any weakness or pullback that we see, it's just in relationship to what inflation is doing and what the Fed reaction function is," said Dan Close, who leads Nuveen's municipal bond arm.
Some investors see signs of more appetite for risk in the market. The corporate bond market saw the busiest two-day stretch in volume for deals since the start of the year on Monday and Tuesday, during which companies issued $36 billion worth of debt, said Close.
"A lot of companies are getting their financing lined up in a very favorable environment," he said, citing tighter credit spreads, or lower average yields on corporate bonds when compared with similar Treasurys.
The benchmark 10-year Treasury yield edged higher Wednesday, settling at 4.491%. Bond prices rise when yields fall.
Recent remarks from Federal Reserve officials suggested interest rates may have to stay elevated for longer before the central bank can bring inflation back to its 2% target.
"I remain optimistic that this can be accomplished in a reasonable amount of time and with a labor market that remains healthy," said Boston Fed President Susan Collins in remarks prepared for a Wednesday speech at the Massachusetts Institute of Technology.
"I think the main message is that they are just not ready to cut right now," said Kevin Gordon, senior investment strategist at Charles Schwab, of recent remarks from Fed officials.
Among individual movers, Shopify shares sank 19% after the online-retail services company said it expects sales growth to slow this quarter. Intel dropped 2.2% after the company said its revenue for the current quarter would be lower than previously expected amid new restrictions on sales by chip makers to Chinese telecom company Huawei Technologies.
Lyft jumped 7.1% after the ride-hailing company's revenue grew and its loss narrowed last quarter. Meanwhile, rival Uber tumbled 5.7% after the ride-hailing company posted a surprise quarterly loss. Shares of Reddit climbed 4% after the social-media company posted higher revenue and a wider loss for the first quarter.
Overseas, the pan-continental Stoxx Europe 600 rose 0.3% as several European indexes set new records. In Asia, Japan's Nikkei 225 fell 1.6%, while Hong Kong's Hang Seng ticked lower by 0.9%.
(END) Dow Jones Newswires
May 08, 2024 16:37 ET (20:37 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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