US stocks ended higher – just – as the trio of major indexes edged out of negative territory following bullish economic data that pointed to strong payrolls data later this week, while the Federal Reserve rate meeting turned out to be a non-event.
After the closing bell, there was more good cheer as bourse behemoth Facebook (NASDAQ:FB) reported revenue and earnings soared in the fourth quarter despite concerns sales could slow as it hits the limit on how many advertisements it puts in the newsfeed.
The world’s largest social network reported non-gaap earnings of $1.41, compared with the average analyst estimate of $1.31 per share. Net income was $3.5bn in the three months until December and $10.2bn for the full year 2016. Facebook shares which closed up 2.2% extended gains by a further 2.2% to $136.15 after the closing bell.
The Dow Jones Industrial Average closed up 0.2% at 19,890, having early in the session coming within 33 points of hitting 20,000 again, before descending into negative territory midsession.
The market bellwether S&P 500 closed up 0.03% at 2279 and led by Arconic Inc. (NYSE:ARNC), up 11.2% at $25.28, after it logged an as-expected net loss in the fourth quarter but revenue beat estimates.
Also in the top three gainers was Apple Inc (NASDAQ:AAPL) up 6.1% to $128.75 after reporting record sales overnight.
No surprise, the Nasdaq Composite was the best-performing index all day, never touching negative territory after Apple, Wall Street’s biggest listed stock, kept investors celebrating. Nasdaq ended up 0.5% at 5642.
The Federal Reserve made no change to rates, as expected. But the statement also gave no clues as to when the central bank plans to initiate further monetary tightening.
“The latest FOMC statement was a virtual non-event, and contained barely a hint that rates would rise again soon. If the Fed does intend to raise rates three times this year as their December dot diagram suggested, then they are making it difficult for themselves by not opening the door to a March hike,” said Rob Carnell, chief international economist at ING.
“While Trump was vocal throughout his campaign about the need for tax cuts, infrastructure spending and the removal of regulations, the lack of detail since his victory means the Fed has had no choice but to keep things steady as it waits for more information,” said Dennis de Jong, managing director at UFX.com.
“It’s likely that June will be the date for the next interest rate hike, but with Trump still light on any concrete plans or timelines, Yellen may be forced to wait even longer before pulling the trigger.”
The S&P Midcap 400 closed lower by 0.2% at 1683 and the S&P Smallcap 600 down 0.2% at 832.
While US markets were still trading news came in that the UK government had cleared its parliamentary hurdle to invoke Article 50 of the EU Treaty. It means Prime Minister Theresa May can proceed with Brexit talks at the end of March as planned.
Read: UK government wins Article 50 vote to cruise to Brexit talks
But US markets appeared unfazed by the latest developments.
Early trading
US stocks gave back most of their initial gains on Wednesday after the oil stockpile rose for a fourth successive week and to the highest level since October.
In a setback for policymakers hoping that OPEC and Russia honour their agreement from last year to cull oil supplies in an effort to shore up prices caught in a two-year depression, the US stockpiles showed no easing.
Inventories of US crude rose by 6.5m barrels in the week ended January 27, according to the Energy Information Administration. That compared with analysts’ estimates for an increase of 2.6m barrels and was the biggest run of gains since April.
But the losses were seen by some traders as overdone since the oil price itself reacted negatively only for a short while and was last up again on the day, by 1.2% to $53.45, which helps to explain why none of the leading oil companies led the falls on any of the indices, S&P 400-500-600.
Giving the market some reason to remain buoyant, the pace of US manufacturing sector growth climbed in January to its highest level in more than two years, highlighting the sector’s rebound from a choppy 2016.
The Institute for Supply Management’s manufacturing gauge rose to 56 last month, from 54.5 in December. That came in ahead of Wall Street estimates calling for 55 and significantly above the 50-line that separates expansion from contraction.
Which is why markets were anxious about how much fuel US President Donald Trump might put into the US economy before he risks inflation. The big banks responsible for underwriting the US government’s debt have predicted a surge in borrowing from the US Treasury in order to fund the Trump administration’s proposed infrastructure spending plans.
