US STOCKS-Megacap rally pushes S&P 500 further above 5,000 mark

With results in from about two-thirds of S&P 500 companies, LSEG data now shows Wall Street estimates for fourth-quarter earnings growth of 9.0% versus expectations for 4.7% growth on Jan. 1 while 81% of companies are beating estimates, compared with a 76% average in the previous four reporting periods. "Earnings have been strong so far, above expectations," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York, New York.

S&P 500 traded above the 5,000 mark for a second day on Friday with boosts from megacap stocks, including Nvidia while investors were encouraged by strong earnings data and modest revisions to 2023 inflation figures. Nvidia was up, hitting a record high after Reuters reported it was building a new business unit focused on designing bespoke chips for cloud computing firms and others, including advanced artificial intelligence (AI) processors.

Megacaps including Microsoft, Amazon.com and Alphabet were also gaining on Friday. With results in from about two-thirds of S&P 500 companies, LSEG data now shows Wall Street estimates for fourth-quarter earnings growth of 9.0% versus expectations for 4.7% growth on Jan. 1 while 81% of companies are beating estimates, compared with a 76% average in the previous four reporting periods.

"Earnings have been strong so far, above expectations," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York, New York. "And there was news about additional growth opportunities for Nvidia specific to cloud computing, another growth area besides AI. Those are the big drivers." At 02:29 p.m. the Dow Jones Industrial Average fell 45.92 points, or 0.12% , to 38,680.41, the S&P 500 gained 26.87 points, or 0.54 %, to 5,024.78 and the Nasdaq Composite gained 198.20 points, or 1.25 %, to 15,991.91.

The S&P 500 has now notched 10 intraday record highs so far this year, also driven by positive earnings and optimism around AI that has boosted shares of chipmakers and other technology-related companies. Also, Wall Street's three main indexes were set for their fifth consecutive week of gains. Earlier, data showed U.S. monthly consumer prices rose less than initially estimated in December, but underlying inflation remained a tad warm - a mixed picture that clouded expectations on the timing of interest-rate cuts from the Federal Reserve.

Strong economic data and hawkish comments from Fed policymakers in recent days have dashed hopes the central bank would start cutting interest rates in March. But Ghriskey points to Fed official predictions in the "dot-plot," which still imply a rate cut this year.

"The market does have the Fed's wind at its back. Seemingly we've reached the top of interest rates. The next move is going to down. We don't know when that's going to be. The Fed keeps throwing cold water on that idea but their votes with the dots say they're going to be easing in the second half." Market participants are awaiting data on January consumer prices next week for more clues on when the Fed will cut borrowing costs.

PepsiCo lost 3% after its fourth-quarter revenue fell short of estimates as multiple price increases crimped demand for its juices and Lay's crisps. Pinterest sank 10% after it forecast first-quarter revenue largely below Wall Street estimates, while Cloudflare rallied 20.1% as it forecast upbeat first-quarter revenue and profit.

Advancing issues outnumbered decliners by a 1.9-to-1 ratio on the NYSE where there were 386 new highs and 60 new lows. On the Nasdaq 2,822 issues advanced and 1,363 declined with advancing issues outnumbering decliners by a 2.1-to-1 ratio.

The S&P 500 posted 46 new 52-week highs and 3 new lows while the Nasdaq recorded 279 new highs and 84 new lows.