NEW YORK: Wall Street rallied on Wednesday, with the benchmark S&P 500 scaling record intraday levels, as Netflix surged after smashing expectations for subscriber growth and chip stocks gained on ASML’s strong earnings.
Riding on the optimism, Microsoft rose 1.1%, hitting a record high, with its market value surpassing $3 trillion for the first time.
The S&P 500 hit an all-time high for the third time in less than a week, fueling a bull-market run it confirmed on Friday after closing at a record. The blue-chip Dow also surpassed the 38,000-point mark for the second time this week.
The tech-laden Nasdaq is less than 4% away from breaching its all-time intraday high hit in November 2021.
Netflix jumped 11.9% to an over two-year high after the firm’s largest-ever fourth-quarter subscriber growth indicated it had won streaming wars with its password-sharing crackdown and a strong content slate.
The S&P 500 communication services index, sheltering the stock, rose 1.7% to a near two-year high, leading sectoral gains.
“Although there have been some misses, majority (of earnings) are coming in in-line with expectations and guidance from most companies remains positive, fuelling the rally here,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
Reflecting upbeat market sentiment, the CBOE Market Volatility Index, a market fear gauge, slipped to a near two-week low.
With the S&P 500 trading around 20 times forward 12-month earnings, compared with its long-term average of 16 times, the results of the “Magnificent 7” group of companies will be in focus to determine whether their valuations are justified.
Megacaps such as Alphabet, Amazon.com and Meta Platforms rose between 1% and 2%.
Tesla rose 0.8% ahead of its fourth-quarter results after the market closes.
Chip stocks Nvidia, Advanced Micro Devices and Broadcom gained between 2.8% and 5.7% after European chip-making equipment maker ASML Holding beat fourth-quarter earnings estimates and posted record-high quarterly orders.
The Philadelphia SE semiconductor index also touched a fresh record high, rising 2.1%.
Meanwhile, AT&T shed 3.1% after forecasting annual profit below expectations, while DuPont De Nemours slid 11.8% after forecasting a fourth-quarter loss.
At 11:24 a.m. ET, the Dow Jones Industrial Average was up 127.03 points, or 0.34%, at 38,032.48, the S&P 500 was up 31.17 points, or 0.64%, at 4,895.77, and the Nasdaq Composite was up 145.13 points, or 0.94%, at 15,571.07.
On the data front, a survey showed business activity picked up in January and inflation appeared to abate, suggesting that the economy kicked off 2024 on a strong note.
A resilient US economy and uncertainty over the timing of interest rate cuts have led investors to reassess their bets.
Traders now see an 85.5% chance of a rate cut in May, according to CME Group’s FedWatch Tool. They were earlier expecting a rate cut in as early as March.
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