Stocks shot higher out of the gate Wednesday, buoyed by a well-received earnings report from streaming giant Netflix (NFLX). Some strong economic data also helped boost equities.
At the close, the Dow Jones Industrial Average was down 0.3% at 37,806, while the Nasdaq Composite was up 0.4% at 15,481. The S&P 500 gained 0.1% to 4,868, its fourth straight record close.
Fueling upside in the main indexes was a positive reaction to Netflix's fourth-quarter results. The company reported year-over-year Q4 revenue growth of 12.5% to $8.8 billion, while earnings per share surged to $2.11 from last year's 12 cents. The top-line results came in higher than analysts were expecting, though the bottom-line figure fell short of estimates.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Despite the bottom-line miss, Netflix stock jumped 10.7% Wednesday thanks to its stellar subscriber numbers. Specifically, the company added 13.1 million new subscribers globally – its biggest fourth quarter ever for subscription growth – easily outpacing its forecast for roughly 8.8 million.
"We enter 2024 with good momentum," Netflix said in its earnings report. For the first quarter, the company forecasts revenue to 13% to $9.2 billion and earnings to be up 56% to $4.49 per share.
"We thought NFLX might tread water in the first half of 2024 with operating income margins set, paid sharing dwindling and ads scaling," says Wells Fargo analyst Steve Cahall. But the company's "fourth-quarter outperformance indicates there's a lot of growth and margin still ahead."
Meta tops $1 trillion in market value
Elsewhere, Meta Platforms (META) became the latest stock to top $1 trillion in market value. META shares surged 1.4% today, bringing its market cap to $1.004 trillion. Meta's fellow Magnificent 7 stocks Apple (AAPL, -0.4%), Nvidia (NVDA, +2.5%), Alphabet (GOOGL, +1.1%), Amazon.com (AMZN, +0.5%) and Microsoft (MSFT, +0.9%) – which briefly topped a $3 trillion market value today – are already members of the trillion-dollar club.
Today's upside for META stock comes after Raymond James analyst Josh Beck named it a "top pick," citing "a growing narrative around one of the most compelling generative artificial intelligence (AI) monetization themes across tech unfolding that could scale to $25 billion to $60 billion of incremental revenue."
January PMI data comes in strong
In economic news, S&P Global's flash manufacturing purchasing managers index (PMI) jumped to a 15-month high of 50.3 in January from December's 48.2. Readings above 50 indicate expansion activity.
The services PMI, which measures activity in the services sector, hit a seven-month high of 52.9 in January.
This morning's PMI data "exceeded forecasts, but tomorrow's gross domestic product (GDP) report and Friday's personal consumption and expenditures (PCE) inflation print are likely to be more impactful on investor sentiment," says José Torres, senior economist at Interactive Brokers. "However, against this backdrop, market participants are expecting the first Fed cut to arrive in May vs March, with robust data serving to extend the journey across the monetary policy bridge."
Related content
-
Eight Key Steps to Take When Investing in the Stock MarketThe stock market can be a confusing place for beginners, but it doesn't have to be.
-
Confused by Annuities? Making Sense of the Different TypesMany investors aren't sure if annuities are a good option for meeting financial goals. Let's look at the different categories, along with their pros and cons.
-
Stock Market Today: Stocks Slip Ahead of Mega-Cap EarningsGE Aerospace shares soared after earnings while United Parcel Service stock slumped.
-
Stock Market Today: Mega-Cap Tech Rallies to Drag Markets HigherMarkets focused on upcoming earnings from Magnificent 7 stocks rather than chaos in D.C.
-
Stock Market Today: Stocks Tumble After Spectacular Global Internet CrashMarket participants rushed out of risk assets to end a wild week of trading.
-
Stock Market Today: Dow Sinks 533 Points as Big Banks, Mega Caps SlumpGoldman Sachs and Apple were two of the worst-performing blue chip stocks on Thursday.
-
Stock Market Today: Semis Get Slammed and Blue Chips BounceThe potential for more curbs on tech sales to China set off a rotation into blue chips.
-
Stock Market Today: Dow Spikes 742 Points After UnitedHealth EarningsThe S&P 500 and Nasdaq also scored wins Tuesday albeit with much smaller gains than the blue chip Dow.
-
Stock Market Today: Dow Adds 210 Points as Apple, Goldman Hit New HighsA big rally in blue chips and some dovish Fed speak boosted the equities market Monday.
-
Stock Market Today: Markets Bounce Back on Rate-Cut Optimism
The latest readings on consumer sentiment and inflation helped lift the odds of the Fed easing in September.
