The S&P 500 and the Nasdaq Composite ended Tuesday's session with modest gains as investors prepared for key inflation data to be released later this week.
The S&P 500 inched up 0.17% to 5,078.18. The Nasdaq added 0.37% to end at 16,035.30. The Dow Jones Industrial Average fell 96.82 points, or 0.25%, to close at 38,972.41.
Retail giant Macy's advanced 3.4% after announcing it would close around 150 of its struggling stores following a revenue miss in the prior quarter. Lowe's gained 1.7% after posting an earnings beat. Zoom Video and Hims & Hers Health rose 8% and 31%, respectively, following earnings reports that exceeded Wall Street expectations.
The market on Tuesday "really doesn't have a lot of direction," according to Sam Stovall, chief investment strategist at CFRA Research. Different sectors "are each marching to the beat of their own drummer," he added.
Indeed, the utilities sector outperformed the broader market, rising about 1.9%. Communications services also rose 1%, while the technology sector added less than 0.1%.
Those moves follow a losing day on Wall Street that pulled the Dow and S&P 500 off record highs seen last week after Nvidia's stellar earnings report.
"What's causing tech, consumer discretionary, communication services and financial stocks to do better is that they tend to do well in a interest rate pause period. Also, that's where the growth is," Stovall said. "And so I think until the Fed starts to cut interest rates, investors are not going to dramatically diversify into mid- and small-cap stocks — they really want to wait and see."
Money Report
The latest consumer confidence numbers{
Consumer confidence declines on concerns over jobs, politics
Consumer confidence slipped in February as worries escalated over a potential labor market slowdown and a tumultuous political environment, according to a Conference Board gauge released Tuesday.
The board's Consumer Confidence Index moved down to 106.7, below the downwardly revised 110.9 in January and off the Dow Jones estimate for 115.1. Moreover, the Expectations Index nudged down to 79.8, just below the 80 benchmark that has been consistent with recessions.
Written responses to the survey showed easing fears about food and energy prices, but "they are more concerned about the labor market situation and the US political environment," said Dana Peterson, chief economist at The Conference Board.
—Jeff Cox
Data from the U.S. Department of Commerce released on Tuesday showed that orders for long-lasting goods declined{
Durable goods orders declined much more than forecast in January
Orders for long-lasting goods fell even more than expected in January, largely due to a big slump in demand for transportation, the Commerce Department reported Tuesday.
Durable goods orders tumbled 6.1% on the month, worse than the downwardly revised 0.3% decline in December and the Dow Jones estimate for a drop of 5%. The category encompasses products as diverse as aircraft, appliances and computers. Transportation was the main culprit for January's slide, down 16.2%.
Excluding transportation, new orders were off 0.3%, while ex-defense new orders slid 7.3%.
—Jeff Cox
Those come before January's reading of the closely watched personal consumption expenditure price index, as well as data on personal income, slated for release on Thursday. Investors will watch these releases for future clues into the health of the economy and for insights into the path of monetary policy.
Stovall is estimating a month-over-month increase in both core and headline inflation, but a yearly decline in Thursday's report.
"It's almost like watching a ping-pong ball drop on a table," Stovall said.
S&P 500, Nasdaq Composite close slightly higher Tuesday
The S&P 500 and Nasdaq Composite ended Tuesday's trading session in the green. Meanwhile, the Dow Jones Industrial Average came under pressure.
The S&P 500 and Nasdaq climbed 0.17% and 0.37%, respectively. The Dow slipped nearly 97 points, or 0.25%.
— Hakyung Kim
Microstrategy shares jump 10% after Benchmark initiates coverage with a buy rating
Benchmark Company initiated coverage of Microstrategy on Tuesday with a buy rating and said it sees about 12% upside on the stock. The shares rose about 10%.
"Microstrategy offers a unique business model focused on the acquisition and holding of bitcoins, which represent the bulk of the company's valuation, with its software business serving in a supporting role as ballast to that valuation and a generator of cash flow used for the purchase of additional bitcoins," Benchmark's Mark Palmer said in a note Tuesday.
"As such, the price of MSTR shares is highly correlated to the price of bitcoin (correlation coefficient of 0.94), although the company's use of leverage to amass its bitcoin holdings can magnify its gains relative to those realized by the cryptocurrency," he added.
The firm has a $125,000 price target on bitcoin by the end of 2025 – about 118% away from its Tuesday price – justified by the boost in demand from the newly launched U.S. spot bitcoin ETFs and the reduced pace of supply after the April halving.
