Stock market today: Wall Street drifts closer to its all-time high

By STAN CHOE
AP Business Writer

NEW YORK (AP) — Wall Street is drifting in early Friday trading and nearing its all-time high set two years ago.

The S&P 500 was up 0.1% at 4,787, just below its record of 4,796.56. The Dow Jones Industrial Average was up 42 points, or 0.1%, as of 9:40 a.m. Eastern time, and the Nasdaq composite was 0.3% higher.

Two financial companies, Travelers and State Street, were helping to lead the market after reporting stronger profit for the end of 2023 than analysts expected. Travelers jumped 5.6%, and State Street rallied 3.8%.

Tech stocks were also strong for a second straight day after heavyweight chipmaker Taiwan Semiconductor Manufacturing Co. delivered a better-than-expected forecast for revenue growth this year. That helped drive a 1.1% gain for Advanced Micro Devices and a 2.6% rise for Broadcom.

Companies overall in the S&P 500 are likely to report only slight growth in profits for the fourth quarter of 2023, if any, if analysts’ estimates are close to accurate. But optimism is higher for 2024. Inflation is on the way down, and the U.S. economy has managed to avoid a recession that many investors had earlier seen as inevitable.

Those factors, along with strong expectations for the Federal Reserve to cut interest rates sharply this year, are what have driven the S&P 500 to the brink of its record. It had earlier dropped as much as 25% from its record after inflation topped 9% two summers ago to reach its most painful level since 1981.

The main medicine the Federal Reserve prescribes to break high inflation is high interest rates, which tighten the brakes on the entire economy by making borrowing more expensive.

With inflation down to 3.4%, the big question on Wall Street now is how many times the Federal Reserve will cut rates this year and when it will begin. A cut for the Fed’s main rate from its highest level since 2001 would relax the pressure on the financial system and give a boost to investment prices.

Yields have already tumbled since autumn on such expectations, helping to give the stock market a head start in its rally. After topping 5% in October, the yield on the 10-year Treasury dropped back below 4% recently.

This week, though, yields recovered some of those losses following reports showing the economy is stronger than expected. While such solid numbers keep worries about a recession at bay, they also have forced traders to drop many of their bets that the Fed will begin cutting rates as soon as March.

The 10-year yield climbed to 4.17% from 4.14% late Thursday, adding some pressure on the stock market.

On Wall Street, Spirit Airlines recovered some of its steep losses from earlier in the week. It rose 22.5% after it said bookings for the peak travel period over Christmas and New Years were strong, and it expects to report fourth-quarter revenue at the high end of its earlier forecast. The stock is nevertheless still down 53.4% for the week after a federal judge blocked its purchase by JetBlue Airways out of worries it could lead to higher airfares.

Wayfair jumped 10% after it said it would cut about 1,650 jobs, or 13% of its workforce, to help it save more than $280 million annually.

On the losing end was PPG, even though the supplier of paints, coatings and other materials reported stronger profit for the end of 2023 than analysts expected. It fell 2.2%

In stock markets abroad, Japan’s Nikkei 225 jumped 1.4% to continue its strong gain since the start of the new year. Japan’s inflation rate slowed for a second straight month, upping the chance that the Bank of Japan may keep its ultra-low interest rates around a big longer.

___

AP Writers Matt Ott and Zimo Zhong contributed.