Stocks climbed on Friday, pushing the S&P 500 and Dow Jones Industrial Average to record closing highs.
The S&P 500 (^GSPC) rose 1.2% to close at 4,839. This marked the S&P 500’s first record close since January 2022. The Dow (^DJI) gained just over 1% to settle at 37,863.
On a percentage basis, the tech-heavy Nasdaq Composite (^IXIC) was the day’s biggest winner, rising 1.7% to close at 15,310. The Nasdaq’s record close stands at 16,057, reached in November 2021.
Investor focus this week turned back to Big Tech stocks pushing markets to new heights as the late 2023 rally waned.
Strong retail sales data and an upbeat reading on consumer sentiment saw investors push out expectations for the Federal Reserve’s first interest rate cut to May from March. Still, optimism that the fundamental driver of last year’s rally in Big Tech — investment in AI — would continue powered the sector higher and helped lift the major indexes to record levels.
Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards
And as Truist’s co-CIO told Yahoo Finance this week, the math linking the “Magnificent Seven” to the fortunes of the overall market is simple — with these names holding a roughly 30% weight in the S&P 500, as Big Tech goes, so goes the market.
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S&P 500 notches record close
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A look at the week ahead
Earnings season is chugging along and will continue to ramp up next week.
How new economic data will steer the next steps for the Federal Reserve will be top of mind for many investors, as the Fed’s preferred inflation gauge, the Personal Consumption Expenditures Price Index is released on Friday
Meanwhile, personal income and spending figures will offer the latest snapshot of the strength of the consumer.
On the corporate earnings front, another wave of financial services companies is on deck to report. American Express (AXP) and Visa (V) are among the major players to reveal their latest quarterly earnings.
Other notable names include Tesla (TSLA), a member of the Magnificent Seven, which has drawn headlines in recent days over CEO Elon Musk’s comments seeking greater influence over company decisions. The streaming giant Netflix (NFLX) is also set to report, as entertainment companies grapple with increasing competition and uncertainty over subscriber growth and potential acquisitions.
Yahoo Finance’s Brent Sanchez has a graphical breakdown of what to watch next week:
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Existing home sales sink to slowest pace in 30 years in 2023
The affordability crunch fueled a record slump in existing home sales year, as elevated rates and risking home prices pushed sales down to the lowest level in decades.
On an annual basis, existing home sales fell to 4.09 million — the lowest level in 30 years — and were 19% lower than in 2022, reports Yahoo Finance’s Gabriella Cruz-Martinez.
The median sales price for a home in 1995 was $114,600, according to the the National Association of Realtors. While people’s incomes were lower, home prices were much more affordable. By contrast, the median price for a home reached a record high of $389,800 in 2023.
Year-over-year sales of previously owned homes declined by 6% and came in weaker than predicted by economists polled by Bloomberg.
Existing home sales fell 1% last month from November to a seasonally adjusted annual rate of 3.7 million, the NAR said Friday. That marked the lowest sales activity since August 2010, when 3.68 million sales were recorded.
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Stocks trending in afternoon trading
Here are some of the stocks leading Yahoo Finance’s trending tickers page during afternoon trading on Friday:
Meta (META) Shares of the social networking company rose 1.5% to a new record high as CEO Mark Zuckerberg doubled down on the strategy to focus on AI. He announced an expansion of its AI infrastructure Thursday, with plans to build Meta’s own artificial general intelligence, or AGI.
Coursera (COUR): While some companies are buoyed by AI excitement, other sectors are on the receiving end of what many see as a major technological disruption. The online course provider Coursera fell more than 11% Friday afternoon following a ratings downgrade of Sell from Neutral from Goldman Sachs analyst Eric Sheridan. He said that AI software tools pose a major risk to courseware providers, including Coursera Chegg (CHGG) and Duolingo (DUOL).
iRobot (IRBT): Following a report that the EU will seek to block Amazon’s deal to purchase the company for $1.7 billion, shares plunged Friday morning. EU officials previously raised concerns about the proposed acquisition late last year, according to the Wall Street Journal, contending that the purchase would restrict competition in the market for robot vacuum cleaners. Shares were down close to 30%.
Spirit Airlines (SAVE): Shares jumped more than 20% after the carrier raised its fourth-quarter guidance, rebounding somewhat following a significant hit to the stock took after a US federal judge blocked JetBlue Airways’ (JBLU) acquisition of the budget airline.
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Spirit rebounds 22% after raising guidance, assessing debt refinance
Spirit shares rebounded 22% on Friday after the Miramar, Fla., company said it is “assessing options to refinance its 2025 debt maturities” and raised its operating margin guidance by 450 basis points for the fourth quarter.
Spirit shares were seeing their best daily performance since 2020, in a reversal from a steep slide during the last three sessions.
A federal judge’s ruling this week blocking JetBlue (JBLU) from acquiring Spirit Airlines (SAVE) has raised questions about what’s next for the carriers — particularly Spirit, whose clock is ticking with $1.1 billion in debt due in September 2025.
On Friday the airline said it had $1.3 billion of liquidity as of December 31, and the merger agreement with JetBlue “remains in full force and effect.” The statement essentially left the door open in the event of an appeal to Tuesday’s ruling.