— Tanaya Macheel
Current market rally can't be compared to the tech bubble, says Citi's Scott Chronert
While it's true that the current bull rally is being propelled by AI- and tech-adjacent stocks, Citi's Scott Chronert disagrees with comparisons to the great Tech Bubble.
"Current multiples are well below '99-'00 levels. Further, our subjective view is that the fundamental circumstance is meaningfully different now vs then," Citi Research's head of U.S. equity strategy wrote.
However, Chronert cautioned that stock fundamentals still have to support the rally in order to sustain his S&P 500 year-end target of 5,100.
"That said, the current spending ramp on gen AI infrastructure and product will need to translate to incremental revenue and growth drivers. But it is premature to judge that," he added. "While the index may overshoot our year-end 5100 target in the short term, it seems premature to increase the probability of our 5700 bull case scenario."
— Lisa Kailai Han
Apple cancels plans for electric car and leans into generative artificial intelligence, report says
Apple is canceling plans to build an electric car and is instead leaning into generative artificial intelligence, according to a report from Bloomberg News.
Apple scaled back its vision for the EV project last month and moved initial launch date back to 2028 from 2026, Bloomberg added. The company had originally planned for the car to be fully self driving but instead shifted to a semi-autonomous model last month. Some of the employees devoted to Apple's EV project will now work on generative AI, the report added.
Apple stock gained 0.5% following the news.
— Brian Evans
Dow underperforms
The Dow lagged the other major indexes on Tuesday.
The blue-chip index slipped 0.4% in the session. Meanwhile, the broad S&P 500 traded near flat, while the technology-heavy Nasdaq Composite ticked up 0.1%,
Part of that underperformance stemmed from a drop of more than 2% in Amgen and Chevron. McDonald's and Honeywell were the next biggest losers, down about 1% each.
Just around a third of the 30 stocks in the Dow were on track for gains. Disney was the best performer in the index, rising more than 1% despite the downtrend.
— Alex Harring
Oil prices rise as market monitors Gaza cease-fire talks, OPEC cuts
Crude oil futures rose Tuesday amid uncertainty about the prospects for a cease-fire in the Israel-Hamas war and as some investors expect OPEC+ will extend its production cuts beyond the first quarter.
The West Texas Intermediate contract for April rose $1.21, or 1.56%, to $78.79 a barrel. Brent April futures rose $1.01, or 1.22%, to $83.54 a barrel.
President Joe Biden told reporters in New York City on Monday that he hoped a cease-fire would be reached in the Israel-Hamas war by March 4. But senior Hamas officials indicated the current proposals for a truce did not meet their demands.
OPEC+ will soon make a decision on whether to extend its production cuts beyond the first quarter. Goldman Sachs expects the reductions to continue through the second quarter with OPEC+ gradually and partially phasing them out in the third quarter, according to research note published Monday.
— Spencer Kimball
Government shutdown would pressure defense stocks, says Morgan Stanley
Morgan Stanley believes defense stocks may be pressured if Congress fails to reach an agreement on the budget in due time.
The first federal funding deadline is approaching this Friday at midnight when several government agencies including agriculture, veterans affairs and transportation, are due to run out of money. The second is next Friday, March 8, after which a full government shutdown would take effect if there is no funding resolution.
"We've been generally surprised by the extent of budget intransigence in Washington in the wake of rising geopolitical tensions ... Upcoming government funding decisions (March 1 / March 8 deadlines) bear important implications for the apparent 'threat/budget divide,'" analyst Kristine Liwag wrote in a Tuesday note.
Liwag added that "a shutdown scenario would place further pressure on Defense stocks, in our view." In the case of a shutdown, new contracts cannot be executed and new funding cannot be allocated, she noted.
— Hakyung Kim
Fed's Bowman says time to cut interest rates hasn't arrived yet
Federal Reserve Governor Michelle Bowman expressed caution expressed caution about the path of monetary policy, saying in a speech Tuesday that there are dangers in giving up the inflation fight too quickly.
"Should the incoming data continue to indicate that inflation is moving sustainably toward our 2 percent goal, it will eventually become appropriate to gradually lower our policy rate to prevent monetary policy from becoming overly restrictive. In my view, we are not yet at that point," Bowman said during a speech to bankers group in Florida.
"Reducing our policy rate too soon could result in requiring further future policy rate increases to return inflation to 2 percent in the longer run," she added. Bowman is a permanent voting member of the rate-setting Federal Open Market Committee.
