Dow rises more than 100 points, S&P 500 heads for 4th straight record day

What’s driving markets

Technology stocks were leading Wall Street higher again on Wednesday. Netflix
NFLX,
+12.92%
jumped over 11% after strong results from the streaming giant, which got the technology-sector earnings season off to a good start.

With the S&P 500 sitting at record levels, some investors think it has become increasingly important that earnings and forecasts are well-received by the market.

“We are focused most acutely on price reactions post reporting (which have been muted over the past three quarters) and the path of guidance/earnings revisions breadth as we progress through earnings season,” said a team at Morgan Stanley
MS,
+1.32%
that includes equity strategists Michelle Weave and Michael Wilson. “Our focus will be on earnings revisions breadth across industry groups — in our view, this measure tends to be the best gauge of corporate guidance,” they wrote in a note.

Earnings reports remain a focus of traders on Wednesday with tech heavyweights such as Tesla
TSLA,
+1.11%,
IBM
IBM,
-0.08%
and Lam Research
LRCX,
+2.93%,
due to report the results after the closing bell.

See: A key Tesla metric is ‘under threat.’ Wall Street will soon learn more.

Broader support for the market was also coming from Treasurys, where the 10-year yield
BX:TMUBMUSD10Y
was up less than 1 basis point, at around 4.15%.

The benchmark rate appears to have found equilibrium around that level following a roller-coaster ride in recent months, suggesting that investors have become more relaxed about inflation, economic growth, and the market’s pricing of the Federal Reserve’s policy trajectory.

Shelby McFaddin, an investment analyst at Motley Fool Asset Management, said investors would be more inclined to “stay put” until they get new information about the health of the economy and whether the central bank is ready to press the button on interest-rate cuts.

“It would make sense to me that there is cautious optimism [in the markets] because if you don’t have anything negative to cling to, you wouldn’t want to sell early,” McFaddin told MarketWatch in an interview.

In U.S. economic data, the S&P flash U.S. services PMI climbed to a seven-month high of 52.9 in January from 51.4 in the prior month, while the flash U.S. manufacturing PMI jumped to a 15-month high of 50.3 this month from 48.2 in December.

Meanwhile, risk appetite was also boosted after China’s central bank ramped up stimulus by cutting the amount of liquidity that banks are required to hold as reserves, which will provide around $139 billion in long-term capital to the market. The move sparked a second day of sharp gains for the Shanghai Composite Index
CN:SHCOMP
after its worst daily drop since April 2022 on Monday.

Companies in focus

• Shares of AT&T Inc. 
  T,
  -3.29%
  dropped 2.5% on Wednesday even though the telecom company reported $16.8 billion in free cash flow for last year, above its prior increased forecast of roughly $16.5 billion.

• Abbott Laboratories’
  ABT,
  -3.11%
  stock fell 3.1% as COVID-test sales continued to plunge, although the healthcare-products company reported fourth-quarter sales that topped expectations.

• Shares of DuPont de Nemours Inc.
  DD,
  -11.69%
  tumbled 11.7% and briefly appeared to be headed toward their worst day in nearly four years after the materials science company issued a profit warning, with weaker demand seen at the end of 2023 expected to continue.