On Thursday, Spirit stock sank as much as 20% after a WSJ article fueled speculation of a company restructure.
The report spurred the following statement from an airline spokesperson : “Spirit is not pursuing nor involved in a statutory restructuring.”
Shares of the low cost carrier are down more than 50% since Tuesday’s court ruling.
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Stocks rise in afternoon trading, S&P set for record high
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Stocks trending in morning trading
Here are some of the stocks leading Yahoo Finance’s trending tickers page during morning trading on Friday:
iRobot (IRBT): Following a report that the EU will seek to block Amazon’s deal to purchase the company for $1.7 billion, shares plunged Friday morning. EU officials previously raised concerns about the proposed acquisition late last year, according to the Wall Street Journal, contending that the purchase would restrict competition in the market for robot vacuum cleaners. Shares were down close to 30%.
Spirit Airlines (SAVE): Shares jumped more than 20% after the carrier raised its fourth quarter guidance, rebounding somewhat following a significant hit to the stock took after a US federal judge blocked JetBlue Airways’ (JBLU) acquisition of the budget airline.
Super Micro Computer (SMCI): Shares surged nearly 30% Friday morning after the company raised guidance for its fiscal second quarter 2024. The company now expects to report more than $3.6 billion in revenue, well above the previous forecast of up $2.9 billion. Adjusted earnings are now expected to be $5.40 to $5.55 per share compared to the previous guidance of $4.40 to $4.88 per share.
Wayfair (W): Following an announcement of significant layoffs amounting to 1,600 jobs or 13% of its workforce, Wayfair shares rose 8%. The company is among a host of others that have cut thousands of employees at the start of the year, including Macy’s (M), Citigroup (C), and Google (GOOG, GOOGL).
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iRobot stock plunges 30% on report EU will block Amazon acquisition
Shares of iRobot (IRBT) plunged Friday morning following a report that the EU will seek to block Amazon’s deal to purchase the company for $1.7 billion.
Competition officials from EU’s executive body met Thursday with representatives from Amazon to discuss the deal, according to the Wall Street Journal. The officials told Amazon the deal was likely to be rejected.
EU officials previously raised concerns about the proposed acquisition late last year, arguing that the purchase would restrict competition in the market for robot vacuum cleaners, the report said. Since Amazon would become both a seller of such products and a marketplace for them, the company might be incentivized to hinder rivals on its marketplace or prevent them selling their products through the platform.
The move to end the deal is not set in stone. It would still require the approval from top political leaders at the European Commission. The deadline for the final decision is in mi February.
Amazon’s regulatory challenges in the EU raises further concerns of how the deal will play out with antitrust officials in the US.
During the Biden presidency, regulators have pushed back on some big name acquisitions. And last year, the Federal Trade Commission sued Amazon alleging that the tech giant maintains an illegal monopoly.
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Consumers haven’t felt this good about the economy since July 2021
Americans are feeling increasingly better about the state of the US economy.
The latest University of Michigan consumer sentiment survey released Friday revealed a 13% jump in overall sentiment during the month of January. The index reading for the month came in at 78.8, its highest mark since July 2021, and well above economists’ expectations for a reading of 70.1.
The cumulative 29% climb seen in the sentiment index over the past two months is the largest two-month increase since the US economy recovered from recession in 1991.
“The sharp increase in December was no fluke,” surveys of consumers director Joanne Hsu said in a press release. “Consumer views were supported by confidence that inflation has turned a corner and strengthening income expectations.”
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Stocks climb as S&P 500 aims for record high
Wall Street kicked off trading on Friday with gains across the board, setting the S&P 500 up for a fresh record high as investors appear to shake off pessimism tied to the Fed’s potential interest rate cuts.
The tech-heavy Nasdaq Composite (^IXIC) jumped 0.5%, eyeing a return to gains notched Thursday as Apple (AAPL) and chipmakers outperformed. The benchmark S&P 500 (^GSPC) gained 0.3%, while the Dow Jones Industrial Average (^DJI) gained 0.3% or about 120 points.
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Ford cuts F-150 Lightning production as electric truck demand flags
Ford (F) said early Friday it would take 1,400 workers off the production line for the F-150 Lightning, the electric version of its best-selling truck, in response to customer demand.
Meaning people aren’t as excited about buying an electric version of the F-150 as the company had planned.
Half of these workers will be moved to the plant making Ford’s new Bronco and Ranger trucks, while the other half will be offered buyouts or find a placement in another role at its Dearborn factory where the F-150 Lightning is being made.
The move recalls a story from Yahoo Finance’s Pras Subramanian in late 2023 that noted last year we saw the industry’s EV dreams meet reality.
Meaning the lofty projections automakers made in recent years that the whole country would start to look like California when it comes to EV uptake are starting to look too dreamy.
And investors have certainly been skeptical — shares of Ford and GM (GM) are both down over the last year, lagging the S&P 500 considerably over that period.
With higher rates making auto financing more challenging for many consumers, fears over an economic slowdown still weighing on consumers, and inventory levels remaining depressed, the euphoric feelings that swept the auto industry in 2021 feel quite distant as 2024 gets underway.
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