The remarks were largely in keeping with communication from Fed officials in recent weeks, as they have stressed that even while rate hikes are likely over, high rates may not be.
—Jeff Cox
Bernstein defends Alphabet despite recent AI troubles, search concerns
Bernstein is defending Alphabet even as concerns mount that the company's "search empire is crumbling."
"We continue to argue that the risk to search is more severe outside of Gen AI, namely vertical and social search," wrote analyst Mark Shmulik, who holds a market-perform rating on shares. "For now, ChatGPT's engagement growth is plateauing, and "the new" Bing has been losing search revenue share since Microsoft declared war."
The commentary from Bernstein comes after Alphabet shares declined more than 4% during Monday as the search giant said it plans to relaunch its Gemini AI picture generator in a "few weeks" after users unveiled a slew of historical inaccuracies.
Some investors in recent months come to view the search giant as falling behind on the AI race, with shares suffering from poor product launches and products from competitors.
But Shmulik said its too soon to "declare Google Search dead."
"We'd much prefer Google to go off and iterate behind closed doors and come back stronger and buttoned up," he said. "And perhaps, this whole saga causes another Code Red at Google and galvanizes Google into a shake up."
He views concerns that generative AI is a current risk to the product as overdone, noting that vertical search through the likes of Amazon and Walmart, and social search via apps such as Meta and Pinterest pose greater "mid-term competitive risks."
"The biggest risk we see from the string of error-riddled gen AI product launches is that talent no longer sees Google as a premier destination to build one's career," he said.
— Samantha Subin
Stocks making the biggest moves midday
These are some of the stocks making the biggest moves during midday trading:
- Norwegian Cruise Line — The cruise ship operator soared 18% on strong forward guidance.
- Unity Software — The video game developer dropped about 9% on disappointing EBITDA guidance.
- Viking Therapeutics — The clinical-stage biotech soared more than 90% after fulfilling primary and secondary endpoints in its Phase 2 GLP-1 study.
Read the full list of stocks on the move here.
— Samantha Subin
Viking Therapeutics shares skyrocket, putting pressure on Eli Lilly stock
Eli Lilly shares have been riding the excitement over anti-obesity drugs for quite a while, but not today. Shares were down slightly as investors rallied around Viking Therapeutics, a clinical stage biopharmaceutical company that is developing an oral drug that would compete with Lilly's Zepbound.
Viking's therapy, VK2735, showed promising results in a phase 2 trial. Patients enrolled in the study tolerated the drug very well, with very few stopping treatment. On average, they saw a 13.1% drop in their weight during the trial, and there were signs that further losses could be achieved.
Viking shares were up more than 90% in recent trading. Even ahead of Tuesday's news, the stock has soared so far this year.
Although Viking's results are promising, analysts believe the market is so vast for these drugs that there is an opportunity for additional players. Also both Novo Nordisk and Lilly, the market leaders, also have next-generation drugs in their pipeline.
—Christina Cheddar Berk
Warner Bros. Discovery halts merger talks with Paramount Global, sources say
Warner Bros. Discovery has gone "pencils down" on a potential acquisition of Paramount Global , halting talks after several months of kicking the tires on merging the media companies, according to people familiar with the matter.
Skydance Media, the film and TV studio run by David Ellison, is still performing due diligence on a potential transaction, two of the people said.
Paramount Global has set up a special committee, which has hired its own financial adviser, to sift through potential bids for the whole company or certain assets. Media mogul Byron Allen offered $14 billion for the company last month, though he has a history of bidding on and not buying large media assets.
Warner Bros. Discovery shares rose 1.6% in midday trading. Paramount Global shares gained 1.7%.
— Alex Sherman, Sarah Min
History shows Tuesday is the worst market day of the month
If history repeats itself, Tuesday could end poorly.
The 27th has the worst average daily return for the S&P 500 in February, according to a Carson Group analysis of data between 1950 and 2023. On average, the broad index has ended the day down 0.24%.
To be sure, the market has blown past historical expectations thus far in the month.
February is typically the second worst month of the year for the S&P 500, per data from the Stock Trader's Almanac between 1950 and 20222. The benchmark index has shed about 0.04% in an average February.
This year, the S&P 500 has jumped more than 4% so far in the month.
— Alex Harring
Utilities stocks outperform Tuesday
The utilities sector was the top-gaining sector Tuesday as the S&P 500 traded near the flatline.
Utilities rose 1.3%, with Constellation Energy popping more than 11%.
The only other sectors in the green were consumer discretionary and materials, which ticked up 0.5% and 0.2%, respectively.
