Stock Market Today: Stocks Close Higher After CPI-Fueled Clobbering
The main indexes finished higher Wednesday, regaining some ground lost during Tuesday's selloff.
Stocks opened comfortably higher Wednesday, bouncing back from Tuesday's inflation-fueled selloff. Helping lift sentiment were relatively dovish comments from Chicago Fed President Austan Goolsbee, who said investors shouldn't "get amped up" about one Consumer Price Index (CPI) reading that came in higher than expected.
"If you see inflation go up a little bit that doesn't mean that we're not on the target to get to 2%," Goolsbee said while speaking at the Council of Foreign Relations in New York. "We can still be on the path even if we have some increases and some ups and downs."
All three main indexes tumbled more than 1% Tuesday after a hotter-than-anticipated January CPI report drastically lowered expectations for a Fed rate cut at both the March and May meetings.
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Lyft earnings typo sends stock soaring
A round of well-received earnings reports were also in focus today, most notably from Lyft (LYFT). Late Tuesday, the ride-sharing firm disclosed its fourth-quarter results that included higher-than-expected earnings of 18 cents per share on in-line revenue of $1.2 billion. The company also said gross bookings were up 17% year-over-year to $3.7 billion.
In the press release, Lyft initially said it anticipates gross margin to expand roughly 500 basis points – or 5 percentage points – in fiscal 2024. This figure sent shares surging more than 60% in Tuesday's after-hour session.
However, Lyft's Chief Financial Officer Erin Brewer later clarified in the earnings call that this was a clerical mistake and the expectation is actually for gross margin expansion of 50 basis points, or 0.5%.
Still, Lyft "exited 2023 on strong footing with Q4 representing the high watermark for growth in rides, their highest level of annual rides in the company's history and bookings," says Needham analyst Bernie McTernan (Hold). As a result, the stock closed today up 35.1%.
Fellow ride-hailing firm Uber Technologies (UBER) also spiked today. UBER gained 14.7% after the company said its board of directors approved its first-ever stock buyback plan, authorizing up to $7 billion in share repurchases.
Robinhood pops on surprising Q4 profit
Robinhood Markets (HOOD) was another post-earnings winner, surging 13.0% after its results. The online trading platform posted an unexpected profit of 3 cents per share for its fourth quarter. The report also showed revenue surged 24% in the three-month period to a higher-than-expected $455 million.
Crypto trading, in particular, was a "bright spot," with crypto volumes coming in at their strongest since Q3 2022, says Needham analyst John Todaro. However, the analyst remains "Hold rated as we gauge the success of international products which could prove necessary to growing volume longer term."
As for the main indexes, the Nasdaq Composite rose 1.3% to 15,859, the S&P 500 added 1.0% to 5,000, and the Dow Jones Industrial Average gained 0.4% to 38,424.
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