In minutes released this morning from the Treasury Borrowing Advisory Committee meeting held on Tuesday, acting deputy assistant secretary Fred Pietrangeli noted that primary dealer estimates for full-year 2017 through to full-year 2019 were “significantly higher” than estimates from the Congressional Budget Office
The S&P 500 market bellwether reacted the most to the oil supply setback, as it turned negative and was down 0.1% at 2276. The Dow Jones Industrial Average clung onto the thinnest of gains of 0.1% to 19,881 – having earlier challenged the 20,000 level with its best of the day, 19,967.
The Nasdaq Composite was somewhat cosseted by the gains of Apple Inc (NASDAQ:AAPL), as the largest-listed stock in the US reported record sales overnight. Nasdaq was up 0.3% at 5631 while Apple gained 5.6% to $128.12. In fact, Apple shares were poised for their best day in six months and leading Wall Street higher.
One stock which had a rough Tuesday when its badly missed earnings forecasts had to face a downgrade this session on top.
Intense competition, a weak retail environment and pricing pressures in the key North American market have prompted S&P to downgrade Under Armour’s (NYSE:UAA) credit rating to junk a day after its shares slumped on disappointing quarterly results.
S&P analysts said Wednesday that they were cutting the athletic clothing maker’s rating one notch from BBB- to BB+, pushing it below the line separating investment grade from junk. The ratings agency said its outlook for the company was negative.
However, after the shares dipped initially, there were up 0.4% at $21.56. On Tuesday they sank 28%.
Meanwhile, the S&P Midcap 400 followed its bigger brother into negative territory, as it slid 0.2% to 1684 and led by Manhattan Associates, Inc. (NASDAQ:MANH) after reporting its fourth-quarter earnings.
In the S&P Smallcap 600 which rose 0.2% to 835 the leader was Wabash National Corp (NYSE:WNC) up 13% to $19.94 after it was upgraded to a Buy by Zacks.
Pre-Open
US shares are expected to open higher on Wednesday, putting behind them the longest losing run by the S&P 500 index since the November presidential election, with bourse behemoth Apple Inc’s (NASDAQ:AAPL) record sales cheering investors who are confident this session’s Federal Reserve rate meeting is a non-event.
The buoyancy in the market was propelled by data showing the US private sector created the most jobs since June. Payroll processor ADP said that in January 246,000 jobs were added, beating the estimate of 168,000 and representing a sharp pick-up from the 151,000 increase in December.
The data may act as a precursor for Friday’s influential non-farm payrolls data and will also be factored into the statement from the Federal Reserve at 1400 ET (1900 GMT).
The Fed is expected to hold its benchmark rate steady after raising it by a quarter point at its December meeting. Wall Street economists said they would pay close attention to any clues on how central bankers have interpreted US President Donald Trump’s fiscal policy pledges, and the generally upbeat economic data that has been released since the last meeting.
Given the scale and pace of stock gains since the November election of Donald Trump, it didn’t take much to hit a new record on the flipside. The broad gauge of US equities fell on Tuesday for the fourth day in a row, marking the longest stretch of losses since before the election in the latest sign of pressure on the Trump rally trade.
But on Wednesday that was forgotten as the S&P 500 was indicated opening up 0.3%, the Nasdaq Composite up 0.6% and the Dow Jones Industrial Average up 0.3%.
Shares in Apple were 4.9% higher at $127.25 pre-market after the company reported sales hit $78.4bn in the latest quarter - is a new record high.
Apple CEO Tim Cook credited the surge in part to "especially strong demand for iPhone 7 Plus," the larger and pricier iPhone model.
The latest iPhone was thought to get a boost in recent months from the massive recall of Samsung's Galaxy Note 7 over an exploding battery issue.
Another Wall Street titan, Facebook (NASDAQ:FB) reports its earnings after the closing bell. Its shares were 1.3% higher at $132.00 pre-market.
In data, the Institute for Supple Management presents its January manufacturing activity index series, with the overall index forecast to rise to 55.0 from 54.7. Any number above 50.0 indicates economic expansion. The data is released at 1000 ET (1500 GMT).
The official US oil stock inventory for the past week is released at 1030 ET (1530 GMT) and crude oil is seen expanding to 3.3mln barrels from 2.8mln a week ago.