Nasdaq Index, Dow Jones, S&P 500 News: Stocks Mixed as Investors Monitor Valuations

Key Points

• S&P 500 rebounds, tech sector drives significant gains.
• Eli Lilly, Palantir outperform with strong quarterly results.
• 10-year Treasury yield reacts to Fed rate cut speculation.

S&P 500’s Resilient Rise Amid Rate Cut Speculations

The major U.S. stock indexes are putting in a mixed performance shortly after the cash market opening on Tuesday, attempting to bounce back after yesterday’s dip driven by higher bond yields and uncertainties about the Federal Reserve’s interest rate cuts. An uptick today will continue the market’s positive trend from 2023, bolstered by major technology companies.

At 15:18 GMT, the Dow Jones Industrial Average is trading 38461.45, up 81.33 or -0.21%. The S&P 500 Index is at 4938.07, down 4.74 or -0.10% and the Nasdaq-100 Index is trading 15561.94, down 35.74 or -0.23%.

Key Stock Movements

Notable stock movements included Eli Lilly, which soared by 5% following a strong fourth-quarter performance, attributed to its new weight loss drug Zepboud and its diabetes medication Mounjaro. Palantir Technologies also saw a remarkable 21% jump after exceeding revenue expectations for the quarter. Additionally, NXP Semiconductors and Spotify recorded gains on the back of better-than-expected results, with Spotify’s increase in Premium subscribers being a key highlight.

Market’s Narrow Leadership and Economic Indicators

Investors remain cautious about the market’s ability to maintain its rally, with concerns over its narrow leadership. A few stocks, including Amazon, Meta, Microsoft, and Nvidia, have significantly contributed to the S&P’s total return this year. Market watchers are also closely following the New York Fed’s household debt and credit report and comments from central bank officials like Loretta Mester and Susan Collins.

Treasury Yields and Federal Reserve’s Stance

The 10-year U.S. Treasury yield briefly dipped below 4% following Jerome Powell’s indication that a rate cut in March is unlikely, though cuts are anticipated later in the year. Powell’s comments have added a layer of caution in the market, with investors seeking clarity on the Fed’s future policy direction.

Market Outlook

The consensus is that the U.S. equity market will likely continue its upward trajectory unless the Federal Reserve or economic indicators deviate significantly from current expectations. The anticipation of rate cuts aligned with solid U.S. economic growth suggests a potential broadening of the recent rally, although this remains contingent on forthcoming economic data and Fed actions.

Technical Analysis

 

E-mini Dow Jones futures are nudging higher on Tuesday, while hovering just below its all-time high at 38892.

Although fundamental factors tied to Fed policy are grabbing the headlines, most technical traders are saying overbought conditions and the market’s relative performance to the 50-day moving average are driving the price action.

Currently, the market is trading at 38540, this puts it considerably above its nearest support, the 50-day moving average at 37554. This makes the Dow susceptible to a near-term break.