An earnings-inspired rally in Meta Platforms (META) fueled gains in the Nasdaq and S&P 500 on Thursday, adding to Fed-related gains registered the day before. However, declines in Merck (MRK) and UnitedHealth (UNH) held back the Dow, which finished with a factional retreat.
The Nasdaq Composite (COMP.IND) finished +3.3%, The S&P 500 (SP500) ended +1.5% and the Dow (DJI) closed -0.1%.
The Nasdaq once again led the major averages higher, soaring 384.50 points to end at 12,200.82. This was the index’s first close above 12,000 since last September. Meanwhile, the S&P 500 rose 60.55 to finish at 4,179.76.
After finishing just above the flat line during the previous session, the Dow Jones underperformed again, slumping 39.02 points to finish at 34,053.94.
Thanks to META, Communication Services ranked as the top performer among the 11 S&P sectors, rising by 6.7%. Consumer Discretionary rose more than 3%, while Real Estate and Info Tech each climbed at least 2.2%.
At the other end of the spectrum, four of the 11 S&P segments finished lower. This included a 2.5% drop in Energy, with oil edging below $76 a barrel. Consumer Staples, Health Care and Materials all slipped as well.
Earnings will continue to be a key driver on Friday, as Amazon (AMZN), Alphabet (GOOG) (GOOGL) and Apple (AAPL) are all set to announce results after the closing bell. Meanwhile, Friday will also see the release of the latest jobs data.
“The stock market continues its move upwards, as it believes that we’re soon going back to normal. While we’re certainly past peak inflation, the Fed made clear yesterday that more work needs to be done,” analyst Leo Nelissen of BN Capital told Seeking Alpha. “Tomorrow’s unemployment/wage numbers could either fuel this rally further (in case of a miss) or once again highlight that underlying inflation numbers are too severe to ignore.”
Nelissen added: “For now, the market continues to trade in my range of low 3,000 points to mid-4,000 points. I believe that the risk/reward is starting to get very unattractive. We’re now at a point where the Fed needs to execute the perfect soft landing without triggering a rebound in inflation expectations. I believe the odds are not in its favor.”
Stocks recorded an afternoon rally on Wednesday following the Federal Reserve’s interest rate announcement. Wall Street focused on comments from Fed Chair Jerome Powell that suggested that recent interest rate increases were starting to tamp down inflation.
The Nasdaq and S&P 500 were able to carry this momentum over into Thursday’s action, bolstered by a 23% rally in META, which announced better-than-expected Q4 revenue and a $40B stock repurchase plan.
However, the Dow finished lower. This came as Merck (MRK) declined in the wake of its quarterly update, hurt by a disappointing 2023 outlook. UnitedHealth (UNH) also dipped, dented by a low Medicare Advantage payment increase for 2024.
Trading was muted in the fixed-income market after a slide in yields the previous day. The 10-year Treasury yield (US10Y) was flat at 3.40% and the 2-year yield (US2Y) slipped 1 basis point to 4.10%.
Elsewhere on the earnings front, Sirius XM (SIRI) plunged nearly 10% after its Q4 results included weak guidance for 2023 revenue and net adds.