Meanwhile, the energy and financials sectors saw the biggest declines, falling 0.8% and 0.3% each.
— Hakyung Kim
Cruise stocks glide higher after strong Norwegian guidance
Norwegian Cruise Line skyrocketed 15% after offering upbeat current-quarter guidance, and lifted the broader cruise sector in tandem.
The company posted a wider-than-expected loss for the current quarter, but said that it that it anticipates a surprise profit of 12 cents a share for the current period. That's above the 20-cent loss analysts polled by FactSet anticipated.
The strong guidance boosted other cruise giants. Royal Caribbean surged more than 4%, while Carnival Corporation skyrocketed more than 7%.
— Samantha Subin
Cybersecurity stocks, ETFs outperforming on Tuesday
Stocks and ETFs tied to cybersecurity are showing strength in what has been a sluggish start for Wall Street on Tuesday.
The Global X Cybersecurity ETF (BUG) rose 1.2%, while the iShares Cybersecurity and Tech ETF (IHAK) rose 0.9%.
Palo Alto Networks was a standout in the group, rising more than 4% and on track for its fourth-straight positive session.
— Jesse Pound
IPO ETF tracks for best month in over a year
An index tracking newly public stocks is on pace for its best month in more than a year.
The Renaissance IPO ETF (IPO) has climbed more than 14% in February. If that holds through the end of the month, the fund will notch its biggest monthly gain since January 2023, when it rallied 15.9%.
The fund includes stocks that came to the market through initial public offerings starting at the end of their fifth day of trading. These stocks are removed after 500 trading days.
Arm Holdings led the fund higher this month, surging more than 99%. Coinbase posted the next biggest gain, up more than 59% on the month. Confluent, Robinhood and AppLovin followed, with each advancing more than 40%.
To be sure, some stocks in the fund bucked the trend. Rivian was the worst performer in the fund this month with a drop of around 30%, followed by Fluence Energy at 21% down.
The fund also hit highs not seen since early 2022 in Tuesday's session.
— Alex Harring, Gina Francolla
Consumer confidence declines on concerns over jobs, politics
Consumer confidence slipped in February as worries escalated over a potential labor market slowdown and a tumultuous political environment, according to a Conference Board gauge released Tuesday.
The board's Consumer Confidence Index moved down to 106.7, below the downwardly revised 110.9 in January and off the Dow Jones estimate for 115.1. Moreover, the Expectations Index nudged down to 79.8, just below the 80 benchmark that has been consistent with recessions.
Written responses to the survey showed easing fears about food and energy prices, but "they are more concerned about the labor market situation and the US political environment," said Dana Peterson, chief economist at The Conference Board.
—Jeff Cox
Record highs in global equities is 'no sell signal,' Bank of America Securities says
Global equities are at all-time highs but that doesn't mean it's time for investors to sell, according to Bank of America Securities.
"An all-time high is a not a sell signal," Nigel Tupper wrote in a Tuesday note titled "No sell signal." "The MSCI AC World Index reached an all-time high in February so contrarian investors may turn cautious on equities, but it's worth remembering equity markets efficiently reflect earnings growth through time."
In fact, Tupper said "2024 could be a strong year for equities," given the median earnings per share growth estimate for global stocks is 16%. In particular, he expects that tech will particularly benefit, as opposed to defensive sectors.
"The recent inflection in the Global Wave suggests investors should now position for a sustained upturn," Tupper added.
The iShares MSCI ACWI ETF is more than 4% higher in 2024.
— Sarah Min
Stocks open flat Tuesday
U.S. stocks started Tuesday's trading session little changed.
The Dow Jones Industrial Average slipped 42 points, or 0.1%.
The S&P 500 and Nasdaq Composite inched up 0.1% and 0.2%, respectively.
— Hakyung Kim
Home prices posted a slightly higher than expected increase in December
Home prices across the 20 biggest markets in the U.S. posted a slightly higher than expected increase in December, according to the S&P CoreLogic Case-Shiller index.
The group saw a year-over-year price increase of 6.1%, slightly higher than the 6% estimate from Dow Jones. Of the group, San Diego saw the biggest gain, rising 8.8%, followed by Los Angeles and Detroit, with each seeing an 8.3% rise. Seventeen of the top 20 markets saw gains.
From a national standpoint, the index rose 5.5% annually, up from 5% in November, and was up 0.4% on a monthly basis before seasonal adjustment.
