U.S. Major Averages Rebound After Investors Look Beyond Rate Uncertainty

Barry Adams
14 Feb, 2024
New York City

Investors reassessed the previous day's losses, and market indexes attempted a mild rebound in Wednesday's trading. 

The S&P 500 index and the Nasdaq Composite advanced 0.5% in early trading after investors worried that a market selloff in the previous session may not be warranted. 

The hotter-than-expected consumer price inflation in January most likely pushed the rate cut later in the year, undercutting the base argument for the recent rally in the last five weeks. 

However, investors shifted their focus to positive earnings, receding inflation, and stable interest rates. 

Investors are looking forward to the release of the producer price inflation report later in the week. 

On the earnings front, Cisco, Generac, Kraft Heinz, Zillow, Airbnb, Robinhood Markets, Lyft, Instacart, and AutoNation were in focus. 

In Europe, benchmark indexes traded near record highs after investors dialed back on rate-cut optimism. 

The number of employed persons in the Euro Area increased by 0.3% from the previous quarter in the final quarter of 2023 to 169.3 million. 

Employment increased by 1.3% from a year ago in the fourth quarter of 2023. 

Employment in the eurozone expanded for the eleventh quarter in a row, giving more leeway to the European Central Bank to keep interest rates at restrictive levels while bringing down inflation. 

Across Asia, the Nikkei index edged lower after flirting with a new 34-year high in the previous session, and property sector stocks continued to lead decliners in Hong Kong after investors returned from Lunar New Year holidays. 

 

U.S. indexes and yields

The S&P 500 index increased 0.2% to 4,993.21, and the Nasdaq Composite fell 0.6% to 15,754.07. 

The yield on 2-year Treasury notes advanced to 4.63%, 10-year Treasury notes increased to 4.30%, and 30-year Treasury bonds edged up to 4.46%.

WTI crude oil increased $0.22 to $78.09 a barrel, and natural gas prices declined 2 cents to $1.68 a thermal unit, a low last seen in September 2020.

Gold increased by $1.73 to $1,990.46 an ounce after the U.S. dollar gained in international trading.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 104.90.

 

U.S. Stock Movers

Airbnb declined 6.2% to $141.43 despite the online booking platform reporting better-than-expected quarterly results.

Revenue in the quarter surged after the company attracted more first-time customers and expanded beyond its core markets in Europe, South America, and Asia. 

Gross booking value in the quarter increased 15% to $15.5 billion, and nights and experiences booked 12% to 98.8 million in the fourth quarter. 

Revenue in the fourth quarter rose 17% to $2.2 billion, net income swung to a loss of $349 million from a profit of $319 million, and diluted earnings per share were a loss of 55 cents compared to a profit of 48 cents a year ago. 

Active listings at the end of the fourth quarter increased by 1.2 million to 7 million around the world. 

Gross booking value in 2023 soared 16% from a year ago to $73.3 billion, and nights and experiences booked jumped 14% to 448.2 million. 

Instacart decreased 3.5% to $27.0 despite the food delivery company reporting positive quarterly results. 

Revenue in the fourth quarter rose to $803 million from $757 million, net income rose to $135 million from $109 million, and diluted earnings per share dropped to 44 cents from $1.11 a year ago. 

Gross transaction volume jumped 7% to $7.9 billion, and orders increased 5% to 70.1 million. 

Transaction revenue increased 6% to $560 million, and advertising and other revenue rose 7% to $243 million. 

The company estimated first-quarter 2024 gross transaction volume to increase between $8 billion and $8.2 billion, an increase between 7% and 10%. 

Lyft Inc. soared 20% to $14.56 after the ridesharing company reported fourth-quarter results.

Revenue in the quarter increased to $1.22 billion from $1.18 billion, and net losses shrank to $26.3 million from $588.1 million. 

Gross bookings on the platform rose to $3.7 billion from $3.2 billion. Active riders increased 10% to 22.4 million from 20.4 million, and rides surged to 190.8 million from 151.1 million a year ago. 

The company estimated gross booking in the first quarter between $3.5 billion and $3.6 billion and adjusted operating earnings between $50 million and $55 million. 

Robinhood Markets surged 12.5% to $13.33 after the online trading platform operator reported better-than-expected quarterly results. 

Revenue in the fourth quarter increased 24% to $471 million from $380 million, net income swung to a profit of $30 million from a loss of $166 million, and diluted earnings per share were 3 cents compared to a loss of 19 cents a year ago. 

Net interest revenue increased 41% to $236 million, and net transaction-based revenue rose 8% to $200 million. 

Assets under custody increased 65% to $102.6 billion, reflecting net new deposits of $4.6 billion totaling $17.1 billion and higher equity valuations. 

Average revenue per user in the quarter increased by 23% to $81.