Dow ends lower, S&P 500 squeaks by with fourth straight record close

By Vivien Lou Chen and Isabel Wang

Netflix posts 10.7% gain after strong results from the streaming giant

U.S. stock indexes finished mixed on Wednesday, with the S&P 500 barely eking out a fourth consecutive all-time high despite a batch of well-received earnings reports.

How stock indexes traded

The S&P 500 SPX finished up only 3.95 points, or less than 0.1%, at 4,868.55, based on preliminary data.The Dow Jones Industrial Average DJIA closed down by 99.06 points, or 0.3%, at 37,806.39 after swinging between slight gains and losses. It had been up by as much as 158.77 points earlier in the day.The Nasdaq Composite COMP ended up by 55.97 points, or 0.4%, at 15,481.92.

On Tuesday, the Dow industrials fell 0.3% to 37,905.45, the S&P 500 rose 0.3% to 4,864.60, and the Nasdaq Composite climbed 0.4% to 15,425.94.

What drove markets

Stocks began slipping during the New York afternoon after having started the day higher, led by technology stocks.

Netflix (NFLX) finished up by 10.7% after strong results from the streaming giant, which got the technology-sector earnings season off to a good start. Meanwhile, Nvidia Corp. (NVDA) rose 2.5% to reach another all-time high of $613.62 per share.

Earnings reports remained in focus, with tech heavyweights Tesla (TSLA), IBM (IBM) and Lam Research (LRCX) due to report results after the closing bell on Wednesday.

Sentiment wavered during afternoon trade, however, with some analysts saying that strong U.S. economic data released earlier Wednesday was weighing on investors' expectations for multiple interest-rate cuts this year by the Federal Reserve.

The S&P flash U.S. services PMI climbed to a seven-month high of 52.9 in January from 51.4 in the prior month, while the flash U.S. manufacturing PMI jumped to a 15-month high of 50.3 this month from 48.2 in December.

"The S&P PMIs were quite strong and are feeding into the market's realization that rate cuts are not going to come as soon as March and that interest rates are not going to fall as much as markets were pricing in," macro strategist Will Compernolle of FHN Financial in New York said via phone.

Meanwhile, the 10-year yield BX:TMUBMUSD10Y held mostly steady before ending at 4.178% or its highest level since Dec. 12.

The benchmark rate appears to have found equilibrium following a roller-coaster ride in recent months, suggesting that investors have become more relaxed about inflation, economic growth, and the market's pricing of the Federal Reserve's policy trajectory.

"We are in a bit of a FOMO, or fear-of-missing-out, environment," said Mark Neuman, founder of Atlanta-based Constrained Capital and creator of the ESG Orphans Index, which tracks stocks with $3 trillion in combined market capitalization. "People are excited about the technology sector, and the returns on the share prices of the Magnificent Seven are suggesting that's the right trade. Now other people are fearing they are going to miss the next leg up."

Risk appetite got a boost earlier in the day after China's central bank ramped up stimulus by cutting the amount of liquidity that banks are required to hold as reserves, which will provide around $139 billion in long-term capital to the market. The move sparked a second day of sharp gains for the Shanghai Composite Index CN:SHCOMP after its worst daily drop since April 2022 on Monday.

Companies in focus

Shares of AT&T Inc. T ended 3% lower on Wednesday, even though the telecom company reported $16.8 billion in free cash flow for last year, above its prior increased forecast of roughly $16.5 billion.Abbott Laboratories' stock ABT closed down by 2.8% as COVID-test sales continued to plunge, although the healthcare-products company reported fourth-quarter sales that topped expectations.Shares of DuPont de Nemours Inc. DD tumbled 14% after the materials-science company issued a profit warning, with weaker demand seen at the end of 2023 expected to continue.

Jamie Chisholm contributed.

-Vivien Lou Chen -Isabel Wang

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01-24-24 1626ET

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