—Jeff Cox
PCE inflation data later this week could be a short-term catalyst, says BMO Wealth Management
Wall Street is keeping a close eye on the latest personal consumption expenditures price index numbers slated for release on Thursday. The inflation data could drive influence market activity for a short period, according to BMO Wealth Management chief investment officer Yung-Yu Ma.
"While the equity market seems due for a pause and a consolidation of its recent gains, key PCE inflation data on Thursday could be the next short-term catalyst for the market, as investors are looking for additional data to help confirm if inflation is truly re-accelerating," Ma said in a Tuesday note.
To be sure, he added that bad news has not been able to stick to the current market for very long.
"This is a teflon stock market, which has shown a remarkable ability to shake off bad news and focus on what is positive, which is classic bull market behavior," said Ma.
"The idea that AI can unleash both spending and productivity is a strong narrative that markets are focused on right now. ... The market may be thinking that rate cuts are now icing on the cake rather than a necessary condition for a sustained rally," Ma added.
— Hakyung Kim
Durable goods orders declined much more than forecast in January
Orders for long-lasting goods fell even more than expected in January, largely due to a big slump in demand for transportation, the Commerce Department reported Tuesday.
Durable goods orders tumbled 6.1% on the month, worse than the downwardly revised 0.3% decline in December and the Dow Jones estimate for a drop of 5%. The category encompasses products as diverse as aircraft, appliances and computers. Transportation was the main culprit for January's slide, down 16.2%.
Excluding transportation, new orders were off 0.3%, while ex-defense new orders slid 7.3%.
—Jeff Cox
Stocks making the biggest moves before the bell: Unity Software, Cava and more
These are the stocks moving the most in premarket trading:
- Unity Software — Shares tumbled 15% after the video game developer forecasted that adjusted EBITDA would come in below analysts' expectations for the current quarter.
- Cava — Shares popped 8% a day after the Mediterranean restaurant chain reported an earnings and revenue beat for the fourth quarter.
- Zoom Video — The communications software stock popped 12% after a better-than-expected fiscal fourth-quarter report.
Read the full list of stocks moving here.
— Lisa Kailai Han
AutoZone rises 3% after fiscal second-quarter earnings beat
Shares of AutoZone popped 3% early Tuesday morning after the automotive parts retailer topped analyst forecasts for both earnings and revenue in its fiscal second quarter.
AutoZone reported earnings of $28.89 per share on revenue of $3.85 billion. Analysts polled by LSEG had only expected earnings of $26.28 on revenue of $3.84 billion.
— Lisa Kailai Han
Macy's shares fall after revenue miss
Shares of department store company Macy's fell 3.6% after the company posted a revenue miss in the fourth quarter.
Macy's reported $8.12 billion in revenue, which was lower than analysts' forecasts of $8.15 billion, per LSEG. Meanwhile, the company's adjusted earnings of $2.45 per share topped consensus estimates of $1.96.
Forward guidance also was weaker than expected. Management forecasts full-year net sales in a range between $22.2 billion to $22.9 billion, versus estimates of $22.95 billion.
— Hakyung Kim
Lowe's shares rise on earnings beat
Lowe's shares traded more than 1% after the home improvement giant reported better-than-expected fourth-quarter results, despite customers taking on fewer home projects. The company also said it expects sales this year to decline to between $84 billion and $85 billion from $86.38 billion in fiscal 2023.
— Fred Imbert
Europe stocks open slightly higher
Europe's Stoxx 600 index opened 0.04% higher Tuesday, as sectors traded mixed.
Major bourses were narrowly higher, with the U.K.'s FTSE 100, France's CAC 40 and Germany's DAX all up by around 0.1%.
— Jenni Reid
Where stocks stand on the month
The three major indexes are on track for wins with just three days left in February's trading month.
The technology-heavy Nasdaq Composite has led the way, jumping more than 5%. The broad S&P 500 followed, climbing more than 4%. The blue-chip Dow has lagged, advancing just over 2%.
— Alex Harring
Stocks making the biggest after-hours moves
These are some of the stocks making notable moves in extended trading:
- Zoom Video — The video-conferencing stock surged 11% following a better-than-expected fourth quarter earnings report.
- CarGurus — The online car retailer platform dropped 9% after providing poor guidance for the current quarter.
- Hims & Hers — The consumer-focused health platform jumped 15% after earnings and guidance topped Wall Street forecasts.
— Alex Harring
S&P 500 futures little changed
S&P 500 futures were near flat Monday night.
Futures tied to the broad index shed 0.1%, as did Dow futures. Nasdaq 100 futures lost 0.2%.
— Alex Harring
