Closing Market Update

Stocks Extend Record Climb, Cap Strong Week

The S&P 500 index and the Dow Jones Industrial Average posted fresh highs behind Nvidia, AI-driven bullishness.

(Friday market close) The S&P 500® index (SPX) and the Dow Jones Industrial Average® (DJI) edged to all-time highs for the second straight day Friday as the market capped a record-setting week fueled by AI-driven bullishness and chip leader Nvidia's (NVDA) stronger-than-expected earnings. The S&P 500 gained for the sixth week out of the past seven.

Nvidia rose another 0.4% to a record high, finished with a surge of nearly 9% for the week and briefly topped $2 trillion in market value. The company's strong results, which included a 265% year-over-year revenue jump, sparked a broad rally Thursday. Technology shares otherwise eased slightly, though the Nasdaq Composite® (COMP) still ended with a 1.4% weekly advance.

"Wall Street continues to find support from AI- and Nvidia-inspired momentum, albeit without much added market breadth," said Joe Mazzola, director of trading and education at Schwab. "That could mean we'll see the market consolidate around these levels. It doesn't mean the rally can't continue but does mean that investors may want to be more discerning." 

Here's where the major benchmarks ended:

  • The S&P 500 index rose 1.77 points (0.03%) to 5,088.80, up 1.7% for the week; the Dow Jones Industrial Average gained 62.42 points (0.2%) to 39,131.53, up 1.3% for the week; the Nasdaq Composite tumbled 44.80 points (0.3%) to 15,996.82.
  • The 10-year Treasury note yield (TNX) shed more than 7 basis points to 4.252%.
  • The CboeVolatility Index® (VIX) fell 0.79 to 13.75.

Retailers were among the market's upside leaders Friday, with the S&P Retail Select Industry Index (SPSIRE) gaining 1.8% and ending at a 22-month high. The retail sector got a boost this week from Walmart's (WMT) stronger-than-expected results reported Tuesday. The biggest U.S. retailer gained 3.1% this week and closed Friday near a record high above $175. Utility shares were also strong Friday.

Read all our market commentary on our Insights & Education page, and you can follow us at @SchwabResearch.

Read all our market commentary on our Insights & Education page, and you can follow us at @SchwabResearch.

Stocks on the move

The following companies had stock price moves driven by analyst ratings, quarterly results, or other news:

  • Block (SQ) rallied 16% after the payments company reported an unexpected quarterly profit and provided strong guidance for the first quarter and full year.
  • Bloomin' Brands (BLMN) added almost 3% after the restaurant company, which runs Outback Steakhouse and other chains, reported stronger-than-expected fourth-quarter results.
  • Booking Holdings (BKNG) tumbled 10% as the online travel-booking company's weaker-than-expected guidance for the current quarter overshadowed stronger-than-expected numbers for the previous quarter. 
  • Carvana (CVNA) soared 32% after the used-car market posted an annual profit and issued strong first-quarter guidance.
  • DraftKings (DKNG) jumped 1.1% after Barclays (BCS) upgraded the sports-betting platform to "overweight" from "equal weight," saying the U.S. digital-gaming market "still has significant growth ahead."
  • EOG Resources (EOG) dropped 3.9% after the energy producer's fourth-quarter results met expectations but its guidance for the current quarter and full year disappointed.
  • Live Nation Entertainment (LYV) gained 2% after entertainment company reported higher-than-expected fourth-quarter revenue of $5.84 billion.
  • Warner Bros. Discovery (WBD) sank 10% after the media conglomerate's fourth-quarter results fell short of expectations. 

The earnings calendar remains busy next week, with nearly 900 companies expected to report results. Numbers from home improvement retailer Lowe's (LOW), expected Tuesday, likely will be scrutinized for clues to the outlook for consumer spending. The same goes for another retailer, TJX Cos. (TJX), which is scheduled to report results Wednesday. Dow member Salesforce (CRM) is also expected to report results Wednesday.

On Saturday, Warren Buffett's Berkshire Hathaway (BRK.A) is expected to report its fourth-quarter results and release Buffett's annual shareholder letter. Berkshire Hathaway shares have gained 16% this year, outpacing the 6.7% climb in the S&P 500.

GDP, PCE updates ahead

This week was relatively light on economic news, but next week brings a few reports that may guide investor expectations for inflation and Federal Reserve interest rate policy. 

On Tuesday, the Census Bureau is expected to report Durable Goods for January. On Wednesday, the government is expected to update its initial estimate for fourth-quarter gross domestic product (GDP). Personal Consumption Expenditure (PCE) prices for January follow on Thursday.

PCE is the Fed's preferred inflation gauge, so the numbers are sure to be of keen interest after the Consumer Price Index (CPI) and Producer Price Index (PPI), released last week, came out higher than expected. The latter two reports stirred concern inflation may be picking up and prompted investors to sharply curtail expectations for Fed rate cuts.

According to Kathy Jones, Schwab's chief fixed income strategist, the Treasury market is currently priced for three quarter-point cuts to the fed funds rate this year.

"The market has absorbed the Fed message that rate cuts aren't coming soon," Jones said. "Now, we wait for upcoming inflation and employment data. We continue to see the Fed initiating rate cuts at the May or June meeting and cutting three to four times in 2024. But it's likely to be a bumpy road given the uncertainty around inflation and policy."

In December, PCE rose 0.2% both overall and in the core rate, which excludes food and energy. Additionally, year-over-year core PCE rose 2.9%, down from 3.2% in November and the lowest monthly figure since March 2021.

Late Friday, traders priced nearly 98% odds the funds target will remain unchanged at 5.25% to 5.5% following the March 19 – 20 Federal Open Market Committee (FOMC) meeting, according to the CME FedWatch Tool. The tool shows a 79% chance the fed funds rate will be unchanged after the FOMC's May meeting but pegs chances of a quarter-point cut in June at about 53%.

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