Stocks were choppy Thursday as investors took in an onslaught of corporate earnings reports. Caution could also be setting in ahead of next week's key inflation update, especially as expectations for a March or May rate cut have dropped dramatically in recent days.
The Dow Jones Industrial Average rose 0.1% to 38,726, while the while the Nasdaq Composite added 0.2% to 15,793. The S&P 500 struggled against the psychologically significant 5,000 level, briefly toppling it in intraday action before closing just below here at 4,997.
Investors have one eye trained on the January Consumer Price Index (CPI) report, due out ahead of Tuesday's open. The results of the next CPI report "may determine whether the stock market will be able to keep setting new record highs in the near term," says Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Recent data has shown the U.S. economy remains resilient even as the Fed keeps its federal funds rate at a 23-year high in order to tame inflation. As such, futures traders are now pricing in an 18% chance the Fed will cut rates by a quarter-percentage point in March, down from 38% one week ago, per CME Group's FedWatch Tool. The probability for a May rate cut is also falling, currently at 52% vs last week's 60%.
Arm stock jumps nearly 50% after earnings
Today, it was all about earnings, with several stocks making major event-driven moves. Arm Holdings (ARM), for one, skyrocketed 47.9% after the chipmaker reported a fiscal third-quarter revenue beat and lifted its full-year outlook. The company cited strong royalty and license revenue, as well as "increasing demand for new technology driven by all things AI [artificial intelligence]."
Additionally, Arm noted that "the broader semiconductor market is showing signs of recovery, particularly in smartphones which returned to strong growth" over the three-month period.
Arm held its initial public offering (IPO) back in September and it was tough sledding for the semiconductor stock in those first two months. However, ARM stock is now up more than 130% since late October.
Disney pops on dividend news, Epic Games investment
Walt Disney (DIS) was another big mover, with the Dow Jones stock jumping 11.5% after the media and entertainment giant reported earnings of $1.22 per share on revenue of $23.5 billion. While DIS beat on the bottom line, its top-line results fell just shy of analysts' expectations for revenue of $23.8 billion.
There was certainly plenty to unpack in Disney's earnings report. While Disney+ subscribers fell by 1.3 million after the company hiked prices on its streaming service, Hulu subscribers increased by 1.2 million. Additionally, DIS boosted its quarterly dividend by 50% to 45 cents per share after reinstating it in December following a three-year suspension. The board also approved a $3 billion stock buyback program.
Meanwhile, DIS said it's investing $1.5 billion in "Fortnite" creator Epic Games, which follows yesterday's headlines of a new sports streaming deal for Disney-owned ESPN.
"In a little over a year since returning to the company as CEO, Bob Iger's actions are already having an impact," says BofA Securities analyst Jessica Reif Ehrlich (Buy). "While several big picture questions remain, we are incredibly encouraged by DIS’ progress on several strategic and financial initiatives which are reflected in its fiscal Q1."
PayPal sinks as CEO warns of "transition year"
Not all of today's earnings reports were as encouraging. PayPal (PYPL) slumped 11.2% after its fourth-quarter results. While the digital payments company beat on both its top and bottom lines in Q4, it gave weak full-year guidance.
In the subsequent earnings call, CEO Alex Chriss said fiscal 2024 is "going to be a transition year, focused on execution to position the business for long-term success."
Related content
- Does NYCB's Selloff Make Regional Bank Stocks a Buy?
- Super Bowl Indicator: Should Bulls Root for the 49ers or Chiefs?
- 3 Uranium ETFs That Pack a Nuclear Punch
-
Stock Market Today: Stocks Rally Despite Rising Geopolitical TensionThe main indexes were mixed on Tuesday but closed well off their lows after an early flight to safety.
-
What's at Stake for Alphabet as DOJ Eyes Google's ChromeAlphabet is higher Tuesday even as antitrust officials at the DOJ support forcing Google to sell its popular web browser. Here's what you need to know.
-
Stock Market Today: Stocks Rally Despite Rising Geopolitical Tension
The main indexes were mixed on Tuesday but closed well off their lows after an early flight to safety.
-
What's at Stake for Alphabet as DOJ Eyes Google's Chrome
Alphabet is higher Tuesday even as antitrust officials at the DOJ support forcing Google to sell its popular web browser. Here's what you need to know.
-
Lowe's Stock Is Falling After Earnings. Here's WhyLowe's stock is lower Tuesday as Wall Street weighs a beat-and-raise quarter against declining revenue. This is what you need to know.
-
Why Walmart Stock's a Buy After Its Beat-And-Raise QuarterWalmart is the best Dow Jones stock Tuesday after the retail giant's solid earnings report and outlook and Wall Street thinks it's just getting started. Here's what they're saying.
-
Winners and Losers of Fed Rate CutsNavigating interest-rate changes can seem daunting, but these areas of the fixed-income market could perform better (or worse) than others.
-
Six Ways to Optimize Your Charitable Giving Before Year-EndAs 2024 winds down, right now is the time to look at how you plan to handle your charitable giving. The sooner you start, the more tax-efficient you can be.
-
How Preferred Stocks Can Boost Your Retirement PortfolioHigher yields, priority on dividend payments and the potential for capital appreciation are just three reasons to consider investing in preferred stocks.
-
Structured Settlement Annuity vs Lump-Sum Payout: Which Is Better?As the use of structured settlement annuities grows, it can be tough to decide whether to take the lump sum to invest or opt instead for guaranteed payments.
